21st Century Business Herald reporter Cao Enhui reported from Shanghai

Sungrow Power Supply Co., Ltd. (hereinafter referred to as Sungrow, 300274.SZ), an optical storage giant, has launched an overseas fundraising plan.

On October 15, Sungrow announced that it intends to issue Global Depositary Receipts (GDRs) overseas based on the company's newly issued A shares, and intends to list on the Frankfurt Stock Exchange in Germany. The new shares will not exceed 10% of the total share capital before the issuance, that is, about 207 million shares, and the total amount of funds raised will not exceed 4.878 billion yuan, which will be used for projects such as the manufacturing of advanced energy storage equipment with an annual output of 20GWh, overseas inverter equipment and energy storage product expansion.

However, the news hit Sungrow's stock price on the same day. On October 15, the company opened lower and moved lower, falling more than 7% at one point during the session. As of the close, its share price closed at 92.45 yuan, down 4.44%, and the latest market value was 191.7 billion yuan.

Some industry analysts told the 21st Century Business Herald reporter that the issuance of GDR is essentially an additional issuance, which will dilute the rights and interests of the original shareholders in the short term. However, if it can successfully achieve overseas fundraising, it will also be conducive to the international layout of enterprises.

In fact, Sungrow is not the only A-share new energy company that has thrown out its GDR plan. Up to now, Tianneng shares (688819. SH), Meijin Energy (000723. SZ), Guoxuan Hi-Tech (002074. SZ), GEM (002340. SZ), LEAD (300450. SZ), Mingyang Intelligent (601615. SH), Shanshan Co., Ltd. (600884. SH) and other 20 new energy manufacturing companies have issued GDR plans, but not many have successfully achieved overseas listing.

"Brother Optical Storage" wants to increase the production capacity of optical storage

In the first half of this year, Sungrow became the "first profit brother" of the A-share photovoltaic sector with a net profit of 4.959 billion yuan attributable to the parent company.

Dismantling its product composition, photovoltaic inverters and other power conversion equipment and energy storage systems achieved operating income of 13.093 billion yuan and 7.816 billion yuan respectively, an increase of 12.63% and a decrease of 8.30% year-on-year respectively. Despite the year-on-year decline in revenue from the company's energy storage system business, its gross profit margin is high - in the first half of this year, its energy storage system gross profit margin was as high as 40.08%, an increase of nearly 10 percentage points from the same period last year.

In the view of brokers, Sungrow, as a leader in optical storage, is expected to benefit from the rise in global energy storage demand. According to the analysis report issued by Soochow Securities, the GDR issued by Sungrow is expected to account for about 3% of the total share capital under the consideration of fundraising, and the projects it invests in can "increase the layout of overseas production capacity and strengthen global brand building". The agency pointed out that at present, the overseas energy storage market demand is strong, and the shipment of Sungrow's large storage continues to grow.

Specifically, the investment funds raised by Sungrow through the issuance of GDR are mainly invested in advanced energy storage equipment manufacturing projects with an annual output of 20GWh, overseas inverter equipment and energy storage product expansion projects, digital improvement projects, and Nanjing R&D center construction projects. Among them, the focus of this fundraising - the annual output of 20GWh advanced energy storage equipment manufacturing project is located in Hefei, Anhui Province, with a total investment of about 1.992 billion yuan, and the financial internal rate of return of investment after production is 20.74% (after tax); The overseas inverter equipment and energy storage product expansion project is located in an overseas region, with a total investment of about 1.927 billion yuan, including a production system with an annual output of 50GW of inverter equipment and 15GWh energy storage products, which will be constructed in two phases, and the financial internal rate of return of the first and second phases of the project is 21.81% (after tax) and 21.87% (after tax).

Data show that from January to August this year, United States energy storage achieved a cumulative installed capacity of 16GWh, a year-on-year increase of 61%, and Sungrow's market share in the United States market maintained the top two positions. In addition, the installed energy storage capacity in the United States is expected to reach 35 to 40GWh this year, doubling year-on-year. In Europe, Chile, Australia and the Middle East, demand for large reserves is also higher. It is worth mentioning that Sungrow signed an energy storage project with a capacity of 7.8GWh in the Middle East in July this year. A number of institutions predict that Sungrow's annual large-scale storage shipments may exceed 25GWh.

After the implementation of the above two fundraising projects, Sungrow will add an annual output of 35GWh of energy storage products and 50GW of inverter equipment production capacity.

It should be noted that Sungrow's issuance of GDR still needs to submit a registration application for the issuance of new A-share basic shares to the Shenzhen Stock Exchange, which has been approved and approved by the China Securities Regulatory Commission for registration. In addition, the GDR offering is subject to the approval of the relevant securities regulatory authorities in Germany and filed with the China Securities Regulatory Commission.

It is not easy for A-share new energy companies to issue GDRs

GDRs, or Global Depository Receipts, are stocks or bonds that are publicly issued globally and can be traded on two or more financial markets.

Since 2022, A-shares have ushered in a wave of GDR issuance. Mingyang Intelligent, GEM, Guoxuan Hi-Tech, Xinwangda and Shanshan have successively issued GDRs and successfully listed. Since then, the GDR boom has been transmitted to the photovoltaic industry, and Foster (603806. SH), Aiko Co., Ltd. (600732. SH), LONGi Green Energy (601012. SH) and LEAD have successively announced the issuance of GDR plans.

According to the incomplete statistics of the 21st Century Business Herald reporter, up to now, 20 A-share new energy manufacturing companies have issued plans to issue GDR, but many companies have not successfully issued them.

Taking the photovoltaic sector as an example, in January 2023, Aixu, a leading cell company, announced that it intends to issue GDR and be listed on the Switzerland Stock Exchange. In June of this year, the company issued another announcement to terminate the GDR issuance.

Foster, a leading photovoltaic film and photovoltaic backsheet company, announced in February 2023 that it intends to issue GDR and also apply for listing on the Switzerland Stock Exchange. But a year later, in January 2024, the company also terminated the matter.

But PV companies' interest in GDR has not stopped. In February this year, LEAD announced that it planned to raise no more than 1 billion yuan through the issuance of GDR, which will be used for the expansion of the European technical competence center and the R&D and upgrading project, the high-end equipment R&D, manufacturing and service capacity improvement project, and the supplementary working capital project. As of now, the company has not announced an update on its progress.

LONGi Green Energy is the first A-share PV company to propose the issuance of GDRs. As early as October 2022, the company officially announced the idea of issuing GDR, and in June 2023, it disclosed the specific plan. According to the plan, LONGi Green Energy intends to raise no more than 19.996 billion yuan through the issuance of GDRs, which will be used for the 46GW monocrystalline silicon rod and slice project in Ordos, the 30GW monocrystalline cell project in Ordos, the 6.6GW monocrystalline silicon rod project in Malaysia, the 2.8GW monocrystalline module project in Malaysia, and the 3.35GW monocrystalline cell project in Viet Nam. However, more than a year has passed, and there has been no update on the progress of the company's GDR matters.

At present, the vast majority of PV companies that intend to issue GDRs have either terminated or made slow progress. An analyst once told the 21st Century Business Herald reporter, "According to the documents previously released by the China Securities Regulatory Commission and the exchange, the complexity and review cycle of GDR projects have become longer, and the advantages have weakened." ”

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21st Century Business Herald reporter noted that in May 2023, the China Securities Regulatory Commission (CSRC) issued the "Guidelines for the Application of Regulatory Rules - Overseas Issuance and Listing No. 6: Guidelines for the Overseas Issuance of Global Depositary Receipts by Domestic Listed Companies", which refines the positioning, application procedures, application of rules, material requirements and implementation arrangements for the overseas issuance of GDRs by domestic listed companies.