On February 29, according to the official website of the Hong Kong Stock Exchange, Shanghai REFIRE Energy Group Co., Ltd. (hereinafter referred to as "REFIRE") submitted a prospectus, with CICC as the sole sponsor.
01
Hydrogen energy unicorn, the science and technology innovation board collapsed
During the two sessions this year, accelerating the development of the hydrogen energy industry was written into the government work report for the first time.
As a clean energy source, the widespread use of hydrogen energy is of great significance to the realization of a green, low-carbon and circular economic system.
At present, the total planned output value of hydrogen energy in mainland provinces and cities by 2025 is close to one trillion yuan. According to the "International Research Report on Hydrogen Energy Technology and Industry Development 2023", it is expected that the next 10 years will be the "golden development period" of the hydrogen energy industry in mainland China.
The hydrogen energy industry has huge market potential, and many hydrogen energy companies are also preparing to go public.
In 2023, a total of 5 hydrogen energy companies have submitted or updated their listing materials, namely: Synergy Hydrogen Energy, Jinyuan Hydrogenation, Zhongding Hengsheng, Qingcheng Technology and Hydrogen Jet Technology. Its China Hydrogen Energy and Jinyuan Hydrogenation were both successfully listed on the Hong Kong stock market during the year.
REFIRE was established in September 2015 and focuses on the design, development, manufacturing and sales of hydrogen fuel cell systems, hydrogen energy equipment and related components.
According to Frost & Sullivan, REFIRE ranked first in China's hydrogen fuel cell system market in terms of the total output power meter of hydrogen fuel cell systems for heavy trucks sold in 2022, and ranked first in China's hydrogen fuel cell system market in terms of cumulative mileage of fuel cell vehicles installed with fuel cell systems sold as of September 30, 2023 (about 168 million kilometers).
In fact, this is not the first time REFIRE has submitted a listing prospectus.
As early as March 2021, REFIRE submitted an application for listing on the SSE's Science and Technology Innovation Board and was accepted, but in August of the same year, REFIRE voluntarily withdrew its listing application.
However, due to the large loan of more than 100 million yuan from the actual controller of REFIRE, it was inquired by the Shanghai Stock Exchange.
Before REFIRE submitted its statement on the Science and Technology Innovation Board in March 2021, the founder Lin Qi directly held 20% of the company's shares, and controlled 5.62% and 1.85% of the company's shares through Shanghai Weiqing and Shanghai Weilan respectively, totaling 27.47% of the company's shares, and was the actual controller of the company.
According to the calculation of Ruicai's "Pre-trial IPO", from 2015 to 2020, Lin Qi borrowed a total of 109 million yuan and 5.5626 million US dollars from relatives, friends, business partners, etc. (including Li Cong).
In the above-mentioned loans, Lin Qi only signed a loan agreement with two people, and the loan agreement was legal and valid. In addition, Lin Qi did not sign a loan agreement with other natural persons or entities for borrowing.
As of June 2021, REFIRE replied to the inquiry of the Shanghai Stock Exchange, and Lin Qi owed a total of 13.1256 million yuan and 2.47 million US dollars, both of which had not been returned.
02
It has never been profitable since its establishment, and cash flow is tight
However, for REFIRE, the continued failure to make a profit since its inception is one of the risks of its operation and hindering its successful listing.
Financial data show that in 2021, 2022 and the first nine months of 2023, the company's revenue will be 524 million yuan, 605 million yuan, and 219 million yuan respectively, and the losses during the period will be 654 million yuan, 546 million yuan, and 460 million yuan respectively, with a total loss of 1.66 billion yuan in less than three years.
Although revenue is growing steadily, losses are also continuing to widen. How to achieve positive revenue is a long-standing problem for reshaping energy.
However, fortunately, the peers have not actually made money, and most hydrogen energy companies are in a state of loss, and reshaping energy can be relaxed at this time.
Sinohytec's 2023 performance report, known as the "first share of hydrogen energy", shows that the company lost 226 million yuan last year. From 2020 to 2022, the company lost 22.5236 million yuan, 162 million yuan, and 167 million yuan respectively.
From 2020 to 2022, the company's losses were 215 million yuan, 703 million yuan, and 273 million yuan respectively. On March 6, 2024, the company's latest announcement said that it is expected to record a loss attributable to the company's owners of about 396 million yuan to 424 million yuan for the year ending December 31, 2023.
From 2020 to 2022 and in the first six months of 2023, the company lost 94.2648 million yuan, 58.7503 million yuan, 120 million yuan and 130 million yuan respectively, and has not yet made a profit.
REFIRE has explained that the performance loss is mainly due to the fact that the fuel cell vehicle industry is still in the early stage of industrialization, the overall market size is small, and the company continues to invest in research and development and carries out equity incentives to confirm higher share-based payment expenses.
Under the pressure of large losses, the net cash flow generated by Reshaping Energy's operating activities has also been negative for many years.
According to the prospectus previously submitted to the Shanghai Stock Exchange, from 2017 to 2019 and from January to September 2020, the net cash flow generated by the company's operating activities was -99.2767 million yuan, -116.4269 million yuan, -365.1556 million yuan and -314.2663 million yuan respectively.
REFIRE explained in the prospectus that the company's net cash flow from operating activities was negative, mainly due to fuel electricity
Affected by the development stage of the automobile industry, the accounts receivable account period is long, and the operating receivables are increasing.
However, nearly three years later, the tight cash flow situation of Reshaping Energy has not improved.
At the end of the first three quarters of 2021, 2022 and 2023, the net cash flow used in the operating activities of REFIRE was -768 million yuan, -728 million yuan and -625 million yuan, respectively.
REFIRE is also expected to improve by continuously improving working capital efficiency, striving to strengthen supply management, optimize inventory control, improve production planning and inventory turnover days, and alleviate cash flow pressure.
03
Administrative expenditures are excessive
REENERGY's administrative expenditure of more than 200 million yuan is also eye-catching, and REENERGY's administrative expenditure has been higher than R&D expenditure.
In 2021-2022 and the first nine months of 2023, REFIRE's administrative expenses were RMB218 million, RMB243 million and RMB224 million, accounting for 41.6%, 40.1% and 102.1% of revenue, respectively, while R&D expenses were RMB230 million, RMB199 million and RMB167 million, accounting for 44.1%, 32.9% and 76.2% of revenue, respectively.
As for the reasons for the continued increase in administrative expenses, REFIRE explained that it was due to the increase in the number of administrative staff and the increase in compensation levels of employees, as well as the increase in the grant of shares to employees under the employee incentive plan in April 2023.
Excessive administrative expenses will affect the company's net profit, which is one of the reasons why REFIRE Energy "increases revenue but does not increase profits". At the same time, as a hydrogen energy company, the core of occupying market share is the competitiveness of products, and R&D expenditure may not bring the expected R&D results, thus affecting market competition.
04
There are risks associated with related-party transactions
As early as 2021, REFIRE was questioned by the Shanghai Stock Exchange for related party transactions.
According to the prospectus submitted in 2021, during the reporting period, REFIRE had a large amount of related party transactions, the main types of which were related party sales and related party purchases. Among them, the main content of related sales is the company's sales of fuel cell system-related products to Synergy and other related parties. The main content of the related procurement is that the company entrusts Synergy to reshape the processing of fuel cell systems.
According to the prospectus submitted this year, there is no Guohong Remodeling, but Beijing Hydrogen Pu Chuangneng Technology Co., Ltd. has appeared, and the prospectus mentions that it is not only the main supplier of REFIRE, but also the main customer of REFIRE.
Related-party transactions may pose a potential threat to companies and investors, including unfair transactions, reduced financial transparency, legal risks, failure of internal controls, and increased audit difficulties. The risks of related-party transactions will also become one of the focus of the CSRC's inquiry.
In addition, REFIRE's customer concentration is too high, which will increase the company's operating risks. REFIRE's revenue from the top five customers accounted for 75.0%, 71.7% and 79.4% of the total revenue for the same period, while revenue from the largest customers accounted for 22.4%, 22.2% and 29.8% of the total revenue for the same period, respectively.
REFIRE is undoubtedly a company with strength and development potential, but the financial and operational problems revealed in the prospectus will be inquired by the Hong Kong Stock Exchange in the future, and if you want to achieve the long-term and healthy development of the company, REFIRE needs to pay attention to it and solve it as soon as possible.
We will wait and see whether the hydrogen unicorn reshaping energy will succeed in this listing journey.