SMM News: recently, the CSRC disclosed Shenzhen Xiang Fenghua Technology Co., Ltd. (hereinafter referred to as "Xiang Fenghua") after the update of the gem IPO prospectus.
According to the prospectus, the company intends to issue no more than 25 million renminbi common shares (A shares) to the public, not less than 25 per cent of the total share capital after the issue. According to the construction schedule of the project, the company will invest the funds raised by the public offering of RMB common shares (A shares) in the construction project of 30000 tons of high-end graphite anode material production base.
It is worth noting that this is the second time that Xiang Fenghua has knocked on the door of listing in the last three years.
Yueling shares, a listed company, had planned to buy a 100 per cent stake in Xiang Fenghua on September 30, 2016, but the deal ended in January 2017 after months of suspension. Yueling shares said that due to the recent changes in the environment and policies of the domestic securities market, the relevant parties of the target company had different ideas about the way the target company docked the capital market, and the company decided to terminate the major asset restructuring. After the termination of the plan of "being acquired by listed companies", Xiang Fenghua opened the road of "listing alone". In October 2017, Xiang Fenghua began to enter the IPO independently. However, in March 2018, Xiang Fenghua terminated the examination and withdrew his application materials, and his first attempt to apply for a listing was aborted.
It is reported that Xiang Fenghua is mainly engaged in the research and development, production and sales of lithium ion battery anode materials, and is a domestic advanced supplier of lithium anode materials. The company's main products can be divided into natural graphite and artificial graphite two categories, products used in power (electric vehicles, such as new energy vehicles, electric bicycles, etc.), 3C consumer electronics and industrial energy storage and other lithium-ion battery fields. In addition to graphite anode materials, the new non-graphite anode materials developed by the company-silicon carbon anode materials are in the pilot stage, B-titanium dioxide, graphene and other new carbon materials products are in the small test stage. At present, the company is BYD, Ningde era, Penghui Energy, Nandu Power supply, Ganfeng Lithium Industry, Multi-Fluorodore, Kanai New Energy, FuNeng Technology and other more than 30 well-known companies suppliers. In 2018, Xiang Fenghua has successfully passed the LG chemical certification test, and is currently actively contacting Samsung SDI, Panasonic and other international well-known lithium power enterprises to prepare for entering the overseas market.
In 2016, 2017 and 2018, Xiang Fenghua's main business income accounted for 100.00%, 100.00% and 99.00% of operating income, respectively. In 2018, the company realized operating income of 599.5488 million yuan and operating profit of 70.8094 million yuan. By the end of 2018, the total assets of the company had reached 1.147418 billion yuan, and the existing operating scale of the company was in line with the overall scale of fund-raising investment projects.
During the reporting period, Xiang Fenghua's top 10 customers accounted for a relatively high proportion of sales, accounting for 84.38%, 82.33% and 91.23% of revenue in 2016, 2017 and 2018, respectively. The main reason is that BYD, the first customer, accounts for a relatively high proportion of sales. In 2016, 2017 and 2018, the company accounted for 54.24%, 55.46% and 62.75% of BYD's sales, respectively. This is basically consistent with the high concentration of the downstream power lithium battery industry, BYD power lithium battery shipments have been among the top two in the industry during the reporting period.
Judging from the change in the proportion of sales of the top 10 customers in the past, during the reporting period, with the exception of BYD, in 2017, of the top 10 customers, Xiang Fenghua's sales of power lithium electricity to old customers such as polyfluorodol (Jiaozuo) New Energy Technology Co., Ltd., Anhui Yijiatong Battery Co., Ltd., Henan New Taihang Power supply Co., Ltd., Jiangxi Anchi New Energy Technology Co., Ltd., etc., are growing rapidly. Mainly because these customers benefit from the rapid development of the new energy industry, the demand for lithium anode materials has increased significantly. In 2018, Suzhou Yuyao Battery Co., Ltd. was added to the top 10 customers. At the same time, Ningde Times New Energy Technology Co., Ltd., Nanchang Kanai New Energy Co., Ltd., Penghui Energy, Henan Lithium Power supply Co., Ltd., Hangzhou Nandu Power Technology Co., Ltd. and other old customers such as artificial graphite demand is growing rapidly.
Judging from the changes in the top 10 customer types, since 2017, Xiang Fenghua's top 10 customer types have gradually changed to mainly supply power lithium electricity customers, and the sales of products are also dominated by artificial graphite, mainly due to the adjustment of the state subsidy policy. The improvement of energy density parameters of financial subsidies for power lithium electricity has led to a sharp increase in demand for artificial graphite in the market since 2017, a significant increase in the supply of power lithium electricity customers, and a corresponding decline in the proportion of 3C consumer electronics customers.
Judging from the cooperation period of the top 10 customers, most of the top 10 customers of Xiang Fenghua were old customers during the reporting period, of which the top 10 customers in 2016, 2017 and 2018 were mainly old customers with more than one year of cooperation. The main reason is that: based on industry practice, upstream suppliers and lithium battery manufacturers generally need a certification period of half a year to one year before reaching formal cooperation, and some well-known customers in some industries have been certified for as long as two years. However, once the two sides reach cooperation, the follow-up cooperative relationship is usually more stable, because lithium battery manufacturers generally do not easily change suppliers because of product quality consistency and other considerations. Under normal circumstances, the company's supply will be accompanied by a gradual increase in customer demand. Take BYD, the largest customer, as an example, the two sides began to cooperate in 2012 and signed the Framework Agreement on the purchase of productive Materials, which stipulates that if there is no objection between the two parties, the contract will be automatically extended for one year. Since 2012, the cooperative relationship between the two sides has been good, and the cooperation has not been interrupted during the period.
At the same time, in order to reduce the risk of single customer dependence, in recent years, with the rapid growth of the new energy vehicle industry, Xiang Fenghua, on the basis of maintaining old customers, has actively stepped up efforts to develop potential major customers abroad and promote cooperation with major international customers as soon as possible. In August 2017, the company has passed Ningde era product certification, and small batch supply of more than 130 tons. In October 2018, there was a faster supply volume. In 2018, the company has passed the LG chemical certification test, and is currently working with Samsung SDI, Panasonic and other international well-known battery manufacturers to carry out cooperation negotiations and related certification. It is expected that LG chemistry will be supplied in small quantities in the second half of 2019.
Battery net also noted that at the end of 2016, 2017 and 2018, Xiang Fenghua's net accounts receivable were 107.422 million yuan, 217.356 million yuan and 227.0945 million yuan respectively, and the scale of accounts receivable continued to grow. And the proportion of net accounts receivable in the current operating income is 45.39%, 59.92% and 37.88%, respectively. The main reasons are as follows: (1) according to the industry practice, customer credit status and business characteristics, the company gives different customers a credit period of 2 to 6 months, and the scale of accounts receivable will increase naturally with the expansion of sales scale; (2) during the reporting period, the company's sales gradually shifted to power lithium battery customers, and the fourth quarter was the peak sales season for new energy vehicle factories, so the fourth quarter was often the peak period for the company's shipments, according to the company's sales credit policy. The fourth quarter shipment basically formed accounts receivable, resulting in a continuous increase in the balance of accounts receivable at the end of the reporting period. In 2017 and 2018, the company achieved sales revenue of 134 million yuan and 207 million yuan respectively in the fourth quarter, accounting for 36.83 per cent and 34.85 per cent of the annual operating income. (3) affected by the "fraud and compensation" incident, since 2017, the state has adjusted the policy for issuing financial subsidies for new energy vehicles, and the conditions for financial subsidies for downstream new energy vehicle enterprises have been stricter, and the subsidies have taken longer to arrive at the accounts. To a certain extent, this also indirectly affects the payback time of accounts receivable of upstream negative material manufacturers.
At the end of 2018, the balance of Xiang Fenghua's accounts receivable was 258.9998 million yuan, an increase of 18.5537 million yuan, or 7.72 percent, over the end of the previous period. The main reasons are: (1) the expansion of the company's production and sales scale accelerated in 2018, and the sales revenue was 207 million yuan in the fourth quarter. Accounting for 34.85% of the main business income in the whole year, this part of the shipment basically forms accounts receivable; (2) in 2018, the state tightened a series of "deleveraging" monetary policies, resulting in difficulties in corporate financing and cash flow, which greatly affected the company's sales rebate. As of December 31, 2018, the balance of accounts receivable within one year of the company's account age is 205.0468 million yuan, accounting for 83. 54% of all accounts receivable balances. The overall aging structure of accounts receivable is OK. At present, the company is taking measures to actively increase the recovery of accounts receivable, with the implementation of the national investment and financing policies to support small and medium-sized enterprises, the cash flow of enterprises will gradually improve, and the situation of accounts receivable is expected to improve in 2019.
Xiang Fenghua said that the fund-raising investment project is mainly focused on expanding the production capacity of graphite anode materials, further enhancing research and development capabilities, strengthening the main business of graphite anode materials, and enhancing the company's sustainable development ability and sustainable profitability. This fund-raising investment project is a construction project of 30000 tons of high-end graphite anode material production base. With the completion and operation of the fund-raising investment project, the production capacity of natural graphite and artificial graphite will be significantly increased, and the R & D capability will be further improved, which will help to enhance the level of market share and brand influence of the company. And for the future business development to train technical professionals, to further enhance the overall competitiveness of the company.