Image source: Visual China
Blue Whale financial reporter Wang Xiaonan
On December 20, the cobalt industry leader Hanrui Cobalt (300618. SZ) terminated the new project with a planned investment of US$1.38 billion at the beginning of the year, and the company also terminated its "tailor-made" private placement of 5 billion yuan. Just when investors thought that Hanrui Cobalt had been "tossing in vain" for a year, the company turned around and threw out a new overseas investment project, and also issued nearly three years and only used half of the fundraising funds for the project.
After Hanrui Cobalt threw out a fixed increase of 5 billion, some investors questioned "the fixed increase in 2020 has not been fulfilled for a long time, and it will raise funds again?" Hanrui Cobalt told Blue Whale Finance that the company said that the ternary precursor in the previous fund-raising project was terminated due to overcapacity, and the remaining fund-raising funds plus the company's money to buy wealth management will be used for new investment projects, but the project funds are still in short supply, but the company no longer considers the fixed increase, and will choose its own funds.
The new project at the beginning of the year was terminated, and the fixed increase of 5 billion yuan was lost
Due to the advantages of the new technology in the nickel field, Hanrui Cobalt terminated the new investment project established at the beginning of the year, and also terminated the "tailor-made" fixed increase of 5 billion yuan.
On December 20, Hanrui Cobalt announced that the company held a board meeting on the same day to deliberate and pass the "Proposal on Terminating the 60,000 Metal Tons Nickel High-pressure Leaching Project of a Wholly-owned Subsidiary and Signing the Termination Agreement". At the same time, the meeting of the board of directors and the board of supervisors also deliberated and passed the "Proposal on Terminating the Issuance of A Shares to Specific Targets in 2023".
On February 10 this year, Hanrui Cobalt announced that Hanrui Hong Kong, a wholly-owned subsidiary of the company, intends to sign a "joint venture agreement" with Huaxin Investment to establish a joint venture company, Indonesia Hanrui Nickel and Cobalt Co., Ltd. The two parties agreed to build a 60,000 metal tonne nickel high-pressure leaching project in the industrial park in Morowali District, Central Sulawesi Province, Indonesia.
The total investment in the construction of the project does not exceed US$1.38 billion, and the authorized capital of the joint venture is US$1 million at the time of establishment, of which Hanrui Hong Kong subscribes US$700,000 and holds 70% of the shares. Subsequently, Hanrui Cobalt also set up a professional team to be stationed in Indonesia to be responsible for specific matters in the implementation of the project. As of the announcement date, the 60,000 metal tons of nickel high-pressure leaching project has completed the industrial and commercial registration procedures of Indonesia Hanrui Nickel and Cobalt Co., Ltd., the main body of implementation, obtained the relevant registration documents, and was filed and approved by the National Development and Reform Commission at the end of September 2023.
On February 10, Hanrui Cobalt also announced a fixed increase to raise funds by issuing shares to specific objects, with a total amount of no more than 5 billion yuan, mainly used for the construction of "60,000 metal tons of nickel high-pressure leaching project". As of the date of the announcement, Hanrui Cobalt has not submitted application documents to the Shenzhen Stock Exchange.
However, due to the advantages of the new technology in the nickel field, on December 20, Hanrui Cobalt planned to terminate the implementation of the "60,000 metal tons of nickel high-pressure leaching project". After announcing the investment project at the beginning of the year, Hanrui Cobalt did not announce other new projects, and now the project that has been in operation for nearly a year has been cut? Obviously, Hanrui Cobalt does not intend to "waste" this year's investment in Indonesia, and the company has turned around and started new projects.
On the day of the announcement on December 20, Hanrui Hong Kong, a wholly-owned subsidiary of Hanrui Cobalt, once again planned to sign a "joint venture agreement" with Huaxin Investment. The two parties to the agreement are also to build a joint venture company in the industrial park in Morowali County, Central Sulawesi Province, Indonesia, and the joint venture company will be responsible for the construction and operation of the "Nitrogen-rich Continuous Blowing High Ice Nickel Project with an annual output of 20,000 tons of nickel metal".
As for why it suddenly switched to the "oxygen-rich continuous blowing" high-ice nickel production process at the end of the year, Hanrui Cobalt said that the production process tends to be mature, and companies in the same industry have recently successfully achieved industrial application. The production of high-glacial nickel by oxygen-rich continuous blowing method has the advantages of small unit construction investment, low operating cost, short construction period, relatively small environmental protection risk and wide range of raw material adaptation.
The total investment of the construction project is 243.2 million US dollars, including project construction investment and working capital. The initial authorized capital of the joint venture is IDR 15 billion, of which Hanrui Hong Kong subscribes and contributes IDR 10.5 billion (about RMB 4.8289 million), with a shareholding ratio of 70%. Although the total investment in the new project is much smaller than the previous one, Hanrui Cobalt has also found a source of funding for this investment.
On the same day, Hanrui Cobalt also disclosed an announcement on changing the use of part of the raised funds. Hanrui Cobalt plans to change the use of the remaining 1.025 billion yuan raised from the previous fund-raising project "10,000 tons/year of metal volume cobalt new materials and 26,000 tons/year ternary precursor project", which will be used for Indonesia's Hanrui "annual output of 20,000 tons of nickel metal oxygen-rich continuous blowing high ice nickel project".
Hanrui Cobalt explained that 940 million yuan has been invested in the "cobalt new material project" and "waste battery recycling project" in the original fund-raising project, which has reached the scheduled usable state in December 2023. Due to changes in the market environment and overcapacity of ternary precursors, after careful research, the company plans to terminate the ternary precursor project, which is also the main source of the remaining 1.025 billion yuan of funds raised by Hanrui Cobalt.
In March 2020, Hanrui Cobalt released the "2019 Non-public Issuance of A-share Shares Plan", and completed the directional fundraising in July of the same year, and the actual funds raised after deducting the issuance costs were 1.877 billion yuan, which will be used for the "10,000 tons/year metal cobalt new materials and 26,000 tons/year ternary precursor project", with a total planning of 4 years.
However, in March this year, Hanrui Cobalt announced that the time for the above projects to reach the intended state of use as a whole was adjusted from November 30, 2023 to December 31, 2024. Even as of mid-2023, only 683 million yuan has been invested in the project, and the investment progress is only 36.61%. And more than sixty percent of the idle raised funds have also been used by Hanrui Cobalt to buy financial management, and the investment income has exceeded 10 million.
After Hanrui Cobalt threw out a fixed increase of 5 billion, some investors questioned "the fixed increase in 2020 has not been fulfilled for a long time, and it will raise funds again?" At the time when Hanrui Cobalt needs money to move to new investment projects, the fund-raising project that has been planned to be postponed has "coincidentally" reached the predetermined state in advance, for which the "accidental" Blue Whale Finance called Hanrui Cobalt, the company said that the ternary precursor in the previous fund-raising project was terminated due to overcapacity, and the remaining fund-raising funds plus the company's money to buy financial management will be used for new investment projects, but the project funds are still in short supply, but the company no longer considers the fixed increase, and will choose its own funds.
With the arrival of the downward cycle, Liang's father and son have cashed out more than 1 billion
Behind Hanrui Cobalt is the Liang father and son from Anhui, because they seized the opportunity of the transformation of new energy vehicle batteries, this rather "mysterious" father and son have led the company to "soar". However, in recent years, affected by changes in raw material prices, the performance of Hanrui Cobalt has ushered in a "cold wave".
According to the official website, Hanrui Cobalt was founded in 1997 and is headquartered in Jiangning District, Nanjing. The business covers the exploration and operation of cobalt and copper mines, ore mining, mineral processing, smelting, new energy, new materials, as well as the production and sales of copper and cobalt products.
The founder behind Hanrui Cobalt is named Liang Jiankun, and in 2017, after 20 years of operation, Hanrui Cobalt landed in the capital market. In 2021, 60-year-old Liang Jiankun handed over the rights to his son Liang Jie, no longer holding any position in the company, and his son Liang Jie served as the chairman and general manager of Hanrui Cobalt, successfully completing the handover of the new and old generations. Born in 1984, Liang Jie graduated from the Chinese People's Liberation Army Artillery Academy in 2008 and continued his studies in Shanghai and Nanjing. After 2011, Liang Jie successively served as assistant general manager and deputy general manager of the company.
On the eve of listing, that is, during the period from 2012 to 2016, Hanrui Cobalt's operating income increased from 488 million yuan to 743 million yuan, and the net profit attributable to the parent company also increased from 9.9638 million yuan to 66.575 million yuan, but the company's revenue and profit are still at a low level. In 2017, Hanrui Cobalt was listed on the Shenzhen Stock Exchange, which coincided with the transformation of new energy vehicles from the era of lithium iron phosphate to ternary batteries, and the market demand for cobalt metal increased, and the price of cobalt also rose sharply. Catching up with the good times, the performance of Hanrui Cobalt also soared for two consecutive years in 2017 and 2018, with the company's revenue of 1.465 billion yuan and 2.782 billion yuan respectively, and the net profit attributable to the parent company was 449 million yuan and 708 million yuan respectively.
Just when the company thought that the new energy vehicle industry would continue to help the price of cobalt rise, the price of cobalt, which had reached the peak, began to decline, and the Hanrui cobalt industry was caught off guard. In 2019, Hanrui Cobalt's operating income fell to 1.779 billion yuan, and the net profit attributable to the parent company was only 13.8657 million yuan. After experiencing a trough, in 2020 and 2022, Hanrui Cobalt ushered in a cyclical rise, with the company's operating income of 2.254 billion yuan and 4.35 billion yuan respectively, and the net profit attributable to the parent company of 335 million yuan and 663 million yuan respectively.
After the completion of the handover of the old and new in 2021, Hanrui Cobalt will usher in another "cold wave" of performance in 2022, and the last time happened in 2019. In 2022, Hanrui Cobalt's revenue will be 5.087 billion yuan, and the net profit attributable to the parent company will only be 212 million yuan. Even though the revenue hit a record high, Hanrui Cobalt's profit was no longer as high as the peak of 708 million yuan in 2018.
In 2023, affected by the economic cycle and supply and demand, the decline in performance brought about by the decline in cobalt metal prices of Hanrui Cobalt will remain unchanged. In the first three quarters of this year, Hanrui Cobalt's revenue was 3.717 billion yuan, down 6.13% year-on-year, and the net profit attributable to the parent company was 131 million yuan, down 48.56% year-on-year, close to "halving".
It is worth mentioning that in the middle of this year, Hanrui Cobalt also disclosed its 2023 equity incentive plan. The incentive object is 82 people, the equity incentive price is 16.73 yuan per share, and the restriction period is 12 months, 24 months and 36 months. However, the above-mentioned equity incentives can only be unlocked if they meet the required performance. The assessment condition for the first lifting of the sales restriction period is based on the operating income in 2022, and the growth rate of operating income in 2023 shall not be less than 15%, that is, the revenue in 2023 shall reach 5.85 billion yuan, or the net profit value in 2023 shall not be less than 280 million yuan.
However, from the current point of view, in the fourth quarter of 2023, Hanrui Cobalt needs to complete a revenue of 2.133 billion yuan, or a net profit of 149 million yuan. Regarding the performance of the fourth quarter and whether the equity incentive can be unlocked, Hanrui Cobalt told Blue Whale Finance that it is not clear for the time being.
In fact, in addition to the impact of cyclical price changes, the fluctuating performance of Hanrui Cobalt is also related to the company's large-scale expansion in recent years and the hoarding of a large number of raw materials during peak periods. When the price of cobalt rose in 2017, the inventory of Hanrui Cobalt rose from 267 million yuan in 2016 to 916 million yuan, and then it rose year after year, reaching 2.533 billion yuan in 2021, and the company's inventory was 1.541 billion yuan as of the first three quarters of this year.
Since its listing in 2017, Hanrui Cobalt has completed three fundraisings, raising about 2.7 billion yuan for production expansion. This includes 373 million yuan raised at the time of IPO, 440 million yuan of convertible bonds issued in 2018, and a fixed increase of 1.901 billion yuan in 2020. Even the planned investment amount of most of these projects is higher than the actual amount of funds raised, which also puts financial pressure on the company.
As of the first three quarters, Hanrui Cobalt's book money funds were 1.612 billion yuan, which also included unused fund-raising funds, corresponding to the company's short-term borrowings of 828 million yuan, and non-current liabilities due within one year of 246 million yuan, with obvious financial pressure.
The current situation of poor and declining operating performance of Hanrui Cobalt has long been reflected in the secondary market, but during this period, Liang's father and son have reduced their holdings and cashed out more than 1 billion yuan. Hanrui Cobalt's share price has risen all the way from the beginning of its listing, reaching 148.34 yuan/share in March 2018, and then all the way down, and returning to the height of 119.28 yuan/share in January 2021, but after that, its stock price has been turbulent several times, and after 2022, it has hit a new low of 25.88 yuan/share in December 21 this year, and the stock price has fallen by nearly 40% in the past year.