Summary:
The new "National Nine Articles" will speed up the process of clearing production capacity through dividend constraints and accelerating the withdrawal of loss-making companies from the capital market.
Under the guidance of the dual carbon transformation goal and the institutional guarantee of the capital market, the new energy industry has bravely stood at the forefront and opened the IPO mode, creating a new round of capital myth after the Internet.
After the implementation of the registration-based system, the relevant IPO financial indicators were relaxed for a time, and unprofitable enterprises that met certain conditions could also be allowed to be listed. The relatively loose listing threshold makes it easier for new players to "enter the game", and at the same time, frequent "refinancing" makes tail companies with insufficient hematopoietic capacity stay in the market through foreign aid blood transfusion, delaying the exit rhythm of inefficient production capacity.
From 2020 to 2023, there will be 21/26 IPOs in the photovoltaic/lithium battery sector, with a total amount of 35.5/47 billion yuan, accounting for 1.8%/2.4% of the total A-share IPO scale, and the refinancing intensity is greater than that of the initial listing, and the refinancing scale of photovoltaic/lithium battery (excluding convertible bonds and exchangeable bonds) is 3.5/4.4 times of the size of their initial listings, accounting for as high as the proportion of A-share refinancing 5.2%/8.6%, which is significantly higher than the proportion of the total market value of the sector.
Caption: From 2020 to 2023, the financing intensity of the secondary market of photovoltaic and lithium batteries will be relatively large (unit: 100 million yuan, %)
Source: Wind, Soochow Securities Research Institute
These high-intensity direct financing provides sufficient "ammunition" for the expansion of the industry and becomes a booster to accelerate the "involution" competition of the new energy industry. After the tide of expansion, there is a stage of overcapacity, followed by one after another price wars, card wars and close hand-to-hand combat. At present, the price reduction promotion of new energy vehicles and the bottoming out of the price of the photovoltaic industry chain are the epitome of the industry's "involution competition".
In the second half of 2022, the exchange began to issue relevant tightening policies one after another, such as making strict requirements for companies that are "listed on debt", and tightening the types of listed companies. Since the second half of 2023, after the Ministry of Finance, the China Securities Regulatory Commission and the three major exchanges jointly launched a "policy combination" aimed at activating the capital market, IPOs have entered a stage of substantial deceleration.
Under the theme of "strengthening the foundation and strict supervision and management", in March this year, the China Securities Regulatory Commission (CSRC) issued four supporting policy documents, including strictly controlling the access to issuance and listing and strengthening the continuous supervision of listed companies.
On April 12, the State Council issued the "Several Opinions on Strengthening Supervision and Preventing Risks and Promoting the High-quality Development of the Capital Market", which was called the new "National Nine Articles" by the market, which is the capital market guidance document issued by the State Council again after the two "National Nine Articles" in 2004 and 2014.
Different from the previous two "National Nine Articles", which focus on "stable development" and "healthy development" of the capital market, the new "National Nine Articles" emphasize "strict supervision and strict management", and intend to realize the whole chain and closed-loop management of issuers from listing to delisting, and strengthen the supervision of market institutions and strengthen their responsibilities as the "gatekeepers" of the capital market.
Caption: Comparison of the old and new "National Nine Articles".
Source: Securities Times
A series of "strict" expressions in the new "National Nine Articles" are particularly eye-catching, and the information on the strong supervision of the capital market is clearer. In terms of "strict control of listing", the new "National Nine Articles" require that the listing standards of the main board and the Growth Enterprise Market be raised, the evaluation standards for the scientific and technological innovation attributes of the Science and Technology Innovation Board should be improved, and the first responsibility of the issuer and the "gatekeeper" responsibility of intermediaries should be consolidated.
In fact, strict supervision has become one of the hottest keywords in the capital market in 2024, and the signal of stricter IPO review is becoming more and more obvious. In the first quarter of 2024, a total of 30 new shares were listed in all sectors of the A-share market, and the number of listed companies was only one-third of the number of cancellations in the same period, raising a total of 23.619 billion yuan, and the financing scale was 65% lower than the same period last year. Among them, more than 7 percent of the new shares IPO raised less than 1 billion yuan, and the only new shares raised more than 2 billion yuan were Ailuo Energy and Yongxing shares.
Caption: 2024Q1 new shares maintain a slow pace of issuance
Source: Guotai Junan Securities
At the same time, as listing regulations continue to tighten, China's initial public offering (IPO) market has set off a wave of cancellations this year, and the number of IPO terminations has reached a record high for the same period. Wind data shows that as of March 31, a total of 88 IPO projects have been terminated for review, of which 84 are voluntary withdrawal of orders, accounting for more than 95%.
In the wave of order cancellations set off by listed companies queuing up, there is no shortage of new energy companies. Since the beginning of this year, the IPO of a number of lithium battery companies has been "stranded", and lithium battery equipment companies Jieruisi, Chengjie Intelligent and battery material recycling company Jirui Technology have terminated their listing review. In addition, Kunlun New Materials, Langtaitong Technology, Haibo Sichuang and other companies have been suspended in their audits and need to submit new financial information.
And the latest one is the energy storage battery company Shuangdeng shares. On April 9, the Shenzhen Stock Exchange announced that due to the withdrawal of the application for issuance and listing of Shuangdeng Group Co., Ltd. and the sponsor, the Shenzhen Stock Exchange decided to terminate its issuance and listing review in accordance with relevant regulations. According to CNESA data, in 2022, Shuangdeng Co., Ltd. ranked first among Chinese enterprises in the global base station/data center energy storage battery market in terms of shipments, and Shuangdeng's lead-acid communication energy storage batteries and lithium-ion communication energy storage batteries have strong market competitiveness.
Caption: The number of A-share IPO cancellations in the first quarter far exceeded the number of listings
Source: Lianhe Zaobao, Wind
In this regard, a senior executive of a listed company of lithium battery materials told a reporter from China Securities Journal: "There is overcapacity in all links of the lithium battery industry chain, and the downstream cannot digest so much capacity for the time being, and the market is cautious about the company's fundraising and expansion of production." He added: "In the first two years, due to the serious mismatch between supply and demand in the upstream and downstream of the industrial chain, the prices of upstream lithium carbonate and the four main materials cathode, anode, electrolyte and separator have risen to varying degrees. In the current market, the performance of some companies is difficult to meet the listing standards. ”
In fact, the rapid growth of lithium iron phosphate manufacturers in the past few years has attracted all kinds of enterprises to follow up and expand production, resulting in the industry facing phased and structural overcapacity and intensified competition in the industry.
In 2023, the production capacity of many companies will be released, while the industry demand will not increase significantly, which will bring about an accelerated decline in capacity utilization. During the reporting period, the effective capacity utilization rate of lithium-ion batteries of Shuangdeng Co., Ltd. was only maintained at about 7%. The capacity utilization rate of German Nano, a listed cathode material company, will drop by about 20 percentage points in 2023, and the net profit will be expected to lose 1.4 billion yuan to 1.65 billion yuan.
Caption: Comparison of the production capacity of the four main photovoltaic materials and glass
Source: Guotai Junan Securities
The photovoltaic industry, which is also experiencing overcapacity, is also facing the challenge of listing companies that are difficult to meet the listing standards. Since last year, the price of the whole photovoltaic industry chain has declined, the price war has continued, and the profit margin of enterprises has been repeatedly compressed. However, some photovoltaic companies that have not yet been listed are difficult to match with the listed leading enterprises in terms of production capacity, market share and cash flow, and are at a disadvantage in the cruel market competition, and it has almost become a luxury for their performance to meet the review and regulatory requirements.
Under the current situation of stricter supervision in the domestic capital market, there are not a few photovoltaic companies that have voluntarily withdrawn their IPOs, such as Topband New Energy, Jucheng Technology, Huayao Optoelectronics, Yuanshi New Materials, Huaxiang Xiangneng, and Youbang New Materials. On March 8, 2024, Guangxi Beibu Gulf Luhai New Energy Co., Ltd. voluntarily withdrew its application materials to terminate its IPO, which became the latest case.
However, some "confident" photovoltaic companies have not given up and still choose to continue to queue. Among them, the more well-known companies include Xinte Energy, Yiyi New Energy, Zhongrun Solar Energy, Runyang Co., Ltd., Zhengtai Aneng, Tianhe Fujia, Sunshine New Energy, Qingtian Technology, etc. Since the beginning of this year, the listing of SolaX Energy and the imminent listing of Laplace New Energy have also brought new hope to the photovoltaic companies that are still queuing.
At the same time, the supervision of "dividends" in the supporting documents increases the "ST" risk of low-dividend companies, and increases the possibility of delisting of low-performing stocks, opening up the policy "blocking point" of high-intensity direct financing to promote the "involution" of the industry. Under the trend of strengthening dividend orientation and compressing refinancing, enterprises that have made money in the past and do not pay dividends and then expand their scale and reinvest, as a result, enterprises that have fallen to the bottom in the overcapacity cycle may collapse.
Caption: The nine articles of the new country attach importance to "supporting the good and limiting the inferior", and open up the policy "blocking point" of high-intensity direct financing to promote the "involution" of the industry
Source: Soochow Securities Research Institute
Soochow Securities Research Report believes that the new "National Nine Articles" may react to the real industry and promote supply-side reform through dividend constraints and accelerating the withdrawal of loss-making companies from the capital market. In this way, we can accelerate the exit of inefficient production capacity, reduce homogeneous competition, encourage technological progress and differentiated development, prevent the "low-end" development of high-tech manufacturing, curb the trend of "involution" of advantageous industries, and restore the profitability of the industrial chain. Driven by a new round of supply-side reforms, the mainland's advantageous manufacturing industries such as photovoltaics, power batteries, and new energy vehicles may accelerate the process of clearing production capacity and further achieve profit recovery.
After the release of the new "National Nine Articles", a number of new energy listed companies have stated that they will resolutely implement the relevant requirements of the new "National Nine Articles", continue to promote the high-quality development of listed companies, and enhance investor returns.
JA Solar said that for listed companies, strict compliance with this regulation will not only help maintain the company's market image and reputation, but also enhance investors' trust in the company, thereby enhancing the company's value. At the same time, it also requires listed companies to pay more attention to risk management and internal control in their daily operations to ensure the steady development of the company.
Trina Solar said that in the future, the company will further promote technological innovation and industrial upgrading, continue to innovate and forge new photovoltaic productivity, and continue to strengthen internal management, strictly control risks, ensure the steady development of the company, bring stable and sustainable investment returns and dividends to shareholders, and enhance the company's investment value.
The relevant person in charge of Guoxuan Hi-Tech said that the new "National Nine Articles" put forward a series of policies in many aspects, such as improving the issuance and listing system, strengthening continuous supervision, and improving the delisting system, which provides a strong policy guarantee for enhancing the stability of the capital market and promoting the high-quality development of listed companies. Gotion Hi-Tech will focus on the development of its main business, adhere to innovation-driven development, accelerate the formation of new quality productivity, enhance the investment value of enterprises, and work with regulators and other parties to promote the high-quality development of the capital market. ”
On the whole, the optimization of financing supervision guidance and the improvement of capital market policies brought about by the nine articles of the new country will horizontally promote the clearance of inefficient production capacity, vertically support industrial technological innovation, further promote industrial upgrading, improve the efficiency of resource allocation, and bring positive significance to the high-quality development of the mainland's new energy industry represented by photovoltaics, power batteries, and new energy vehicles.
Source: Global Zero Carbon