Jiangsu Azure (also known as Jiangsu Aucksun), a Chinese supplier for Li-ion batteries used in various types of equipment and energy storage systems, announced on September 23 that it plans to invest USD 280 million in a battery manufacturing plant in Malaysia. The plant will be developed through a new wholly-owned local subsidiary and have a production capacity of 10GWh per year for cylindrical batteries.
According to Azure’s own notice on this project, the new plant will manufacture cylindrical batteries belonging to the 21, 40, and 50 series. The applications of these batteries include energy storage equipment (including portable systems, residential systems, and industrial/commercial systems), power tools, smart mobility, and cleaning equipment.
Azure has almost 20 subsidiaries located across China (e.g., Suzhou, Shanghai, Dongguan, Huai’an, and Yangzhou). It focuses on three core businesses: Li-ion batteries, LED chips, and distribution of metal products. Its Li-ion battery business mainly offers solutions for light traction systems, power tools, and different kinds of equipment. In particular, Azure is a leading supplier for power tool batteries, which require to have a high discharge rate. The company is one of the world’s top four suppliers for small batteries used in power tools.
Tenpower, a wholly-owned subsidiary of Azure, has accumulated 16 years of experience in the development and manufacturing of Li-ion cylindrical batteries. Its automated production lines, which provide an enormous production capacity for Azure, are currently recognized as state-of-the-art in both China and the international market.
Regarding financial performance, Azure generated a revenue of CNY 3.8 billion for the first half of 2022, showing a year-on-year growth rate of 23.9%. Its operating profit for the same period came to CNY 410 million, showing a year-on-year decline of 4.46%. Its net profit attributable to the parent company came to CNY 350 million, showing a year-on-year growth rate of 3.49%. Of the half-year total revenue, the Li-ion battery business accounted for around CNY 1.718 billion, showing a year-on-year growth rate of 43.31%. As for Tenpower, its net profit for the first half of 2022 amounted to CNY 247 million, representing around 70% of the net profit attributable to the parent company.
Commenting on the investment project in Malaysia, Azure stated that it has been cultivating the market segment for cylindrical batteries over many years. Furthermore, overseas sales now comprise around 50% of the total sales made by its Li-ion battery business. In this context, setting up battery production capacity in regions outside China has become an urgent necessity.
Also, some of Azure’s existing and potential clients have built assembly or processing plants in Malaysia. The country also offer many advantageous conditions for foreign investors. Its policies on foreign investments have remained fairly consistent and align with international trade rules. Furthermore, the country has a large pool of laborers and professionals. All in all, Malaysia is now one of the most attractive places for foreign investments in Southeast Asia.
Hence, Azure will be establishing a local subsidiary to build and operate the new plant, which will serve as a major overseas manufacturing base. Azure believes that projects like this one are critical because overseas plants will be able to quickly provide products and services to foreign clients. Also, being able to effectively meet the demand of the whole international market will improve the company’s overall competitiveness and help the company to keep its market share.
On the other hand, Azure’s notice also pointed to some risks. The new plant in Malaysia is the company’s first major overseas investment project. Potential changes in the local laws, policies, business environment, and economy could affect the development schedule of the new plant and delay its construction. Also, the application for the project has yet to be filed with and greenlit by the relevant regulatory authorities in China and Malaysia.
This article is a translation of a Chinese article posted by TrendForce. It contains information that is either sourced from other news outlets or accessible in the public domain. Some Chinese names are transcribed into English using Hanyu Pinyin.
