Zhongli Group's 10 billion acquisition case speeds up

After bidding farewell to Changxin Technology, Shenzhen BAK power battery Co., Ltd. (hereinafter referred to as "BAK Power") and Jiangsu Zhongli Group Co., Ltd. started to accelerate the acquisition of 10 billion Yuan.

On May 4, Zhongli Group announced that the company intends to acquire a 3.41% stake in BAK Power held by Tibet Haoze Trading Co., Ltd. with a self-raised fund of RMB 350 million. This is the third capital increase after Zhongli Group announced the acquisition of BAK Power at the end of February. As of this announcement, its shareholding BAK Power reached 8.29%, becoming the fourth largest shareholder of BAK Power.

It can be seen that when Zhongli Group entered the start of the business strategy upgrade, the largest-scale merger and acquisition case of the cable-photovoltaic enterprise cross-border joint ternary lithium-power battery enterprise will be accelerated, and the competition is intensified. For BAK Power in the power battery industry, it will also build and dock the capital market bridge through mergers and acquisitions.

In this regard, Zhongli Group said in the announcement: "The further acquisition of Bicker Power's equity is conducive to the company's expansion of the influence of the comparative power, and the in-depth layout of the new energy power battery industry is necessary to realize the company's long-term development strategy of the new energy industry behavior".

Zhongli expands new energy business

Time Weekly reporters read the announcement and learned that before the capital increase, Zhongli Group increased its capital by 300 million Yuan and 200 million Yuan to BAK Power on February 7 and April 3, respectively, and accordingly won the bid of 2.93. % and 1.95% equity, and as of this announcement, the capital increase is 8.29%.

Accordingly, according to the latest shareholder list of BAK Power, Zhongli Group has become the fourth largest shareholder, second only to the largest shareholder Shenzhen BAK Battery Co., Ltd. (holding 33.37%) and Tibet Haoze (17. 66%) and Changxin Technology (8.34%). It is worth noting that, except for the first increase in holdings, the Zhongli Group subsequently increased its holdings from the hands of the second largest shareholder of BAK Power, Tibet Haoze.

However, prior to this, Zhongli Group disclosed the “Notice on the Suspension of Significant Events” on February 3, and announced on February 24 that the company plans to spend 10 billion Yuan to acquire BAK Power shares and has already cooperated with Shenzhen City BAK Battery Co., Ltd. and Tibet Haoze Trading Co., Ltd. signed the "Equity Purchase Intention Agreement".

On the one hand, it launched the largest acquisition in the power battery industry in recent years, and on the other hand, it increased its capital three times in four months. In the industry, Zhongli group bet on BAK power with such a large amount, which shows its determination in the layout of new energy business.

It is understood that Zhongli Group was formerly known as Changshu Tangshi Cable Factory. It was established in 1988. The company is mainly engaged in the manufacturing of optical and cable industry, photovoltaic new energy and special communication equipment. The “Zhongli” and “Tenghui” brands were established through independent research and development, production and self-built marketing channels. According to public data, Zhongli Group's 2017 consolidated statement of the company achieved operating income of 19.415 billion Yuan, an increase of 71.94% over the same period of the previous year. The net profit attributable to the parent company was 306 million Yuan, an increase of 311.49% over the same period of the previous year.

It is worth noting that the increase in revenue of Zhongli Group is largely due to the photovoltaic industry, especially the development of poverty alleviation power stations (EPC+ distributed). According to the 2017 annual report of Zhongli Group, the PV industry's annual revenue was 11.122 billion Yuan, which is far higher than the revenue of the communications industry, special communication equipment, optical fiber and other industries at a ratio of 57.29%. Among them, the revenue of poverty alleviation photovoltaic power stations was 3.087 billion Yuan, accounting for 15.9%, second only to the largest proportion of photovoltaic cells and components (24.17%).

However, the photovoltaic industry has also brought about an increase in the company's accounts receivable while achieving the outstanding performance of Zhongli Group. On March 5th, the Shenzhen Stock Exchange issued a letter of inquiry on the high receivables of Zhongli Group in 2017. In response, the Zhongli Group’s reply on March 13 pointed out that Zhongli Group’s large amount of accounts receivable was 5.033 billion Yuan, and the accounts receivable remained at a high level because of the unfinished work of “disappearance” in 2017 and the long recovery period of photovoltaic poverty alleviation projects.

Although Zhongli Group stated in the announcement that due to the generally long recovery period of PV power plants, it is reasonable to maintain a high level of accounts receivable, but the production capacity of the entire photovoltaic industry has expanded rapidly, and local overcapacity and industrial chain development have not occurred. At the moment of equilibrium and other phenomena, Zhongli Group obviously does not want to put the company's performance growth only in "one basket."

To this, the group in 2017 in the annual report said that 2018 is the company's business strategy to upgrade the launch of the years, companies in the communications, do best and stronger on the basis of the photovoltaic industry plates, continue to increase investment in new areas such as new energy power battery, actively promote the enterprise's business extension and industrial upgrading, around the "industry, capital, brand, innovation" four dimensions steady.

Bick Power twists and acquisitions

However, the restructuring of Zhongli Group and BAK Power has attracted the attention of the industry. Apart from the cross-border layout of photovoltaic cells in photovoltaic companies and the considerable scale of restructuring funds, of course, because of the dramatic drama in this restructuring the protagonist - the twists and turns of the merger of BAK Power.

It is reported that in 2016, the wholly-owned subsidiary of Lihe has planned to invest 300 million Yuan to participate in the capital increase of BAK Power. After the capital increase, the company will hold a 3.33% stake in BAK Power. However, in view of the fact that the parties failed to reach an agreement on the details of the cooperation, the company intends to terminate the investment in BAK.

In March 2017, Changxin Technology disclosed plans to acquire RMB 77.5 billion for the 75% stake in BAK Power. On the evening of January 30 this year, Changxin Technology announced that in view of the new situation in the new energy vehicle industry and the adjustment of the state's subsidy policy for new energy vehicles, the company decided not to initiate restructuring and capital increase.

In fact, as early as April 2016, Changxin Technology said at the 2015 performance briefing: “There is a plan to reorganize BAK Power in theory after the node on August 30, 2016. The two sides are currently reorganizing. The relevant terms have basically reached a consensus, and it is expected that the company will acquire BAK-related power and battery PACK-related assets in the form of 'share + cash' payment. The goal is to achieve results in 2016."

Although, from the current situation, Changxin Technology has to say goodbye to BAK Power for the time being, but the reason why Lihe, Changxin Technology and Zhongli Group are in the same phase of BAK Power is nothing more than the future of power battery promising prospects. In fact, as the current hottest ternary power battery technology leader and the most active expansion company, BAK Power, which is in the power battery outlet, is not unattractive for capital.

It is reported that BAK Battery is a leading international new energy enterprise integrating lithium-ion battery, electric vehicle and battery recycling. BAK Power is one of its businesses, with Zotye, Chery, BMW Brilliance, Geely, FAW, Yutong and other car dealers have a cooperative relationship.

According to the data of the third-party organization Lithium Research, in 2017, the Li Ke lithium battery installed 1.5GWh, accounting for 4.34% in the domestic market, ranking fifth, second only to CATL, BYD, Waterma, Guoxuan Hi-Tech. In 2016, BAKER achieved revenue of 2.391 billion Yuan and net profit of 451 million Yuan. In the first three quarters of 2017, it achieved revenue of 1.641 billion Yuan and net profit of 277 million Yuan.

In addition, according to the “Five-Year Development Strategy” disclosed in the 2017 BAK 15th Anniversary Celebration, BAK’s strategic development goal by 2020 is to become the industry leader of the green lithium battery eco-chain and enter the comprehensive strength of China’s lithium-ion battery enterprises. At the same time, BAK proposed a product expansion plan that is compatible with the market, achieving 8GWh capacity in 2017 and 15GWh capacity deployment by 2020.

It can be seen that Zhongli Group has successively increased its capital, BAK Power, and is aiming at the core sectors and core enterprises that are important in the development of new energy vehicles in the future. The continued overweight will help them finally win this strategic highland. For BAK Power, in the Ningde era lightning IPO, the power battery industry is further concentrated, the support of the capital market, BAK Power, will reserve more ammunition preparation industry in the big reshuffle battle.

However, it is worth noting that the latest progress of the restructuring disclosed by Zhongli Group on May 4 this year shows that “the major asset restructuring plan is still in the process of further demonstration, there is still significant uncertainty”.

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