On April 27, Lingda announced that due to the triggering of multiple risk warnings such as financial and normative situations, the company's shares will be suspended for one day on April 29, and the company will be subject to other risk warnings (ST) from April 30, and the stock abbreviation will be changed from "Lingda shares" to "ST Lingda".
The reporter noted that while other risk warnings were implemented, whether the company's core production line can resume production and whether the main photovoltaic business can achieve self-help will be a more urgent matter for the company.
Multiple risks are concentrated
Lingda shares were implemented "ST"
The implementation of "ST" reflects the company's current multiple risk factors.
In terms of financial reasons, Grant Thornton Certified Public Accountants (Special General Partnership) (hereinafter referred to as "Grant Thornton") issued the "2023 Internal Control Assurance Report" with a negative opinion and the "2023 Annual Audit Report" with a paragraph of "material uncertainties related to continuing operations" for Lingda Shares. In addition, the net profit deducted from 2021 to 2023 will be -95.94 million yuan, -19.47 million yuan, and -276 million yuan respectively, which will continue to be negative.
According to the relevant provisions on risk warning in the listing rules of the ChiNext Board of the Shenzhen Stock Exchange, "the company has been issued an internal control audit report or assurance report that cannot express an opinion or negative opinion in the most recent year" and Article 9.4 (6) "the company's net profit before and after deducting non-recurring gains and losses in the last three fiscal years is negative, and the audit report of the last year shows that there is uncertainty about the company's ability to continue operations", the company's shares will be subject to other risk warnings (ST).
In terms of operating reasons, Jinzhai Jiayue New Energy Technology Co., Ltd. (hereinafter referred to as "Jinzhai Jiayue"), a subsidiary of Lingda Co., Ltd., will temporarily suspend production of 3.5GW-182mm large-size PERC high-efficiency solar cell production line in March 2024. According to Lingda in its 2023 annual report, Jinzhai Jiayue contributed more than 90% of its operating income to Lingda.
Due to multiple factors such as technology iteration and the recent low price of PERC photovoltaic cells in the photovoltaic industry, the company's equipment technical transformation and liquidity problems, and Lingda has not yet clarified the solution to the shutdown, Jinzhai Jiayue is expected to be unable to resume normal production within 3 months.
According to Item (1) of Article 9.4 of the Risk Alert in Chapter 9 of the Rules Governing the Listing of Stocks on the Growth Enterprise Market of the Shenzhen Stock Exchange, "the Company's production and business activities have been seriously affected and are not expected to return to normal within three months", the Company's shares will be subject to other risk alerts (ST).
Lingda shares will be suspended for one day on April 29, and will resume trading on April 30 and start to implement other risk warnings.
Grant Thornton's audit also exposed the occupation of non-operating funds by related parties in 2023. At noon on April 27, Lingda announced that it had received the "Decision on Ordering Corrective Regulatory Measures against Lingda Group Co., Ltd." issued by the Dalian Securities Regulatory Bureau.
The Dalian Securities Regulatory Bureau said that the 2023 annual report of Lingda shares showed the occupation of non-operating funds by a number of related parties of the company. In response to these matters, Lingda failed to fulfill its information disclosure obligations in a timely manner as required. According to the relevant regulations, the Dalian Securities Regulatory Bureau decided to take regulatory measures to order Lingda shares to be corrected, and recorded them in the integrity file of the securities and futures market. The Dalian Securities Regulatory Bureau will also carry out on-site inspections of the company and take the next steps according to the inspection situation.
The suspension of production resulted in a loss in the first quarter
The resumption of production may face challenges
At present, the most urgent thing for Lingda is to resume production of the core production line as soon as possible to ensure the stability and sustainability of the company's production and operation.
The reporter noticed that the current suspension of production of Jinzhai Jiayue has seriously affected the performance of Lingda shares. In the first quarter of 2024, Lingda's operating income was 284 billion yuan, a significant decrease of 87% year-on-year; The net profit after deducting non-attributable to the parent company was -43.62 million yuan, a significant decrease of 509.46% year-on-year.
Will Jinzhai Jiayue's PERC cell production line be able to resume production smoothly in the future, and what difficulties or challenges will it face in resuming production?
From the perspective of the development trend of the photovoltaic industry, a number of photovoltaic technology experts and investors interviewed by reporters said that in 2024, the photovoltaic technology route will accelerate the "shift", and the market share of P-type photovoltaic cells (PERC belongs to this category) may drop from about 70% last year to about 20%; The market share of N-type batteries will jump to 70%-80% this year.
Judging from the announcements of Lingda shares in recent months, the market price of PERC cells produced by Jinzhai Jiayue has plummeted, and continued production may not be able to make ends meet. In addition, in the context of PERC facing market obsolescence, it may be difficult to find value for the restart of PERC production lines.
In addition, Lingda also said in its reply to the Shenzhen Stock Exchange's letter of concern on April 10 that the company is considering upgrading the PERC production line to an N-type production line.
In terms of capital investment required for upgrading, although the cost of transformation depends on the specific transformation plan, drawing on the announcements of other listed companies engaged in such transformation and upgrading, the cost of a single GW transformation is about tens of millions to 100 million yuan.
At the end of the first quarter of 2024, the monetary capital of Lingda shares was 38 million yuan, and the company's financial capacity may be stretched compared with the needs of transformation.
More importantly, many of the above-mentioned respondents said that N-type batteries can basically meet the market demand. If Lingda's new N-type capacity is not competitive enough, it may still not be profitable.
Looking back, since Lingda entered the capital market, it has tried to cross over a number of popular industries.
At the time of listing, the company's main business was cement kiln waste heat power generation business. In 2013, Lingda began to seek development opportunities in the field of natural gas clean energy and photovoltaic power generation. In 2014, the company acquired Golmud Shenguang New Energy Co., Ltd., which had the world's most advanced high-power concentrated photovoltaic power generation technology at that time. Since 2017, Lingda has focused on the development of new businesses in the fields of financial investment, high-tech investment, and health, and has successively invested in Beijing Huashukang Data Technology Co., Ltd., invested in Shanghai Yishida Commercial Factoring Co., Ltd., Linggan Technology (Shanghai) Co., Ltd., invested in Shanghai Yiweishi Technology Co., Ltd., established a wholly-owned subsidiary, Lingda Biotechnology (Shanghai) Co., Ltd., established a subsidiary Woda Industrial Hemp (Yunnan) Co., Ltd., and established an American Industrial Hemp Testing Center. In 2020, Lingda Co., Ltd. acquired Jinzhai Jiayue New Energy Technology Co., Ltd. through major asset restructuring investment, forming the current photovoltaic-based business structure. (Shanghai Securities News)