Yiwei Lithium Energy'S Introduction Of Ski War Investment Market Reaction Is Cold, Seems To Be Good Behind The Bad?

The power battery business layout of Yiwei lithium energy (300014. SZ), the leading lithium battery company in China, has a new trend.

On the evening of December 9, Yiwei lithium energy announced that in order to seek greater development, the company plans to introduce South Korea SK Innovation Co., Ltd. (hereinafter referred to as "ski") as a strategic investor through debt to equity swap.

Working with ski for many years

According to the announcement, Yiwei lithium energy will sign a "debt equity swap contract" with its subsidiaries Yiwei Jineng and ski, and sign a joint venture contract with ski. When ski exercises equity conversion, it takes its cash loan creditor's rights to Yiwei Jineng as capital contribution and obtains 49% equity of Yiwei Jineng, and the company gives up the preemptive right at the same time.

According to qixinbao data, Yiwei Jineng was established on June 20, 2018 and is a wholly-owned subsidiary of Yiwei lithium energy. In July 2018, Yiwei Jineng, a newly established ski subsidiary, signed a cash loan contract with Blue Dragon Energy Co., Limited (hereinafter referred to as "BDE") and intends to apply for a maximum loan of no more than 500 million yuan.

In the following two years, Yiwei Jineng signed several cash loan contracts with BDE. The company provided pledge guarantee with 60% equity of Yiwei Jineng, and the loan interest was as low as 2% (simple interest). Yiwei Jineng received loans four times in September 2018, August 2019, December 2019 and April 2020, totaling RMB 2035.243 million.

According to the announcement on the evening of December 9, BDE, ski, Yiwei Jineng and Yiwei lithium energy have signed the debt assignment agreement, in which BDE transfers all the loan claims of BDE to Yiwei Jineng to ski; meanwhile, all parties agree and confirm that all rights and obligations of BDE under the cash loan contract and related agreements (including the equity pledge contract signed by BDE and the company) shall be inherited by ski.

The Sanyuan soft package business of this cooperation with ski belongs to the field of power battery, and the latter is the key battery business of Yiwei lithium energy in recent years. -Photo by Gan Jun

Before this transaction, Yiwei lithium energy held 100% equity of Yiwei Jineng. After ski exercises equity conversion, the equity proportion of Yiwei lithium energy will drop to 51%.

With the introduction of ski war investment, there are also details of changes in the previous cooperation projects between Yiwei lithium energy and ski. In terms of joint venture capital of 20.5 billion U.S. dollars, the company plans to invest 25.5 billion US dollars in the joint venture with Sun Wei Power Co., Ltd. in the capital of 20.59 billion U.S. dollars, the company plans to invest 25.5 billion dollars in the joint venture with Sun Wei power.

According to the announcement, the investor of Yiwei lithium energy has been changed into a wholly-owned subsidiary of Yiwei Power Hong Kong Co., Ltd., with the amount of contribution reduced to US $366 million, and the proportion of the company's registered capital also decreased to 30%. The production scale of the joint venture is changed from 20gwh to 27gwh.

For Yiwei lithium energy, the introduction of ski as a war investment has continued the years of cooperation with ski in the field of power batteries. From the past performance, the cooperation between the two is relatively successful. "Capital, technology, talents, customers and management" are five in one. "The new team of Soochow securities and power evaluates the cooperation between Yiwei lithium energy and ski.

In terms of management, Yiwei Jineng appointed two Korean directors as early as 2018, and employed Korean general manager and technical deputy general manager.

In terms of customers, Yiwei lithium energy Co., Ltd., which cooperates with ski, has successively won large orders. In August 2018, the company signed a multi-year supply agreement with Daimler, with the supply period as long as the end of 2027. In March 2019, Yiwei lithium energy announced that it plans to raise no more than 3 billion yuan and establish a Sanyuan soft package production line no less than 5.8gwh. In the same month, the company also became a supplier of Hyundai Kia, with orders expected to reach 13.48gwh in the next six years. In July 2020, Yiwei lithium energy also announced that it was negotiating a battery supply agreement with BMW Brilliance, and Hubei Yiwei Power Co., Ltd., a subsidiary company, received a letter from BMW Brilliance Automotive Co., Ltd.

The introduction of ski is not good

The Sanyuan soft package business of this cooperation with ski belongs to the field of power battery, and the latter is the key battery business of Yiwei lithium energy in recent years.

According to the public information, Yiwei lithium energy is a battery enterprise mainly engaged in the R & D, production and sales of consumer batteries (including lithium primary batteries, small lithium-ion batteries) and power batteries (including new energy vehicle batteries and their battery systems, and energy storage batteries), and its main products are lithium primary batteries and lithium-ion batteries.

Founded in 2001, Yiwei lithium energy started from lithium primary battery, and entered the consumer lithium electronic battery market in 2010. In the next few years, Yiwei lithium energy gradually became the industry leader in the field of e-cigarette and wearable devices. Since 2016, Yiwei lithium energy has promoted the strategic position of power battery and started to invest in this field on a large scale.

"From the current time point to the future, the most important investment logic of Yiwei lithium energy is to judge whether the power battery business can break through in the second line." Tianfeng securities in the recent research report so pointed out. From the performance of 2020, the power battery business has also become the most important driving force of Yiwei lithium energy.

In the first three quarters of 2020, the revenue of Yiwei lithium energy was 5.34 billion yuan, with a year-on-year increase of 16.66%; the net profit attributable to parent company was 946 million yuan, with a year-on-year decrease of 18.35%. Among them, the company achieved a revenue of 2.164 billion yuan in the third quarter, a year-on-year increase of 5.68%; and a net profit of 583 million yuan, a year-on-year decrease of 11.44%.

According to the calculation of the new team of Soochow securities and power, the performance of Yiwei lithium energy's power battery doubled in the third quarter, contributing about 60 million to 70 million profits. The power battery shipment volume in the third quarter reached 1.5gwh, with a month on month increase of 30%. From the perspective of structure, the company's soft package power battery revenue of nearly 1.3 billion yuan in the first three quarters.

Soochow securities forecasts that this year Yiwei lithium energy's power energy storage battery revenue will double year on year, reaching 4 billion. In addition, the business will continue to grow by more than 50% in 2021, with revenue of 6-7 billion.

The 21st century economic reporter noted that there was no consensus among all parties in the market regarding the introduction of ski as a strategic investment in Yiwei lithium energy. In some online stock investment communities, there is also a debate between investors about whether this transaction is "good" or "bad".

For example, Everbright Securities believes in the research report that the introduction of ski into Yiwei lithium energy as a strategic investor will help both sides further play their synergy effects in technology, market, management and supply chain, and improve Yiwei lithium's soft pack battery technology and market position.

"The profit angle is definitely declining, but the company told the market two months in advance, so the performance is not very strong." A reporter in the 21st century told a reporter in the electricity industry. It said that the introduction of ski war investment was "theoretically a bad news" for Yiwei lithium energy: "the core is profit. It used to be 40 million yuan a year, but now it will be divided into 200 million yuan a year. "

Although the in-depth cooperation with ski is conducive to the development of Yiwei lithium energy Sanyuan soft package business, the researcher pointed out to the reporter that Yiwei lithium energy may have other plans in the field of power battery: "in the long run, Yiwei lithium energy may want to make its own ternary square. (both sides) there is no problem in business cooperation, (Yiwei lithium energy) first learn the technology and then start to make square by ourselves. I just think its cooperation with ski is not as smooth as the market expected. The two of them are not so friendly. "

By the end of December 10, Yiwei lithium energy fell 0.66% to 66.02 yuan / share.

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