Citic Bo develops the "money scene" of BIPV, it is difficult to be optimistic, to deal with the "change of face" caused by the lack of risk, and the intensive reduction of institutions and senior executives to "run away".

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As a major domestic photovoltaic bracket manufacturer, Citic Bo (688408.SH) has been questioned because of its performance "changed face" shortly after its listing. Perhaps to shake off the decline, Citic Bo is looking to other photovoltaic businesses, such as BIPV (photovoltaic building integration).

On December 20th, Citic Boxin signed a contract for rooftop distributed photovoltaic power generation, which is expected to become the largest BIPV project in the world after completion. However, senior figures in the photovoltaic industry told the Financial Associated Press that the economic benefits of BIPV are more reflected in the future, and there is a larger hype in the secondary market at this stage.

Contrary to the high share price in the secondary market, Citic Bo's revenue fell and gross profit fell one year after its listing. In response to the query, the company issued two "clarification announcements on market rumors" in the fourth quarter, but the response also reflected the company's weakness in dealing with the differentiation of the market structure. As a result, the number of funds and other institutions stationed in the company has changed from 181 in the second quarter to 36 in the third quarter.

BIPV is in its infancy.

On December 20, according to media reports, Suzhou CITIC Bo New Energy Technology Co., Ltd. and EPC China Power Construction Group Jiangxi Electric Power Design Institute Co., Ltd. formally signed the roof distributed photovoltaic project contract of Jiantao Base (Phase I 120MW) in Gao'an City, Jiangxi Province. The project all adopts CITIC Bo "Zhiding" BIPV solution and has entered the construction stage. After completion, it is expected to become the largest single BIPV project in the world.

A few days earlier, it was reported that the photovoltaic power station at the Best Base of Shuncheng Ceramics Group, the largest single BIPV project in South China, invested by Southern Electroweb Zhuhai Comprehensive Energy Company and contracted by CITIC Bo, was officially connected to the grid.

In this regard, senior figures in the photovoltaic industry told the Financial Associated Press that CITIC Bo has expanded its BIPV project in recent years, relying on the basis of photovoltaic brackets, but because of its late start, its BIPV business income is relatively low, only 1.44% in 2020. "because the economic benefits of BIPV are more reflected in the future, this is the poor performance of the main industry this year, the company's focus on the market shift, in the secondary market speculation is very large. The person said.

"BIPV this market segment, the future is very bright, the reality is very bony." The person explained that BIPV is currently driven by no clear subsidy policy, and its economic benefit is much worse than that of BAPV (photovoltaic ancillary buildings). It is more suitable for new buildings, the cost of retrofitting BIPV in old buildings is too high, and there is also the question of whether building energy conservation can be truly integrated.

A reporter from the Financial Associated Press noted that Citic's share price has performed well since it went public last year, especially during the period from May to July this year, when there was a straight climb, rising from a low of 111.67 yuan per share to a high of 274.21 yuan per share. As of December 20, Citic Bo closed at 202.96 yuan, with a total market capitalization of about 27.5 billion yuan, while the price-to-earnings ratio (PE (TTM)) was 167.22. Citic's valuation premium far exceeded the industry average.

On the other hand, Citic Bo's performance paper is dwarfed by its share price. According to the financial report, in the first three quarters of 2021, Citic's operating income was 1.717 billion yuan, down 6.84% from the same period last year, while its net profit was 52 million yuan, down 69.77% from the same period last year. The non-net profit of the mother deduction was 11.6384 million yuan, down 92.6% from the same period last year. The performance changed greatly after only one year on the market, especially the net profit dropped sharply by 70%.

Dealing with the weakness of market differentiation

The stock price is up and the performance is down, and the market begins to question the value of CITIC. In the face of relevant questions, on December 16, CITIC Bo issued a "clarification announcement on market rumors", which is also the second time that the company has issued such an announcement in the fourth quarter. Revenue decline, the company said: affected by the epidemic, component prices rose sharply, the photovoltaic industry in 2021 centralized ground power station project operating rate lower than the same period last year.

Although Citic Bo attributed the decline more to the industry, a reporter from the Financial Associated Press noted that in fact, apart from Citic Bo, few leading companies in the photovoltaic industry reported a year-on-year decline in profits in the first three quarters of this year.

In this regard, the above photovoltaic industry veterans told the Financial Associated Press that although the photovoltaic industry has ushered in growth this year, there is a great differentiation in structure. "the growth in installed capacity is mainly due to distributed photovoltaic, while centralized photovoltaic installation has declined. This is also the main part of CITIC's business affected." It is reported that because of the high cost of tracking support and the general lighting conditions of distributed power station site, tracking support is mainly used in centralized power station in our country, but its application in distributed power station is insufficient.

In addition, the net cash flow of CITIC Beau's operating activities continues to be negative. The company believes that since the second quarter of 2021, steel prices have risen rapidly, and the company has adopted the strategy of steel stock preparation in order to control the rising cost of steel prices. this led to negative operating cash flow in the second and third quarters of the company. And this also shows that CITIC Bo is indeed under pressure in the procurement link.

In terms of gross margin, Citic Bo's operating margin from January to September in 2021 was 9.73 percentage points lower than that in the same period in 2020. It believes that the rising prices of raw materials such as steel, logistics costs and other factors lead to an increase in the company's unit cost. The market environment of the support industry in 2021 is quite different from that in 2020. due to the lower start-up scale of Jizhong power station in 2021 and the fierce market competition, the company has not completely passed on the increase in steel prices to customers in order to further consolidate its market share.

As for the failure to transfer the cost of raw materials, a market analyst told the Financial Associated Press that to a certain extent, this shows that the competitiveness of CITIC Bo products is not strong enough. Furthermore, if the domestic leader needs to make obvious concessions on cost transfer, it also shows that the acceptance of China's photovoltaic support industry in the domestic industrial chain is not high.

In order to make up for the lack of domestic application scenarios of tracking brackets, CITIC Bo has actively opened up overseas markets in recent years, and expanded to other countries around the world with India as the fulcrum. However, its overseas sales are not stable. The Indian market, which accounted for 86.54% (373 million yuan) of overseas sales revenue in 2018, shrank sharply to almost disappear in 2017 and 2019. The top five customers of the company changed frequently from 2017 to 2020, especially overseas customers are different from year to year, which also reflects the lack of stickiness of CITIC blog customers.

From institutional pursuit to intensive reduction of holdings

Although the performance is not very satisfactory, brokerages are favored by CITIC Bo, and its share price can not rise without the praise of agency rating reports. From September 2020 to December 2021, brokerages including Soochow Securities, Tianfeng Securities, Ping an Securities and Oriental Securities maintained their buy or increase ratings for a total of 23 times.

Among them, sponsor institution, lead underwriter Anxin Securities is the most eye-catching, Anxin Securities New Energy and Power equipment Chief analyst 5 times, significantly higher than other securities firms, not only evaluation of CITIC Bo "global leadership, performance take-off", but also made 2020-2022 revenue, profit continuous growth forecast, but the reality continues to break away from expectations.

Citic was indeed very popular with institutional investors in the second quarter, when its share price soared. The semiannual report of 2021 revealed that a total of 181 institutions held shares in CITIC, including 176funds, 1 QFII, 2 social security funds and 2 securities firms.

However, this enthusiasm appears to be getting colder after the correction of Citic Bo's share price. By the third quarter, the number of institutions that had previously held shares was only 36, and most of them had withdrawn, including two brokerages with a collection of financial management-- Anxin Capital Management and Eastern Securities Management. The shareholders behind these two asset management are CITIC Securities and Oriental Securities, which are bullish on CITIC.

In addition to institutional holdings, Citic's original shareholders and executives are also cashing out. On August 30, 2021, Citic Bo lifted the ban on the sale of old shareholders with a market capitalization of more than 4 billion. Since September, CITIC Bo has issued several announcements about the reduction and correction of Dong Jiangao's plan, as well as the illegal reduction of core technical personnel. Citic Bo Dong Secretary and Deputy General Manager resigned due to personal career planning reasons.