On February 16, in a conference room in Block B, building 4, Tian'an Digital City, Longgang, Shenzhen, an extraordinary general meeting of shareholders that may affect the future development of Shenzhen Fluence Technology Plc(300647) (300647, SZ) was held here.
At the meeting, the proposal on the proposed investment in the construction of lithium battery cathode key material production base and the signing of investment agreement was deliberated and adopted.
According to this proposal, Shenzhen Fluence Technology Plc(300647) will invest 5 billion yuan in the next four years to increase the size of lithium battery materials, build a production line for waste lithium batteries and electrode materials with an annual processing capacity of 45000 tons of metal, 60000 tons of precursors, 20000 tons of lithium carbonate and 20000 tons of cathode materials.
According to the plan of Shenzhen Fluence Technology Plc(300647) , a total of three phases of the project will be completed by the end of 2025. When is fully completed, it is expected to realize an annual sales revenue of 8.688 billion yuan and a net profit of 625 million yuan . In this way, even if the construction period is included, the investment payback period is only 8.63 years.
But can the progress of the project really be smooth sailing? For Shenzhen Fluence Technology Plc(300647) with only 173 million yuan of monetary funds on the account (by the end of the third quarter of 2021), this 5 billion yuan does not seem to be easy to get together. Moreover, in the 2021 performance forecast, Shenzhen Fluence Technology Plc(300647) also suffered its first loss in a decade.
At present, the cathode material industry has a pattern of "constant strength of the strong and polarization". What is the foundation of the "big step approach" of Shenzhen Fluence Technology Plc(300647) ?
radical investment dragged down the company's performance. Where did the large cross-border funds come from?
For Shenzhen Fluence Technology Plc(300647) whose main products are electronic product radiators and LED lighting lamps, this 5 billion yuan lithium battery material project can be said to be quite "desperate". In a recent letter of concern issued by the Shenzhen Stock Exchange, Shenzhen Fluence Technology Plc(300647) was asked to explain "whether the company has the financial strength for project construction".
According to the report of the third quarter of 2021, Shenzhen Fluence Technology Plc(300647) has a closing balance of monetary funds of 173 million yuan, short-term loans of 373 million yuan and non current liabilities due within one year of 98.256 million yuan.
Carrying the cross-border hope of Shenzhen Fluence Technology Plc(300647) this time is its holding subsidiary Gejiu shengbihe Industrial Co., Ltd. (hereinafter referred to as "Gejiu shengbihe"), which has long focused on the field of lithium battery materials. According to Shenzhen Fluence Technology Plc(300647) 's previous reply to the letter of concern, by the end of 2021, Gejiu shengbihe's net assets were 145 million yuan (Unaudited).
It can be seen that with the current Shenzhen Fluence Technology Plc(300647) and the financial strength of Gejiu shengbihe, it seems not easy to scrape up 5 billion yuan for the construction project. So how do you get the money? According to Shenzhen Fluence Technology Plc(300647) , the capital sources of Gejiu shengbihe investment mainly include retained profits, loans from financial institutions, other equity financing and other self financing methods. In other words, it is to "do everything possible" to raise money. If you can raise it, you can borrow it.
The total investment of the project is 5 billion yuan, including 2.4 billion yuan for equipment purchase and plant decoration, 1.5 billion yuan for initial working capital and 1.1 billion yuan for plant and land repurchase. Among them, the government of Honghe Hani and Yi Autonomous Prefecture is responsible for the construction of the plant and related supporting facilities, which is provided to Shenzhen Fluence Technology Plc(300647) for paid use according to the preferential treatment of "three exemptions and two halving" (enterprise income tax is exempted for three years and halved for two years from the profit-making year).
Since this part of the cost will only occur after the project is put into operation for a long time, the fund to be raised in Shenzhen Fluence Technology Plc(300647) a few years is actually 3.9 billion yuan. However, by the end of the third quarter of 2021, the total assets of Shenzhen Fluence Technology Plc(300647) were only 2.08 billion yuan .
In the last six years, the company's net profit has continued to decline, which may also hinder Shenzhen Fluence Technology Plc(300647) 's fund-raising journey.
If such a large cross-border investment needs motivation, what makes Shenzhen Fluence Technology Plc(300647) so bold? It may also be related to the continuous decline of the company's net profit in recent six years.
Before going public in 2017, Shenzhen Fluence Technology Plc(300647) had a steady growth in performance. From 2012 to 2016, the company's net profit increased steadily from 23.37 million yuan to 54.61 million yuan. After going public in 2017, the net profit of Shenzhen Fluence Technology Plc(300647) began to decline year by year. It also suffered its first loss in nearly 11 years in 2021. It is expected that the net loss will be 127.5 million yuan to 172.5 million yuan.
The performance "decline" in 2021 is also related to the radical M & A after Shenzhen Fluence Technology Plc(300647) listing. In 2017 Shenzhen Fluence Technology Plc(300647) acquired 51% equity of Zhejiang jiongda Energy Technology Co., Ltd. (hereinafter referred to as "jiongda energy") engaged in energy-saving services at a premium of nearly 5 times. In 2018, it not only acquired the remaining 49% equity of jiongda energy at a more expensive price, but also acquired 60% equity of CIC optoelectronics industry (Shenzhen) Co., Ltd. (hereinafter referred to as "CIC optoelectronics"), And Gejiu shengbi and 49.5% equity (another 5% equity was acquired in 2021 to form a holding).
However, the above acquisition does not seem to bring stable benefits. Take jiongda energy, which once contributed huge profits to listed companies, for example. Although it has completed the three-year performance bet from 2018 to 2020, it is suspected that its performance "changed face" in 2021. in the 2021 performance forecast, Shenzhen Fluence Technology Plc(300647) said that in combination with the 2021 performance, industrial policies, market environment and other factors, the company plans to make a provision for goodwill impairment of about 79 million yuan for jiongda energy and CIC optoelectronics.
According to the 2021 semi annual report, the book value of goodwill corresponding to CIC optoelectronics is 7.515 million yuan, and the book value of goodwill corresponding to jiongda energy is 102 million yuan. It can be judged that the goodwill impairment this time is mainly affected by jiongda energy.
If the acquisition of jiongda energy is the "last big bet" of Shenzhen Fluence Technology Plc(300647) , under the background that the impairment of jiongda energy's goodwill has dragged down the company's performance, hastily announced the 5 billion yuan production expansion plan and opened a new round of cross-border Shenzhen Fluence Technology Plc(300647) . What is the odds of winning this time?
not affected by the rise in raw material prices? How to do the lithium battery business of Shenzhen Fluence Technology Plc(300647)
Every round of "big bet" requires confidence. Where does the confidence of Shenzhen Fluence Technology Plc(300647) overweight lithium battery cathode material come from this time? This should be seen from the current market pattern of cathode materials.
What is cathode material? According to The Pacific Securities Co.Ltd(601099) Securities Research Report, cathode material is the key material of lithium battery, accounting for about 32% of the cost of lithium battery materials, which directly affects the energy density, cycle life and safety of the battery, and then affects the comprehensive performance of the battery.
The production base to be built this time Shenzhen Fluence Technology Plc(300647) has an annual capacity of 60000 tons of precursors, 20000 tons of lithium carbonate and 20000 tons of cathode materials.
Among them, precursor and lithium iron phosphate are upstream raw materials for the production of cathode materials. As can be seen, Shenzhen Fluence Technology Plc(300647) the core of this round of layout is the cathode material industry chain.
At present, the sharp rise in the price of raw materials has affected the competition pattern of the cathode material industry to some extent, resulting in the trend of "the strong is always strong and polarization".
"At present, with the continuous rise of resource prices, what cathode material enterprises earn is the price difference of raw material inventory," said Moke, chief analyst of true lithium research
It is understood that according to the approximate composition proportion of nickel, cobalt and manganese (aluminum), ternary cathode materials can be divided into ncm333 (the proportion of nickel, cobalt and manganese is 3:3:3), ncm523, ncm622, ncm811 and other products.
Taking ncm523 as an example, Merck said: "at present, the price of ncm523 material is 310000 yuan / ton, of which the cost of precursor is 140000 yuan, the cost of lithium carbonate is 160000 yuan (all according to the current price), and the cost of power is 5000-10000 yuan. Coupled with equipment depreciation and labor, it is basically a loss."
According to the data, the average market price of domestic lithium carbonate was 53000 yuan / ton on January 4, 2021. By December 31, 2021, the price rose to 275000 yuan / ton. Within one year, the price has increased by more than four times.
In view of this situation, Merck believes that there are few methods that cathode material enterprises can take, nothing more than purchasing raw materials in advance. For example, if the raw materials purchased before and after new year's day are used, the precursor cost is 130000 yuan and the lithium carbonate cost is 120000 yuan, then there will be profits at the current price of 310000 yuan of ncm523 material. In addition, you can also increase the purchase volume to reduce the unit purchase price.
\u3000\u3000 "So, from a certain point of view, what cathode material enterprises are competing for now is financial strength. Rich enterprises hoard more raw materials and make money by playing time difference. The top ranked enterprises are generally listed companies with relatively strong financial strength, so it is likely to further improve their market share this year. That's what 'the strong is always strong and polarization' says." Said Mercer.
In terms of financial strength, Shenzhen Fluence Technology Plc(300647) is obviously inferior to the "top players" in the cathode material industry. However, the sharp increase in the price of lithium battery raw materials last year has given Shenzhen Fluence Technology Plc(300647) the confidence to increase the cathode material, because it seems confident that the production and operation of Gejiu shengbihe, the holding subsidiary, will not be affected by the price of raw materials.
Gejiu shengbihe takes a different route from most cathode material manufacturers. Its raw materials do not come from traditional lithium ores, but from the recycling of waste lithium batteries. The fluctuation of upstream mineral product supply and price has a relatively small impact on it. at present, Gejiu shengbihe has built a complete industrial chain of "comprehensive recycling of waste lithium-ion battery materials → precursor / lithium carbonate → cathode materials"
Image source: Shenzhen Fluence Technology Plc(300647) announcement screenshot
In the reply to the inquiry letter of Shenzhen Stock Exchange, Shenzhen Fluence Technology Plc(300647) also listed this production mode as the first place of Gejiu shengbi and "main competitive advantage". Shenzhen Fluence Technology Plc(300647) said that, (Gejiu shengbihe) has mature, advanced and complete industrial chain production technology, which ensures the supply of key raw materials, especially in the period of price rise and supply shortage of raw materials, which can effectively ensure that the company's production and operation will not be greatly impacted, ensure the delivery capacity, and reduce the cost of raw materials to a great extent, Enhanced market competitive advantage and profitability.
However, the confidence not affected by the price fluctuation of raw materials should be based on the smooth recycling of waste lithium batteries. Can Gejiu shengbihe under Shenzhen Fluence Technology Plc(300647) do it?
"bad money drives out good money", the development problem of power battery recycling enterprises
In fact, at present, the whole power battery recycling industry is facing the situation of "bad money expelling good money".
A senior industry insider told reporters, now the policy on the recycling of waste power batteries is not very clear. Some say that the vehicle factory bears the main responsibility for recycling, that is, you can recycle a battery pack when you sell a car, but in fact (this policy) has not been officially implemented, and (who will recycle) has not been completely clear .
Mercer also said that although the principle of "who sells who recycles" has been established, there are no specific rules, and the ownership of the battery belongs to the owner. If the vehicle factory or battery factory wants to recycle, it also depends on whether the owner thinks the price is appropriate.
"Therefore, the recycling capacity of many enterprises is idle. How to recycle waste batteries is a big problem." Said Mercer.
Relevant industry insiders said that now there is a situation that regular enterprises can't collect batteries and a large number of waste batteries flow into small workshops. Because small workshops without business qualification do not need to invest too much environmental protection cost, and the bid for waste batteries is higher than that of regular manufacturers. While regular manufacturers invest much more in recycling equipment than small workshops. Fixed assets have to be depreciated and the cost is very high.
At the same time, the person also said that the current situation faced by the industry is: there is a huge gap between the amount of waste batteries that can be recycled and the amount of raw materials required by the company's actual production and manufacturing. Even leading enterprises can not only rely on recycling to obtain sufficient lithium battery raw materials .
Under the background that "top players" in the industry such as Gem Co.Ltd(002340) (002340, SZ) and Guangdong Bangpu Recycling Technology Co., Ltd. are facing such problems, does Gejiu shengbihe, with a (Unaudited) revenue of only 209 million yuan and a net profit of only 3.4811 million yuan in 2021, really have the foundation to successfully realize the recycling of waste lithium batteries?
Of course, the arrival of the "retirement tide" of power batteries may help to solve this problem. Tianfeng Securities Co.Ltd(601162) a research report once said that electric vehicles generally enter the replacement cycle in 5-6 years, while ternary batteries really start to increase in 2017-2018. It is expected that China will usher in the first round of ternary retirement around 2022.
When power batteries are decommissioned on a large scale, it may make the production capacity of many recycling enterprises no longer idle. However, there are not many enterprises eyeing this tuyere. In other words, it is not easy to fully benefit from the "retirement tide", but also face a lot of competition.
And the name of Gejiu shengbihe does not appear in the three batches of 47 enterprises that meet the industrial standard conditions for comprehensive utilization of waste power batteries of new energy vehicles (hereinafter referred to as the "white list"). will the "lack" of qualification become the bottleneck restricting the development of Gejiu shengbi in the future?
Senior insiders said that the white list is not a blacklist, but a guiding role. It will not be used as a restriction on "licensing qualification" and is not mandatory. It's not that you can't do it without meeting this standard.
However, the source also pointed out that when manufacturers such as vehicle manufacturers or battery manufacturers choose recycling enterprises as their partners and enter their own supply chain, they will certainly choose enterprises on the white list. Just like selecting class cadres to give priority to "three good students".
In other words, even if Gejiu shengbihe, a subsidiary of Shenzhen Fluence Technology Plc(300647) , is not affected by the continuous rise in the price of lithium battery raw materials, Gejiu shengbihe may face the embarrassing situation of "unable to collect the old batteries", making it difficult to maintain the competitive advantage in the plan.
At the same time, any price rise has a cycle, and the price of lithium battery raw materials will not rise indefinitely. The 5 billion yuan investment of Shenzhen Fluence Technology Plc(300647) this time is expected to complete the construction of all phase III projects by the end of 2025. In addition, there are questions about whether the company can maintain its existing competitive advantage after the first two phases of projects are put into operation.
When the price of lithium battery raw materials ends to rise, a major comparative advantage of Gejiu shengbihe will also disappear. In the cathode material industry where the continuous expansion of "head players" leads to the continuous improvement of market concentration, Gejiu shengbihe may face a severe market competition situation.
