In the name of lithium-ion batteries, a suspicious restructuring
On the evening of November 24th, Anhui Xinli Finance Co., Ltd. (600318.SH, hereinafter referred to as "Xinli Finance") disclosed a "Major Asset Replacement and Issuance of Shares to Purchase Assets and Raise Matching Funds and Related Party Transactions Plan".
According to the "Plan", Xinli Financial plans to transfer the equity of its important companies engaged in financing guarantee, small loan, pawn and financial leasing and other financial businesses out of listed companies, and buy shares from Shenzhen BAK Battery Co., Ltd., Tibet Hao 19 shareholders of BAK Power, including Ze Trading Co., Ltd., placed about 75.62 percent of the shares of BAK Power.
So far, this listed company, which originally focused on financial business, has switched itself to the extremely popular new energy track through equity acquisition.
Xinli Financial also announced on the same day that the company will resume trading on November 25. Somewhat beyond market expectations, after the resumption of trading, Xinli Financial recorded four daily daily limits in a row. Under the combined push of multiple factors, the stock price of Xinli Financial soared by 85.48 percent in November.
However, in the almost boiling atmosphere of the stock price, the voices of doubts are also endless. On November 28, the Shanghai Stock Exchange sent a letter of inquiry to Xinli Finance, raising more questions about the transaction between Xinli Finance and BAK Power.
Can the BAK battery with its own popular label of "lithium battery" make Xinli Finance, which is trying its best to innovate its business territory, get its wish? Can the BAK battery, which has twice hit the A-share market and "defeat", turn over in the current hot electric energy storage outlet?
01. There is a four-connection board when the reorganization is undecided
November was a thrilling month for Xinli Finance. First, it announced the news of its reorganization with BAK Power, which attracted much attention. Later, it was suspected of existence due to stock changes. An inquiry letter from the Shanghai Stock Exchange brought it to the forefront.
On November 10, Xinli Financial announced the suspension notice of planning a major asset reorganization, announced the purchase of BAK Power's equity through asset replacement and issuance of shares, and announced that it will suspend trading from November 11. On the day the news was announced, Xinli Financial's share price rose by the daily limit.
Two weeks later, on November 24, Xinli Finance announced its restructuring plan, saying that it planned to sell out the equity of five companies in the financial business of Xinli Finance and put 75.62 percent of BAK Power into it. Xinli Financial also warned that because the company's stock price fluctuated by more than 20 percent in the 20 trading days before the first disclosure of this restructuring, it may be suspected, so this transaction has the risk of being suspended, suspended or cancelled.
Public information shows that half a month before the announcement of the restructuring news, that is, starting from October 25, Xinli Financial's stock price continued to rise, an increase of more than 37 percent , and its market value increased from 3.374 billion yuan to November. 6.876 billion yuan on the 30th. During this period, two private equity products of Shanghai Tongyi Investment Management Company, "Tongyi Kirin No. 5" and "Tongyi Kirin No. 6", suddenly bought millions of shares of Xinli Financial, becoming the ninth and No. 1 shares of Xinli Financial. Top ten tradable shareholders.
On November 25th, Xinli Financial resumed trading, and the daily limit continued in the following days. On the evening of November 28, the Shanghai Stock Exchange issued a reorganization inquiry letter regarding Xinli Finance's proposed acquisition of 75.62 percent of BAK Power's shares, requiring Xinli Finance to provide information on whether to avoid reorganization and listing, the profitability of the target company, and insider information. issues and supplementary disclosures.
The Shanghai Stock Exchange pointed out in the inquiry letter that as the acquirer, Xinli Financial's share price rose by the limit on the day before the suspension of the restructuring, and the company's share price rose more than 20 trading days before the disclosure of the plan. The 20 percent standard stipulated in Article 5 of the Notice of Party Behavior. What exactly is going on?
Xinli Financial stated in the description of confidentiality measures and systems that the company has adopted strict and effective confidentiality measures. However, the well-documented fact is that in 2020, the private equity fund under Shanghai Tongyi Investment has entered the top ten tradable shareholders of Zhongli Group, a shareholder of BAK Power. Does Shanghai Tongyi Investment and Zhongli Group have the motive and facts of "precise hunting" BAK Power? This is exactly what market public opinion refers to, and it is also the focus that needs to be verified urgently.
In fact, this is not the first time that Xinli Finance has faced similar doubts. As early as December 6, 2019, the Anhui Supervision Bureau published an administrative penalty decision on its official website, disclosing the fact that Xinli Financial was in another stock.
02. Xinli Finance repeats the "curve survival technique"
Switching to a new track and changing the main business is nothing new to Xinli Finance.
Xinli Financial was born out of Anhui Chaodong Cement Co., Ltd. established in 1999. Since 2015, Xinli Group has successively acquired a total of 17.34 percent of the unrestricted circulating shares of Anhui Chaodong Cement held by Changxing Mining, becoming the latter's largest shareholder; in the same year, the listed company acquired from Xinli Group. financial business. By 2016, Anhui Chaodong Cement had sold its cement assets and officially changed its name to Anhui Xinli Finance. After many moves, Xinli Finance finally completed the backdoor listing.
Nearly five years have passed in a flash, and Xinli Finance, which was listed on the backdoor, did not shine on the financial track it was sure about. Judging from the performance of recent financial data, the decline of Xinli Financial's main business has become more and more obvious. In the first three quarters of 2021, the company's revenue was only 305 million yuan, a year-on-year decrease of 14.34 percent ; the net profit attributable to the parent was only 884,600 yuan, a year-on-year decrease of 69.51 percent .
The ceiling of rising performance is within reach, and Xinli Financial once again encounters the troubles of growth. In the reorganization plan announced on November 24, Xinli Financial stated in writing that "the growth of the financial business the company is engaged in is weak, there is a risk of performance decline, and it is urgent to seek business transformation."
It is impossible for everyone to step into the same river. For Xinli Finance, which is in a dilemma with regard to business lines and performance expectations, it is somewhat tragic to retake the "Long March Road" of "restructuring", although it does not lose the original intention of "seeking development".
Xinli Finance, which is striving for a second breakthrough, has anchored BAK Power this time.
Only in terms of the development of Xinli Finance itself, this is indeed a wishful thinking. Before the reorganization, Xinli Finance was mainly engaged in traditional financial businesses such as financing guarantees, small loans, pawns, and financial leasing; once the reorganization with BAK Power was completed, the main business of Xinli Finance will be completely new: lithium-ion battery research and development, production and sales, cylindrical Trendy and cutting-edge technological elements such as batteries, prismatic batteries, and polymer batteries will immediately come to you.
An executive of a well-known new energy technology company in Shenzhen told the market that he knows Xinli Finance and BAK Power very well, "Betting on the new energy track, Xinli Finance is obviously prepared this time." In his opinion, if this If the two companies can complete the reorganization as desired, Xinli Finance is expected to quickly acquire lithium-ion battery-related product lines, customer groups and technical talents, and quickly enter the hot lithium-ion battery industry.
In the announced restructuring plan, Xinli Finance also stated that lithium-ion batteries are one of the industries with the most potential for development driven by emerging application fields such as new energy vehicles, and a large amount of industrial capital has entered the industry. An industry researcher from Beijing Panzai Xincai Data Co., Ltd. believes that this differentiated asset injection will greatly reduce the difficulty of entering the market and initial operating risks when the second curve of Xinli Finance and the original business span are large.
BAK Power, the target of Xinli Financial's restructuring, was established in 2005. It was a subsidiary of Sino-Belgium Energy, a US-listed company, which was the first lithium-ion battery company in my country to land on the US Nasnaq market. In the 1990s when the global consumer electronics boomed, my country's lithium-ion batteries rose simultaneously, and BAK was one of the "Big Four" of the first generation of lithium-ion batteries.
According to BAK Power's official website, BAK Power initially entered the industry with consumer batteries, and then gradually expanded into the power lithium-ion battery market. At present, the company's main business includes cylindrical, square and polymer cells, as well as battery packaging, battery solutions, etc., which are mainly used in new energy vehicles, consumer products and backup energy storage.
According to the relevant data released by the Lithium Battery Research Institute (&II) of the High-tech Industrial Research Institute, in the global lithium-ion battery company shipment rankings from 2016 to 2019, BAK Power ranks firmly in the top ten. According to another published industry research report, as of now, there have been more than 200,000 new energy vehicles loaded with BAK power lithium-ion batteries.
03. The "dilemma" meets and redeems each other?
In the high growth channel of the lithium battery industry in the past ten years, BAK Power has always been favored by the capital market.
In 2017, Changxin Technology Zeng Dongnian acquired a 75 percent stake in BAK Power at a high price of 6.75 billion yuan. However, given the unclear regulatory policy at the time, the two sides eventually returned with regret. Regarding this failed marriage, Changxin Technology has stated that it will restart the acquisition plan as soon as the policy allows. In 2018, Zhongli Group joined the ranks of admirers, expressing its intention to spend 10 billion yuan to acquire control of BAK Power.
However, both of these deals have so far failed to materialize due to unclear policies related to acquisitions. But it is worth mentioning that, as of now, among the 23 shareholders of BAK Power, in addition to the largest shareholder Shenzhen BAK holding 29.14 percent , Changxin Technology and Zhongli Group respectively hold 11.65 percent of BAK Power and 8.29 percent equity.
What is embarrassing is that BAK Dynamics, which was once glorious, has experienced twists and turns on its way to the capital market. It has hit the A-share listing twice before, but both ended in failure. In 2019, BAK Power was also caught in "serial debt".
According to public information, in 2019, due to the decline of new energy vehicle purchase subsidies, the installed capacity of new energy vehicles dropped significantly, and the overdue payment of Zotye Auto and Huatai Auto led to the tight cash flow of BAK Power; BAK Power was therefore in arrears. Its lithium-ion battery material supplier has nearly 700 million yuan in debt.
Since the beginning of this year, BAK Power's operating capital is still relatively tight due to the uncertainty of large capital expenditures and the recovery of large accounts receivable, although BAK Power has eased. The restructuring plan announced on November 24 disclosed that from 2019 to the first nine months of 2021, BAK Power's operating income was 1.383 billion yuan, 1.564 billion yuan and 1.69 billion yuan, respectively, and the net profit attributable to the parent was -7.68 100 million yuan, -1 billion yuan, -7.3628 million yuan, and the cumulative loss reached 1.776 billion yuan; at the same time, BAK Power still has a large amount of outstanding balance, some of which are overdue, and there is a situation that the bank account is frozen.
On the evening of December 2, Changxin Technology announced that the company signed an equity transfer and offset agreement with BAK Battery. The general idea of the agreement is that because BAK Power failed to fulfill its performance commitments in 2018, BAK Power's controlling shareholder, BAK Battery, needs to compensate Changxin Technology of 115.5 million yuan, while the company currently only receives 8 million yuan in performance compensation. Therefore, the two parties agreed to adjust the remaining performance compensation of 107.5 million yuan to share compensation based on the valuation of BAK Power of 10.25 billion yuan.
It is precisely in view of BAK Power's business capabilities and many other issues that the Shanghai Stock Exchange put forward different opinions in the inquiry letter issued on November 28.
How much is BAK Power worth? Changxin Technology gave a valuation of over 10 billion in the above-mentioned offset agreement, but there are endless voices of doubt. A number of professionals in the power lithium-ion battery industry believed that BAK Power, which was once indistinguishable, "now seems to have no advantages except for the remaining building."
If calculated according to the shareholding amount of Zhongli Group, a shareholder of BAK Dynamics, the valuation of BAK Dynamics at 10 billion is indeed a bit "inflated". According to public data, Zhongli Group holds 8.2927 percent of the equity of BAK Power, and the corresponding equity book balance is 388 million yuan. Based on this calculation, the current valuation of BAK Power is only about 5 billion yuan.
Nonetheless, Xinli Financial is still relatively hopeful.
Under the atmosphere of the global lithium battery market maintaining a high prosperity, in addition to the continuous increase in the entire supply chain of the track giants such as the Ningde era, cases of cross-border entry into the lithium battery market are not uncommon.
The International Energy Agency predicts that by 2030, there will be a global lithium demand gap of about 50 percent based on existing and under-construction lithium production projects.
BAK Power may not be the best choice, but the lithium-ion battery track is tempting enough. As the former head company of the domestic lithium-ion battery track, BAK Power's dynamic in recent years can also see its active self-help ideas.
After the "serial debt" in 2019, BAK Power has been quite cautious in its own development direction. While taking root in the increasingly hot "small power" market, it is also deeply engaged in the design and development of large cylindrical batteries.
In the "small power" market, BAK Power is penetrating into smart home products with various types of high-rate and large-capacity lithium-ion batteries; Tuan and other major shared travel companies have reached cooperation and supply batteries for first-line lithium-ion light vehicle brands such as Ninebot and Xinri; in terms of power tools, BAK's high-rate discharge cells have been verified and confirmed by TTI, the world's leading power tool. Started mass supply for several power tool brands under TTI.
Lin Jian, chief scientist of BAK Battery, said that BAK Battery is the earliest and currently the only company in China that has maturely mastered the directional blasting technology of cylindrical cells and successfully solved the thermal instability technology. Compared with the large square, the safety of the cylinder is the biggest advantage when the energy density and power density are similar.
