Enjie (002812): Integration of wet process 西安耍耍网 integration industry accelerates the company’s further consolidation of leading positions
Investment highlights: Company announcement: The company and Shengli Precision merged the “Suzhou Jieli New Energy Materials Co., Ltd. Distribution Framework Agreement”, intending to transfer cash to 100% equity of Suzhou Jili held by Shengli Precision with a transaction amount of approximately20.
200,000 yuan, including 9.
The consideration of RMB 500,000 was transferred to the equity of this transaction and Suzhou Jieli owed no more than 10 to Shengli Precision.
7 billion total other payables.
As of December 31, 2018, Suzhou Jili’s asset size was 17.
10 trillion, factor budget 14.
3.4 billion, net assets 2.
7.6 billion; operating income in 20184.
280,000 yuan, operating profit -1.
2 billion yuan, net profit -1.
30,000 yuan, cash flow from operating activities 0.
This agreement is a framework agreement. The final specific content is subject to the formal agreement between the two parties to the transaction. The formal restructuring of the company’s equity acquisition is submitted to the company’s board of directors and subject to antitrust review by the Ministry of Commerce. Therefore, the transaction is still subject to certainty.
Suzhou Jieli’s poor management has led to gradual progress, but it still has high-quality customers, and its wet process replacement amount is second only to Enjie.
Shengli Precision has successively acquired 100% equity of Suzhou Jili in 2015 and 2016 with a total of approximately 11 cash, respectively. However, due to intensified competition in the market and poor management, Suzhou Jili’s performance has gradually exceeded its performance commitments, which has been outstanding for two consecutive years.
Suzhou Jieli has reached the production of 8 wet-process base film production lines at the end of 2018. Its equipment comes from Japan Steel Works, with a production capacity of about 400 million square meters. The replacement volume in 20181.
2.5 billion square meters, accounting for about 11% of the domestic wet method share, second only to Enjie shares.
In addition to being one of the major suppliers of power battery CATL, Suzhou Jieli provides 9-12μm wet-method film with monthly supply exceeding 1 million square meters, and also mass-produces 5-7μm for consumer batteries for international Japanese and Korean customers.High-end ultra-thin crystals with technological capabilities at the leading level in the industry.
The integration of the wet crack industry has accelerated, and Enjie has further consolidated its leading rank.
In general, competition has intensified due to major expansions in the industry. At the same time, the continuous decline of new energy vehicle subsidies has led to continued pressure on the industry chain to reduce prices. A variety of companies have made outstanding profits. The industry has entered a reshuffle integration phase.Announced that it obtained its 60% equity by increasing capital in Hunan Zhongli, and Enjie bought Jiangxi Tongrui for 200 million in November 2018.
Through its leading technology, customers, and scale advantages, Enjie makes its cost and profitability far exceed its peers. In 2018, the wet-segment subdivision has an internal share of 45%, and its leading advantages are significant.
The company’s production capacity reached 1.3 billion pings at the end of 2018, and it is still continuously expanding. At the end of 2019, the production capacity reached 2.8 billion pings.
If the company’s initial public offering of Suzhou Jieli is successfully completed, the total market share is expected to reach more than 60%, which will further consolidate the leading advantages and enhance its bargaining power among large customers.
At the same time, through the mutual benefits of technology and customers, Suzhou Jili’s profitability is expected to greatly improve.
Investment suggestion: Maintain the “overweight” rating, and temporarily ignore the impact of the acquisition, and maintain profit forecasts. It is expected to return to net profit in 2019-21.
7.2 billion, EPS 1.
95 yuan, PE 32X, 23X, 17X.
Risk reminder: release of production capacity exceeds expectations, intensified competition in the industry leads to sharp fluctuations in product prices