Source of this article: Entrepreneurship Circle Author: Huang Yukun
article | Reporter Huang Yukun
The new energy track is on fire, and the stock prices of a number of listed companies that are at the forefront of industry chain have soared. Fengyuan Shares (002805.SZ) is one of them. Not only did its stock price hit a record high in July, its chairman and actual controller Zhao Guanghui climbed to the top of the richest man in Dongzaozhuang due to the surge in market value.
Fengyuan Shares’ recently disclosed semi-annual report shows that in the first half of this year, the company achieved operating income of 710 million yuan, a year-on-year increase of 126.05%; net profit attributable to the parent company was 94 million yuan, a year-on-year increase of 316.02%. After the semi-annual report was disclosed, Fengyuan Shares accepted a conference call from more than 200 institutions including Changling Asset Management and Tongan Investment on the same day. On August 2, more than 30 institutions including Tuoling Fund and Zhongdao Investment went to Fengyuan Shares for on-site exchanges.
Fengyuan shares stated that the company's performance has increased significantly, mainly due to the rapid development of the new energy industry and strong demand from downstream customers. With the gradual release of the production capacity of the company's new lithium battery cathode material production line, the company's lithium battery cathode material production and sales have increased significantly compared with the same period last year, bringing positive contributions to the company's performance.
It is worth noting that the asset-liability ratio of Fengyuan Shares continues to increase, and short-term borrowings have increased significantly. At the end of June, short-term borrowings were 838 million yuan, an increase of 305.55% from the beginning of the year, while the company's monetary funds during the same period were 615 million yuan. Not long ago, the China Securities Regulatory Commission approved Fengyuan's non-public issuance of no more than 53 million new shares, and the total amount of funds raised was no more than 940 million yuan. This is the company's second scheduled increase in two years.
A research report from Guosheng Securities stated that the scheduled issuance of Fengyuan shares is imminent, which is expected to further assist the company’s construction of new production capacity, ease the company’s liquidity pressure, and reduce financial costs. As of now, the target and price of Fengyuan Shares' private placement have not been announced. The reporter called the contact number of Fengyuan Shares' secretary-general many times, but no one answered.
Transformed into new energy, turning side business into main business
As the penetration rate of domestic new energy vehicles continues to increase, the industry prosperity of lithium iron phosphate cathode materials continues to heat up. Data from the Gaogong Industrial Research Lithium Battery Research Institute (GGII) shows that China’s lithium iron phosphate cathode material shipments in the first half of 2022 were 410,000 tons, with a month-on-month increase of 517% and a year-on-year increase of 130%. Judging from product price trends, the overall average price of lithium iron phosphate materials increased by more than 40% in the first half of the year.
Affected by this factor, a large number of cathode material manufacturers experienced rapid growth in the first half of the year. Data show that Fengyuan shares achieved operating income of 710 million yuan in the first half of the year, a year-on-year increase of 126.05%; net profit attributable to the parent company was 94 million yuan, a year-on-year increase of 316.02%, and both revenue and profits hit new highs since listing.
Fengyuan Co., Ltd. was established in 2000. It initially started in the oxalic acid chemical industry. After being listed on the Shenzhen Stock Exchange in July 2016, the industry began to transform into new energy lithium battery cathode materials. In the first half of this year, Fengyuan's lithium battery cathode materials contributed 577 million yuan in revenue, accounting for 81.37% of total revenue, an increase of 20.45% compared to the first half of last year.
Fengyuan Shares successfully entered the capital market with its oxalic acid business, and is known as the "first share in Zaozhuang " by the outside world. In November 2016, it announced the establishment of 's wholly-owned subsidiary Fengyuan Lithium Energy to enter the field of cathode materials. It took more than two years of preparation before it was officially put into production. From 2019 to 2021, cathode materials contributed 44.95%, 36.84% and 68.70% of Fengyuan Shares’ operating income respectively. In the 2021 annual report, Fengyuan Shares stated that the company’s main business is transforming into lithium battery cathode material business, supplemented by oxalic acid business.
In the first half of this year, Fengyuan's lithium iron phosphate cathode materials and oxalic acid products achieved operating income of 577 million yuan and 131 million yuan respectively, accounting for 81.37% and 18.40% of total revenue respectively.
In fact, with the current situation of the new energy track being hot, in addition to Fengyuan Shares, many companies are also entering the lithium iron phosphate industry across borders. Longpan Technology (603906.SH) is a top-ranking lubricant company. Starting in 2021, the company has entered the field of lithium iron phosphate cathode materials through independent research and development, equity acquisition, etc.In the first half of this year, Longpan Technology's operating income increased by 371.12%. The company said that this was mainly due to the increase in sales revenue of lithium iron phosphate cathode materials. A research report from Shenzhen Hong Kong Securities stated that according to GGII data, in the first half of this year, the prices of lithium iron phosphate and ternary cathode main materials increased by 89% and 48% respectively year-on-year. The main reason was that the prices of upstream nickel, cobalt, manganese sources and lithium ores soared, resulting in an increase in the prices and costs of ternary precursors and lithium salts, which were then transmitted to the cathode main materials.
In a recent research activity, Fengyuan Shares responded to the issue of rising upstream raw materials that investment institutions are more concerned about. Fengyuan shares stated that the company has a stable supplier guarantee system, has signed long-term agreements with core suppliers at agreed prices, and has locked in the supplier's supply volume. In addition, the company's 1,000-ton clay lithium extraction pilot line is also being actively promoted.
short-term borrowings increased sharply, and the actual controller Zhao Guanghui participated in the private placement of
. As a "rising star" in lithium battery cathode materials, Fengyuan Shares is accelerating the expansion of production capacity to compete for the market.
In its semi-annual report, Fengyuan Co., Ltd. stated that in terms of the construction of lithium iron phosphate material production lines, the 40,000 tons of Zaozhuang base and the 25,000 tons of Anqing base are expected to be completed and put into trial production by the end of August and September this year respectively. In order to accelerate the construction and release of production capacity, the first phase of the 50,000-ton production line at the Yuxi base has been adjusted from batch construction to one-time construction. It is expected to be completed and put into trial production by the end of November. In terms of the ternary material production line under construction, the high-nickel ternary 8,000-ton production line entered equipment debugging and other stages at the end of July.
However, with the further development of the cathode material business, Fengyuan Shares' asset-liability ratio continues to increase. As of the end of June, Fengyuan's asset-liability ratio was 57.89%, an increase of 18.92% from the beginning of the year. The reporter noticed that at the end of June, Fengyuan Co., Ltd.’s short-term borrowings were 838 million yuan, an increase of 305.55% from the beginning of the year, while the company’s monetary funds at the end of the same period were 615 million yuan.
html On July 2, Fengyuan shares' private placement was approved by the China Securities Regulatory Commission. This private placement plans to raise no more than 940 million yuan. The investment projects with raised funds are the "Production Base Project for Lithium Iron Phosphate Cathode Materials with an Annual Production of 50,000 tons of Lithium Batteries" and the "Supplementary Working Capital Project."Although all the issuance targets of this private placement have not yet been determined, the company’s chairman Zhao Guanghui has determined that the subscription amount will be no less than 30 million yuan and no more than 90 million yuan. Public information shows that Zhao Guanghui was born in Zaozhuang, Shandong in 1964. He has been the chairman of Fengyuan Co., Ltd. since its establishment. Zhao Guanghui is the technical founder of the company's oxalic acid series products and has presided over the R&D and innovation work of many of the company's core technologies over the years.
It is worth mentioning that Zhao Guanghui reduced his holdings of Fengyuan shares many times from January to March 2021, with a cumulative reduction of 3.68 million shares, cashing out approximately 52 million yuan. As for the reason for this reduction, Fengyuan Co., Ltd. said that it was the capital need to repay the previous stock pledge financing borrowings. As of the end of June this year, Zhao Guanghui held a total of 59.6171 million shares of Fengyuan shares, and held 33.51% of shares. He was the actual controller of Fengyuan shares. For
’s participation in the fixed increase, Zhao Guanghui issued a “Letter of Commitment Regarding No Situation or Plan of Reduction of Shareholdings during a Specific Period” on April 13, stating that he would not reduce his holdings of the company’s shares and within 6 months from the date of the issuance of the commitment letter to the completion of the non-public issuance, and that he had no plans to reduce his holdings.
In terms of fund holdings, as of the end of June, a total of 8 funds held a total of 5.3324 million shares of Fengyuan shares. Among them, Sino-European Innovation Future Hybrid (LOF) liquidated 3.7081 million shares of Fengyuan shares it held in the second quarter. China New Energy Innovation Stock Fund therefore became the third largest shareholder of Fengyuan shares.
The fund manager of the China New Energy Innovation Stock Fund is Zheng Zehong, the "Energy Brother" of China Asset Management. He said in the fund's 2021 annual report that specifically regarding the fund's investment, more positions will be concentrated in sub-segments that will still see both volume and price rise in 2022. At the same time, the real leaders in the midstream segment will be selected and strive to achieve excess returns. In the first quarter of this year, China New Energy Innovation Fund bought 3.5814 million shares of Fengyuan shares. Although it failed to enter the top ten positions, it has become the fund's "invisible heavyweight stock."
Judging from the stock price performance, it is obvious that Fengyuan shares did not disappoint Zheng Zehong.From June to early July, the stock price of Fengyuan shares continued to set new highs and hit a record high, reaching a maximum of 74.15 yuan. Based on the lowest point in April and the highest point in July this year, Fengyuan's share price has increased 2.5 times. The leap in
's stock price has also made Zhao Guanghui's worth rise all the way. At the beginning of this year, Shandong Business Daily released the 2022 Shandong Stock Rich List. Among the 100 Shandong private entrepreneurs on the list, Zhao Guanghui and Cheng Zhongfa from Zaozhuang, Shandong were on the list with a wealth creation value of 1.882 billion yuan and 2.439 billion yuan respectively. Zhao Guanghui, the former richest man in Zaozhuang, was surpassed by Cheng Zhongfa.
Today, as the share price of Fengyuan shares has soared, if calculated based on the current value of the stock holdings, Zhao Guanghui's wealth has exceeded that of Taihe Technology chairman Cheng Zhongfa, and has regained the title of the richest man in Zaozhuang.
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