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Recently, the Shanghai Stock Exchange officially accepted the listing application of Xiamen Xia Tungsten New Energy Materials Co., Ltd. (hereinafter referred to as "Xia Tungsten New Energy") on the Science and Technology Innovation Board, and Xia Tungsten New Energy started a sprint journey on the Science and Technology Innovation Board. The company plans to raise 1.5 billion yuan for the industrialization project of lithium-ion battery materials with an annual output of 40,000 tons.
According to public information, Xiamen Tungsten New Energy's main business is the research and development, production and sales of cathode materials for lithium-ion batteries. At present, the main products are lithium cobalt oxide, nickel-cobalt-manganese ternary materials, etc.
The performance fluctuates violently and relies on government subsidies for "blood transfusion", and the profitability is worrying
According to the prospectus, from 2017 to 2019, the operating income of Xiamen Tungsten New Energy was 4.211 billion yuan, 7.026 billion yuan, and 6.978 billion yuan respectively, and the revenue growth rate from 2018 to 2019 was 66.84% and -0.69% respectively. The net profit in 2017-2019 was 173 million yuan, 82 million yuan, and 143 million yuan respectively, and the growth rate of net profit in 2018-2019 was -52.88% and 74.62%, respectively. It is obvious that, whether it is the company's revenue or profit, the company's performance development fluctuates violently and is extremely unstable.
Even though the company has a large amount of revenue, its profit performance is not satisfactory, and the problem of insufficient profitability is prominent.
It was observed that from 2017 to 2019, the gross profit margins of the company's main business were 12.34%, 10.01%, and 7.76%, which were in a state of continuous decline. The industry averages were 17.03%, 15.05%, and 15.80% in the same period, and the company's gross profit margin was significantly lower. According to the performance of the peers, I do not know why the gross profit margin of products under the influence of the same industry is so different?
In the past three years, the unit price of the company's lithium cobalt oxide and NCM ternary material products has also continued to decline. As a subsidiary of Xiamen Tungsten Industry, it is backed by the actual controller Fujian Provincial State-owned Assets Supervision and Administration Commission, and the quality of the customer group is high and stable. Why is the bargaining power of the company seriously insufficient?
With the decline of the state's subsidy policy for new energy vehicles, the upstream and downstream enterprises in the new energy vehicle industry chain are facing great pressure of declining demand and cost reduction, and the company's profit space may be further squeezed. Can the company respond to the impact of the drop in product prices and its response plan.
Jingdajun further analyzed and found that from 2017 to 2019, the capacity utilization rate of the company's core product NCM ternary material was around 90%, but in the first half of 2020, there was a sharp decline, and the capacity utilization rate was only 38.23%. In this case, why does the utilization rate decline off a cliff?
In addition, from 2017 to 2019, the government subsidies included in the current profit and loss of Xiamen Tungsten New Energy were 20.3554 million yuan, 7.721 million yuan and 90.3776 million yuan respectively, and the proportion of government subsidies in the current net profit was 11.73%, 10.59% and 63.32% respectively. %, in 2019, it accounted for more than 60%. I can't help but wonder if the growth rate of net profit in 2019 will change from negative to positive. Is it simply relying on government subsidies for "blood transfusion"? If government subsidies completely decline, will the company's performance change?
The main cost of research and development results "no income from particles" is high
From 2017 to 2019 and the first half of 2020, the company's research and development expenses were 172.5924 million yuan, 332.3448 million yuan, 245.4265 million yuan and 100.3965 million yuan respectively, accounting for only 4.10%, 4.73%, 3.52% and 3.27% of operating income. . At the same time, the R&D expense ratio is also slightly lower than the average level of companies in the same industry.
The lithium battery cathode material industry is a technology-intensive industry, and R&D investment is the key to enterprise growth. However, the R&D investment of Xiamen Tungsten New Energy accounts for less than 5% of the revenue. Why is the R&D investment insufficient?
As of the signing date of the prospectus, the company has obtained 27 authorized patents, including 22 invention patents. However, after careful observation, we found that the company's 22 invention projects were all proceeds from assignments, and 5 projects were original proceeds. Statistics show that from 2017 to 2019 and the first half of 2020, the company's scientific research funds totaled 820.7602 million yuan. As of now, there is still no patented technology that has been successfully developed by itself, and the conversion efficiency of R&D input and output is unacceptable.
In addition to the lack of revenue in research and development, the company's main business costs have continued to rise in the past three years. From 2017 to 2019, the main business costs of Xiamen Tungsten New Energy were 3.627 billion yuan, 6.262 billion yuan and 6.384 billion yuan respectively, of which the direct material costs accounted for 92.84%, 91.19% and 90.15% of the main business costs in the same period. %, accounting for more than 90%, and the price fluctuation of direct materials will have a greater impact on the cost of main business.
According to the prospectus, among the main raw materials required for the production of Xiamen Tungsten New Energy, the consumption of cobalt, nickel and lithium metal salts is the largest. Xiamen Tungsten New Energy prides itself as "one of the companies with the largest demand for cobalt in the lithium-ion battery cathode material industry". Due to the lack of cobalt resources in China, the required cobalt raw materials are highly dependent on external sources.
Cobalt is a small metal, and its price fluctuates greatly. In addition to supply and demand, the price of cobalt products is also affected by factors such as geopolitics, climate, and disasters. If unforeseen events occur, it may cause significant fluctuations in cobalt prices, thereby increasing business risks. The company is already facing high prices. If the raw material core product cobalt is in short supply or the price skyrockets, how much threat and impact will it have on business performance? Does the company have a production cost control budget?
Is the high asset-liability ratio a "mine"?
From 2017 to 2019, the book values ​​of the company's accounts receivable were 499,240,300 yuan, 881,079,000 yuan, and 659,595,700 yuan, accounting for 11.85%, 12.54%, and 9.45% of the current operating income, respectively. From 2017 to 2019, the book values ​​of the company's inventories were 1,233,213,300 yuan, 1,590,230,900 yuan, and 859,942,100 yuan, accounting for 32.68%, 28.66%, and 16.08% of the current total assets, respectively.
It can be found that although the company's accounts receivable and inventory have declined in 2019, the scale of the two is still relatively large and at a high level, which brings certain pressure on the company's liquidity. How to improve the speed of payment collection and control inventory risk is an important challenge the company is currently facing.
Looking at the balance sheet, from 2017 to 2019, the company's asset-liability ratios were 80.67%, 85.40%, and 70.68%, which were at a relatively high level. The company's own funds cannot meet the demand for working capital and investment in fixed assets brought about by the rapid growth of production and operation scale. Funds are mainly raised through debt financing methods such as bank loans and related party loans.
From 2017 to 2019, the company's financial expenses were 42,322,500 yuan, 113,097,500 yuan, and 113,738,900 yuan, respectively. The increase in expenses was mainly due to the increase in the company's total borrowings and the increase in interest expenses.
After sorting out, it is found that Xiamen Tungsten New Energy has not been optimistic about its capital in recent years, and the high interest brought by it may make the company's capital operation more difficult.
By checking the 2020 semi-annual report, the company's short-term loans and long-term loans due within one year are 1.767 billion yuan and 199 million yuan respectively, totaling nearly 2 billion yuan, while the current cash balance of Xiamen Tungsten New Energy is only 336 million yuan , the difference is more than 5 times.
The company has used extremely high capital leverage to leverage the scale. Financial security and capital problems are prominent. Once the market fluctuates and the book capital is not enough to repay, is there any short-term debt repayment risk?
With such a bold burden of high debt, the risk of a high-leverage expansion operation model is highlighted. In addition, 600 million yuan in this fundraising was used to supplement liquidity. Whether there has been a hole in the capital chain and an urgent need for capital flow is unknown.
High customer concentration, the largest customer ATL is both a customer and a supplier
From 2017 to 2019 and the first half of 2020, the company’s total sales to the top five major customers amounted to RMB 3,717,772,700, RMB 6,542,802,400, RMB 6,370,703,100, and RMB 2,751,568,600, respectively, accounting for 88.28%, 93.12%, and 91.30% and 89.56%.
ATL has been Xiamen Tungsten New Energy's largest customer for three consecutive years. In the past three years, its sales revenue accounted for about 50% of its revenue and continued to increase.
ATL is the world's leading 3C lithium battery company, and customers such as BYD and Panasonic are the world's leading companies in the power battery field. On the one hand, how the company maintains stable cooperative relations with ATL, BYD, Panasonic and other companies will be directly related to its sustainable profitability and future performance. On the other hand, due to the uncertainty of the undeveloped new energy vehicle industry chain, if the main customers change their own business conditions due to market downturn and other reasons in the future, resulting in a sharp drop in their demand for the company's products, whether the company needs to continue to expand into new customers and markets?
In addition, it was observed that from 2017 to 2018, ATL, the largest customer, was also the company's largest supplier during this period, with dual identities of customer and supplier.
A company is both a customer and a supplier, which may be related to the division of labor in the lithium-ion battery cathode material industry, but in general, this phenomenon is prone to financial problems.
On the one hand, it involves the issue of accounting, whether the full method or the net method should be used for accounting, which will have a significant impact on the company's income, costs and even expenses; on the other hand, this phenomenon is also easy to adjust financial performance across periods. Then, how to determine the purchase and sale price between the company and ATL company, is it fair? Can you respond.
Is the frequent borrowing of funds and on-lending with related parties suspected of interest transfer?
During the period from 2017 to 2019 and the first half of 2020, the company borrowed a total of 1,135 million yuan from the indirect controlling shareholder Metallurgical Holdings and 60 million yuan from the indirect controlling shareholder Rare Earth Group. The funds were mainly used for the company's annual production of 10,000 tons of automotive lithium-ion Ternary cathode material industrialization project.
In addition, from 2017 to 2019, the company temporarily borrowed bills from the controlling shareholder Xiamen Tungsten Industry and its controlled subsidiaries to pay for supplier purchases, with a total of about 1,545.2169 million yuan, of which the corresponding amount of bills borrowed in 2017-2018 was more than Big.
Whether such frequent borrowing of funds from related parties has a certain benefit transfer remains to be seen.
In addition, the company also has embarrassing related party on-lending behavior.
In 2019, Xiamen Tungsten New Energy obtained a total of 540 million yuan of working capital loans from Xiamen Haicang Sub-branch of China Construction Bank and Xiamen Canghai Sub-branch of Agricultural Bank through Xiamen Tungsten Industry for turnover, and the bank loans after the turnover were used for production and operation activities such as payment for goods.
The observation found that in 2019 and the first half of 2020, Xiamen Tungsten New Energy purchased materials from its controlling shareholder Xiamen Tungsten Industry for only 77.182 million yuan. Whether the on-lending has a real transaction background, the truth is unknown.