Author: Suhang

Product: IPO Insights

Since reaching the highest point of 64.12 yuan/share on September 3, 2021, the stock price of Chint Electric (601877.SH) has fallen into "falling endlessly". It closed at 22.52 yuan/share on October 19, and the stock price has been "knee-cut".

in December 2022, chint electric completed "a eat a", bought 29.99 percent of tongrun equipment at a price of 1.02 billion yuan, and injected inverter energy storage business into it.

Recently, Zhengtai Electric has spun off its subsidiary Zhengtai Anneng Digital Energy (Zhejiang) Co., Ltd. (hereinafter referred to as "Zhengtai Anneng") in the Shanghai Main Board IPO, the sponsor is Guotai Junan Securities.

As an important part of the former electrical appliance king in the photovoltaic industry, Chint Anneng's ability to absorb money cannot be underestimated, but disputes such as "pit farmers" and frequent related transactions have never stopped.

01

Technical content questioned

Debt service pressure is greater

Chint Aneng is mainly engaged in household photovoltaic business. In recent years, with the rapid development of the entire industry, its performance has achieved rapid growth.

In 2020-2022 and January-June 2023 (the "reporting period"), Chint Energy generated operating income of $1.633 billion, $5.631 billion, $13.704 billion and $13.705 billion, respectively, with revenue growth of 244.79 percent and 143.39 percent in 2021 and 2022, respectively.

during the same period, it realized net profits of 0.254 billion yuan, 0.867 billion yuan, 1.753 billion yuan and 1.202 billion yuan respectively.

Unlike other A- share photovoltaic companies, Chint Aneng is not engaged in production, but mainly provides services such as development, survey, design, installation, commissioning and terminal operation and maintenance monitoring of household photovoltaic power stations, as well as sales of system equipment.

However, this model has also brought the "low technical content" controversy to Chint.

although in the prospectus, zhengtai an can listed technical barriers as one of the main barriers to enter the industry, but during the reporting period, its research and development expenses were only 2.2365 million yuan, 2.8854 million yuan, 4.6866 million yuan and 10.2134 million yuan respectively, and the research and development cost rate was as low as 0.14, 0.05, 0.03 and 0.07 respectively.

Financial barriers are perhaps the more important factor than technical barriers.

at the end of the reporting period, chingtai aneng's asset-liability ratio was 77.00, 81.20, 76.92 and 76.93 respectively, which was higher than tris solar energy (688599.SH), Zhonglai shares (300393.SZ) produced by business coverage components, and sunny day technology with similar business content.

Image source: Chint Anneng prospectus

In 2020, Chint Aneng's short-term borrowings will be 0, and after launching the household PV power plant sales business in 2021, its short-term borrowings will reach $0.622 billion, $2.122 billion and $1.632 billion at the end of each period in 2021, 2022 and the first half of 2023, respectively.

As a member of the "Zhengtai Department" of Nan Cunhui, the richest man in Wenzhou, Zhengtai An can rely on the endorsement of the group to successfully raise funds and expand its scale rapidly.

According to the prospectus, between 2022 and June 2023, Chint Group and Chint Electric jointly guaranteed nearly 8.5 billion yuan of bank loans from Chint Aneng.

at the same time, the photovoltaic loan project provided by zhengtai aneng for users is also guaranteed by the indirect controlling shareholder zhengtai group and its related party Zhejiang zhengtai new energy investment co., ltd. as of the end of the reporting period, the balance was 1.09 billion yuan.

However, as of the end of June 2023, the total amount of short-term loans, financial lease loans with a lease term of one year and non-current liabilities due within one year was 7.794 billion yuan, which still has great debt service pressure.

At the same time, the highly criticized large-scale related transactions also exist between Zhengtai Anneng and the Group. In each of the reporting periods, Chint Group was the largest supplier of Chint Aneng, with purchases of $1.019 billion, $1.622 billion, $4.083 billion and $2.335 billion, accounting for 23.22 per cent, 12.93 per cent, 16.55 per cent and 13.70 per cent of the total purchases for the period, respectively.

02

product exposure "routine"

The progress of the whole county is not as expected

in July 2021, a post entitled "a photovoltaic named" jindingbao "rented 20 roofs, but asked me to repay 100000 huge sum of money" was posted on platforms such as Zhihu. the author "dressed as a cat and riding a tiger" said that chint company wanted to rent the roof of the house to install solar panels to generate electricity, and promised to rent 20 yuan per square meter.

The "Golden Dingbao" flyer posted on it reads "No cost required", "Rental income for 20 years" and "Roof Power Station for you in 20 years".

and the author of the post carefully read the contract and found that in fact this is not a lease contract, but a cooperative development contract. As Party A, the user shall not dismantle the product or terminate the contract in advance during the contract period, and shall ensure that the product is not stolen, artificially damaged or lost, otherwise the product shall be purchased at the depreciated price, and the product shall be cleaned regularly.

Even if the power plant project cannot generate power normally for more than 30 days due to force majeure or non-product quality reasons, Party A will not be entitled to the current quarter's revenue.

"China Energy News" reported in December 2021 that the "Jindingbao" household photovoltaic development project implemented in some villages and towns in Henan, Shanxi and other provinces has also been exposed to exaggerated publicity and serious inappropriateness of contract rights and responsibilities.

"Jindingbao" is a photovoltaic power generation cooperation development project launched by Zhengtai Anneng. Users provide roofs, courtyards and other sites. The equipment construction, operation and maintenance of the power station are all undertaken by the enterprise. Zhengtai Anneng official website shows that under this mode, "users do not have to bear the responsibility of debt repayment, and the risk is low and the return is fixed".

Image source: Chint Anneng official website

In addition, Zhengtai Anneng also has operating leasing products "Jinzubao" and photovoltaic loan products "Green Power Home".

The latter two models have received a lot of controversy in recent years. Reports about "photovoltaic loan scams" and "financing traps" have been frequently reported in the newspapers. At present, there are still many disputes such as the difficulty of protecting the rights and interests of users.

On June 20, 2021, the National Energy Administration issued the "Notice on Submitting the Whole County (City, District) Roof Distributed Photovoltaic Development Pilot Program", and the whole county of distributed photovoltaic was promoted.

zhengtai anneng is also aiming at the opportunity to start the investment and merger business of household photovoltaic projects in 2021, including the joint venture platform company model, that is, to sign a strategic cooperation agreement with the state-owned central enterprises, jointly set up a joint venture platform company, and develop the whole county to promote business. As well as the consortium development model, in the form of a consortium, signed a strategic cooperation agreement with the county government to jointly develop projects. This also resulted in the high growth of the sales business of photovoltaic power plants in the previous article.

However, there are still many problems to be solved in promoting the development of the whole county, and the progress of achieving the goal is not as expected. By the end of April 2023, the total grid-connected capacity of the whole county to promote roof distributed photovoltaic pilot areas was 36.92 million kilowatts, only 22% of the planned target was completed.

Chint clearly prefers this business, which allows for a sharp increase in revenue. In the first half of 2023, the company's co-construction business model held under the household photovoltaic power station, that is, its fixed assets in the original book value of photovoltaic power station increased by only 0.19 billion yuan compared to the end of 2022, the construction of photovoltaic power station project is only 0.194 billion yuan.

Image source: Chint Anneng prospectus

At the same time, in the first half of 2022, the book balance of household photovoltaic power stations held for sale, that is, photovoltaic power stations in inventory, reached 20.22 billion yuan, an increase of 6.346 billion yuan from the end of the previous year.

and Guodian Investment Group, which has previously cooperated with Chint Anneng here and is likely to pay for these inventories in the future, has almost "dominated" Chint Anneng's top five customers after 2022.

among the top five customers in zhengtai anneng reporting period, power investment ronghe new energy development co., ltd. is 35.64 owned by state power investment group. Zhejiang power investment anneng new energy technology co., ltd., Chongqing yuganxing energy development co., ltd. and power investment rongyu Chongqing new energy co., ltd. are also funded by state power investment subsidiaries at all levels.

Image source: Chint Anneng prospectus

in December 2022, the sino-russian energy fund, which holds 50% of the shares held by state power investment group, will invest 0.15 billion yuan in zhengtai energyFormer holding 0.47 per cent.

03

Valuation up 10 times in 2 years

60 billion more listed companies will Nan Cunhui add?

Chint has a long history of photovoltaic layout. As early as 2006, Zhejiang Chint Solar Energy Technology Co., Ltd. ("Chint Solar") was established to enter the production of photovoltaic cells and photovoltaic modules.

in July 2015, zhengtai solar invested 50 million yuan to set up an energy limited, the predecessor of zhengtai energy.

In November 2015, Chint Solar was transformed into a subsidiary of Zhejiang Chint New Energy Development Co., Ltd., which subsequently became a wholly-owned subsidiary of Chint Electric through asset restructuring.

In February 2021, Chint Solar transferred 84.72 percent of its limited contribution to Aneng to Chint Electric, which became the controlling shareholder of the Company.

Image source: Chint Anneng prospectus

In October and December 2021, Aneng Limited introduced 11 new shareholders, including Industrial Finance, ICBC Finance and Sequoia Wenchen, with a new registered capital of 0.36 billion yuan, a capital increase price of 2.78 yuan per share, a total financing amount of about 1.001 billion yuan, and a corresponding post-investment valuation of about 6.005 billion yuan.

In September 2022, the company as a whole changed to a joint stock company.

in November and December 2022, 15 companies or funds, including Yinneng Investment, Haihe Investment, Green Fund, BOC Investment and Sino-Russian Energy, invested a total of about 3.609 billion yuan in Zhengtai Anneng, corresponding to a post-investment valuation of about 31.602 billion yuan.

in this issue, zhengtai anneng plans to issue no less than 0.271 billion shares, that is, no less than 10.00 of the total share capital of the company after the issue, and plans to raise 6 billion yuan, so as to calculate the valuation of the issue of about 60 billion yuan.

that is to say, the new 60 billion capital feast of boss nan may enable the companies participating in the investment in 2021 to obtain nearly 10 times the income, and the companies participating in the investment at the end of 2022 will also obtain about double the income.