Lithium giant Waltma’s financial crisis was originally the founder’s wrong judgment

In February 2016, when Wattmar sold 2.9 billion yuan to Jianruiwo to realize A-share listing, its founder Li Yao would never have expected two years later, the company’s financial situation would make itself "Drowned to the eyebrows."

At present, the situation is really turning too fast. Before that, Wattmar was still a black horse enterprise in the Ningde era and BYD's power battery. The annual revenue increased by more than 160%, which is called the performance myth in the capital market, and since April 1 In the half month of the announcement of the company’s debt default, everything has a chain effect like the falling dominoes.

Jianruiwo can announce that on April 2, 13 bank accounts under Waterma’s name were frozen by the court, and by April 12, the number of frozen accounts was increased by another 8. The total amount of freezing was 63.32 million yuan. In addition, following the judicial freeze on the 33,333,720 shares of Li Yao's pledge on March 27, the shareholders of Waterma's listed company, Jianruieng, Guo Hongbao, and Li Yao, were asked by several securities companies to repurchase the pledge stocks in advance. The supplement pledges more stocks, and the latest announcement on April 12 shows that once Guo Hongbao’s pledged stocks are all disposed of in breach of contract, they will endanger the status of the person in charge.

In terms of the capital market, on April 9, Jianruiwo was able to announce the debt restructuring, and also received a total of more than 5% of the company’s shareholders, Tong Xinjian, Tong Jianming, Huo Jianhua and Sun Xisheng notice of the reduction plan. More obviously, since the resumption of trading on April 2, the company's share price has fallen for four consecutive days. As of the date of publication, the market value has evaporated by more than 7 billion yuan.

Even though Li Yao and Guo Hongbao have begun to respond positively and respond to this crisis, the aftershocks caused by the pressure on the capital chain seem to continue in Waterma and its parent company, Kenrui. However, from the company's interviews with the company including Watmar's vice president, Jianruieng general manager Zhong Mengguang and Li Yao, they still want to send a positive signal to the market: the company's current problem is For the wrong judgment of the market environment, the short-term cash flow problem will be solved by introducing strategic investors and expanding development and storage energy.

On April 16, Time Weekly reporter called Li Yao and Zhong Mengguang, hoping to understand the current situation of the company's financial solutions, but failed to connect. An official of the Investor Division of Jianruiwo told the Times Weekly that in repaying debts, the most important thing is to solve the bills payable. Among them, the progress in negotiating with the suppliers is not bad, and the bills payable by the banks are also According to the Ministry, I hope to be able to repay the loan.

In addition, the person said that the company mentioned in the recent exchanges with investors - the plan to launch the ternary lithium battery production line this year is actually the company's previous planning, but whether the plan is on schedule, has not yet been determined, "currently we More energy is still on solving the debt problem."

No matter how the situation finally develops, looking back now, a "star enterprise" in the power battery industry, from "rise" and "endangered", can always bring a lot of thinking to the industry.

The cash pressure behind the performance myth

In recent years, with the explosion of China's new energy vehicle market, the power battery industry has also entered a period of rapid growth. The domestic market has gradually formed several leading power battery companies such as Ningde Times, BYD and Waterma.

Different from the Ningde era, which is still in the IPO, and the BYD Battery Division, which grew up inside the BYD Group, the rise of Waterma will start from an acquisition in early 2016.

In February 2016, the Jianrui Fire Fighting Announcement, which had not been renamed as Jianrui Woneng, announced that the company had acquired 100% equity of the company it held from all shareholders of Waterma by way of issuing shares and paying cash. The consideration was 5.2 billion yuan, and the value of Waterma also increased by six times from the net assets of only 900 million yuan at that time.

This shocking industry merger was called "snake swallow" by the industry at the time. It is understood that Watmarma, which was established in 2002, is the first power lithium battery enterprise in China that successfully developed lithium iron phosphate new energy vehicle power battery, automobile starting power supply, energy storage system solution and took the lead in realizing large-scale production and batch application. First, in the full fiscal year before the acquisition, its revenue reached 2.642 billion yuan, and in 2015, Jianrui Fire, which was caught in the loss of fire equipment production and sales business, its revenue was only 581 million yuan.

In addition to seeking new business growth points, the high-priced mergers and acquisitions of Jianrui Firepower are valued by the potential of the new energy vehicle. It is reported that, according to the M&A agreement, the founder of Waterma, Li Yao, is the compensation obligor of the performance commitment. Since January 1, 2016, Waterma has been as of December 31, 2016, December 31, 2017, and 2018. The accumulated net profit attributable to the parent company after deducting non-recurring gains and losses on December 31 of the year is not less than 403.5 million yuan, 909 million yuan, and 1.518 billion yuan respectively.

As a result, the two hands open the highlights of the time.

The annual report of Jianrui Woneng and the audit report of Waterma in 2016 show that Waterma has developed rapidly after the completion of the merger, and its operating income is 745 million yuan in 2014 and 2.642 billion yuan in 2015. In 2016, it expanded to 3.819 billion yuan and exceeded 10 billion thresholds in 2017, reaching 10.181 billion yuan. The revenue growth in 2016 and 2017 was 44.54% and 166.6% respectively.

According to the statistics of the Higher Industrial Research Institute (GGII), in the first three quarters of 2017, the total installed capacity of Waterma batteries ranked among the top four in the world. In 2017, it ranked among the top three in the country, ranking behind the Ningde era and BYD. The bright results made Watmarta the focus of the industry.

However, in the process, Waterma hides the "crisis." As early as 2016, Waterma merged into the risk warning of the first annual report of the company, the parent company pointed out that due to the rapid growth of the Waterma business in the second half of 2016, the company increased the investment in fixed assets and raw materials. With the increase in loan payables, notes payable and short-term borrowings, Watermar's gearing ratio is significantly higher than the average of listed companies in the same industry. The reason is that Waterma is a non-listed company, its ability to pass equity financing is limited, mainly relying on debt financing channels to raise funds, and second, Waterma's liabilities are mainly based on current liabilities.

As of the end of 2016, Watermar's current liabilities accounted for 78.54% of total liabilities. Among them, the ratio of short-term borrowings to total liabilities was 18.19%, and the ratio of notes payable and accounts payable to total liabilities was 53.23%, while the above three items accounted for 71.42% of total liabilities. The main content of the debt.

In addition, as the business volume of Waterma continues to grow, the company's accounts receivable also increased significantly. As of December 31, 2016, the net amount of accounts receivable was 4,468,399,400 yuan, compared with the previous year. It has increased by 255.66%. In 2015, 2016 and the company's net accounts receivable accounted for 28.33% and 31.02% of the company's total assets (excluding goodwill), which constituted an important part of the company's assets. As of the third quarter of 2017, the company's accounts receivable was 9.931 billion yuan, exceeding the revenue of 8.6 billion yuan in the statistical period.

This eventually became one of the reasons for the problem with the Waterma Capital Chain.

The road to self-help is still difficult

On April 9, Mr. Zhong Mengguang, Vice President of Waterma and General Manager of Jianrui Woeneng, bluntly interviewed by many media, the misjudgment of the policy situation and the rapid expansion of the company led to the current cash flow of the company.

He said: "There are three reasons. One is to underestimate the impact of the state's policy adjustment on the electric vehicle industry in 2017, and the impact on our sales market. The impact of 30,000 kilometers is indeed very large, directly affecting the company's fund collection process; Second, the company's optimistic attitude towards the industry has increased the speed of expansion, building factories and comprehensive technical reforms in various places, hoping to make up for the loss of profits by means of scale expansion. Third, the company has long used short-term debt long-term investment to expand its business scale and encounter The money is tightening and there are some difficulties in funding."

It is understood that on December 30, 2016, the Ministry of Finance, the Ministry of Science and Technology, the Ministry of Industry and Information Technology and the National Development and Reform Commission jointly issued the "Notice on Adjusting the Financial Subsidy Policy for the Promotion and Application of New Energy Vehicles." In the new regulations, non-individual purchases of new energy vehicles require 30,000 kilometers of operation before they can apply for subsidies.

The direct result of the above policies is that, in particular, the traditional power battery manufacturers that started with lithium iron phosphate have significantly declined in profit growth and return speed, while Waterma, which is mainly supplied by passenger cars and logistics vehicles, is the main supplier also affected. However, from the past two months, Kenrui can also try to release a positive signal in response to this financial crisis.

On April 12, in the letter of reply to the Shenzhen Stock Exchange, Jianrui said that the company will solve the supplier's bills payable and accounts payable in the form of inventory materials, batteries and vehicles, and fixed assets. It is expected to repay 2.8 billion yuan of accounts payable or bills payable; on the other hand, after the coordination of the China Banking Regulatory Commission, on 18 April, 18 financial inter-institutions will be established to establish the Waterma Creditor Finance Committee, and strive to extend the existing bank's 5.6 billion loans. In the year, guaranteed interest is paid on schedule and any written agreement has been signed so far.

In addition, while tightening the collection of customers' arrears, the purchase, and sale of receivables, the realization of fixed assets, and the equity financing of subsidiaries, the company's shareholders and management actively introduce strategic investors to attract capital inflows and enhance fluidity.

However, in order to truly solve this dilemma, Jianruiwo still needs to face a lot of difficulties. First of all, in terms of inventory realization, Wang Chao, secretary general of China Battery Alliance, pointed out to the reporter of Time Weekly that from the analysis of the financial report of Jianrui Woneng, if the operating income of Waterma is mainly reflected in the form of credit sales, the payment of its customers Insufficient capacity, and the development of new customers takes time. I am afraid that there will be certain difficulties in the rapid flow of existing inventory to form a cash flow.

In terms of introducing strategic investors, Jianrui Wooneng’s announcement revealed that the company had conducted serious research and demonstration work on the matter with relevant strategic investors and intermediaries. However, as the strategic investor and Mr. Guo Hongbao and Mr. Li Yao did not reach an agreement on the relevant cooperation plan, Mr. Guo Hongbao and Mr. Li Yao decided to abandon the cooperation with the strategic investor after friendly consultation with the strategic investor. .

Alliance mode and industry shuffle

The industry generally believes that the subsidy of new energy vehicles has been one of the reasons for the financial crisis of the company, but in the half-month of the sky, like Waterwheel, perhaps with the "Waterma Alliance" The mode is related to the product route.

Wang Chao told the Times Weekly reporter that the contraction of the new energy vehicle subsidy policy is not necessarily directly related to Wattma’s debt default. From the energy report, it can be seen that compared with the Ningde era and Yiwei Lithium Energy Accounts Receivable The proportion of operating income is at a relatively benign level. The proportion of accounts receivable by Jianruiwo has greatly exceeded the revenue, and the lack of payment ability of customers has led to the problem of the tight capital chain.

It is understood that Waterma's main customers are the members of the "China Waterma New Energy Automobile Industry Innovation Alliance", in which the company has established its joint industrial chain with its own power battery business as its core, the model of downstream companies. It is reported that this model has once become a powerful engine to promote Walter's business performance, but it also casts a shadow of related transactions such as “reverse customization” in the industry.

According to a recent research report by Guojin Securities, Waterma's main lithium iron phosphate product will face further differentiation of ternary batteries. "The power lithium battery industry is in the semi-final stage, the ternary technology path is clear, the big-to-big picture is more and more clear, and the leading enterprises with technical advantages and cost control capabilities will win in the duel, whether from the perspective of subsidy policy or downstream demand. Look, this year's high endurance and high energy density will be the core of the car's structural changes, and the ternary technology path is clear."

The report further analyzes: "For Wattmar's long-term cash flow pressure, the company's strategic layout announced in the ternary and energy storage field at the beginning of the year may be the only way to crack at this stage, the company's ternary technology The speed of progress, the speed of product enhancement, and the stability of downstream sales channels will all affect the company's ability to pay back. In the long run, whether the company's energy storage layout can make substantial progress and breakthrough will become one of the focuses. ""

In this regard, Wang Chao also pointed out that, in fact, since 2016, the formation of effective installed lithium battery companies is gradually decreasing, mainly because the new energy subsidy policy is tilting towards high-end production capacity. On this basis, backward production capacity gradually exiting the market is a normal phenomenon and an inevitable trend.

A senior person in the lithium battery industry analyzed with the reporter of Time Weekly that the future will not only be in the field of power batteries but also a new reshuffle in the whole vehicle companies.

It is worth noting that on April 14, Jianruiwo said on the investor interaction platform that the company plans to launch a ternary lithium battery production line this year and increase research and development in this technology field. Prior to this, on April 3, Waterma signed a "sales contract" with Xi'an Zhongshang Intelligent Technology Co., Ltd., and sold 1300 MW of energy storage batteries to the partners in the next year, with a total selling price of 975 million yuan.

The page contains the contents of the machine translation.