5 boards in 14 days! BYD, a pharmaceutical company whose shares soared 106% and whose financial fraud was a thing of the past?

Spark Global Limited reports:

The restructuring of controlling shareholders has not yet settled, Yan ‘an Bikang signed the “big order” first.

On the evening of July 19, Yan ‘an Bikang (002411.SZ) announced that the holding subsidiary Jiujiu Technology recently signed a “long-term cooperation agreement” with BYD supply chain, the two sides on Jiujiu Technology to BYD supply chain long-term supply of lithium hexafluorophosphate reached an agreement.

Affected by the news, Yan ‘an Bikang rose 10.01% in the morning trading on July 20, closing at 8.79 yuan/share, with a total market value of 13.47 billion yuan.

In the 14 trading days since July, Bikang Yan ‘an has been in the rise for 9 days, among which it gained 5 daily limits on July 2, 9, 13, 15 and 20, with a monthly increase of 58.95%. The company’s shares have surged 106.82% since April 1 this year. The stock had 66,000 shareholder households at the end of the first quarter.

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(Stock price trend of Yan ‘an Bikang since April)

It is understood that in addition to Yan ‘an Bikang, Tianji shares, more than more fluorine also recently signed with BYD lithium hexafluorophosphate supply cooperation agreement. Time Finance called Yan ‘an Bikang several times for questions related to the cooperation and the company’s business situation, but no one answered the phone.

The production capacity is 5000 tons, accounting for only 5% of the revenue
“Is this the underrated new energy pharmaceuticals?” A cooperation agreement announcement, Yenan will Kang’s stock appeared in such a voice.

According to Yan ‘an Bikang on July 19 evening announcement, its subsidiary Jiujiu Technology and BYD supply chain signed a “long-term cooperation agreement”, the two sides negotiate to determine the supply and procurement of lithium hexafluorophosphate products.

It is understood that Jiujiu Technology is a wholly-owned subsidiary of Yan ‘an Bikang, which belongs to the new energy, new materials and chemical industry. According to the financial report, Jiujiu Technology in 2020 to achieve revenue of 1.404 billion yuan, down 5.94% year-on-year; Net profit reached 154 million yuan, up 42.8% year on year; However, its net cash flow from operating activities was 44.11 million yuan, down 68.23 percent year on year.

Specifically, Jiujiu will supply to BYD under the premise that the product meets the technical parameters, quality requirements and the price has market competitiveness, and the supply from July to December 2021 is not less than 1150 tons; In 2022, the supply shall not be less than 3,360 tons; The supply in 2023 shall not be less than 3360 tons.

As early as July 1, yanan will reply investors to ask questions, said kang on interactive platform company subsidiary jiujiu long science and technology production of six fluorine for lithium battery electrolyte electrolyte lithium phosphate products, the main customers for the downstream production electrolyte and lithium battery business, including domestic new main bond, shanshan shares by listed companies, gift materials, byd, etc.

It is worth mentioning that Xinchebang proposed to buy 74.24 percent stake of Jiujiu Technology for 2.2 billion yuan in November last year, but the deal was abruptly terminated in January this year.

It is not yet clear whether it will be the right choice to keep the technology for the long term.

As a listed pharmaceutical company, Yan ‘an Bikang’s crossover is a bit “fierce”. Before 2020, Yan ‘an Bikang was still “conscientious” in the pharmaceutical business, but now it is better known as the new energy business.

Yan ‘an Bikang mentioned in its 2020 financial report that the current design capacity of the company’s existing lithium hexafuorophosphate device is 5,000 tons/year, and the actual capacity reaches 6,400 tons/year. So how much is the “lithium content” of Yanan Bikang?

According to the financial report in 2020, the revenue of Yan ‘an Bikang’s new energy business reached 373 million yuan, accounting for only 5.37% of the revenue. The revenue of the pharmaceutical business segment reached 4.458 billion yuan, accounting for 64.12% of the revenue, which was the main source of revenue. Next came the pharmaceutical production business, which realized the revenue of 1.031 billion yuan, accounting for 14.83% of the revenue. However, revenue in the pharmaceutical business segment and pharmaceutical manufacturing business fell 22.54 percent and 49.12 percent, respectively, from the previous year.

In addition to the decline of the main industry, new energy has become the “life-saving straw” of Yan ‘an Bikang.

Since September last year, the price of lithium hexafluorophosphate has continued to rise, several times to refresh the record high. “The current price of lithium hexafluorophosphate has reached 385,000 yuan per ton, which is very expensive,” Mo Ke, founder of Realli Research, told Time Finance on July 20. However, qualified lithium hexafluorophosphate production has certain difficulties.”

Another market said that this Saturday the mainstream offer of lithium fluorophosphate has been in 360,000 ~ 430,000 yuan/ton, compared with last week up 10,000 yuan/ton. Before that, in July 2020, its lowest price was less than 70,000 yuan/ton, which has increased more than 5 times since then.

Everbright Securities forecasts that the amount of lithium hexafluorophosphate needed in the power battery field will be about 15,000 tons in 2021 and about 54,400 tons in 2025, with an average annual growth rate of about 40%. The market has broad prospects.

Raw material prices continue to rise, if the Jiujiu Technology 5000 tons/year capacity, Yenan Bikang last year income of 373 million yuan seems to be “not up to expectations”.

Mo Ke said this analysis, in the production capacity ramp up stage, the company needs to solve the problem of stable production and investment, revenue may not be the most critical. “If the quality is not stable, downstream customers are generally not willing to take, the price will not be able to go up.”

Everbright Securities also pointed out that the production of lithium hexafluorophosphate higher barriers to entry, even if the current industry start-up rate, production up obviously, but the main increment is still concentrated in mature technology, product quality, customer stability of the leading enterprises. Moreover, due to the high investment intensity and long expansion cycle of lithium hexafluorophosphate project, new entrants need sufficient financial support and long return cycle bearing capacity.

For the second half of the price trend of lithium hexafluorophosphate, Mo Ke analysis said, the rise space should not be too big. “But this cooperation between Bikang Yan ‘an and BYD will form a demonstration effect, which will benefit the company’s future development.” “Murko said.

At the same time, Time Finance noted that Yan ‘an Bikang Hexafluorophosphate Lithium’s gross profit margin in 2019 was 12.99%, while the same industry companies Tianci Materials and Xinzhoubang’s gross profit margin in the battery material business was 27.16% and 25.76%, respectively.

Guotai Junan “forced” into the new shareholders
On the evening of July 19, Yan ‘an Bikang also disclosed the progress related to the restructuring of controlling shareholders.

Bikang said it received a “Notice of the Progress of the Application for Restructuring” from its controlling shareholder, Xinyi Bikang, which received the “Civil Order” from the Intermediate People’s Court of Yan ‘an, Shaanxi Province on July 18, 2021.

According to the Civil Order, because Shaanxi Beidu New Materials Company and Xinyi Bikang have a highly mixed legal person relationship, Orient Securities’ dumping of pledged shares will affect the bankruptcy proceedings according to law. Xinyi Bikang has applied to the court for property preservation measures against all the shares held by Shaanxi Beidu in Yan ‘an Bikang.

Time Finance has learned that Xinyi Bikang holds 472 million shares of Yan ‘an Bikang, or 30.81% of the shares, all of which are frozen at present. Shaanxi Beidu is the eighth-largest shareholder of Yan ‘an Bikang and currently holds 11.8 million shares, or 0.77 percent. Among them, the number of shares in the state of pledge was 11.56 million, accounting for 98.02% of the total shares held by the company.

On July 20, the bank of China Beijing lawyer at RuanWanJin told the financial times, said the company personality confusion, refers to the company and the shareholders or another company personality completely mixed as a whole, fully behind by its shareholder or controlled by another company, and this kind of control or make the company loss of independence or in a business can’t independent decisions. Because of the existence of this relationship between the two parties, it will affect the bankruptcy proceedings.

In addition to this, yan kang had previously announced, xinyi will kang, Li Zongsong and guotai junan stocks pledged repo trading, not by the agreement to repay the debt, the Shanghai financial court to auction or sell off xinyi will kang holds 37.368 million shares of the company to pay off the debt, but the shares in ali judicial auction platform to auction end.

After the application of Guotai Junan, Shanghai Financial Court issued the “Execution Order”, ruling that the 37.368 million shares of the company held by Xinyi Bikang should be compensated to the application executor Guotai Junan. According to the first-quarter report, Guotai Junan currently holds 22.22 million shares, with a shareholding ratio of 1.45%. Based on the closing price on July 20, the market value of the shares is 195 million yuan 6A862A84-3FD9-4291-B325-EEF0866A8989.jpeg
Photo Source: Yan ‘an Bikang Quarterly Report

Time Finance found that in the past 2020, Yan ‘an Bikang once stood in the spotlight for financial fraud.

On March 26, last year, for suspected letter and violations, Yan ‘an Bikang was placed on file by the CSRC investigation. On August 18, Shaanxi Regulatory Bureau found out that Bikang took up the funds in the name of acquisition and channeled the funds to related parties through extremely covert engineering matters.

According to calculation, from 2015 to 2018, the controlling shareholders and their related parties of Yan ‘an Bikang occupied a total of 4.497 billion yuan of non-operational funds of the listed company, and there were major omissions in the financial statements of Yan ‘an Bikang in 2015, 2016, 2017 and 2018. The investigation results show that Yan ‘an Bikang inflated monetary funds through false financial bookkeeping and falsified bank statements.

For this reason, Yan ‘an Bikang and the actual controller Li Zongsong were respectively fined 600,000 yuan, some of the company’s Dong Jiangao are among the punishment. Soon after, Yan ‘an Bikang split Jiujiu Technology to the GEM listing on the matter ended.

But this year, Yan ‘an Bikang seems to have “changed its face.”

In the first quarter of 2021, Bikang Yan ‘an achieved revenue of 1.444 billion yuan, down 11.45% year on year; Net profit reached 133 million yuan, a year-on-year increase of 110.93%. Prior to 2020, Yan ‘an Bikang mother net profit loss of 1.071 billion yuan, a year-on-year decline of 546.77%.

It is worth mentioning that in the first quarter of this year, Bikang Yan ‘an has achieved positive net profit growth for the first time since 2017.

On July 13, Yan ‘an Bikang released the results forecast for 2021 mid-term report that it is expected that the net profit attributable to the mother in the first half of the year is 3.0 to 330 million yuan, with a year-on-year increase of 157.92% to 183.71%, due to the release of new energy product capacity of Jiujiu Technology, which brings profit improvement.

However, as of the end of the first quarter, Yan ‘an Bikang’s receivables reached 4.505 billion yuan, after averaging more than 4 billion yuan in 2019 and 2020. At present, its short-term borrowings are 2.281 billion yuan and liabilities total more than 10.4 billion yuan, but the monetary funds are only 562 million yuan.

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