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On December 5, Blue Whale News reported (Reporter Wang Xiaonan) that "retail investor" Jiang Haidong has sued Suzhou Harmontronics Automation Technology (688022.SH) controlling shareholder and actual controller.

On December 5, Jiang Haidong, who participated in the private placement of Suzhou Harmontronics Automation Technology in 2023, took the company's controlling shareholder, Hengtong Investment, and its actual controller, Cai Changwei, to court, requesting Hengtong Investment to pay him a total of 44.9719 million yuan in supplemental remuneration and demanding joint liability from Cai Changwei.

In March 2023, Jiang Haidong invested in Suzhou Harmontronics Automation Technology through private placement and block trading, spending a total of 79.353 million yuan in two separate investments. On October 30 of the same year, Jiang Haidong signed the 'Supplemental Agreement' with Hengtong Investment and Cai Changwei. From March 2023 to now, the stock price of Suzhou Harmontronics Automation Technology has dropped by more than 70%, causing Jiang Haidong's initial investment to gradually shrink.

Regarding why legal action is still required for the implementation of obligations when both parties have already signed the supplemental agreement, Blue Whale News sent an interview outline to Suzhou Harmontronics Automation Technology. The company stated that the detailed situation agreed upon by the relevant parties is still under further verification.

"Retail investor" sues the controlling shareholder and actual controller for supplemental remuneration after the stock price plummeted by over 70%.

On December 5, Suzhou Harmontronics Automation Technology disclosed an announcement regarding lawsuits involving its controlling shareholder and actual controller. Controlling shareholder Hengtong Investment and actual controller Cai Changwei are facing two lawsuits, with the plaintiffs being "retail investor" Jiang Haidong who participated in the private placement in 2023.

According to the announcement, in the first lawsuit, the plaintiff Jiang Haidong requests the defendant Suzhou Harmontronics Automation Technology to pay him a deficiency compensation of 16.3678 million yuan, with Cai Changwei bearing joint liability; in the second lawsuit, Jiang Haidong requests Suzhou Harmontronics Automation Technology to pay him a deficiency compensation of 28.6041 million yuan, with Cai Changwei also bearing joint liability. The two lawsuits involve a total of 44.9719 million yuan (provisionally calculated based on the closing data from September 9, with the final amount to be based on the data from the date the plaintiff actually exits the investment).

Regarding whether this lawsuit will affect the listed company, Suzhou Harmontronics Automation Technology stated that it will not have a significant impact on the company's production and operation, and that the above-mentioned cases have not yet been heard in court, so the outcome of the lawsuit cannot be determined at this time. At the same time, the controlling shareholder and actual controller of Suzhou Harmontronics Automation Technology have promised that, except for the agreements involved in this lawsuit, there are no similar agreements signed with other parties.

The agreements mentioned by the controlling shareholder and actual controller of Suzhou Harmontronics Automation Technology are precisely the 'source' of the two lawsuits.

The reason for the first lawsuit can be traced back to March 20, 2023, when the plaintiff Jiang Haidong invested in Suzhou Harmontronics Automation Technology stocks through a block trade, with Suzhou Harmontronics Automation Technology as the counterparty. The trading amount was 28.8531 million yuan and the trading shares were 0.5 million shares, with an average trading price of 57.7 yuan/share. Prior to this, on March 17, the plaintiff Jiang Haidong also participated in the issuance of A-shares by Suzhou Harmontronics Automation Technology to specific targets for the year 2022, allocating 0.869 million shares with a subscription amount of 50.4999 million yuan at an issue price of 58.11 yuan/share, which is also the reason for the second lawsuit.

In April 2023, Suzhou Harmontronics Automation Technology disclosed the announcement of the 2022 private placement listing, with the issuing objects including Caitong Fund, Taiping Asset, Huatai Asset, Huaxia Fund, JPMorgan, and 18 other investors. The issue price was 58.11 yuan/share, with the number of shares issued being 16.4015 million shares and the total amount of funds raised being 0.953 billion yuan. The stocks subscribed by all issuing objects cannot be transferred within six months from the end of the issuance.

On October 30 of the same year, Jiang Haidong signed the 'Deficiency Compensation Agreement' with Suzhou Harmontronics Automation Technology and Cai Changwei, agreeing that Suzhou Harmontronics Automation Technology would assume the deficiency compensation obligation for Jiang Haidong's investment principal, with Cai Changwei promising to bear joint liability for the obligations undertaken by Suzhou Harmontronics Automation Technology under the agreement.

Since March 2023, the stock price of Suzhou Harmontronics Automation Technology has continued to decline, dropping from 48 yuan/share to a historical low of 8.17 yuan/share on September 18 of this year. On December 4, Suzhou Harmontronics Automation Technology closed at 12.83 yuan/share, with a decline of over 73% compared to March of last year.

In total, Jiang Haidong spent 79.353 million yuan on two investments, but as the stock price of Suzhou Harmontronics Automation Technology continued to decline, his earlier investments gradually diminished in value. Now the plaintiff Jiang Haidong requires the two defendants, Suzhou Harmontronics Automation Technology and Cai Changwei, to fulfill the deficiency compensation obligation.

Regarding why both parties have signed a compensation agreement but still resort to legal obligations, Blue Whale News sent an interview outline to suzhou harmontronics automation technology, and the company stated that it is still verifying the details agreed upon by the relevant parties.

Data shows that "big investor" Jiang Haidong was born in 1986, and as of September 30, he held a total of 1.9166 million shares of suzhou harmontronics automation technology, with a holding ratio of 1.09%, making him the fifth largest shareholder of the listed company, with a market value of approximately 0.022 billion yuan. In addition, Jiang Haidong also holds 2.3487 million shares of 富淼科技 (688350.SH), with a holding ratio of 1.92% and a market value of approximately 0.029 billion yuan; he also holds 14.1871 million shares of hengtong optic-electric (600487.SH), with a holding ratio of 0.58% and a market value of approximately 0.24 billion yuan.

The frequent shareholding reduction by the controlling shareholder and the instability of several executive departures.

Data shows that suzhou harmontronics automation technology was established in 2012 and went public in July 2019, being one of the first batch of listed companies on the star. The company focuses on the main channels of electrification and intelligentization of autos, providing intelligent manufacturing solutions and standardized machine and complete line equipment to customers.

Currently, the controlling shareholder of suzhou harmontronics automation technology, hanchuan investment, holds a 27.93% equity stake, and the actual controller Cai Changwei directly holds 0.48% of the company's equity. Through controlling hanchuan investment, hanchuan dehe, and hanzhiyuanhe, he holds 27.93%, 5.32%, and 1.2% of the equity respectively, totaling a control stake of 34.93%.

Three years after its listing, as soon as the lock-up period expired, the actual controller of suzhou harmontronics automation technology, Cai Changwei, could not wait to reduce his shareholdings in the listed company through companies he controls. According to incomplete statistics from Blue Whale News, from November 2022 to March 2023, due to his own funding needs, hanchuan investment, hanzhiyuanhe, and hanchuan dehe collectively reduced their holdings and cashed out approximately 0.28 billion yuan.

In addition to the above-mentioned lawsuit with shareholder Jiang Haidong, the actual controller of suzhou harmontronics automation technology, Cai Changwei, recently received a warning letter from the jiangsu securities regulatory bureau.

On October 11, suzhou harmontronics automation technology announced that the jiangsu securities regulatory bureau discovered during routine supervision that the company had not timely disclosed the total of 4.795 million yuan of non-operating funds transactions with actual controller Cai Changwei and related party Suzhou Chip Source Temperature Control Technology Co., Ltd., nor did it disclose it in the company’s 2023 annual report. The above actions violate regulations, and the jiangsu securities regulatory bureau decided to take administrative regulatory measures by issuing warning letters to suzhou harmontronics automation technology, Cai Changwei, and He Zhongdao, which will be recorded in the integrity file of the securities and futures market.

It is worth mentioning that He Zhongdao, one of those who received a warning letter, is considered a "veteran" executive at Suzhou Harmontronics Automation Technology, having served as vice president and chief financial officer. He was dismissed on November 15 for "insufficient capability." In addition, on July 26, two vice presidents of Suzhou Harmontronics Automation Technology both left the company; Xu Yang resigned as vice president for personal reasons, while Vice President Zhang Chun was terminated.

The planning in the new energy sector is offbeat, leading to a massive loss of 0.314 billion yuan in the first three quarters.

In addition to facing frequent shareholding reduction from the controlling shareholder and instability in management, Suzhou Harmontronics Automation Technology's performance is currently in a painful phase due to missing the rhythm of the new energy industry.

In 2017, Suzhou Harmontronics Automation Technology began entering the new energy lithium battery industry. By 2018, the sector's revenue was only 36.0342 million yuan, accounting for 8.27% of total income. As the global automotive industry's landscape dramatically changed, new energy vehicles rose, and penetration rates accelerated, in 2020, the domestic new energy sector experienced explosive growth, with Suzhou Harmontronics Automation Technology's new energy segment revenue increasing to 0.16 billion yuan, a year-on-year increase of 47926%, marking the highest growth among all sectors; however, its gross margin was only 20.87%, the lowest among all businesses.

Suzhou Harmontronics Automation Technology, which had high hopes for the new energy sector, also adjusted its strategic layout in 2021 by shutting down non-core businesses, focusing on automotive intelligence and electrification, and independently establishing a charging and swapping business while retaining battery equipment operations. The company stated in its annual report, "To seize market share in battery swapping equipment, a large amount of funds have been invested in research and development and capacity construction, and no annual dividends will be distributed." That year, Suzhou Harmontronics Automation Technology's new energy business revenue continued to grow to 0.213 billion yuan, accounting for 28.1% of total revenue.

The year 2022 was the last year of rapid expansion for new energy battery production. Likewise, Suzhou Harmontronics Automation Technology's charging and swapping business revenue surged to 0.289 billion yuan, along with battery equipment business revenue of 0.233 billion yuan, resulting in total new energy revenue reaching 0.522 billion yuan, accounting for 45.66% of the company's total revenue.

However, starting in 2023, the lithium battery industry that Suzhou Harmontronics Automation Technology's new energy battery equipment business is in is overall in a "de-stocking" phase. With increasing competition in the lithium battery industry, project gross margins are declining, and customers are generally cautious about large capital investments such as battery swapping stations, leading to decreased customer investment willingness, resulting in Suzhou Harmontronics Automation Technology investing significantly in this sector but revenue falling year-on-year.

Among these, the revenue from the charging and swapping business decreased by 60% year-on-year to 0.115 billion yuan, with the gross margin declining to single digits at 8.65%. Although revenues from automotive intelligent equipment and battery manufacturing equipment increased year-on-year, the decline in gross margin from core operations led Suzhou Harmontronics Automation Technology to record its first loss since going public in its annual report.

After going public, suzhou harmontronics automation technology saw revenue rise from 0.457 billion yuan in 2019 to 1.339 billion yuan in 2023, but the company's net income for shareholders has not exceeded 80 million yuan, even posting a loss of 0.085 billion yuan in 2023.

To avoid further impacts on the company's cash / money market and profits from the new energy fund battery equipment and charging-swapping equipment businesses, suzhou harmontronics automation technology quickly adjusted its global strategy, focusing on project delivery and accounts receivable recovery. However, in the first three quarters of 2024, suzhou harmontronics automation technology's performance still did not improve, with revenue of 0.467 billion yuan, a year-on-year decrease of 61.18%; net income for shareholders posted a massive loss of 0.314 billion yuan, and its gross margin fell to 17.59%, the lowest since going public.

To further integrate company resources, focus on core business development, and reduce operational risks, on November 7, suzhou harmontronics automation technology plans to transfer all 81% equity of its holding subsidiary, bo rui autos, for a total price of 48.4065 million yuan, of which 26% of the equity was just acquired three months ago.

In recent years, suzhou harmontronics automation technology's debt repayment pressure has also increased year by year, with the company's liability ratio rising from 23.42% in 2019 to 63.36% in the first three quarters of this year. As of September 30, suzhou harmontronics automation technology's cash / money market amounted to 0.311 billion yuan, while short-term borrowings reached a staggering 0.96 billion yuan.