Kill crazy! This photovoltaic enterprise has thrown a heavy weight "Rocket"

Recently, the popularity of Liansheng Technology has continued to soar, throwing out heavyweight bombs one after another.

On April 17th, Liansheng Technology announced that its subsidiary subsidiary, Meishan Liansheng, has signed a sales framework contract with Huasheng New Energy for at least 1GW of A-grade G12 heterojunction solar cells, with a sales amount exceeding 200 million yuan, surpassing its main business revenue for the whole year of 2023.

Just ten days ago, Liansheng Technology announced its plan to acquire no less than 51% of the controlling stake in Xingchu Century and 18.9% of the minority stake in its subsidiary Tianjin Liansheng through a combination of equity and cash, while simultaneously raising matching funds.

In the current cyclical downturn of the photovoltaic industry, many companies are shrinking their business fronts to resist the cold winter, and Liansheng Technology's actions are particularly noteworthy.

The Ambition of a Cross border King

Liansheng Technology, this "newcomer" in the photovoltaic field, formerly known as Sanwu Internet, was once the dominant player in the Chinese enterprise email market and the first listed company on the ChiNext board in Fujian. However, in the wave of transformation of the Internet industry, it missed a good opportunity for development. Since then, the direction of business development has changed frequently, and it has successively set foot in Bitcoin, online celebrity economy and other fields, all of which ended in failure. From 2018 to 2022, the company incurred a cumulative loss of nearly 700 million yuan, and its operating condition is precarious.

In 2022, Sanwu Internet will undergo significant changes, and the equity held by the actual controller Gong Shaohui will be auctioned off one after another. In December of the same year, the control of the company was transferred, and Hainan Juxing Technology Co., Ltd. became the controlling shareholder. Huang Mingliang and Ouyang Ping became the actual controllers of the company and renamed the company Liansheng Technology, embarking on a new journey of cross-border photovoltaics.

After transformation, Liansheng Technology is ambitious in the field of photovoltaics, making high-profile bets on the heterojunction track and investing 11.5 billion yuan to launch two major heterojunction battery projects, Meishan 8GW and Nantong 12GW, in an attempt to overtake.

Radical expansion has rapidly transformed Liansheng Technology into a shining dark horse in the heterojunction field. In 2023, Liansheng Technology's HJT battery sales revenue reached 63.8 million yuan, ranking as the largest business with a proportion of 26%; In the first quarter of 2024, HJT batteries have achieved mass production of 195.58 MW, contributing 26.05% of total revenue with a sales revenue of 63.8038 million yuan, and jumping to the top business pillar with a gross profit margin of 14.32%. Meanwhile, in March and April 2024, Liansheng Technology signed contracts with Guosheng Technology and Huasheng Group for the purchase of 145 million silicon wafers and sales of 700 MW solar cells, as well as the purchase and sales of 180 million silicon wafers and 1 GW solar cells. The estimated transaction scale far exceeds the annual revenue of 2023.

However, although HJT technology is known for its high conversion efficiency, it is referred to as a "burning money" project due to its high cost and high funding requirements. According to Liansheng Technology's 2024 semi annual report, the Meishan 8GW project has a total investment of 4 billion yuan, but the actual investment is only 1.164 billion yuan; The total contract price of Nantong Phase I 3GW project is 610 million yuan, with a cumulative investment of about 160 million yuan. The two major projects still need a significant funding gap before they can be put into operation.

To maintain cash flow, Liansheng Technology has successively sold assets such as Daoxi Technology and Sanwu Internet. At the same time, the controlling shareholder also extended a helping hand and provided financial support. In November 2024, Hainan Liansheng plans to provide a free loan quota of 170 million yuan to support Tianjin Liansheng's loan application and replacement; In December, as the previous interest free loan limit was about to expire, Hainan Liansheng continued to provide Liansheng Technology with interest free loans totaling no more than 40 million yuan.

Despite this, Liansheng Technology has still not been able to overcome its business difficulties. According to the latest financial report, Liansheng Technology expects a revenue of 450 million to 550 million yuan for the full year of 2024, with a net loss attributable to the parent company of 60 million to 120 million yuan. This is also Liansheng Technology's seventh consecutive year of losses. Liansheng Technology explained that the photovoltaic market has encountered a phase of supply-demand mismatch, with prices of products in various links of the photovoltaic industry chain generally falling. The company's gross profit margin for photovoltaic products has decreased, and the provision for inventory depreciation has increased, leading to further expansion of losses.

The grand strategy of 'counter trend mergers and acquisitions'

Faced with continuous business pressure, Liansheng Technology did not choose to shrink its business, but instead attempted to break through the situation with a "counter trend acquisition" that could be considered a bold gamble.

On April 7th, Liansheng Technology suspended trading due to planning a major asset restructuring, with an expected suspension period of no more than 10 trading days. The latest resumption of trading and termination of planning related matters will be on April 21, 2025.

It is worth noting that as the core of this transaction, the background of Xingchu Century cannot be underestimated. Its predecessor, ZTE Energy Co., Ltd., was established in 2007 and is one of the three key pieces of the "ZTE series" energy storage map. Hou Weigui, founder of ZTE Corporation, as well as "ZTE series" companies ZTE Weixiantong and ZTE Development, collectively hold over 35% of the shares; The Zigong Municipal Government introduced this enterprise with the ambition of building a "sodium electricity energy storage city". Its subsidiary, Zigong Jinma Industrial Investment Co., Ltd., as a state-owned platform, is still the largest shareholder with a shareholding ratio of about 25.78%.

(Source: Tianyancha)

Combining the profound genes of the "ZTE series" with the strong support of Zigong state-owned assets, Xingchu Century, as a global leader in the field of smart microgrids for photovoltaic storage, has been making great strides forward. In April 2022, the company is fully committed to its IPO and eager to achieve a new leap forward. However, the capital market is constantly changing, and the domestic A-share market will tighten its IPO market in 2023, which will hinder the listing of a large number of companies. Xingchu Century has to temporarily shelve its listing plan.

The setback in the IPO process undoubtedly dealt a heavy blow to Xingchu Century, not only slowing down its development pace, but also gradually surpassing its industry position by competitors. According to the "White Paper on Energy Storage Industry Research 2023", Xingchu Century ranked second in the shipment volume of energy storage systems in the domestic user side market in 2022. Its independently developed intelligent energy management system once became a technical benchmark in the industrial and commercial energy storage track. But by 2023, the company has failed to enter the top ten list of energy storage system shipments in the domestic user side market. At the same time, the domestic energy storage industry is expanding on a large scale, and the market is rapidly moving towards oversupply. The smoke of price wars is spreading, and the space for technological premiums is rapidly being compressed. Even if forced to go public, the market valuation premium will be greatly discounted.

The unfinished capital path of Xingchu Century provides an excellent strategic entry point for Liansheng Technology. If this acquisition is successfully completed, Xingchu Century will leverage Liansheng Technology to achieve a curve listing. By integrating Xingchu Century's resources, Liansheng Technology is expected to build a vertical closed loop of "light storage integration", which can not only convert its photovoltaic power plant resources into its own battery consumption channels; At the same time, the support of energy storage business is expected to improve the company's financial performance. In addition, the overseas channel resources accumulated by the "ZTE series" complement the existing distribution network of Liansheng Technology, helping to increase market share.

Another target company, Tianjin Liansheng, also occupies an important position in Liansheng Technology's photovoltaic layout, undertaking the construction project of 6GW heterojunction cell capacity. According to Tianyancha data, prior to this transaction, Liansheng Technology held 33.69% of the equity of Tianjin Liansheng. If the transaction is completed, its shareholding ratio will increase to 52.59%. And successfully acquiring controlling shares will give Liansheng Technology greater say in key areas such as decision-making and resource allocation, laying the foundation for it to seize the initiative in fierce market competition.

Whether Liansheng Technology's strategic turnaround this time can become a key turning point for it to reverse its predicament remains to be seen by the market. But it cannot be denied that in the cyclical fluctuations of the industry, only enterprises that adapt to changes and survive can truly overcome the fog of cycles.