The Jinzhou Jixiang Molybdenum Co.Ltd(603399) (603399. SH) of the dual main industry development had the idea of “lithium”, but this plan was questioned by the Shanghai Stock Exchange as soon as it was launched. The financial Associated Press reporter noted that Jinzhou Jixiang Molybdenum Co.Ltd(603399) has successively thrown out a number of cross-border M & A plans in recent years, but most of the M & A plans were terminated after being questioned by the exchange. The reporter learned from Jinzhou Jixiang Molybdenum Co.Ltd(603399) that the company is fully prepared for the acquisition. The target company Hunan Yongshan has a capacity of 25000 tons of lithium salt, which is likely to be put into operation in the first half of the year.
On the morning of January 15, the relevant person in charge of the company told the financial associated press that the main business of Hunan Yongshan and the company’s existing molybdenum business belong to the mineral industry. There is great synergy in business, and the production and marketing modes of the two are similar, so they are not cross-border. “Both parties of the related party transaction know the bottom of the matter and do not gamble against the performance commitment, so there is a high possibility of success.”
480 million yuan chasing “lithium”
On January 6, Jinzhou Jixiang Molybdenum Co.Ltd(603399) announced that it planned to purchase 100% equity of Hunan Yongshan held by Ningbo Yongshan with 480 million yuan in cash to cross-border enter the lithium battery industry. It should be noted that Ningbo Yongshan is a wholly-owned subsidiary of Ningbo Shanshan Co.Ltd(600884) (600884. SH), and the actual controllers of Jinzhou Jixiang Molybdenum Co.Ltd(603399) and Ningbo Shanshan Co.Ltd(600884) are Zheng Yonggang, both of which are listed companies of Shanshan. This transaction constitutes a connected transaction.
On the evening of the same day, the Shanghai Stock Exchange made a detailed inquiry on the details of its acquisition case and asked Jinzhou Jixiang Molybdenum Co.Ltd(603399) to explain whether the acquisition of the target assets from related parties has synergistic effect with the company’s existing business, whether the company has the corresponding ability and conditions to realize the effective operation and management of the target assets, as well as the rationality and necessity of this transaction.
According to the announcement, Ningbo Shanshan Co.Ltd(600884) Hunan Yongshan, the subject of this sale, mainly produces lithium carbonate, lithium hydroxide and other products, which are the main raw materials of lithium battery cathode materials. Downstream applications include power batteries and energy storage batteries. Jinzhou Jixiang Molybdenum Co.Ltd(603399) is a molybdenum metal production and processing enterprise, which implements the dual main business development mode of molybdenum product business + film and television business.
For the reasons for the acquisition, Jinzhou Jixiang Molybdenum Co.Ltd(603399) said that the company is in the molybdenum production and processing industry. Affected by macroeconomic fluctuations, changes in upstream and downstream market demand and other factors, the industry fluctuates greatly, resulting in performance fluctuations of the company in recent years. This time, it is planned to extend the business segment to the field of new energy through the acquisition of the target company.
In terms of business synergy, Jinzhou Jixiang Molybdenum Co.Ltd(603399) believes that the original smelting business and Hunan Yongshan belong to the mineral processing industry. The company has rich industry experience in this field and has strong industrial synergy with Hunan Yongshan. After the completion of this transaction, Jinzhou Jixiang Molybdenum Co.Ltd(603399) will continue to focus on the processing and production of metal minerals, optimize the company’s product structure, reduce the impact of molybdenum industry fluctuations on the company’s operating performance, and improve the company’s anti risk ability and sustainable profitability.
The exchange pointed out that as of September 30, 2021, the underlying assets were 386 million yuan of projects under construction; The net profit in 2020 is -4889700 yuan; The net profit from January to September 2021 was 6.3145 million yuan. The Shanghai stock exchange requires the company to supplement and disclose the business model, industry competition pattern and industry status of the subject assets, and explain whether the subject assets have complete production and operation capacity.
The relevant person in charge of the aforementioned company believes that one of the close concerns of the exchange for this acquisition is that Hunan Yongshan is a project under construction. According to the reply announcement, the main businesses of Hunan Yongshan are battery grade lithium hydroxide production, battery grade lithium carbonate production and battery grade lithium carbonate OEM, of which the first two are “purchase production sales” mode and the last is OEM mode.
In terms of production and operation capacity, Hunan Yongshan, established in 2019, has planned to establish a 45000 T / a lithium salt construction project, of which the phase I 15000 T / a lithium hydroxide and 10000 t / a lithium carbonate production project has been in the stage of equipment installation and commissioning by the end of 2021, and it is expected to complete commissioning and put into operation in June 2022; According to the plan, the 15000 T / a battery grade lithium hydroxide and 5000 t / a battery grade lithium carbonate production lines of the company’s phase II project will also be completed and put into operation within three years.
Ningbo Shanshan Co.Ltd(600884) said that Hunan Yongshan is currently in the construction investment period and still needs continuous capital investment and working capital support in the future.
According to the financial report, in the first three quarters of 2021, Jinzhou Jixiang Molybdenum Co.Ltd(603399) achieved a revenue of 2.96 billion yuan, a year-on-year increase of 79.01%; The net profit was 42.9005 million yuan, a year-on-year increase of 128.55%; Deduction of non net profit was 41.7818 million yuan, a year-on-year increase of 126.25%. As of the end of the reporting period, the net cash flow of the company was 421 million yuan.
It should be noted that Jinzhou Jixiang Molybdenum Co.Ltd(603399) has high expectations for this M & A. “In recent years, downstream industries such as new energy vehicles have developed rapidly. With the company’s sufficient financial support and professional operation management, the target company will have good development prospects and can provide better performance returns for the company.” So said the company.
the performance of the underlying asset is worth looking forward to
As the key raw materials upstream of the new energy vehicle industry chain, lithium carbonate and lithium hydroxide have been rising both in volume and price with the continuous hot sales of new energy vehicles for more than a year.
Ji zewei, an expert of Baichuan Yingfu cathode materials, told the financial associated press that behind the sharp rise in the price of lithium carbonate products, there is a high imbalance between supply and demand, which is difficult to fundamentally change in the short term.
According to incomplete statistics, more than 10 listed companies crossed the lithium battery industry in the second half of 2021 alone. Benefiting from the hot market, the secondary market has experienced “rising with lithium” for many times. In the first three quarters of 2021, Tianqi Lithium Corporation(002466) revenue and net profit increased by 59.58% and 148.02% year-on-year respectively, Ganfeng Lithium Co.Ltd(002460) revenue increased by 81.19% year-on-year, and net profit increased by 648.24%.
The financial Associated Press reporter noted that the reply announcement also publicized the existing letter of intent for production and OEM business orders of Hunan Yongshan. Specifically, Hunan Yongshan has signed the letter of intent with BASF and agreed to supply in batches to BASF battery materials related production bases after production, including battery grade lithium hydroxide and battery grade lithium carbonate products; In addition, the company has reached strategic cooperation intentions with downstream power battery customers such as honeycomb energy on investment and development of lithium resources, lithium salt supply, lithium salt product processing, etc.
In fact, the wild prospect of Hunan Yongshan is more than that. According to the announcement, the company will deepen cooperation with BASF and further extend to BASF’s global cathode material supply chain system. Jinzhou Jixiang Molybdenum Co.Ltd(603399) said that the lithium salt industry is a technology and talent intensive industry, and Hunan Yongshan has competitive advantages in both aspects.
According to the observation of the financial Associated Press reporter, the Jinzhou Jixiang Molybdenum Co.Ltd(603399) acquisition of Hunan Yongshan is quite similar to the previous Suzhou Ta&A Ultra Clean Technology Co.Ltd(300390) (300390. SZ) entry into the lithium battery industry.
Suzhou Ta&A Ultra Clean Technology Co.Ltd(300390) the original main business was anti-static ultra clean technology products and medical device products.
In 2018, the company and Changjiang chendao, Contemporary Amperex Technology Co.Limited(300750) (300750. SZ) and other companies jointly invested in Tianyi lithium industry to enter the lithium battery industry. In November 2020, the company completed the acquisition of 26% equity of Tianyi lithium, and the shareholding ratio increased to 68%, becoming its controlling shareholder.
According to the data, Tianyi lithium industry’s phase I battery grade lithium hydroxide project with an annual output of 20000 tons will be put into operation in 2020, and mass production and shipment will be realized in the first half of 2021.
In April 2021, Suzhou Ta&A Ultra Clean Technology Co.Ltd(300390) 780 million yuan will be added. The company plans to invest in the construction of “battery grade lithium hydroxide phase II construction project” through its subsidiary Tianyi lithium industry. After the phase II project is completed, the total capacity of lithium hydroxide of Tianyi lithium industry will reach 45000 tons / year.
In terms of production capacity, whether it is a phase I project or a master plan project, the scale of Tianyi lithium industry is very close to that of Hunan Yongshan. It is worth mentioning that as of the closing on January 14, Suzhou Ta&A Ultra Clean Technology Co.Ltd(300390) had a market value of nearly 40 billion yuan.
the transaction price is cautious
The announcement shows that on the benchmark date of September 30, 2021, the audited shareholder’s equity of Hunan Yongshan is 301272000 yuan, and the value of all shareholders’ equity assessed by the income method is 483 million yuan, with a value-added rate of 60.32%. The transaction price was finally determined as 480 million yuan.
An insider told the financial associated press that compared with similar recent acquisition cases, this consideration is obviously low.
For example, in September 2021, Yabao chemical announced that it planned to acquire Guangxi Tianyuan new energy materials Co., Ltd., a Chinese lithium producer. Its main capacity is 25000 T / a battery grade lithium hydroxide, which is similar to the scale of Hunan Yongshan phase I project, but the acquisition price is US $200 million, about 1.3 billion yuan, which is 2.7 times the selling price of Ningbo Shanshan Co.Ltd(600884) .
In this regard, the relevant person in charge of the above companies said that whether the transaction price is high or low depends on the level. If it is from the pure PE valuation, such as Tianqi Lithium Corporation(002466) and Ganfeng Lithium Co.Ltd(002460) at the head of the market, they have opened up the whole vertical industrial chain, there are mines in the upstream, and the intermediate technology is mature, Therefore, their PE valuation may be relatively high.
In view of the comparison with the purchase price of Guangxi Tianyuan lithium industry, the relevant person in charge of the above company pointed out that Guangxi Tianyuan lithium industry was actually in the same state as Hunan Yongshan at the end of 2017. It had been officially put into operation by 2020. In the past two years, the production capacity has climbed, and it has a relatively mature industrial chain; The target company, Hunan Yongshan, will not start construction until the end of 2020. At present, it is still in the transition of projects under construction, and the subsequent operation still needs sufficient financial support.
“Our valuation is not low, but more cautious.” He said.
