Focus Analysis |" Carbon neutrality" has become a hot spot, and companies with slippers, toys and auto parts are all going to do photovoltaics

Author | Yuan Silai

Edit | Su Jianxun

Another listed company intends to ride on the east wind of photovoltaics.

On January 10, Junda Shares, which makes auto trim parts, announced that it intends to sell its shares and "raise funds to develop the photovoltaic cell business." ”

Just last year, they spent 150 million shares to make photovoltaic cells hongye new energy, and then acquired 51% of the parent company Jietai Technology, becoming the controlling shareholder, the transaction price of the acquisition was as high as 1.4 billion, while the capital of Junda shares at that time was only 203 million.

It turned out to be a very cost-effective acquisition, and after joining the popular track of photovoltaics, the stock price of Junda shares rose nearly 4 times last year.

This is not an emerging industry, and there is no shortage of mature companies. However, the release of the new policy heralds a new round of capital influx. After carbon neutrality was written into the government work report, the photovoltaic sector became a hot word for investment, and the CSI photovoltaic industry index rose by 49% last year, far exceeding the disk.

No one at the helm is willing to regret missing the turning point after the final pattern is determined. Companies have joined this just beginning boom with their own thoughts and purposes, and their business is somewhat reluctant to build a boundary with photovoltaic energy, and many companies have no accumulation. But in any case, they will not be willing to miss the opportunity to turn around brought by photovoltaics.

Stock prices skyrocketed

Cross-border photovoltaics have become a life-saving straw for many listed companies, even if their past business has nothing to do with photovoltaics.

In 2020, Baofeng Fashion, known as the "Slipper King", announced that they would change the company name from "Baofeng Fashion International Holdings" to "Jinyang New Energy Technology Holdings". The Quanzhou company, which produces "Baofeng brand" and "Baoren brand" slippers, left its past manufacturing business behind and made photovoltaic cells.

They have been in deep trouble for years. Baofeng Fashion was once China's largest exporter of slippers, and when it was at its most beautiful, it could have a revenue of 1.352 billion yuan a year and produce more than 50 million pairs of slippers. But since 2013, their revenue and profit have been slashed, and they have been losing money for 6 years since 2014.

In 2019, Baofeng Fashion began to develop energy storage battery production lines, but it was not until 2020 that it really went deep into the photovoltaic cell industry and started HJT (heterojunction) batteries.

The company, which has been hovering below HK$1 for many years, once reached HK$18 after announcing the transformation, rising 211% in three trading days.

Baofeng announced its first order in June 2021 – signed a purchase agreement with Jiangsu Runyang New Energy for 200 million silicon wafers, and then announced that taiyi photovoltaic and panda photovoltaic each had a total supply of not less than 100 million monocrystalline wafers.

It's hard to say whether these deals will bring huge profits in the short term. According to the announcement released by Jinyang New Energy, they signed a contract with Taiyi Photovoltaic for 1 million single-cast silicon wafers, and the unit price is 30% lower than the market price. In view of the HJT battery, Tongwei, Longji, JA Technology and other powerful industry leaders are all making efforts, it may be difficult for Jinyang to compete for a long time.

Regardless of whether it can make a lot of money in the photovoltaic industry, Baofeng, which has changed its name, has temporarily got rid of the dilemma. With rising stock prices, it can raise more money, invest in more projects, and tell more stories.

A similar cross-border is happening in the toy industry, which is also far away from photovoltaics.

Compared with self-built production lines, acquisitions have become an easier way for external companies to enter the photovoltaic industry. On the same day as the announcement of Junda Shares, Mubang Hi-Tech, which makes educational toys, announced that it intends to acquire 100% of the equity of Inner Mongolia Haoan New Energy in cash. The latter is a typical mom-and-pop shop, mainly making monocrystalline silicon wafers and silicon rods, which was officially put into production in July 2019, and the production capacity will reach 3GW until February this year, with only about 400 employees. The reason for Mubang Hi-Tech's acquisition of the latter is to expand into a development situation of "educational toy industry + photovoltaic industry" dual main business.

Mubang hi-tech revenue is not bad, the past three years of operating income have increased, but the net profit has declined, in addition to accounting for more than 80% of the revenue of educational toys, they also do education, precision non-metallic molds, medical equipment. Liao Zhiyuan, the actual controller of the company, has shown interest in photovoltaics, and he controls Guolian Dentons, which is the largest shareholder of a polysilicon purification and recycling company.

Just before the announcement was disclosed, Mubang Hi-Tech's stock price rose by 20% in 3 trading days. This is good news for the second largest shareholder, Bang Ling International, who plans to reduce their holdings by 13.7054 million shares from January 25, 2022 to July 22, 2022. The latter is a private company, and according to Tianyan, its place of incorporation is in Hong Kong.

Manufacturing into photovoltaics

In July 2020, TCL finally won 100% of the equity of Central Group for 10.974 billion.

The acquisition was crucial for TCL, which completed a major restructuring in 2019, and after divesting the home appliance and mobile phone businesses, began to transform semiconductors and displays.

At that time, photovoltaics had not yet become a hot topic, and the TCL acquisition had caused controversy and doubt, especially in the previous acquisition of Alcatel mobile phones and Thomson color TV businesses that had suffered a fiasco.

It turns out that Li Dongsheng bet on the industry. According to the first three quarters of the financial report, the revenue increased by more than 1 times and the net profit increased by more than 2 times in the same period according to the financial reports of the first three quarters.

In addition to the industry boom, this growth is indeed inseparable from the reform after TCL entered. In the words of Li Dongsheng, the silicon wafer business and the TCL panel business are both capital-intensive, technology-intensive and long-term industries, and material suppliers overlap. TCL's entry into ownership has changed the way the old state-owned enterprise raises funds and manages, and in this sense, the acquisition of Zhonghuan by tens of billions is not a rough business splicing. And at a time when both the panel and display industries are in decline, the photovoltaic business gives TCL a more promising future.

They are not the only home appliance manufacturers to enter photovoltaics. Gree did not leave his own line, bent on creating a "photovoltaic air conditioner". They were working on technology to combine central air conditioning and photovoltaic power generation in 2013, but only last year began to announce high-profile photovoltaic central air conditioning products. Dong Mingzhu said in an interview with CCTV that the use of photovoltaic air conditioners can save Gree hundreds of millions of dollars in electricity bills every year.

Gree's transformation is not loud enough, and the stock price is not improving. Skyworth provides a better path. They only established a subsidiary in early 2020, mainly providing household photovoltaic installation, financial one-stop services, and will also undertake the construction of distributed photovoltaic power plants. This business generated 2.19 billion in revenue for the first three quarters of 2021. Just looking at the data, this does not account for much of Skyworth's 35.9 billion revenue, but the growth rate is more than 200%. Skyworth's share price, which has been weak for three years, soared from HK$2.4 to HK$6.6 within a month after the PV results were announced.

For many traditional industries, this is a growth password that has been rare for many years. But not all companies will ride the wind. Lance, an important supplier of Apple, announced in November last year that it would enter the photovoltaic glass, equipment and other businesses, and in the early stage, they mainly attacked their own supply chain and technology accumulation of photovoltaic ultra-thin glass. According to Lens's planning, they also intend to enter the downstream battery and module industries. However, after the news was announced, the stock price of Lens Technology fluctuated and returned to the original point.

For a veteran in the industry, the situation of manufacturers flocking to it is actually not unfamiliar. Over the past decade, the photovoltaic industry has had three ups and downs. Countless speculators and doers have thrown themselves into it with ambition and ambiguity. This time is no exception, after the wave, there will inevitably be some emerging leaders and losers. Perhaps for investors, more careful screening of targets is needed.

Image from 36 Kr