Sunshine Power: Why are you still borrowing money?

On the evening of August 9, the 56th meeting of the China Securities Regulatory Commission's GEM Approval Committee passed the initial application of Sunshine Power Supply Co., Ltd. Sunlight Power is mainly engaged in the R&D, production and sales of solar photovoltaic inverters and wind energy converters. It is the largest solar photovoltaic inverter manufacturer in China with a domestic market share of 42.8%.

However, on the one hand, the company’s sudden assault has become a phenomenon. On the other hand, the export orders for photovoltaic inverters in the first half of the year have experienced a slowdown in growth, which has cast doubt on the entire process of its listing.

Three companies rush into shares

The company’s prospectus submission shows that before the company’s listing, it has seven corporate shareholders, of which Shangge Investment is an issuer’s employee holding company and five are venture capitalists, and the most special is Kirin Asia. The data shows that the actual controller of Kirin Asia is the Spanish natural person JAVIERIGNACIO, who also holds ENERINICITATIVASENERGETICAS and S. L. 50% equity. In 2008, the company purchased 52 solar PV inverters from Sun Power, with a total purchase amount of RMB 9,928,100, which was Sunpower's second largest customer in 2008.

A further study by the reporter found that the Spaniard is still Global Solar Fund, S. C. A, Sicar (referred to as GSF) Class A manager, is responsible for the day-to-day operations of this fund. According to the US stocks research website i, U.S. stocks, the GSF investment objective is to develop solar energy projects for non-listed companies. The project is mainly located in Europe. GSF's main investor is Wuxi Suntech, the leading domestic polysilicon manufacturer, and promised to invest 258 million euros, accounting for 86% of the total GSF fund size. In addition, Best (Regent) Asia Group Ltd, which is held by Wuxi Suntech CEO Shi Zhengrong, holds another 10.67% share of GSF.

The timing of Kirin Asia's share of solar power is also very coincident. On October 10, 2010, it subscribed for 2,584,600 new shares in USD equivalent to 1,730.77 thousand yuan. Due to the exchange rate changes, the actual capital increase price was 6.763 yuan per share. At this time, less than ten sunlight power supplies were used to hit the GEM. month. As for the company's net profit of 148 million yuan in 2010, the company's diluted earnings per share after issuance was 0.83 yuan. The price-to-earnings ratio of this share is only 8.15 times. For such a company that has maintained an annual growth rate of more than 300% for the past three years, this share price is close to the price of cabbage.

Even before going public, the act of rushing into stocks has already benefited. According to pre-disclosure documents, on January 31 this year, the company’s general meeting of shareholders passed a resolution to distribute a cash dividend of RMB 2 (including tax) to all shareholders for every 10 shares. Based on this calculation, Qilin Asia has obtained dividends of more than RMB 500,000.

At the same time, Sunyang Investment (Limited Partnership) and Huizhi Venture Capital also invested in the shares, and they each subscribed for 10.8554 million shares and 960,000 shares of sunlight power at actual prices of 6.696 yuan/share and 6.656 yuan/share, respectively. The company stated that due to changes in exchange rates and errors in the calculation process, there are subtle differences in the price per share of the capital increase. The actual controller of the company, Cao Renxian, promised that the newly added shareholders would subscribe at a price of 6.65 yuan per share and that more than the portion of the investment payable should be included in the company’s capital reserve. If the newly added shareholders demand to withdraw, Cao Renxian will pay the full amount.

One of the shareholders of Huizhi Venture Capital is Hefei Innovative Technology Venture Capital Co., Ltd. (referred to as “Innovation Investment”). According to the China Venture Capital Investment Information System, Xia Mao, the legal representative of Huizhi Venture Capital, is also an innovative investor. General Manager, while Creative Investment is a wholly-owned subsidiary of Hefei State-owned Assets Holdings Co., Ltd., and Sun Power is a local company in Hefei. With the joining of Huizhi Venture Capital, Sunshine Power has been backed by the “local team”.

The general partner of Shenyang Investment is Tianjin Kirin Sunshine Investment Management Consulting Co., Ltd. The legal representative of the latter is Ni Xinxian. According to the results of the Internet search, this person has served as the general manager of the headquarters of IFC Securities, the vice president of Orient Securities and the vice president of Shanghai Dasheng Assets Co., Ltd.

Solar power belongs to the concept of solar power generation. According to statistics of Wind data, the dynamic average price-earnings ratio of this stock is 37.11 times. Then, the reasonable stock price after the company's listing should be 30.80 yuan, and the return rate of the three companies in the short ten months is more than 350%.

Bad money or not bad money?

In general, an important purpose of the listed company will be to directly finance through listing and make up for the insufficiency of indirect financing such as bank lending. There are reasons why some companies have not passed the meeting, which is related to their lack of funds for development, such as Great Wall Motor (02333.HK), which failed in June 2008.

According to the report of the Sunpower IPO prospectus, the current ratios of the company at the end of 2008, the end of 2009, the end of 2010, and the end of June 2011 were 3.37, 1.99, 1.77 and 1.68 respectively; the quick ratios were 1.95, 1.42, 1.25 and 1.05 respectively. . In the report period of the company, the ratio of liquidity and quick ratio declined, which was due to the rapid expansion of the company's business scale and the increase in the company's current liabilities.

The company's accounts receivable turnover ratios at the end of 2008, the end of 2009, the end of 2010, and the end of June 2011 were 2.89, 3.06, 4.29, and 1.52, respectively, and the inventory turnover ratios were 1.28, 1.57, 2.06, and 0.59, respectively. From 2008 to 2010, these two indicators have indeed improved, but the figures for the first half of this year were less than half of 2010, and the decline in operational capacity has put the company’s capital flow on a test.

On the other hand, the company appears to be very well-funded. At the beginning of this year, the company distributed a cash dividend of 26.88 million yuan. This number is almost a year of net profit for many companies preparing to land on the GEM.

At the same time, the company’s asset structure is very light. During the reporting period, long-term borrowings in each period were zero. The ratio of short-term borrowings to total liabilities was zero, 17.80%, 1.08%, and 7.93% at the end of 2008, the end of 2009, the end of 2010, and the end of June 2011 respectively. Its liabilities consist mainly of notes payable, accounts payable and advance receipts. About half of the company’s latest two advance receipts were for the “Golden Sun” demonstration project received in 2010 and the central government received payment for contract payments on behalf of customers. In other words, all the contracts were confirmed as operating income after the completion of the contract.

At the same time, Solar Power’s cash flow appears quite plentiful. The company's 2010 net profit soared 320.37% year-on-year to RMB 148 million. Together with the 90.39 million yuan in cash brought by the three companies that had been rushed into shares at the end of last year, the company now holds huge amounts of cash. In 2010 and the first half of the year, the company’s currency funds exceeded 3%. 100 million yuan. It is worth mentioning that the Solar Power Prospectus shows that the IPO fundraising scale is only 326 million yuan. In other words, while holding 300 million in cash, the company has to raise 300 million yuan from the capital market.

Uncertain prospects for investment projects

In 2008, 2009, 2010 and January-June 2011, the comprehensive gross profit ratio of the main business of Sunshine Energy was 47.48%, 49.64%, 49.81% and 46.63%, respectively, which were maintained at a relatively high level.

However, this does not hide the company's future market concerns. The major outbreak of the company's performance last year was largely due to the successful development of foreign markets. In 2008, 2009, 2010 and January-June 2011, the company’s export revenue accounted for 24.07%, 8.37%, 62.25%, and 20.72%, respectively. In the first five major customers in 2010, four foreign customers emerged. .

However, on May 5th this year, the second-biggest Italian government of European solar energy promotion officially signed the “No. 4 Energy Act”, which will be valid from June 1, 2011 to December 31, 2016. The final subsidy ratio has not yet been determined, but it is known that in the next five years it plans to add 9.77 GW installed capacity and invest 1.361 billion euros in subsidies. In contrast, during the buffer period from June 1, 2011 to December 31, 2012, Italy plans to add 2.69 GW of installed capacity and invest 580 million euros in subsidies. The later installment subsidies were significantly smaller than before.

This is a major blow to solar energy. Last year, Italy was the company’s largest exporter, accounting for more than 40% of its operating income. In the first half of this year, the percentage of revenue generated by Italian customers in revenues in the first half of the year just exceeded 10%, an absolute decrease of nearly 90%. Similarly, the promotion of the best in Germany will also slow the pace of construction and subsidies.

In response, Sunshine Energy said it will intensify efforts to open up the domestic market. In 2010, its domestic business income was 226 million yuan, accounting for 37.75% of total revenue. In the first half of this year, domestic business revenue was 232 million yuan, accounting for 79.28% of total revenue. At the same time, the company’s revenue share of wind energy converters also increased from 7.23% last year to 10.90%.

However, its fund-raising plan will build a solar photovoltaic inverter project with an annual output of 1 million kilowatts. The construction period is two years, twice the current production capacity, but there is no production plan for wind energy converters. In the case of the impact of foreign market size and only 400,000 kilowatts of domestic photovoltaic installed capacity last year, the market prospects of the solar power investment plan are doubtful.