Deepening global cooperation with Gotion High-tech (002074.SZ) from four dimensions, ENVISION GREEN (01783) shows high growth potential.

n High-techENVISION GREENThe strategic cooperation agreement signed between High-tech and ENVISION GREEN includes four key areas, and the two parties will deepen their cooperation globally around these four areas. One of them is to build a battery recycling and after-sales service system. Based on ENVISION GREEN's global service network and Gotion High-tech's projected annual battery production capacity, the two parties will cooperate to jointly establish a comprehensive system for lithium battery sales, after-sales service, and recycling. Gotion High-tech will provide technical support, personnel training, and assistance in setting up service stations, while ENVISION GREEN will provide comprehensive after-sales service through its global service stations.EENGotion High-tech Understanding that ENVISION GREEN currently has 65 service networks globally, demonstrating strong overseas channel capabilities. According to previous capacity goals disclosed by Gotion High-tech, it is expected that from 2025, there will be over 300GWh of battery capacity worldwide annually, with overseas markets reaching as high as 100GWh. This means that at least 500,000 tons of retired batteries will need to be processed in overseas markets, with a disposal value close to 20 billion RMB. With such a large capacity plan, a considerable number of service network facilities will be required. After both parties have confirmed a cooperation framework agreement, they will accelerate the construction of global service networks. It can be expected that 2025 will be the explosive period for the joint construction of service networks by both parties. Secondly, the joint construction of a global battery materials trading center. Both parties will use Hong Kong and Singapore as pilot bases to promote the international circulation and supply of batteries, components, and related equipment. The trading center will support global battery production, recycling, and remanufacturing to ensure the stable operation of green supply chains. Thirdly, jointly building demonstration points for battery production lines. Both parties will establish the first power battery disposal facility in Hong Kong's EcoPark operated by ENVISION GREEN as a demonstration point for the cascaded utilization of batteries to showcase progress in battery recycling, remanufacturing, and reuse. Gotion High-tech will provide technical support based on its production capacity, while ENVISION GREEN will provide chain support and actual operational scenarios at the EcoPark to promote the sustainable development of the environmental industry. It is evident that Gotion High-tech not only provides technical support for ENVISION GREEN's power battery disposal facilities but also, with its large production capacity, will provide the batteries to be processed, effectively ensuring the steady progress of this demonstration project. Fourth, the Low Carbon Research Institute and Battery Passport pilot project. Both parties will leverage the GuoxuanJingji Low Carbon Research Institute to launch a pilot program for a fully closed battery project in Hong Kong, aiming to establish a traceable life cycle management system for batteries in Hong Kong, covering aspects such as restricted substances, recycling, and label expansion to comprehensive lifecycle management systems including carbon footprint, use of recycled materials, and due diligence on the supply chain. It is clear that the in-depth cooperation between Gotion High-tech and ENVISION GREEN in four dimensions covers the entire chain process of battery recycling, indicating that their collaborative development is deeply intertwined. The goal of establishing 100 globally integrated maintenance sites, which include after-sales and recycling, by 2025, is particularly encouraging, signaling that their cooperation will experience explosive growth this year. ENVISION GREEN's influence and service capabilities on a global scale are expected to significantly increase, with its performance likely to see significant growth as well. With tremendous growth potential in the future, the long-term valuation is expected to align with Redwood. In fact, the future performance growth points of ENVISION GREEN are not limited to the scope of cooperation with Gotion High-tech. Upon closer examination, it is clear that despite only entering the new energy sector in 2021, ENVISION GREEN has developed a clear expansion path for its global service system for lithium battery recycling and reuse and has shown immense development potential. In terms of market regions, ENVISION GREEN has already obtained a full set of licenses for power battery disposal, transportation, and export in the Hong Kong market, and its total dismantling and processing capacity is leading in the Hong Kong industry. Additionally, leading global new energy vehicle manufacturers whose names begin with "T" and other top new energy vehicle manufacturers have already designated ENVISION GREEN as their service partner for battery cycling in the Hong Kong market. ENVISION GREEN has a leading advantage in licenses, channels, and other aspects in the Hong Kong market, and its expected first power battery processing facility in Hong Kong is set to start trial operations by the end of this year or early next year. Following this, ENVISION GREEN is likely to expand into the Greater Bay Area based on its leading position in the Hong Kong market. In the European and American markets, ENVISION GREEN is expanding the power battery recycling market through partnerships with cell factories and the establishment of local channels. The deep cooperation with Gotion High-tech is the first case of ENVISION GREEN's collaboration with cell factories. Currently, ENVISION GREEN is in discussions with leading global new energy vehicle manufacturers to jointly explore the Southeast Asian market. If successful, ENVISION GREEN's vast global service system for lithium battery recycling and reuse, radiating from Hong Kong to Europe, America, and Southeast Asia, will officially take shape. In terms of partners, ENVISION GREEN cooperates not only with battery manufacturers like Gotion High-tech but also with battery material manufacturers like Zhejiang Huayou Cobalt and leading global new energy vehicle manufacturers whose names begin with "T", as well as companies at different stages of the industry actively cooperating with ENVISION GREEN. This demonstrates ENVISION GREEN's attractiveness to various enterprises based on its rich network and strong operational capabilities overseas. It is worth noting that starting from 2025, major new energy automobile producing countries outside of the country will reach their peak period for battery recycling, increasing downstream demand for recycling. Leveraging its abundant network resources, ENVISION GREEN is not only serving domestic enterprises going overseas but also accelerating the expansion of overseas corporate clients, continuously strengthening its global service system. Judging by its stock performance, ENVISION GREEN's layout has been recognized by the capital market. Since 2023, the stock price of ENVISION GREEN has been steadily rising, and it has seen growth following the announcement of the cooperation. This indicates that investors hold an optimistic view of its in-depth cooperation with Gotion High-tech and future potential.The stock price of EEN has increased by as much as 17 times. Although the stock price experienced abnormal fluctuations on February 6, it later rebounded strongly and steadily reached a new all-time high, reflecting the capital market's confidence in its fundamentals and continued recognition of its intrinsic business value.Looking into the future, the real value of ENVISION GREEN may not reach the market value of HK$10 billion. If compared to the American battery recycling company Redwood, the future real value of ENVISION GREEN may become clearer. Established in 2017 by former Tesla Chief Technology Officer JB Straubel, Redwood has formed partnerships with major global battery companies and car manufacturers such as Volkswagen, Toyota, Ford, Volvo, Panasonic, and Farasis Power, accumulating a wide range of customers. The development model of Redwood is very similar to that of ENVISION GREEN, and both operate in overseas markets, which is a key comparison point between the two. Based on the future prospects, Redwood has received support from large investors such as Fidelity, Goldman Sachs, and Amazon. After a Series D financing of $1 billion in 2023, Redwood's post-investment valuation has exceeded $5 billion, and it is likely to further increase. At a hearing of the Senate Energy and Natural Resources Committee, Straubel stated that Redwood's goal is to produce approximately 100GWh of battery copper foil and active cathode materials by 2025. According to industry estimates, to produce 100GWh of battery copper foil and active cathode materials, 120-130GWh of batteries need to be recycled. ENVISION GREEN's service Gotion High-tech has already achieved a capacity of 100GWh overseas starting from 2025, in addition to Zhejiang Huayou Cobalt, T-head new energy vehicle companies, and other future clients. The future growth potential for battery recycling at ENVISION GREEN is significant, potentially aligning its valuation level with Redwood in the long term. It is worth noting that ENVISION GREEN's current market value of HK$10 billion includes other businesses such as smart buildings and green transportation. The company is actively expanding its green energy solutions, including new battery storage systems and electric vehicle charging solutions, integrated building energy-saving services, etc. The real value of its battery recycling business is still to be discovered by the market. In the mid-2024 performance report, ENVISION GREEN's revenue from reverse supply chain management and environmental services grew by 138.23% year-on-year, showing a breakout trend that will provide support for the stable growth of ENVISION GREEN's stock price. It is foreseeable that as the global service system for lithium battery recycling and reuse continues to strengthen, the real value of ENVISION GREEN will be gradually reflected in its stock price.