Tianyu Ecology plans to hold Qinghai Poly Source and set foot in the field of lithium hexafluorophosphate

On the evening of February 22nd, Tianyu Ecology (603717) issued an announcement that in order to achieve its strategic layout and improve sustainable profitability, the company plans to invest no more than 610 million yuan in cash in Qinghai Juzhiyuan New Materials Co., Ltd. (hereinafter referred to as: Qinghai Juyuan). For its production capacity improvement and business development. After the capital increase is completed, the company will hold a 51% stake in Qinghai Juzhiyuan. This capital increase comes from Tianyu Ecological self-financing, including but not limited to its own funds and M & A loans.

The data show that the main business of Tianyu Ecology is landscape ecological engineering, and the company's operating performance is not satisfactory in recent years. The loss will be 157 million yuan in 2020 and 150 million yuan to 220 million yuan in 2021.

Qinghai Juzhiyuan was established on January 7, 2016 with a registered capital of 150 million yuan. Its business scope includes research and development, production and sales of lithium hexafluorophosphate, lithium battery cathode materials and lithium battery ternary materials.

Qinghai Juzhiyuan has 10 independent intellectual property rights (patents) for the production of lithium hexafluorophosphate-related products, and 11 patents are under application, totaling 21. Qinghai Juzhiyuan has been approved by the Management Committee of Chaidamu Circular economy Experimental Zone with an annual output of 6000 tons of high-end lithium hexafluorophosphate construction project, of which the first phase of the production line of 2000 tons of lithium hexafluorophosphate was completed in the second half of 2021. It has been approved by Delingha Emergency Management Bureau for trial production, but has not yet been formally put into production. Qinghai Juzhiyuan Phase II production line with an annual output of 4000 tons of lithium hexafluorophosphate is still under construction.

By the end of 2021, Qinghai Juzhiyuan had total assets of 882 million yuan and net assets of 91.3501 million yuan. The operating income in 2020 and 2021 was 0 yuan and 3.8177 million yuan respectively, and the net profit was-4.6747 million yuan and-28.0451 million yuan respectively.

In terms of performance commitment, Tianyu Ecology signed a gambling agreement with the seller, and the seller promised that the net profit of the audited company in Qinghai Juzhiyuan from 2022 to 2024 would not be less than 300 million yuan, 400 million yuan and 500 million yuan respectively. The assessment of net profit shall be calculated on the basis of the total amount of three years.

It is worth noting that the announcement also suggests that Qinghai Juzhiyuan products are greatly affected by the relationship between supply and demand in upstream and downstream industries, and there is a risk of product price fluctuations; Qinghai Juzhiyuan has been approved for trial production of "lithium hexafluorophosphate". However, the formal production license is being processed, so there is a risk that the formal production time of the product is uncertain. At present, the source of Qinghai Juyuan is in a state of loss, it has not been formally put into production at the stage of trial production, and the operating income is low, so there is a risk that the profit is lower than expected; in the course of operation, Qinghai Juzhiyuan may also face risks such as policy restrictions, technology iteration and so on. If the business development of Juzhiyuan in Qinghai does not reach the expected level, it will lead to the risk of losses in this transaction.

On the 22nd, the Shanghai Stock Exchange quickly issued an inquiry letter, with regard to the source of Tianyu Ecological Capital increase in Qinghai, requiring, combined with the current main business operation and profitability, to explain the reason and necessity of the re-acquisition of the source of loss in Qinghai. Explain what kind of talent reserve, technology accumulation, business resources and R & D capabilities the company has about lithium battery materials, and evaluate the risks and uncertainties of the lithium battery material industry, as well as the funds and resources needed to enable Juzhiyuan in Qinghai to achieve normal production.

The Shanghai Stock Exchange also asked Tianyu Ecology to explain the reasons why the 6000 ton lithium hexafluorophosphate production line in Qinghai Juzhiyuan has not yet been formally put into production, the estimated completion time of the formal production license and the impact of overdue completion, whether there are substantial obstacles to the aforementioned examination and approval procedures and specific countermeasures, and to analyze and demonstrate what kind of administrative examination and approval and production license are required for the Qinghai Juzhiyuan business to reach a mature commercial state, and whether there are substantive obstacles at present.