GAC Group Sells Stake in Battery Unit to Charge Up Its Profits

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Guangzhou Greater Bay Technology Co. Ltd. specializes in ternary lithium batteries and ultra-fast charging systems.

Fierce competition in China’s auto market has prompted GAC Group to transfer an 18.82% stake in its loss-making battery unit to its controlling shareholder GAC Industry Group for more than 1.3 billion yuan ($179 million), the company announced Tuesday. The move aims to improve the group’s profitability.

The transferred stake includes GAC Group’s entire 15.82% holdings in Guangzhou Greater Bay Technology Co. Ltd. and a 3% stake held by its wholly owned subsidiary GAC Capital Co. Ltd. Once the transfer is completed, GAC Group will retain an indirect 15.6% stake in the battery unit via GAC Capital but will no longer be a direct shareholder.

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GAC Group plans to transfer an 18.82% stake in its loss-making battery unit to the controlling shareholder GAC Industry Group for over 1.3 billion yuan ($179 million) to improve profitability.
Despite selling its stake, GAC Group expects a net profit gain of 2.26 billion yuan in 2024, keeping an indirect 15.6% stake while facing significant financial pressure from China's auto market competition.
The transaction aligns with GAC Group's strategy to optimize investments, while analysts caution it's a one-time gain and future valuation declines could hurt financials.

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Who’s Who

GAC Group: GAC Group is transferring an 18.82% stake in its loss-making battery unit, Greater Bay Technology, to its controlling shareholder, GAC Industry Group, for over 1.3 billion yuan. This move aims to improve profitability amidst a challenging Chinese auto market. GAC Group’s revenue fell 24.18% and net profit dropped 97.34% in 2024's first three quarters. The transaction provides a temporary financial boost but holds long-term valuation risks.

GAC Industry Group: GAC Industry Group is the controlling shareholder of GAC Group, owning a 53.16% stake. Its chairman is Zeng Qinghong, who also chairs GAC Group. GAC Industry Group is acquiring an 18.82% stake in the battery unit, Guangzhou Greater Bay Technology Co. Ltd., from GAC Group for over 1.3 billion yuan. This acquisition is part of GAC Group's strategy to improve profitability amid competition in China's auto market.

Guangzhou Greater Bay Technology Co. Ltd.: Guangzhou Greater Bay Technology Co. Ltd., established in September 2020, is a key player in GAC Group's new energy vehicles (NEVs) venture. It specializes in ternary lithium batteries and ultra-fast charging systems. Despite its strategic importance, the company has struggled financially, reporting losses of 534 million yuan in 2023 and 449 million yuan in the first nine months of 2024. Its Guangzhou battery factory began operations in October 2023.

GAC Capital Co. Ltd.: GAC Capital Co. Ltd. is a wholly-owned subsidiary of GAC Group, holding a 3% stake in Guangzhou Greater Bay Technology Co. Ltd., which is part of the 18.82% stake transferred to GAC Industry Group. After the transfer, GAC Group will still retain an indirect 15.6% stake in the battery unit via GAC Capital.

Yinpai Battery Technology Co. Ltd.: Yinpai Battery Technology Co. Ltd. is a battery subsidiary of GAC Group, focusing on lithium iron phosphate technology. Its factory began operations in December 2023, reflecting GAC's diversified approach to battery production.

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What Happened When

September 2020：: Greater Bay Technology was established

October 2023：: Greater Bay Technology's Guangzhou battery factory began operations

December 2023：: Yinpai Battery Technology Co. Ltd.'s factory commenced operations

2023：: Greater Bay Technology reported losses of 534 million yuan

First nine months of 2024：: Greater Bay Technology reported losses of 449 million yuan

First three quarters of 2024：: GAC Group's revenue dropped 24.18% year-on-year to 74.04 billion yuan, and net profit plummeted 97.34% to 120 million yuan