“Investor Network” Zhang Wei
Entering 2024, domestic NEV companies are fiercely fighting a price war. The main reason has a lot to do with the “dive” in lithium battery prices in 2023. However, there are always two sides to the matter. The price reduction of lithium battery materials has given new energy vehicle companies the motivation to wage a price war, but it has also made many lithium companies feel pressured. Fluorine chemicals manufacturer Yongtai Technology (002326.SZ) is one of them.
On January 30, Yongtai Technology released a performance forecast. It is estimated that net profit due to mother in 2023 will be a loss of 450 million yuan to 650 million yuan, a serious decrease from the 2022 profit of 554 million yuan. Yongtai Technology said that product market prices have dropped a lot, leading to a marked decline in sales revenue and gross sales margin, which ultimately led to huge losses in performance.
Meanwhile, Yongtai Technology is going to court with downstream customers.
From the end of 2023 to the beginning of 2024, mutual lawsuits between Yongtai Technology and Guoxuan Hi-Tech (002074.SZ) subsidiaries attracted much attention. Whoever wins the case in the end will have to wait for a ruling. However, the lawsuit with Guoxuan Hi-Tech's subsidiary caused Yongtai Technology to be frozen for more than 200 million yuan. Whether this will affect Yongtai Technology's operations remains to be seen.
Bank funds have been frozen at 203 million yuan
To clarify the cause of the commercial dispute between Yongtai Technology and Guoxuan Hi-Tech's subsidiary, we must start with the lithium battery industry chain.
According to reports, the lithium battery materials produced by Yongtai Technology are mainly lithium hexafluorophosphate. Lithium hexafluorophosphate is a type of lithium salt. Its appearance is a white crystalline powder. Lithium hexafluorophosphate is an important component of the electrolyte, accounting for about 40% of the total cost of the electrolyte. Electrolytes collaborate with materials such as positive and negative electrodes to improve battery performance.
In recent years, new energy vehicles have developed rapidly, and demand for power batteries has soared, leading to strong supply and demand for electrolytes. In 2023, domestic electrolyte shipments will be 1.11 million tons, of which nearly 70% will be used for new energy power batteries.
At the beginning of 2022, the lithium hexafluorophosphate market was booming. Feidong Guoxuan New Materials Co., Ltd. (hereinafter referred to as “Feidong Guoxuan”), a subsidiary of Guoxuan Hi-Tech, signed a “Material Purchase Agreement” with Yongtai Technology. Feidong Guoxuan purchased lithium hexafluorophosphate and vinyl carbonate from Yongtai Technology, and agreed on terms such as minimum purchase amount, purchase price, deduction of prepaid security deposit, and contract period.
In January 2022, Feidong Guoxuan paid a security deposit of 200 million yuan to Yongtai Technology. In June 2022, Yongtai Technology agreed to Feidong Guoxuan to continue to perform the contract by entrusting procurement from Hefei Qianrui Technology Co., Ltd. (Feidong Guoxuan's related party, hereinafter referred to as “Qianrui Technology”).
On December 19, 2023, Yongtai Technology issued an announcement stating that Feidong Guoxuan (Defendant 1) and Qianrui Technology (Defendant 2) were sued for breach of contract. As for the reason for the lawsuit, Yongtai Technology said that for orders with Feidong Guoxuan and Qianrui Technology, Yongtai Technology has already shipped them, and Feidong Guoxuan and Qianrui Technology have not paid 102 million yuan for the purchase.
Meanwhile, Feidong Guoxuan and Qianrui Technology placed orders, Yongtai Technology completed preparations, and Feidong Guoxuan and Qianrui Technology owed 128 million yuan for the purchase. Yongtai Technology also stated that according to the agreement, the minimum purchase amount for lithium hexafluorophosphate is 4,500 tons, with an actual purchase of 1,472 tons; the minimum purchase amount of vinyl carbonate is 660 tons, with an actual purchase of 139 tons. Yongtai Technology said that the above actions by Feidong Guoxuan and Qianrui Technology have caused an actual loss of 273 million yuan in lithium hexafluorophosphate sales (minimum uncompleted procurement amount* market price difference).
In the end, Yongtai Technology requested Feidong Guoxuan and Qianrui Technology to pay 311 million yuan on the basis of “unpaid purchase price (102 million yuan) + unexecuted purchase loss (RMB 273 million) + overdue purchase interest (RMB 9.33 million)”.
In the same announcement, Yongtai Technology also mentioned that in April 2023, Feidong Guoxuan commissioned a lawyer to send it a letter requesting the refund of the advance deposit; on December 8, 2023, Feidong Guoxuan commissioned a lawyer to send another letter requesting Yongtai Technology to fully refund the security deposit on the premise that all orders have been executed.
On January 9 of this year, Yongtai Technology issued an announcement stating that after receiving a civil lawsuit, Feidong Guoxuan requested the court to order Yongtai Technology (defendant) to return the security deposit and loss of occupied funds totaling 203 million yuan. Feidong Guoxuan's lawsuit was based on the fact that after the agreement was signed, both parties settled the purchase price, and the prepaid deposit was not deducted; at the same time, the two parties agreed that the contract period would be June 30, 2023, which has already reached its end, but Yongtai Technology has not refunded the prepaid deposit.
Feidong Guoxuan may have already acted before filing a civil lawsuit.
In another announcement issued on December 19, 2023, Yongtai Technology said that the company discovered that some bank account funds had been frozen, namely: CCB Linhai Duqiao Branch (basic account) frozen 36.94 million yuan and CCB Linhai Branch (special fund raising account) frozen 166 million yuan, for a total of 203 million yuan. As for the reason for the freeze, Yongtai Technology believes that the initial judgment may be due to a property preservation application submitted by Feidong Guoxuan and the company to the Hefei Intermediate Court over a sales contract dispute.
In short, the two sides are holding their own opinions on this no-head case. Currently, there are no new developments in the mutual lawsuit between Yongtai Technology and Feidong Guoxuan. In the end, what is right and wrong is also subject to the court's decision, and relevant investors will continue to pay attention.
The loss is expected to exceed 400 million in 2023
In addition to the fact that bank account funds were frozen due to a contract lawsuit with Guoxuan Hi-Tech's subsidiary, Yongtai Technology is also facing quite a few problems.
First, there is a decline in performance.
According to the quick performance report, Yongtai Technology expects a loss of 450 million yuan to 650 million yuan in net profit to mother in 2023. According to Wind information, Yongtai Technology made a profit of 554 million yuan in 2022, the most profitable year since its listing. As a result, 2023 fell into huge losses, and there was a big contrast between before and after.
As for the reason for the huge profit loss, Yongtai Technology mentioned three points: first, the main business revenue scale and product gross margin have declined a lot; second, daily operating costs and expenses have a certain degree of rigidity in the short term; third, asset impairment losses have increased a lot over the same period, and preparations for the inventory price drop have increased by 91 million yuan over the same period last year.
According to reports, the main raw material for lithium hexafluorophosphate is lithium carbonate. Since daily operations require early procurement of raw materials, Yongtai Technology stocks many raw materials at high prices, and when selling products (lithium hexafluorophosphate sales), the price of lithium carbonate continues to decline in 2023, which ultimately led to Yongtai Technology's gross margin loss in sales margin for lithium battery products in 2023. Yongtai Technology also mentioned that in 2023, downstream demand in the pharmaceutical and plant protection sectors fell short of expectations, leading to a drop in product prices, and a year-on-year decline in sales revenue and gross profit scale.
Simply put, sales of Yongtai Technology's main products declined, but expenses were not reduced. Coupled with preparations for price drops, this led to serious losses in 2023.
According to the 2023 Interim Report, Yongtai Technology's revenue mainly comes from trade, pharmaceuticals, lithium batteries and other materials, and plant protection. The four major sectors account for 37%, 29%, 21%, and 14% of revenue, respectively. Judging from the revenue composition, the revenue contribution rate of lithium battery materials has not yet had an absolute advantage.
Looking forward to the future, Yongtai Technology said it will continue to focus on its core business, promote continuous improvement of process technology, continue to reduce production costs, increase product market share, further optimize the industrial chain layout, give full play to the advantages of the vertically integrated industrial chain, and enhance the company's profitability and overall competitiveness.
Second, Yongtai Technology has a large external guarantee amount.
According to an announcement on March 13, Yongtai Technology provided a credit guarantee for its wholly-owned subsidiary Shanghai Nonghui Chemical Co., Ltd. with a principal amount of 102 million yuan (52 million yuan + 50 million yuan). Yongtai Technology said that as of the date of this announcement, the cumulative guarantee balance for subsidiaries was 2,435 billion yuan, accounting for 71% of the company's most recent audited net assets.
Finally, Yongtai Technology's major shareholders have a high share pledge ratio.
According to the enterprise survey equity information, the first two shareholders of Yongtai Technology were natural person shareholders. Among them, Wang Yingmei holds 15.79% of the shares. She is the chairman and largest shareholder of Yongtai Technology. The second-largest shareholder is Renbao, with a shareholding ratio of 12.19%, and the third-largest shareholder is Citibank, National Association, with a shareholding ratio of 4.07%. With the exception of these three shareholders, Yongtai Technology's other shareholders all hold less than 1% of their shares.
Currently, the shares held by the two previous shareholders of Yongtai Technology have all been pledged in high proportions. According to Wind information, as of February 8, the number of shares that Wang Yingmei had not released was 76.33 million shares, accounting for 53% of her total shareholding; the number of shares held by Gobao was 45.54 million shares, accounting for 41% of her total shareholding.
If calculated using the weighted average reference price on the starting date of the pledge, the pledged shares of the two major shareholders of Yongtai Technology fell by 33% and 59% respectively as of March 15. However, with both of their shares pledged, it remains to be seen whether the two major shareholders can lead Yongtai Technology to turn a loss into a profit. In the secondary market, as of the close of trading on March 15, Yongtai Technology reported 10.54 yuan/share, down 10% in 2024, and the company's market value was 9.6 billion yuan. (Produced by Thinking Finance) ■