The lithium company was filed for bankruptcy restructuring! The power battery is still in the process of expanding production.

On the evening of May 9th, * ST Lion (002684) announced that the creditor Guangzhou Huansen Investment Co., Ltd. (hereinafter referred to as Guangzhou Huansen) had submitted an application for the reorganization of * ST Lion to the Shenzhen Intermediate people's Court on April 29th because the company was unable to fulfill its guarantee obligation to pay off a debt receivable of 320 million yuan.

According to the announcement, on March 28, 2018, * ST Lion wholly-owned subsidiary Hubei Lion Optoelectronics Co., Ltd. (hereinafter referred to as "Hubei Lion Optoelectronics") and Shenzhen Likai Fund Management Co., Ltd. (hereinafter referred to as "Shenzhen Likai") signed a "accounts receivable transfer contract", agreed that Shenzhen Likai transferred Hubei Lion Optoelectronics to enjoy a total of 329 million yuan of accounts receivable, and paid the Hubei Lion photoelectric transfer consideration of 323 million yuan.

* ST Lions shall provide joint and several liability guarantee to Shenzhen Likai for all debts under the above-mentioned contract for assignment of accounts receivable. On June 21, 2018, Guangzhou Huansen transferred the above-mentioned creditor's rights held by Shenzhen Likai, * the guarantee responsibility of ST Lions to Shenzhen Likai Synchronize.

* ST Lion said it was uncertain whether the bankruptcy reorganization application would be accepted by the court. If the court decides to accept the reorganization application, * ST Lion or the administrator appointed by the court will submit the company reorganization plan for the creditors' meeting to vote.

If * ST Lions successfully implements the restructuring and completes the restructuring plan, it will help to optimize the company's asset and liability structure and enhance the company's sustainability and profitability. However, if the restructuring fails, the company will run the risk of being declared bankrupt.

Aggressive expansion is a drag on performance

Data show that * ST Lion business is mainly divided into three parts: energy storage, clean energy power engineering and new energy applications (including battery manufacturing, smart travel, battery materials, etc.).

* ST Lion was listed on the Shenzhen small and medium-sized board in 2012 and was originally engaged in the product and research and development of lead-acid batteries. Around 2015, the main business of * ST Lion began to shift to lithium battery business, but due to the aggressive layout of the new energy sector, debt overdue, assets frozen, capital chain broken, stock price and performance seriously declined: the net profit belonging to shareholders of listed companies in 2017 was-134 million yuan; in 2018, the net profit of * ST Lions belonging to shareholders of listed companies was-2.769 billion yuan.

Over the past two years, * ST Lions has been trying to save itself and achieved some results: the company's total revenue in 2019 was 1.323 billion yuan, an increase of 20.24 percent over the same period last year; and the net profit belonging to shareholders of listed companies was 152 million yuan, up 105.47 percent from the same period last year.

In 2020, the operating income of * ST Lion was about 1.093 billion yuan, down 17.35% from the same period last year; the net profit belonging to shareholders of listed companies changed from profit to loss, with a loss of about 1.814 billion yuan, down 1295.05% from the same period last year; and basic earnings per share was 3.20 yuan, down 1285.19% from the same period last year.

For the decline in performance in 2020, * ST Lion said that affected by the COVID-19 epidemic and other factors, the time for the company's upstream and downstream enterprises to resume work and production was delayed, and the work plan for the second phase of debt restructuring was also forced to be postponed, resulting in a continuing serious shortage of operating funds and high capital costs, which had a greater impact on its production and operation activities.

At the same time, in 2020, due to a continuing serious shortage of operating funds, ST Lion's business could not be carried out as planned, the failure to increase production was difficult to form a scale effect, and the lengthening of the project duration led to an increase in project costs, resulting in a substantial decline in the company's operating gross profit margin, which could not cover the period expenses, resulting in a large operating loss.

It's hard to survive. There's still hope.

Despite operating losses and debt overhang, the construction of * ST Lion Lithium Battery new project is still in progress, and there is still hope.

In terms of lithium electricity, * ST Mengshi currently has two lithium-ion power battery factories in Zhaoan, Fujian and Sanmenxia, Henan. The company plans to build a ternary cylindrical lithium-ion battery project with a total capacity of 6GWh in Zhaoan, Fujian, Line A (1GWh) has been completed and put into production in 2017, mainly producing 18650 products, with a full production capacity of 70 million, the company has successfully developed 18650 cylindrical 3500mAh cell products, which will be put into mass production; Line B (1GWh) is mainly planned to produce 18650 cells while taking into account 21700 products, most of the equipment has been in place and is expected to be completed and put into production in October 2021. The lithium battery production project with a total capacity of 5GWh is planned and built in Sanmenxia City, Henan Province. The main products are single 150Ah energy storage lithium iron phosphate square aluminum shell lithium ion battery, battery pack and PACK, are expected to be completed and put into production by the end of 2021.

In 2020, * ST Mengshi lead and lithium battery business achieved operating revenue of 273 million yuan, down 17.87% from the same period last year. Among them, the lead battery business achieved an operating income of 142 million yuan, a decrease of 26.88% compared with the same period last year. On the one hand, the epidemic situation and trade frictions between China and the United States had a great impact on the company's lead and electricity export business in the first half of the year, and on the other hand, after the business gradually recovered in the second half of the year, due to the shortage of funds, some orders could not The operating income of the lithium battery business reached 131 million yuan, a decrease of 5.25% compared with the same period last year, and the revenue fell short of expectations, mainly due to the lack of full release of lithium battery capacity and small shipments due to liquidity conditions. at the same time, it is unable to form a scale effect, resulting in a low gross profit margin. The sector due to the previous large investment in assets, asset depreciation, financing interest and liquidated damages led to losses in the lithium battery business.

In addition, in 2020, * ST Mengshi energy storage business achieved operating income of 35.875 million yuan, an increase of 33.08% over the same period last year, while clean energy power engineering business achieved operating income of 246 million yuan, an increase of 0.08% over the same period last year.

In the first quarter of 2021, * ST Lion's revenue increased by about 218 million yuan, up 20.46% from the same period last year; net profit and loss was about 222 million yuan, down 10.17% from the same period last year; and basic earnings per share was 0.39 yuan, down 11.43% from the same period last year. By the end of the first quarter of 2021, * ST had total assets of 6.196 billion yuan, total liabilities of 8.196 billion yuan, net assets of-2 billion yuan, and asset-liability ratio of 132%.

ST Lion said that in 2021, the company will aim to turn net assets into regular assets and turn losses into profits, focusing on three core tasks: "rapidly promoting and resolving delisting risks, rapid development of the 14th five-year Plan scenery storage project, and rapid improvement of the operation quality of core subsidiaries". By continuing to promote debt restructuring and major strategic cooperation, including major asset restructuring with China Building Materials, reducing the scale of liabilities, increasing high-quality assets, while disposing of inefficient assets, and shutting down subsidiaries with losses and weak profitability, realize the positive conversion of net assets and resolve the risk of delisting.