is also quietly changing in the context of global LCD panel pattern reconstruction.
Sanshan Co., Ltd. announced on the evening of June 9 that it plans to acquire LG Chemical's LCD polarizer business and related assets for US$770 million (approximately RMB 5.4 billion). This transaction is expected to constitute a major asset restructuring, but does not constitute a restructuring and listing.
Source: Company Announcement
Information shows that LG Chemistry belongs to LG Group. It began to carry out LCD polarizer business in 1997 and has become the industry leader since 2013. It is worth mentioning that LG Display, also a subsidiary of LG Group, will stop production of LCD TV panels in South Korea by the end of this year.
fixed-increase of 3.2 billion yuan to support
The above trading counterparts are LG Chemical and its subsidiaries China Lejin Investment, Nanjing Lejin, Guangzhou Lejin, and Taiwan Lejin. The transaction method is that LG Chemical has set up a holding company in China, and Sanshan Co., Ltd. acquires 70% of the holding company through capital increase, and LG Chemical holds the remaining 30% of the equity.
Source: Company Announcement
Specific transaction targets are: 100% equity of Beijing Lejin; Nanjing Lejin LCD polarizer business; Guangzhou Lejin LCD polarizer business; Taiwan Lejin LCD polarizer business in China; LCD polarizer assets directly held by LG Chemistry; intellectual property rights related to LCD polarizers directly held by LG Chemistry.
The above transaction is a cash acquisition. Sanshan Co., Ltd. will raise the transaction price through its own funds, private placement of shares raised funds, self-raised funds, etc. and pay according to the transaction progress. However, the implementation of the transaction is not subject to the approval of the China Securities Regulatory Commission for the private placement.
Sanshan Co., Ltd. also issued a plan for a private placement, intending to issue shares to the controlling shareholder Shanshan Group and its subsidiaries, as well as the indirect controlling shareholder subsidiaries, at a price of 9.31 yuan per share, raise funds to the controlling shareholder Shanshan Group and its subsidiaries, as well as the indirect controlling shareholder subsidiaries, and all of them will be used to increase capital of the above-mentioned holding companies to acquire the target assets.
As of the close of June 9, Sanshan Co., Ltd. was 12.51 yuan per share.
Source: Dongcai Choice
In terms of own funds, as of the end of the first quarter, the cash balance of Sanshan Co., Ltd. was 2.242 billion yuan, but at the same time, the company's short-term loan balance reached 3.892 billion yuan.
expansion business
Sanshan Co., Ltd. core business is the research and development, production and sales of lithium battery materials. It is a domestic manufacturer of lithium battery materials spanning the three major lithium battery materials, including positive electrode, negative electrode and electrolyte. It is one of the largest comprehensive suppliers of lithium battery materials in my country.
Sanshan Co., Ltd. said that through this acquisition, it entered the LCD polarizer market, which is dominated by only a few companies in the world, and continues to maintain the leading position of the original LG Chem in the LCD polarizer market, using its key solutions and technologies to expand its market share. The localized production of polarizers will help improve the self-sufficiency rate of my country's polarizer business, further improve the industrial layout, and enhance the overall competitiveness and sustainable development capabilities of listed companies. After the transaction of
is completed, the asset scale, sales revenue and operating capabilities of Sanshan Co., Ltd. will be further improved, and the company will become a leading enterprise in the domestic polarizer industry.
In 2019, Sanshan Co., Ltd. achieved main business revenue of 8.497 billion yuan, a year-on-year decrease of 2.78%; net profit excluding non-net profit was 161 million yuan, a year-on-year decrease of 46.88%, lower than the planned target disclosed in the company's 2018 annual report. The main reason is that the performance of lithium battery positive electrode materials business declined year-on-year.
Sanshan Co., Ltd. 's performance target set in the 2019 annual report is to achieve a year-on-year growth of main business revenue for the whole year, and a year-on-year growth of non-net profits is not less than 10%. However, in the first quarter of this year, due to the impact of the epidemic, the performance of Sanshan Co., Ltd. declined. The company achieved operating income of 1.222 billion yuan in a single quarter, a year-on-year decrease of 39.85%; a loss of 83.7 million yuan, while the company made a profit of 35.4 million yuan in the first quarter of 2019.
Local gaps to be filled
It is understood that the full name of the polarizer is polarized, which can control the polarization direction of a specific beam. The imaging of LCD modules must rely on polarized light. Without any polarizer, the LCD module cannot display images.The global polarizer market size exceeds 10 billion US dollars.
Source: Sanlipu annual report
At present, Japan and South Korea occupy most of the polarizer production capacity. According to TrendForce's calculations, the annual effective production capacity of polarizers in 2019 is expected to reach 566 million square meters. The top three manufacturers are LG Chem, Nitto Optoelectronics and Sumitomo Chemical, with a total market share of up to 65%, and their position is difficult to shake in a short period of time. Samsung SDI ranks fourth, accounting for 9% of global production capacity. Manufacturers in Taiwan, Chengmei Materials, Benmai and Lite Optoelectronics account for 15%. Mainland Chinese manufacturers Shengbo Optoelectronics, Sanlipu and Shengbaolai account for about 8%; the rest of the manufacturers account for about 3%.
Industry insiders said that as the entire display panel industry gathers in mainland China, the supporting facilities of polarizers have become very mature, and many polarizers are concentrated in East China and South China.
China has become the world's largest and fastest growing LCD market. Benefiting from the rapid development of my country's downstream panel industry, the demand for polarizers, as one of the core materials of panels, has steadily increased. Compared with the market share of domestic panel production capacity, the market share has exceeded 30%, and the supply relationship of local polarizers is still relatively scarce.
announcement shows that according to Wits View forecast data, the proportion of LCD TV panel shipments in mainland China will reach 58% by 2020. Assuming that my country's LCD panels under construction and production lines are fully loaded, the total polarizer area is 438 million square meters. According to IHS data, my country's polarizer production capacity in 2020 was only 207 million square meters, and the supply and demand gap reached 231 million square meters.
Source: Wu Keren Gao Jiachen China Securities Journal
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