“Science and Technology Innovation Board Daily”, September 6 (Reporter Yu Jiaxin) Competition for power batteries has intensified, and many companies have increased their expansion of consumer battery business.

On September 5, Yuchen Intelligence announced that the company and natural persons Zhang Hua (transferor 1) and Hou Xianlu (transferor 2) signed the “Conditional Equity Acquisition Agreement for Shenzhen Jiayang Battery Co., Ltd.” with respect to Shenzhen Jiayang Battery Co., Ltd. (hereinafter: Jiayang Battery) to purchase 6 million yuan of the 10 million yuan registered capital of the target company held by transferor 1 and transferor 2 by means of cash payment, which is 60% of the shares of the target company. Among them, it is proposed to purchase an investment of 5.93 million yuan (or 59.3%) of the registered capital of the underlying company held by Zhang Hua and an investment of 0.07 million yuan (or 0.7% of the shares) of the registered capital of the underlying company held by Hou Xianlu.

According to the announcement, through this acquisition of shares in the target company Jiayang Battery, Yuchen Intelligence plans to develop a consumer lithium-ion battery PACK assembly business.

According to the Asset Appraisal Report, the assessed value of the target company was 328.06 million yuan as of the evaluation reference date. Based on the assessed value, the parties negotiated a final transaction price of 0.15 billion yuan for 60% of the shares in the target company of this transaction.

The main products of Yuchen Intelligence are intelligent lithium-ion battery equipment and intelligent manufacturing equipment for consumer electronics, which are upstream in battery production. Since 2023, due to factors such as increased competition in the lithium battery equipment industry, its performance has continued to decline. In the first half of this year, revenue was 0.291 billion yuan, a year-on-year decrease of 47.39%; net loss was 45.2658 million yuan, a year-on-year decrease of 231.33%.

The acquired Jiayang Battery was established in 2006, and the main business of its branches is R&D, production and sales of battery packs for consumer electronics products.

The announcement mentioned that Jiayang Battery and Yuchen Smart now belong to the same lithium-ion battery industry chain. Jiayang Battery is on the battery application side, and Yuchen Smart is upstream on the battery production side. “This merger and acquisition is based on Jiayang Battery's comprehensive strength in the consumer battery PACK field, and can form strategic collaboration with the company in terms of technology, talent, products, supply chain, etc.” According to Yuchen Intelligence.

The “Science and Technology Innovation Board Daily” reporter noticed that going overseas may become one of the key directions of Yuchen's intelligence efforts. As it stated in the announcement, Jiayang Battery has always focused on export sales, and the overseas operation system is perfect, which is in line with Yuchen Intelligent's strategic plan to “go overseas with equipment”. After the merger and acquisition, Jiayang Company's rich overseas market operation experience can help the company build overseas systems and accelerate the company's business development in overseas markets.

Industry insiders said that the current layout not only strengthens the layout of the consumer lithium battery business horizontally, but also expands the industrial chain to the PACK section vertically and focuses on increasing the layout overseas, and the competitiveness of enterprises is expected to be strengthened.

“There are currently only a few large battery cell suppliers in the consumer electronics market. PACK manufacturers usually deal with end customers.” Marco, founder of Real Lithium Research, told the “Science and Technology Innovation Board Daily” reporter.

Zhang Xiang, Secretary General of the International Association for Intelligent Vehicle Technology, further stated that it can be seen that the company is expanding its business downstream of the industrial chain and has a more complete industrial chain layout, which will also enhance its bargaining power, including competitiveness.

“However, the lithium battery market pattern for consumer electronics products is relatively stable, profits are also relatively stable, and total market demand has not increased much from year to year. It is a bit idealistic to expect that the acquisition of this lithium battery company will save them from losing money.” Marco, founder of Real Lithium Research, told the “Science and Technology Innovation Board Daily” reporter.

According to the announcement, the transaction was paid in five installments, and the funds were obtained from the company's own funding. Looking back at Yuchen Smart's performance, while the company's net loss in the first half of the year, net cash flow from operating activities was -0.164 billion yuan, increasing cash flow pressure.

At the same time, the contract also stipulates terms such as performance promises, compensation, and rewards for excessive performance.

Among them, Party B (Jiayang Battery) promised that the target company's net profit for 2024 will not be less than 33 million yuan, the net profit for 2025 will not be less than 36 million yuan, the net profit for 2026 will not be less than 40 million yuan, and the cumulative net profit for the three years will not be less than RMB 0.109 billion. If the target company fails to meet the performance promise, the compensation plan is implemented as agreed in the equity transfer agreement.

According to Jiayang Battery's financial data, the company's net profit as of May 31, 2024 was 14.8215 million yuan, and net profit for 2023 was 67.9288 million yuan.

“The target company acquired by Yuchen Intelligence has annual revenue of 0.511 billion yuan and is moderately large. However, in combination with the performance of the first five months of this year, it is still difficult to achieve the gambling target, which will continue to rise in the next few years.” An industry insider told the “Science and Technology Innovation Board Daily” reporter.