King Kong PV: "stumbling blocks" on the road to transformation one after another

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In 2024, the brutal elimination competition of the photovoltaic industry is escalating further. On the one hand, the installed capacity of photovoltaic has repeatedly reached new highs, and the entire industry is in a situation of "oversupply"; on the other hand, the price of photovoltaic modules is still declining, and many enterprises do not hesitate to sacrifice profits in order to cope with low-price competition; under the double pressure, photovoltaic enterprises are facing the challenge of breaking the situation.

With the acceleration of the industry knockout competition, cross-border enterprises may be the first to be affected, and many enterprises have begun to be "forced" to dispose of relevant assets. Upon terminating the project, Haiyuan Composite Materials transferred 100% of the equity of Chuzhou Saiwei Energy Technology Co., Ltd. to Zhejiang Aiko Solar Technology Co., Ltd. at a price of 38 million yuan, and Royal Group also transferred control of Anhui Green Energy, the company responsible for the TOPCon battery business, at the same time as terminating the photovoltaic project.

However, there are also some cross-border players who are still "surviving", and King Kong Photovoltaic (300093. SZ), for example, its transformation is full of twists and turns. Under the multiple pressures of capital, market, industry, and corporate governance, it has a long way to go to reverse its predicament.

01

King Kong PV fell into continuous losses

The performance forecast shows that in 2023, the attributable net profit of King Kong PV is expected to lose 284 million yuan ~ 385 million yuan. According to the company, the main reason for the change in performance is that all links in the industrial chain of the photovoltaic industry will accelerate the launch of production capacity in 2023, the price of terminal products will show an overall downward trend, and the competition will be fierce under the fluctuation of the industry cycle. At the same time, the production line of the company's Jiuquan base is in the stage of commissioning and capacity ramp-up, and the related operating costs are high.

This is not the first time that King Kong PV has lost money. Since 2019, the company has been in the red, and the net profit loss has continued to increase in the following years.

According to public information, the predecessor of King Kong Photovoltaic is King Kong Glass, which used to be a leading enterprise in the domestic glass deep processing industry, mainly engaged in the research and development, production and sales of special glass products, and the products are used in the Olympic "Bird's Nest", Tokyo "Silkworm Cocoon" Building, Expo Cultural Center, Guangzhou Pazhou International Convention and Exhibition Center and other landmark buildings. On July 8, 2010, the company was listed on the GEM.

Less than two years after listing, the company's performance began to change, and its net profit continued to decline from more than 40 million to more than 5 million. In 2020, the company also broke the thunder of financial fraud. In April of that year, the Guangdong Securities Regulatory Bureau found that the company had inflated its operating income by 96.3637 million yuan, inflated interest income by 24.083 million yuan, and inflated profits by 118 million yuan from 2015 to 2017.

However, the company also had greater ambitions, choosing the direction of heterojunction cells (HJT) with higher energy conversion efficiency but higher cost, and at the same time throwing out a 1.2GW expansion plan for HJT cells and modules, while PV cell giants JinkoSolar and Trina Solar believed that TOPCon had higher mass production efficiency, better mass production costs and a clearer path to improve efficiency and reduce costs.

In June 2022, King Kong Glass announced that it plans to invest a total of 4.191 billion yuan to build a 4.8GW high-efficiency heterojunction cell and module project in Jiuquan, Gansu Province. At the same time, the company's photovoltaic business revenue accounted for nearly 80% of the total revenue, and the company officially changed its name to King Kong Photovoltaic.

But the ideal plumpness can't resist the skinny feeling of reality after all. After the transformation in 2021, King Kong PV's losses continued to expand. The data shows that in 2021 and 2022, the company's net profit attributable to the parent company will lose 202 million yuan and 269 million yuan respectively.

02

Under the shortage of funds, there is an urgent need for "blood transfusion"

According to the 2023 semi-annual report, the "4.8GW heterojunction project", King Kong PV has invested a total of 826 million yuan, and the investment progress is 26%. According to the original plan, this project still requires a large amount of capital investment.

However, in the context of tightening financing and continuous losses, the capital chain of King Kong PV has been in a tight state. As of September 2023, the company's total assets are 3.316 billion yuan, total liabilities are 3.420 billion yuan, and the asset-liability ratio is as high as 103.12%, which is much higher than that of its peers, while its net assets are -104 million yuan, and the monetary funds on the account are only 359 million yuan, which is already in a state of insolvency.

In May 2023, King Kong PV was eager to solve the problem of expansion and debt funds by a fixed increase of 2 billion yuan, but the financing amount shrank to 500 million yuan ~ 1.042 billion yuan in August. The plan was simply cancelled on November 6 last year, perhaps due to changes in the financing environment.

Only one month after the cancellation of the private placement, on December 18, 2023, King Kong Solar issued A shares to the controlling shareholder Ouhao Group, planning to raise no more than 939 million yuan, and the funds raised will be used to supplement liquidity and repay loans. In addition, Ouhao Group also forgave its debts, and Ouhao Group unconditionally and irrevocably exempted the company from its repayment obligations for debts totaling about 336 million yuan.

And this year, the company has sought to borrow at high interest rates. On March 4, King Kong Photovoltaic issued an announcement on asset mortgage loans, in order to meet the company's daily operation needs, the company intends to sign a "loan contract" and a "maximum mortgage contract" with "Guangzhou Megvii", Guangzhou Megvii provides a loan of 275 million yuan to the company, and the company's subsidiaries "Suzhou Profile" and "Suzhou King Kong" provide mortgage guarantee for the aforementioned loan with part of its land and real estate.

According to the announcement, the interest rate of this loan is as high as 11.5%, and the loan period is from March 1, 2024 to March 1, 2025. Based on this calculation, after one year, King Kong PV needs to pay 31.625 million yuan in interest.

Overall, King Kong PV has not let go of any channel that can be "transfused" in the past year. But King Kong PV's dilemma goes far beyond that. Last year, there were frequent changes in the senior management of King Kong PV. In April last year, Gong Jiangfeng, an independent director of the company, resigned; in June, Yan Chunlai, a director, member of the special committee of the board of directors and general manager, resigned; in July, Zhao Zhongkui, a supervisor of the company, resigned; and in December, Jiang Wanchang, director and deputy general manager of the company, resigned.

In addition to personnel changes, King Kong PV is also facing the continuous supervision of the China Securities Regulatory Commission and the litigation of many companies. On December 18, 2023, King Kong Solar was taken regulatory measures by the Gansu Regulatory Bureau of the China Securities Regulatory Commission for failing to perform other duties in accordance with the law, and the detailed violations included the company's weak financial foundation, corporate governance needs to be further standardized, and the company's related party transactions increased by three points. In March this year, King Kong PV once again announced that since February 7, 2024, the company has added 6 new litigation and arbitration cases, involving a cumulative amount of 29.9395 million yuan, accounting for 121.01% of the company's audited net assets attributable to shareholders of listed companies in 2022. In less than a month, King Kong PV has been entangled in a number of lawsuits.

It can be seen that the transformation of photovoltaic has not made the days of King Kong photovoltaic better, but the "stumbling blocks" are one after another. And when the entire industry is facing a major adjustment, the long dark night experienced by the company may have just begun.