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After relying on Huawei to turn losses into profits, Saicis announced that it will repurchase the equity of its subsidiary in advance.
On the evening of June 11, Saicis announced that its subsidiary Saicis Automotive will invest 1.254 billion yuan to repurchase 55% of Saicis Electric from Jingyun Chuangfu and Saixin Fund. The two investors collectively invested 1.1 billion yuan when they participated in the establishment of Saicis Electric. In addition to paying the investment funds, Saicis also paid additional funding costs of about 6% per year for this repurchase of equity.
At the beginning of 2022, when Saicis's SF5 model was involved in the 'production suspension' controversy, Chongqing State-owned Assets timely cooperated with Saicis and signed a cooperation agreement. After taking the Huawei 'express' and successfully turning losses around, the company fulfilled its repurchase commitment with the State-owned Assets half a year in advance.
On the second trading day after the announcement of the repurchase, Saicis's stock price closed at 85.99 yuan/share, down 0.02% from the previous trading day, with a market capitalization of about 129.8 billion yuan.
Assisted by Chongqing State-owned Assets to fulfill the repurchase commitment in advance.
According to Saicis's announcement, its subsidiary Saicis Automotive will invest 1.254 billion yuan to acquire 55% equity of Saicis Electric. Saicis Electric was jointly funded by Saicis Automotive, Saixin Fund and Jingyun Chuangfu, with the three holding 45%, 15% and 40% respectively. After this acquisition, Saicis Automotive will hold 100% of Saicis Electric.
However, according to the announcement, Saicis Electric is still in a loss state. In the first quarter of 2023 and 2024, the company's operating income was 105 million yuan and 29 million yuan, respectively, with a net loss of 53 million yuan and 11 million yuan, respectively. At the end of the first quarter of 2024, the company's total assets were 2.222 billion yuan and net assets were 785 million yuan.
The reason why Saicis spent more than 1.2 billion yuan to acquire the equity of a company in deficit is due to the 'helping hand' extended by Chongqing State-owned Assets to the company.
Saicis Electric was established at the end of December 2021. At that time, Saicis's production capacity was doubted by the market due to the rumors related to the slowdown of the production of its SF5 model under a disguised suspension. At this moment, Chongqing State-owned Assets reached a cooperation agreement with Saicis. According to the company's announcement, the three parties will jointly invest 2 billion yuan to establish Saicis Electric to build Saicis's intelligent electric vehicle parts assembly project, with Saicis Automotive investing 900 million yuan, Saixin Fund investing 300 million yuan, and Jingyun Chuangfu investing 800 million yuan.
In addition to Saicis Automotive, the other two shareholders of Saicis Electric also have Chongqing State-owned Assets background. Saixin Fund was initiated by Chongqing Development and Investment, a state-owned sole proprietorship enterprise, while the shareholders of Jingyun Chuangfu include Jianxin Trust and two Chongqing State-owned Assets investment funds.
At the beginning of its establishment, Saicis reached an agreement with Chongqing State-owned Assets on the time for the capital to be withdrawn. According to the agreement, Saicis can purchase the equity of Saicis Electric held by investors through private placement within 36 months after the actual payment of the first round of investment funds, or repurchase the relevant equity. When repurchasing, the company will pay an annual interest rate of 6% to Chongqing State-owned Assets.
From the time perspective, the cooperation announcement was made on the evening of January 4, 2022, and Saicis can repurchase the equity prior to January 2025. However, Saicis chose to repurchase in June 2024, half a year ahead of the final deadline. This also means that without considering cash dividends, if Saicis wants to repurchase the above-mentioned equity, it needs to pay not only 1.1 billion yuan of investment funds but also 6% funding cost per year. Calculated based on a 2.5-year investment period, Saicis needs to pay a total of 1.265 billion yuan, which is close to the repurchase amount of 1.254 billion yuan.
Looking at the timeline, Saicis can repurchase the equity within 36 months after the actual payment of the first round of investment funds. Saicis can repurchase equity before the beginning of 2025 at the latest. However, Saicis chose to repurchase it in June 2024, half a year ahead of the final deadline.
This also means that without considering cash dividends, if Saicis wants to repurchase the above-mentioned equity, it needs to pay not only 1.1 billion yuan of investment funds but also 6% funding cost per year. Calculated based on a 2.5-year investment period, Saicis needs to pay a total of 1.265 billion yuan, which is close to the repurchase amount of 1.254 billion yuan.
In the announcement, Saicis also stated that this repurchase of equity is beneficial for reducing the company's financing costs and will not harm the company's and shareholders' rights and interests. In addition, due to the sales agreement's equity sale clause, Saicis Electric has been fully included in the company's consolidated financial statements, and this transaction will not lead to changes in the scope of the consolidated financial statements.
Of course, the ability to repurchase early is also due to Saicis's improved operating conditions. In the first quarter of 2024, Saicis turned losses into profits. The quarterly report shows that the company's operating income was 26.561 billion yuan, a year-on-year increase of 421.76%, and the net profit attributable to the parent was 220 million yuan, an increase of 844 million yuan year-on-year, achieving a turnaround.
After boarding the Huawei "fast track", the company continues to expand production capacity.
Looking back at the development of Chongqing Sokon Industry Group Stock, it can be seen that whether it is due to the SF5's involvement in public opinion turmoil or the achievement of turning losses into profits, it is all thanks to the company's cooperation with Huawei.
Chongqing Sokon Industry Group Stock was founded in 2007. At the beginning, the company was an asset integration platform controlled by the founder Zhang Xinghai brothers, named Xiaokang Limited (later renamed Xiaokang shares). After the establishment, the company integrated the automobile group, Yu'an Group and other automobile, motorcycle, and accessory businesses under the control of Zhang Xinghai, and Dongfeng Xiaokang, a joint venture with Dongfeng Group, also belongs to the company.
In 2016, Chongqing Sokon Industry Group Stock was listed on the main board of the Shanghai Stock Exchange. However, with the intensification of competition in the fuel vehicle market and the company's start of burning money for new energy vehicle technology research and development, the company's performance has continued to decline since 2018. From 2018 to 2020, the company's operating income was 20.24 billion yuan, 18.13 billion yuan, and 14.302 billion yuan respectively, and the net income attributable to the parent company was 106 million yuan, 67 million yuan, and -1.729 billion yuan, respectively.
Against this background, Chongqing Sokon Industry Group Stock urgently needs to "turn over" with external help. During the Shanghai Auto Show in April 2021, the company and Huawei announced their cooperation, and the jointly developed Chongqing Sokon SF5 also officially went on sale. Benefiting from this cooperation, Chongqing Sokon Industry Group Stock's stock price skyrocketed. From April 1, 2021, to June 22, 2021, the company's stock price increased from 23.64 yuan/share to 78.23 yuan/share, an increase of 230.92%, and the market capitalization also increased to 101.5 billion yuan.
However, since the launch of the WENJIE M5 at the end of 2021, the SF5 has stopped accepting reservations for a while, and some car owners who paid a deposit have said that they cannot pick up the car, which has also raised concerns about Chongqing Sokon Industry Group Stock's production capacity. It is precisely under such circumstances that Chongqing Sokon Industry Group Stock chose to "join hands" with Chongqing State-owned Assets. Since then, the company has also frequently expanded its production capacity.
In July 2022, Chongqing Sokon Industry Group Stock completed a 7.13 billion yuan private placement, which also broke the financing record of the A-share electric vehicle industry at that time. According to the announcement, the above-mentioned funds will be used for the development of electrified vehicle models and product platform technology upgrade projects, factory intelligence upgrade and electric drive production line construction projects, user center construction projects, and supplementary working capital.
After this private placement, the company's production capacity is still relatively tight. The 2023 annual report shows that the annual production capacity of the company's new energy vehicle factory is 150,000 vehicles, and in the same year, the company produced 153,700 new energy vehicles, with a capacity utilization rate of 102.49%. In 2024, the sales of the company's new energy vehicles further increased. Thanks to the hot sales of models such as WENJIE M7 and M9, from January to May 2024, the cumulative sales of the company's new energy vehicles reached 156,800, a year-on-year increase of 342.35%.
While helping Chongqing Sokon Industry Group Stock turn losses into profits, the rapidly growing sales also put forward more requirements for the company's production capacity.
In April of this year, Chongqing Sokon Industry Group Stock released a major asset restructuring plan. According to the announcement, the company plans to purchase 100% equity of Longsheng New Energy held by Chongqing Industrial Mother Fund, Liangjiang Development Investment Corporation and Liangjiang Equity Investment and Development Corporation by issuing shares. As the evaluation work has not been completed, the consideration of the transaction has not yet been determined.
The main asset of Longsheng New Energy is the Liangjiang Super Factory, which is mainly used to produce the WENJIE M9 series of new energy vehicles and is one of Chongqing Sokon Industry Group Stock's important production bases. In February of this year, the factory was officially completed and put into production, with an expected annual production capacity of 700,000 vehicles.