Jianrui Wo can make a huge loss of 3.7 billion in 2017

On the evening of April 26, Kennedy released its annual report for 2017, which achieved revenue of 9.66 billion yuan for the year, an increase of 152.88 billion yuan over the same period last year. However, the net profit was -3,684 million yuan, a decrease of 966.82 yuan from the same period last year.

Kennedy also released the report for the first quarter of 2018. Due to the decrease in sales orders and the decline in business volume, the operating income in the first quarter was 1.17 billion yuan, a year-on-year decrease of 59.88 billion yuan; The net profit is -319 million yuan.

Kennedy said that the reason for the loss was due to the adjustment of the National new energy industry policy subsidies, the rapid growth of subsidiary Wotema's business expansion, the slow return of accounts receivable, and the tight capital chain, resulting in subsidiary Wotema's net profit. Did not reach expectations.

In July 2016, Jianrui fired 5.2 billion yuan to acquire the Waterma transaction and officially changed its name to Jianrui Woneng. The company's main business shifted from the original fire equipment and fire engineering business to new energy vehicles and power batteries. According to public information, the company achieved operating income of 4.467 billion yuan in 2016, a year-on-year increase of 668.45%; net profit of 425 million yuan, an increase of 1100.42%. In the first half of 2017, the company achieved operating income of 6.066 billion yuan, a year-on-year increase of 2618.5%, and a net profit of 558 million yuan, a year-on-year increase of 43772.27%.

However, in the second half of 2017, Wotema's business volume continued to grow while accounts receivable also increased significantly.

According to the report, Wotema's net accounts receivable as at 31 December 2017 amounted to $829.3 million, an increase of 177.20 percent over the previous year. Although Wotema's downstream customers are mostly well-known domestic vehicle manufacturers, the capital strength is strong and the credit situation is good, but the return situation is not good, and downstream customers have cash flow and payment difficulties.

Debt is also a major problem that Kenrui can face. According to the report, as of March 2018, the company's major liabilities were 21.238 billion yuan, of which 10.09 billion yuan were notes payable, 2,221 billion yuan were accounts payable, 4.474 billion yuan were borrowed by banks, 2.593 billion yuan were long-term accounts payable from financing leases, and 332 billion yuan were borrowed by non-financial institutions. Shareholders borrowed 1.59 billion yuan. The company's overdue debt was 1.998 billion yuan, mainly for bills payable and bank loans.

As of the end of March 2018, the company's operating rate was about 20 %, and some production subsidiaries were suspended, and the demand for materials was reduced. At the same time, the supplier's payment conditions are also more stringent than before, and it is only under the condition of full payment that normal supply can be maintained.

In addition to financial factors, Wotema also made mistakes in the selection of technical routes. Wotema has always adhered to the technical route of lithium iron phosphate power cells. The developed lithium iron phosphate power cells are characterized by high safety, rapid charging, low-temperature resistance, and long life. In 2017, 32700-6 .5 Ah, 7.0 Ah, and 7.3 Ah was developed on the basis of 32650-6 .0 Ah. The single energy density reached 150 Wh/Kg, 160 Wh/Kg, and 165 Wh/Kg, respectively. The cycle of life exceeds 4,000 times. However, the latest subsidy policy introduced in early 2018 clearly favors high-energy-density power battery products, and the share of lithium-ion batteries in the market has increased.

The report analyzes several current characteristics of the power battery industry.

1, power battery companies cost pressure has increased dramatically. Affected by the above-mentioned factors such as the decline of the financial subsidies for new energy vehicles and the increase in the threshold of the recommended catalog, lithium-ion enterprises face the dilemma of "pushing down pressure", and the corporate gross profit rate has dropped significantly year-on-year.

2, power battery enterprise capital pressure is huge. First, pressure from "long periods" and receipts. Because terminal car companies are often in a relatively strong position, power battery companies will generally bear the pressure of long account periods in order to obtain orders. If other companies do not follow suit, they will be passive in market competition.

3) Structural overcapacity is evident. China's power battery production capacity has reached 101 GWh in 2016 and will reach nearly 250 GWh in 2020. In terms of demand, there are only 27 GWh and 37 GWh in 2016 and 2017, respectively, and only 101 GWh in 2020. The overall supply is several times the demand. The structural overcapacity of the industry is serious and the competition among the industry is intensified. Adding to the dual pressure of upstream supply and downstream economic demand, the price of power batteries has accelerated. In 2017, the price of power batteries has dropped by more than 28 percent year-on-year, reducing the profit space of power battery manufacturers.

The report said that in 2018, the company will focus on operating a business with a high return rate to ensure the normal turnover of funds and achieve the healthy development of the company. In the future, Wotema will rely on his research and development and market experience accumulated in the lithium iron phosphate new energy power battery route to consolidate his market position. At the same time, it will also further extend the product to the R&D, production, sales, and energy storage market layout of ternary power batteries. On the other hand, the company will create new profit growth points through the integration of upstream lithium resources.

The report also revealed that the energy density of the 32700-6 .5 Ah, 7.0 Ah, and 7.3 Ah three lithium iron phosphate power batteries developed by Wotema can reach a maximum of 135 Wh/kg, and they have all been put into production one after another. In the future, it will continue to develop lithium battery products with a system energy density of 140 W/kg or more. In the research and development of high-specific energy all-solid battery, the construction of the project team and the construction of the solid-state battery test center have been completed, and the preparation process of the solid-state battery has been initially determined.

In 2017, the company plans not to send cash dividends, do not send red shares, and do not increase capital stock with Provident fund.

The page contains the contents of the machine translation.