Bank Of China Cashmere Industry ((000982): 2 Billion Lithium Battery Raw Materials Cross-Border Into New Energy Deducting The First Profit In Seven Years

From cashmere industry to new energy, the restructured cashmere industry of Bank of China (000982. SZ) gradually revived through cross-border investment.

In March this year, through the establishment of a new company and the acquisition of two companies, the Bank of China entered the new energy industry from the new energy lithium battery materials as the entry point, and then entered the downstream application end market of new energy in August. At present, it has an annual production capacity of 4200 tons of lithium iron phosphate.

With the recovery of cashmere industry, textile industry and the help of investment in new energy companies, in the first three quarters of this year, the operating income of BOC cashmere industry reached 296 million yuan, a year-on-year increase of 492.53%; The net profit was 38.6 million yuan, up 138.73% year on year; The net profit after deducting the recurrent profit and loss also ended the loss of the previous six years, with a profit of 22.1901 million yuan, an increase of 735.41% year on year.

In order to further expand the production and sales scale of lithium iron phosphate, a few days ago, Bank of China cashmere industry disclosed that it would transfer 100% equity of Sichuan xinruiheng lithium energy technology Co., Ltd. (hereinafter referred to as "xinruiheng") at a price of 0 yuan, and its paid in registered capital of 50 million yuan will be used to construct an 80000 T / a lithium iron phosphate project as cathode material for lithium iron batteries in Germany and Argentina Ecological Economic Industrial Park.

However, it should be noted that the total investment amount of this expansion project is as high as 2 billion yuan, which is undoubtedly a large-scale investment project for the Bank of China cashmere industry with a total assets of 1.2 billion yuan. By the end of September this year, the company's monetary capital was 291 million yuan, accounting for 14.55% of the total investment of this project.

Expand the scale of LiFePO4 by purchasing xinruiheng

According to the investment plan, BOC cashmere intends to transfer 100% equity of xinruiheng held by Chongxin Xinda, with the corresponding subscribed registered capital of RMB 50 million. As the paid in registered capital of xinruiheng is 0 yuan, the transaction price is 0 yuan, and the equity transaction price is 0 yuan.

After the completion of the transaction, the Bank of China cashmere will pay 50 million yuan of registered capital to xinruiheng, and xinruiheng will become a wholly-owned subsidiary of Bank of China.

The reporter of Changjiang business daily noted that xinruiheng is a new company established this year. By the end of October this year, xinruiheng had a total assets of 1.604 million yuan, total liabilities of 1.3 million yuan, net assets of - 39600 yuan and receivables of 100000 yuan. In the first ten months, the operating income of xinruiheng was 0 yuan, the net profit was - 39600 yuan, and the net cash flow from operating activities was - 1039600 yuan.

Although it has not been established for a long time and is still in an insolvent state, xinruiheng has signed a project investment agreement with the Management Committee of Deyang ABA eco economic Industrial Park on September 13 this year, and plans to invest in and build an 80000 T / a lithium iron phosphate production line for lithium battery cathode material and supporting facilities in the park.

According to the announcement, the total investment of the above-mentioned lithium iron phosphate production line project is expected to be 2 billion yuan, including 1.2 billion yuan of fixed assets and 800 million yuan of working capital respectively. The total construction period of the project is 4 years. In the first phase, it is planned to build a production line with an annual output of 20000 tons of lithium iron phosphate as cathode material for lithium batteries. The first phase of construction is expected to be completed within 12 months from the date when the conditions for commencement are met.

At present, xinruiheng is carrying out the preliminary work of environmental impact assessment, energy assessment, stability assessment, safety assessment, feasibility study, preliminary design, etc. after the above procedures are completed, the construction can be started only after the land use, project planning, construction permit and other procedures are handled.

As the Bank of China cashmere industry has the annual production capacity of 4200 tons of lithium iron phosphate, and the production and sales operation is good, the company's investment is also intended to further expand the production and sales scale of lithium iron phosphate, and make full use of the rich local raw material resources for deep processing, so as to better play the advantages of the production chain by building a high-quality lithium rich material production base, Accelerate the transformation and upgrading of the company.

After the restructuring, the cross-border new energy dual main industries are parallel

According to the data, the predecessor of BOC cashmere is Ningxia shengxuerong, which has been listed for 21 years. In 2007, the controlling shareholder of the company changed from Saint snow velvet group to Bank of China International Group.

However, in recent years, the main business of Bank of China cashmere has basically lost its profitability. Since 2015, it has deducted non net profit loss for six consecutive years. In 2018 and 2019, the company's net profit was 2.983 billion yuan and 2.732 billion yuan respectively. The company's shares were warned of delisting risk. In 2019, bankruptcy reorganization was carried out, and the controlling shareholder was changed to Hengtian Jinshi.

It is not until 2020 that the restructured Bank of China cashmere industry has completed asset light operation, and at the same time, the reversal of accounts receivable impairment reserves, investment income of financial products and other non recurrent profits and losses boost the company to turn around losses and smoothly "take off the hat".

The cashmere industry of Bank of China has also admitted that cashmere industry is characterized by periodicity, seasonality, regionality and capital intensity. It is small in overall scale, highly competitive, sensitive to economic cycle and season, volatile raw material prices and low profits in the process of processing. In addition, the company's productive assets are stripped after restructuring, and the share capital is doubled. It only relies on cashmere raw material Trade and OEM of bulk commodities, Profit pressure is high.

In this context, the restructured Bank of China cashmere industry has actively carried out double main business operations. Last year, it acquired Beijing Junlan investment as a platform for industrial investment activities, trying to cross industry investment, M & A and other opportunities.

In March this year, BOC cashmere invested 150 million yuan to establish Chengdu Xiangheng new energy materials Investment Management Center (limited partnership) with Beijing Junlan investment, which was used to increase capital and acquire 100% equity of Dujiangyan juhengyi and 80% equity of Sichuan liguu new energy, with a total transaction price of 50 million yuan. Through this acquisition, the Bank of China cashmere entered the new energy industry from new energy lithium battery materials.

In July this year, BOC cashmere set up a wholly-owned subsidiary, Shanghai Sanling, with its own capital of 54 million yuan, as a wholly-owned asset holding platform for the company to carry out power exchange projects and enter the downstream application end market of new energy.

With the recovery of textile industry and the benefit of investment in new energy companies, in the first three quarters of this year, the operating income of BOC cashmere industry reached 296 million yuan, an increase of 492.53% year-on-year; The net profit was 38.6 million yuan, up 138.73% year on year; After deducting the non recurring profit and loss, the net profit also turned into a profit of 22.1901 million yuan, a year-on-year increase of 735.41%, which was the first time that non net profit was deducted in recent seven years.

However, it should be noted that this 2 billion yuan project is undoubtedly an ultra-high-scale investment for the Bank of China cashmere industry, which has not yet fully recovered. As of the end of September this year, the total assets of BOC cashmere industry was only 1.241 billion yuan, with a debt ratio of 9.83%. The monetary capital was 291 million yuan, accounting for 14.55% of the total investment of this project.

As the source of the investment funds is the company's own and self raised funds, which is higher than the current book capital level of the company, there is uncertainty whether the later funds can be in place on time, and the project investment amount, implementation schedule adjustment, project income and profit also have the risk of not meeting the expectations.