Recently, Zhongli Group (002309) disclosed its 2021 annual performance forecast, and it is expected that the net profit loss will be 3.2 billion yuan to 4 billion yuan. Zhongli Group mentioned in the announcement that the company's loss is expected to be about 2.2 billion yuan, mainly involving the impairment of accounts receivable, prepaid accounts and inventory assets of the private network communication business; Guarantee for subsidiary Zhongli Electronic Financing, accruing estimated liabilities; Losses were accrued for long-term equity investments in subsidiary Zhongli Electronics.
On one side, there was thunder, but on the other hand, there were many good news. Since April 2021, Zhongli Group has successively issued announcements on the signing of supply and procurement contracts between its wholly-owned subsidiaries and Sun Company. Faced with the company's "bleak" status quo and "good" future, investors choose to bet on the latter. Since April 2021, the stock price of Zhongli Group has fluctuated upwards, rising by 53.78%. Not only that, the next day of "stepping on the thunder", the company's stock price was even higher, and the closing price of the day rose by 5.76%, not only was not affected by negative news, but also became a "little red in the evergreen bush" under the general poor performance of the market.
Despite the strength of the secondary market, Zhongli Group still has many problems outstanding: the profitability level continues to decline, the short-term debt repayment pressure has increased sharply, and the restructuring and fundraising decision is slightly "child's play"... Under the convergence of various problems, can the good expectation of the photovoltaic business pull the Zhongli Group out of the mud for two consecutive years?
The transfer of the equity of the subsidiary unexpectedly reduced the loss
According to the data, Zhongli Electronics, founded in 2009, is mainly engaged in the research and development, production and sales of information and communication technology equipment. In 2016, Zhongli Group became the largest shareholder of Zhongli Electronics with a shareholding ratio of 50.86% through its shareholding, and included Zhongli Electronics in the scope of consolidated statements.
The revenue of the special communication equipment industry involved in Zhongli Electronics became an important part of Zhongli Group's financial report in the two years after the merger, and the contribution of this business increased from more than 1 billion yuan to nearly 2 billion yuan. Seeing that the upward momentum of Zhongli Electronics is booming, in 2018, Zhongli Group hit the iron while it was hot and planned to acquire the remaining shares of Zhongli Electronics through fixed increase in capital.
However, an announcement on September 5, 2019 announced that the fundraising had failed – Zhongli Group's application for a fixed increase failed to pass the review of the CSRC's Issuance and Review Committee.
After the fixed increase was rejected, Zhongli Group then began to transfer part of the equity of Zhongli Electronics. On December 6, 2019, Zhongli Group announced that it intends to transfer 21.76% and 10.1% of the equity of Zhongli Electronics to Suzhou Shajiabang Tourism Development Co., Ltd. (hereinafter referred to as "Shajiabang Tourism") and Jiangsu Jiangnan Commercial and Trade Group Co., Ltd. respectively.
It is worth mentioning that Shajiabang Travel, one of the transferees of this equity transfer, appeared as the second largest shareholder of Zhongli Group in the first quarter and semi-annual report of 2021 with a shareholding ratio of 5.61%. However, with a series of reductions in Shajiabang Tourism since November 2021, its shareholding ratio has dropped below 5%, and it has also withdrawn from the position of second largest shareholder.
After the completion of the equity transfer, Zhongli Electronics became a shareholding company of Zhongli Group, and the revenue data of the special communication equipment industry was also fixed in 2019. This "high-quality asset" suffered a "break", which seemed quite regrettable at the time. However, as Zhongli Electronics fell into the whirlpool of private network communication business, the impact of Zhongli Group, which has dropped its shareholding ratio again and again, has been reduced a lot.
The sum of the two years' losses exceeded 6 billion yuan
Putting aside the unexpected factor of stepping on the thunder, the performance of Zhongli Group in recent years is obvious to all. Even if the photovoltaic industry ushers in new development opportunities after 2020, Zhongli Group, which is deeply involved, is still not getting rid of the fate of loss. As of the end of September 2021, under the premise of a year-on-year increase in revenue of 31.92%, The loss of Zhongli Group has further expanded to 1.481 billion yuan year-on-year, and there has been two consecutive quarters of revenue increase without profit.
In the 2021 annual performance pre-loss announcement on January 18, in addition to the provision of 2.2 billion yuan related to the private network communication business, another rough reason for the loss was the poor performance of the photovoltaic business - the business is expected to lose about 1.1 billion yuan, of which the operating loss caused by the surge in main raw materials and sea freight, resulting in a production capacity that cannot be fully released, is about 650 million yuan.
If it is true as the performance forecast said, this will be the second consecutive year of huge losses of more than 2 billion yuan for Zhongli Group, and the company will also become one of the few listed companies in the photovoltaic industry to have negative non-net profit for four consecutive years. At this point, all the profits of Zhongli Group in the past ten years of listing have been completely erased.
Coincidentally, Zhongli Group was able to enter the photovoltaic industry through the acquisition of 51% of the equity of Suzhou Talesun Photovoltaic Technology Co., Ltd. (hereinafter referred to as "Suzhou Talesun") ten years ago. Only from the perspective of profit data, Zhongli Group has proved with actions what is called ten years of trance.
In addition to the increase in losses, the slowdown in R&D investment, the increase in short-term debt repayment pressure, and the receipt of warning letters have also struck.
In terms of R&D expenditure, from 2018 to 2020, the data of Zhongli Group fell from 525 million yuan to 284 million yuan, and the company's explanation for this is that it was affected by the epidemic. As of the end of September 2021, the R&D expenditure data reached 276 million yuan, an increase of more than 30% year-on-year, but this is also based on the low base of the same period.
Zhongli Group's monetary capital data has been maintained at a good level, with only 3 billion yuan in 2018 in the past five years. But by the end of September 2021, the data had once again dipped to around $2.4 billion. In addition, the company's current ratio showed a rapid decline after 2014. In the third quarter of 2021, the data has dropped from 1.59 to 0.92, and the company's short-term debt repayment pressure has intensified rapidly.
The bad news keeps coming. On January 13 this year, Zhongli Group issued an announcement that it had received a warning letter from the Jiangsu Securities Regulatory Bureau. According to the announcement, After Receiving the Enforcement Notice of the Shares Held by the Court, Wang Boxing, the controlling shareholder, chairman and legal representative of Zhongli Group, did not disclose the relevant circumstances in a timely manner; Wang Weifeng, the concerted actor of the controlling shareholder and the company's then general manager, did not promptly inform Zhongli Group of pre-disclosure when he learned that the shares held by him might be passively reduced.
Why do mergers and acquisitions and restructurings repeatedly "withdraw orders"?
Judging from the annual report data, almost all of the revenue of Zhongli Group's photovoltaic industry comes from Suzhou Tensun. There is nothing wrong with focusing on the main business, but Zhongli Group obviously wants to get rid of such a shackle. The company's original investment in Zhongli Electronics was to break the situation, but the result was lamentable.
Looking back at Zhongli Group's fundraising plans and mergers and acquisitions plans in recent years, it seems that it can be described as "chaotic".
On March 10, 2020, Zhongli Group launched a private placement plan to raise 1.575 billion yuan for the construction of a new 1GW high-efficiency heterojunction battery module production project and a 2.1GW high-efficiency TOPCon battery and module technology transformation project.
However, this fixed increase plan was internally rejected. On December 25, 2020, Zhongli Group issued an announcement that due to the large breakthrough and progress in the conversion efficiency of the mass production of TOPCon batteries and heterojunction batteries involving the two technical routes of the fundraising project, after consultation by the board of directors, the company decided to terminate the refinancing plan and apply to the CsrC to withdraw the relevant application documents for refinancing.
This is not the first time that Zhongli Group has staged "self-denial", and the company's vigorous asset restructuring plan in 2018 has also "ended without a problem".
Since February 2018, Zhongli Group has begun to plan to acquire the equity of Shenzhen BAK Power Battery Co., Ltd. (hereinafter referred to as "BAK Power"), a domestic power battery head enterprise, by issuing shares and paying cash, and the transaction price may reach 10 billion yuan.
Unfortunately, after nearly a year of waiting, this plan was shattered. On January 10, 2019, Zhongli Group issued an announcement that in view of the macroeconomic environmental factors such as the large fluctuations in the secondary market and deleveraging during the planning of major asset restructuring, combined with the actual situation of the target company and the company's future development plan, the company decided to terminate the planning of this major asset restructuring. After the merger and acquisition vision fell short, Zhongli Group's stock price went all the way down, with a maximum drawdown of nearly 70%.
In November 2021, the listed company Xinli Financial threw out a restructuring plan, the same target is BAK Power - its plan to set aside the main financial business, and will put in 75.62% of the equity of BAK Power, hoping to transform into a new energy company. Subsequently, Xinli Financial's stock price doubled in 18 trading days.
Compared with the two, I don't know how Zhongli Group feels. Superimposed on the heels planted on Zhongli Electronics, Zhongli Group repeatedly self-denied, resulting in the company's performance losses more and more deeply.
Reporter Xu Haifeng Intern reporter Chen Zhi
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