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The performance of China's largest low-voltage electrical appliance company is weak. Does nancuhui inject nearly 10 billion photovoltaic capital to reverse the decline

at the Bund International Financial Summit held in mid November, Nan Cunhui, chairman of Chint Group, said that the photovoltaic industry would also start a new round of reshuffle. This is Nan Cunhui's latest public statement on the new energy industry. But for him, a photovoltaic asset with Chint's mark and a valuation of nearly 10 billion is breaking into the sight of the capital market

in the past 30 years, Nan Cunhui has brought Chint electric to the leading position of low-voltage electrical appliances in China. Moreover, in the photovoltaic field, Chint Group's photovoltaic business (then Chint solar) has also quietly stood on the height of the largest private photovoltaic enterprise in China

now, the two core industries of Chint Group are about to converge. Chint Electric will issue shares to purchase Chint's rights and interests in new energy development and raise supporting funds, which has been approved by the CSRC. The controlling shareholder Chint so that the operators can query the test results according to the conditions, and the day when the photovoltaic assets of the group are injected into the listed company is getting closer and closer

the latest revised transaction report shows that Chint electric purchased 85.40% equity of Chint new energy development, two parts of assets, and 100% equity of Yueqing Xiangru, Yueqing zhantu, Yueqing Fengyuan and Hangzhou taiku for a consideration of 9.371 billion yuan. The latter four hold 14.04% equity of Chint new energy development. In total, this restructuring will acquire 99.44% equity of Chint new energy development

after one year of operation, Nan Cunhui has not only made the photovoltaic industry that has been operating for 10 years obtain a valuation of nearly 10 billion, but more importantly, under the photovoltaic reshuffle tide he foresees, his industry can obtain capital protection in advance to calmly deal with the undercurrent surging in the industry

however, the paradox is that the secondary market reacted too calmly. On November 27, 2015, the day Chint electric first announced its acquisition plan and resumed trading, Chint Electric's share price rose only slightly by 1.03% that day. A year later, the news that the revised acquisition plan was approved by the CSRC also failed to significantly stimulate the company's share price. As of December 12, Chint's share price closed at 22 yuan, down 4.18%

the first share of low-voltage appliances encountered a performance bottleneck

investors may be more concerned about why Nan Cunhui injected Chint new energy development into Chint appliances at this point? In fact, the reality is much more subtle than the brilliant capital operation. At present, Chint electric, as the largest manufacturer of low-voltage electrical appliances in China, has entered the bottleneck period of operation. Therefore, the injection of new assets will undoubtedly first play a role in maintaining the growth of the performance of listed companies

in 2010, Chint electric was successfully listed and won the first share of A-share low-voltage appliances. In the first three years of listing, Chint electric ushered in rapid development. During this period, the company's revenue reached a breakthrough of 10 billion yuan, and its operating revenue in 2012 was 10.703 billion yuan, with an average annual growth rate of 30%. At the same time, the attributable net profit of the company also increased from 639 million yuan to 1.262 billion yuan, with an average annual growth rate of 41%

Chint appliances is mainly engaged in terminal appliances, distribution appliances, control appliances, construction appliances and other products, so its business segment is inextricably linked with the development of the domestic real estate market. The three years before listing coincided with the rapid development of the real estate industry, and Chint appliances achieved rapid performance growth

but soon, Chint electric encountered a business inflection point. With the overall growth of China's economy slowing down, the growth rate of the company's revenue and attributable net profit fell in. In 2015, the company's revenue and attributable net profit experienced negative growth for the first time since its listing. According to the annual report, Chint Electric's operating income and attributable net profit in 2015 were 12.026 billion yuan and 1.743 billion yuan respectively, with a year-on-year decline of 5.80% and 4.88% respectively

Chint's third quarterly report this year shows that in the first nine months, the company achieved operating income and attributable net profit of 9.109 billion yuan and 1.283 billion yuan respectively, with a year-on-year increase of 3.80% and 0.79% respectively. Although the recovery of positive growth, but compared with the highest growth rate of 35% in the same period in the past, it is no longer brave

homeopathic injection of photovoltaic assets

weak performance growth and even regression, the controlling shareholder Chint Group smelled the crisis. Therefore, the management considered a 1 + 1 operation to inject photovoltaic assets into listed companies to maximize their value

Chint Group's photovoltaic business dates back to 2006. At that time, photovoltaic was a sunrise industry in China, and the low threshold attracted many gold diggers, including nancunhui. After ten years of development, Chint Group's photovoltaic business has stood out from the battle for survival. According to the 2016 top 20 list of Chinese photovoltaic power station investment enterprises released in May this year, Chint new energy development reached 800MW and ranked fourth in installed capacity. By the end of June this year, the total assets of Chint new energy development had reached 20.145 billion yuan

the photovoltaic business of Chint Group was originally undertaken by Chint new energy development and Chint solar, and the former was wholly-owned by the latter. At the initial stage of establishment, the division of labor between Chint new energy development and Chint solar energy was clear. Chint new energy's business is mainly in the domestic market, covering EPC and power station operations. Chint solar is responsible for module production and focuses on overseas projects

in 2015, after a series of internal integration, Chint solar became a subsidiary of Chint new energy development, and the two businesses were combined into one, concentrated in Chint new energy development. As of September 2016, Chint new energy development and its holding subsidiaries have built and built about 1.48gw of power stations, with the capacity of 700MW solar cells and 1.7gw photovoltaic modules respectively. Value is the second largest biomass source on earth after plant fiber. It is worth mentioning that Chint solar once acquired the Frankfurt (Oder) module business of Conergy, a famous German photovoltaic enterprise, in 2014, so it also has a 300MW photovoltaic module capacity in Germany

for the above assets, nancunhui initially wanted to list it overseas. Overseas listing is a fast track to realize asset securitization. However, the share price performance of photovoltaic zhonggai shares is not satisfactory. Zhonggai shares including Yingli Green Energy (TGE), Zhongdian photovoltaic (CSUN), Yuhui sunshine (SOL) have received delisting warnings, and Jingao solar (Jaso) and Trinasolar (TSL) have simply announced their intention to delist through privatization. Therefore, under the balance, it is preferred to inject photovoltaic assets into the existing listed company platform

common problems of photovoltaic assets

senior analysts in the new energy industry told the interface that injecting photovoltaic assets into listed companies is currently Chint's biggest focus. In the analyst's view, Chint's photovoltaic business has developed rapidly in recent years, and the scale of the power station has broken through GW very early, which is an important direction for the company's future transformation

compared with existing listed companies in the same industry, Chint's competitiveness in new energy development is not inferior. In terms of components, Chint new energy's group price capacity is on par with Hairun PV; In terms of combined installed capacity, Chint new energy development is second only to solar energy (), which has a combined installed capacity of 2.5gw as of the first half of this year. In addition, in terms of performance, in the first half of this year, Chint new energy development's consolidated operating income was 3.905 billion yuan, and its revenue scale can rank fourth among A-share photovoltaic listed companies, second to GCL integration, Longji shares and Zhongli technology. Its attributable net profit in the same period was 350million yuan, ranking fifth among A-share photovoltaic listed companies

however, Chint new energy's profitability remains to be further tested. Since this year, the company's profits have begun to release, but with the decline in downstream demand after the 30 June rush, the prices of upstream group prices and other products have been seriously affected, and the profits of component listed companies in the third and fourth quarters are under pressure. Take GCL integration, Zhongli technology and Hairun PV, the three major component companies of A-share, for example. In the third quarter, the above companies can automatically reset the net profits of 16 million yuan, -92 million yuan and 02 million yuan by pressing the reset button on the main interface, respectively, with a month on month decline of 82.42%, 48.39% and 93.33% respectively

at the same time, the above analysts also believe that the entire photovoltaic industry will develop towards parity in the next three to four years. In this process, the trend of price war, price increase and price reduction is very certain. At present, a large part of the investment income of photovoltaic power stations depends on government subsidies. Once the future enters the era of parity, government subsidies disappear, and the profit space of photovoltaic power stations will be compressed

however, the performance of Chint's new energy development commitment does not seem to have fully considered the impact of the above factors. According to the plan, Chint new energy development committed non net profits of no less than 701 million yuan, 805 million yuan and 900 million yuan from 2016 to 2018 respectively. Taking this year's performance commitment as an example, after completing the attributable net profit of 350million yuan in the first half of the year, Chint new energy development needs to maintain at least the same profitability in the second half of the year. However, in the face of the overall decline in component prices in the third quarter, it is still unknown whether Chint new energy development can achieve its performance commitments on schedule

what is more worthy of investors' attention is that due to the capital intensive characteristics of the photovoltaic industry, it is easy for Zhengtai new energy development to become a high debt asset. As of June 30, 2016, the consolidated asset liability ratio of Chint new energy development was 74.39%. Over the same period, Chint's asset liability ratio was 42.26%. If the acquisition is completed, Chint's asset liability ratio will increase by nearly 20% to 61.30%

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