The "first share of hydrogen fuel cells", Yihuatong, handed over the hong Kong Stock Exchange, with a negative net profit for two consecutive years

On January 27, 2022, Beijing Yihuatong Technology Co., Ltd. (hereinafter referred to as "Yihuatong" or the "Company") submitted a form to the Hong Kong Stock Exchange for listing on the Main Board of hong Kong, with Zhifu and Guotai Junan International as joint sponsors.

The proceeds of the offering were mainly used for the Company's research projects, capacity enhancements, allocation of investments and potential acquisitions, product promotion and marketing.

As of December 31, 2021, Zhang Guoqiang was the largest shareholder, owning 18.59% of the company's equity, followed by Yutong Bus, Sino Analytica Growth Fund and Dongxu Optoelectronics holding 3.92%, 3.59% and 3.59% of the shares respectively.

1

Losses for two consecutive years

Founded in 2012, Yihuatong is a leading fuel cell system manufacturer in China, with the ability to design, develop and manufacture fuel cell systems including core components fuel cell stacks.

In August 2020, Yihuatong was listed on the Science and Technology Innovation Board at an issue price of 76.65 yuan per share, and since the high point of December last year, Yihuatong's stock price has fallen by more than 35%, and the total market value is currently around 14.1 billion.

As of December 31, 2021, Yihuatong fuel cell system has been powered by more than 1,800 fuel cell vehicles on the road in 16 cities across the country, with a maximum mileage of more than 200,000 kilometers.

From 2018 to January to September 2021, the company achieved revenue of 368 million yuan, 554 million yuan, 572 million yuan and 373 million yuan, and achieved net profit attributable to the mother of 0.23 billion yuan, 0.64 billion yuan, -0.23 billion yuan and -0.71 billion yuan, from profit to loss.

According to the company's calculations, in 2021, the company is expected to achieve operating income of 610 million yuan to 650 million yuan, an increase of 6.59% -13.58% year-on-year, and it is expected to achieve a net profit attributable to the mother of -140 million yuan to -190 million yuan, down 521.57% -743.56% year-on-year.

The net profit in 2021 fell sharply year-on-year, mainly due to the fact that since 2019, the operating conditions and payment collection of the company's customers Shenlong Bus and Zhongzhi Chun'an have not been as expected, and at the end of 2021, the company, out of prudence, increased the proportion of bad debt losses on receivables of the above two companies from 40% in 2020 to 90%, of which the bad debt loss in the third quarter of 2021 was about 65.8796 million yuan.

In addition, the company's gross profit margin has decreased year by year. During the reporting period, the company's sales gross profit margin was 50.32%, 45.12%, 43.66% and 30.39% respectively. The company's revenue is usually recognized in the second half of the year, resulting in a large difference between the interim gross profit margin and the full year gross profit margin.

However, as market participants continue to compete, the cost and price of fuel cells have declined, and the company does have the risk that product pricing levels and gross margins will continue to decline with the industrialization process.

2

Fuel cell vehicle penetration is low

New energy vehicles include pure electric vehicles and fuel cell vehicles, from the perspective of the global trend of energy conservation and emission reduction, new energy vehicles will become the main development force of the vehicle industry in the future.

Compared with pure electric vehicles, fuel cell vehicles have some obvious advantages in terms of low temperature environment, environmental protection of the whole industry chain, mileage and filling time. However, due to the current scarcity of hydrogen refueling stations, as well as the risk of hydrogen storage and hydrogenation process, the penetration rate of hydrogen fuel cell vehicles is still low and is still in the early stage of industrialization.

From 2017 to 2019, China's hydrogen fuel cell vehicle sales were 1272, 1527 and 2737 respectively, while the sales of new energy vehicles reached 777,000, 1,256,000 and 1,206,000 respectively, accounting for less than 1%.

From 2016 to 2019, China's fuel cell vehicle sales increased from 0.6 thousand to 2.7 thousand, with a compound growth rate of 63.3%. In 2020, the promotion progress was slowed down by the impact of COVID-19, so the sales of fuel cell vehicles fell to 1.2 thousand, and in August 2021, the relevant policies of the demonstration city were introduced, coupled with factors such as the cost of hydrogenation and the cost of fuel cell systems, the market expects that the fuel cell industry will return to a high-speed development track.

It is expected that china's fuel cell system installed capacity will reach 6598.9MW in 2025, with a compound annual growth rate of 142.2% from 2020 to 2025.

By the end of 2020, the number of fuel cell system manufacturers in China exceeded 100, and the market competition was relatively concentrated. In 2020, the total market share of the top five fuel cell system suppliers in terms of the total sales power output meter of fuel cell systems reached 93.2%. In 2020, Yihuatong sold a total of 35.0MW fuel cell systems, ranking first in total sales power output, and its market share reached 34.8%. The bottom four accounted for 32.7%, 11.3%, 8.7% and 5.7%, respectively.

3

epilogue

As the first share of domestic hydrogen fuel cell, although the market share in the industry ranks first, but there are still more potential risks in Yihuatong, the overall penetration rate of fuel cells is still low, in 2022, with the landing of the national supplement policy, whether the fuel cell industry can usher in an inflection point is still unknown, and the company's profitability has yet to be verified.