(Yicai Global) July 28 -- Shares of Putailai New Energy Technology dropped after the leading Chinese supplier of lithium battery anode and diaphragm materials revealed a plan to raise CNY8.5 billion (USD1.26 billion) in a private placement. The firm also said first-half earnings surged.

After sinking by as much as 6.5 percent earlier today, Putailai [SHA: 603659] closed down 4.1 percent at CNY73.81 (USD10.95). The shares are still up about 46 percent since major Chinese stock indexes began to rally at the end of April.

Putailai said late yesterday that the funds raised will be mainly used to expand its capacity to turn out two lithium battery material products. Private placements can depress a publicly listed company’s stock price in the short term, as they dilute the stakes held by existing shareholders.

CNY3.89 billion of the proceeds will go on a new factory in Qionglai in Sichuan province, with an annual output of 100,000 tons of lithium battery anode materials. About CNY2.37 billion will go to build another plant in the same place, with an annual capacity of 960 million square meters of lithium battery separators. The remainder will supplement the company’s working capital.

Net profit soared 80 percent from a year earlier to CNY1.4 billion (USD207 million) in the six months ended June 30, the Shanghai-based company said in an earnings report also released late yesterday. Revenue surged 76 percent to CNY6.895 billion.

Lithium battery anode materials and lithium battery separators were the main sources of first-half operating revenue. Its anode materials business revenue reached CNY3.2 billion, a 31 percent gain, while shipments rose 22 percent to 55,000 tons, the report showed. Income from Putailai’s lithium battery separator business jumped 76 percent to CNY1.58 billion, while sales hit 1.729 billion sqm, close to last year’s total of 2.171 billion sqm.

Putailai also said that in order to optimize the allocation of resources and expand financing channels, it has decided to spin off Jiangsu Katop Automation, its lithium battery automation production equipment unit. The details have yet to be determined.

The report suggested that that business had a total of CNY1.05 billion in main business income, up 93 percent, and net profit also surged. As of the end of June, the company’s total orders for various facilities in hand was about CNY3.5 billion.

Putailai includes major battery makers Contemporary Amperex Technology, LG, and Samsung among its clients.

Editor: Peter Thomas