CF Energy Corp. (CFY) (“CF Energy”, together with its subsidiaries, the “Group”), a leading new energy service provider in the People’s Republic of China (the ”PRC”) is pleased to announce that the Group has acquired 70% stake in a profitable local Beihai City electric (“EV”) vehicle battery swap station operator, Beihai Brighton Road New Energy Ltd. (the “Beihai Company”) in Beihai City, Gangxi Province, the PRC, for a consideration of RMB1.24 million with reference to the valuation of RMB 1.77 million for the Beihai Company.
The Company provided strategic advice and support to the Beihai Company in establishing the first two EV battery swap stations in Beihai City, and only completed the acquisition when the Beihai Company met all pre-set goals of the development plan. Since the first EV battery swap station became operational on May 23, 2022, by the end of October 2022, with both stations in operation, the Beihai Company had generated total revenue of RMB1.11 million and EBITDA of RMB0.33 million. The Beihai Company currently has 344 registered active taxis as its EV battery swap users with 90 more battery swap EV taxis expected to be added by early next year to a total of 434 taxis. There are currently 550 taxis in Beihai City in total, our clientele accounts for 62.5% of the market. The estimated 90 new battery swap EV taxis will bring the total market to 640 taxis, our market share estimated to be 67.8%. All of the taxis in Beihai City are battery swap cars, Only Beijing EV and Dongfeng EV are within the government’s supplier list for taxis.
To strengthen the financial position of the Beihai Company, the Group is currently in the final stage of raising RMB 14.0 million of long-term financing for the refinancing of the equipment and battery inventory, pending internal approval procedures of the lending finance institution.
The Company’s EV battery swap business development strategy in the Beihai City expansion has delivered successful results. This reported case may be viewed as evidence to show that CF Energy has the ability to capitalize its early mover advantage with accumulated extensive market developing and operating experience. Many cities of similar size and characters in China may present fresh new opportunities in the early development stage of the EV battery swap markets to the Company. While the Company will continue to grow its established EV battery swap markets in Sanya, Haikou, and Beihai City, it will keep its eyes open for good new opportunities in other cities.