Pride Over The Past Three Years: Performance Rebounds, Valuations Fall, Youth Cars Default On Funds

- Dec 17, 2019-

Pride, previously at the center of a performance-controversial vortex, has recently sued youth cars.

The Beijing News reporter was informed that there are two disputes over the sales contract between Pride New Energy Battery Technology Co., Ltd. (hereinafter referred to as "Pride") and Jinhua Youth Automobile Manufacturing Co., Ltd. (hereinafter referred to as "Youth Automobile"). Youth car has been sued twice and compensation has been obtained.

Pride is a leading domestic power battery company. In recent years, its equity has changed frequently, and its profitability has fallen sharply. A few years ago, Ningde Times and other shareholders sold 100% of Pride's equity to Orient Seiko for a price of 4.75 billion yuan; in 2019, 100% of Pride's equity was sold to Dinghui at a price of 1.5 billion yuan by Orient Precision. system". In the past few years, the industry situation has changed dramatically.

Some experts told the Beijing News that during the outbreak, industry giants such as the Ningde era were very important to Pride's growth, which also brought a lot of revenue to Pride, but entered a brutal phase-out phase, and the new energy industry Reduced subsidies, a huge decline in production and sales of enterprises in the short term, fewer market orders, which will affect Pride's performance.

At present, Pride is already in a state of gradually returning blood. Orient Seiko disclosed that in the first seven months of 2019, Pride achieved a net profit of 133 million yuan attributable to shareholders of the parent company, a marked improvement from 2018.

On December 10, a reporter from the Beijing News called Ningde Times and Pride's official website. No one answered. The reporter sent an interview letter to Ningde Times and Pride's official website. As of press time, no reply has been received. A reporter from the Beijing News contacted more than a dozen Pride employees. One of the executives said that he had left from Pride and that internal Pride employees were generally unable to speak out at the moment, which was inconvenient to discuss related issues.

Compensation in both lawsuits

The Beijing News reporter was informed that the first lawsuit between Pride and Youth Automobile was filed on September 5 this year. According to the civil judgment of the People's Court of Wucheng District, Jinhua City, Zhejiang Province, the plaintiff, Pride, sued the defendant Shenzhen Jiajie Modern Logistics Co., Ltd. (hereinafter referred to as "Jiajie Logistics") and Youth Automobile. After the case was filed on September 5, 2019, a verdict was recently issued.

The judgment showed that Plaintiff claimed that on November 12, 2015, Plaid and the two defendants signed a "Tripartite Purchase Agreement" with the number 1521155604. The three parties agreed that the defendant, Youth Car, commissioned the defendant Jiajie Logistics to purchase parts and raw materials from the plaintiff. The contract stipulates that 10% of the total transaction price shall be used as a warranty, and the warranty period shall be one year, and the warranty shall be returned after one year. After the contract was signed, the plaintiff fully fulfilled his obligations in the contract as scheduled and delivered all the products to the defendant. The transaction guarantee money under the contract was RMB 768,500. After reaching the time point for returning the guarantee money, the defendant did not return the guarantee money on schedule.

The court ruled on November 25: The defendants Jiajie Logistics and Qingnian Automobile jointly returned to Pride the warranty of RMB 768,500 and compensated for the loss of interest within ten days from the effective date of this judgment (at an annual interest rate of 4.75% from June 2017) Calculated from the 1st day to the date of actual performance).

The second lawsuit was filed on September 5, 2019. After the plaintiff Pride and the defendant Qingnian Automobile and Nantong Huiye Supply Chain Technology Co., Ltd. (hereinafter referred to as "Huiye Technology") dispute over a sales contract, the People's Court of Wucheng District, Jinhua City, Zhejiang Province, filed a case on September 5, 2019. Judgment was made recently.

The judgment showed that the plaintiff Pride claimed that the defendant Huiye Technology signed a "purchase and sales contract" with the plaintiff on September 11, 2016, with the contract number 211556--HYGGY2201609-001, stipulating that the defendant Huiye technology purchased raw materials and zero Parts, and pay the payment to the plaintiff's account, while agreeing that the plaintiff should deliver the goods to the designated warehouse and accept the inspection and receipt of the third-party youth automobile. Later, the defendant Qingnian Automobile signed an agreement with the plaintiff. The contract stipulated that the plaintiff would pay a product warranty of RMB 2.577 million to Qingnian Automobile. The warranty period is one year. .

After the above contract was signed, Plaintiff claimed that the company had fully fulfilled its contractual obligations and delivered all the products to the defendant. However, the defendant did not return the warranty money on time after the time point at which the warranty money was returned. As of September 1, 2019, the defendant had owed the plaintiff a total of 2,158,900 yuan in guarantee payment and a default fine of 301,100 yuan. The above amount was urged by the plaintiff several times, and the defendant ignored it.

Court ruling: The defendant Qingnian Automobile returned to Pride's warranty of RMB 2.15979 million and compensated for interest losses within ten days from the effective date of this judgment (calculated from January 1, 2018 to the date of actual performance at an annual interest rate of 4.75%). ).

Business information shows that Youth Car was established on April 3, 1996, with a registered capital of 210 million yuan. The legal representative is Pang Qingnian, and the major shareholder is Youth Car Group Co., Ltd. The company holds 84.01% of the shares in Youth Cars. The investment amount is 176 million yuan.

Several equity changes

Pride is a total solution provider of new energy vehicle power battery systems, mainly providing PACK integration services for power batteries. Power battery systems include lithium-ion power battery packs, battery management systems (BMS), and battery structure and electrical integration design. .

In recent years, Pride has frequently changed its equity.

The report on the acquisition of Pride issued by Orient Precision in October 2016 shows that in April 2010, Peking University, BAIC Industrial Holdings, Dongguan Xinnengde and Foton Motor jointly invested in the establishment of Pride. When Pride was established, the registered capital was 100 million yuan, of which Peking University first invested 41 million yuan, accounting for 41% of the registered capital; Dongguan Xinnengde invested 25 million yuan, accounting for 25% of the registered capital; Beiqi Industrial Holdings invested 24 million yuan. , Accounting for 24% of the registered capital; Foton Motors invested 10 million yuan, accounting for 10% of the registered capital.

On March 25, 2016, Pride agreed that Dongguan Xinnengde would transfer its 25% equity interest in Pride to Ningde Times at a price of 67.5 million yuan.

On March 27, 2016, Pride passed the transfer of a total of 5% of the shares held by Pride and Ningde Times to the newly established limited partnership, Qinghai Puren Intelligent Technology Research and Development Center (Limited Partnership). matter. Among them, Peking University first transferred 3% of Pride's equity for 9 million yuan, and Ningde Times transferred 2% of Pride's equity for 6 million yuan. At the same time, the matter of BAIC Group's free transfer of its 24% equity interest in Pride to BAIC Industrial Investment, a wholly-owned subsidiary, was considered and approved.

After the shareholding change, Pride's shareholders include Peking University, Beijing Automotive Industry Investment, Ningde Times, Foton Motor, and Qinghai Puren, with shareholdings of 38%, 24%, 23%, 10%, and 5%, respectively.

On October 1, 2016, Orient Seiko issued an announcement that it planned to issue shares to all Pride shareholders at a price of 4.75 billion yuan and pay cash to purchase 100% of its shares in Pride. More than 10 other specific investors issued shares to raise matching funds of 2.9 billion yuan, and the total amount of matching funds raised did not exceed 100% of the transaction price of the assets to be purchased; the supporting funds were intended to be used to pay the cash consideration for the purchase of the underlying assets and to pay the intermediaries related to the transaction Institutional expenses, R & D and industrialization of new energy vehicle batteries at Puyang Puyang base.

According to this transaction plan, Dongfang Seiko paid 40% of the cash consideration to Peking Xianxing, Ningde Times, BAIC Investment, and Foton Motors, and paid 60% of the paid share price; Orient Seiko paid Qinghai Puren to pay the share consideration Is 100%. The total number of A-shares to be issued for the purchase of assets (except for the raising of matching funds) in this issuance is 320 million shares.

On April 7, 2017, Pride completed the industrial and commercial change registration procedures for the transfer of assets in this transaction, and obtained a new business license issued by Beijing Municipal Administration for Industry and Commerce. Pride became a wholly-owned subsidiary of Oriental Precision the company.

Two years after Orient Seiko acquired Pride, due to performance disputes, in November this year, Orient Seiko released a report on the sale of major assets, intending to pay 1.5 billion yuan in cash to Tianjin Dinghui Ruixiang Equity Investment Fund Partnership (Limited Partnership) ), Tianjin Dinghui Ruipu Equity Investment Fund Partnership (Limited Partnership) sold a total of 100% of Pride.

According to business information, Tianjin Dinghui Ruixiang Equity Investment Fund Partnership (Limited Partnership) was established on July 26, 2016, and Tianjin Dinghui Ruipu Equity Investment Fund Partnership (Limited Partnership) was established on August 4, 2016. The shareholders of both companies are Shanghai Dinghui Fulin Equity Investment Partnership (Limited Partnership) and Shanghai Dinghui Baifu Wealth Management Co., Ltd. The legal representative of both companies is Wu Shangzhi.

According to reports, CDH Investment was established in 2002 and is one of the largest alternative asset management institutions in China. As of March 2015, the amount of funds under management exceeded 100 billion yuan. CDH Investment's predecessor was the Direct Investment Department of China International Capital Corporation. It was founded by six founders, including Wu Shangzhi and Jiao Zhen, with the Singapore Government Direct Investment Co., Ltd., China Investment Guarantee Co., Ltd. and Zurich Insurance Capital Group.

Results have plummeted and improved

From the perspective of performance, since 2014, the new energy automobile industry has ushered in explosive growth, and Prader's operating income has also achieved rapid growth. It was 247 million yuan in 2014, 1.114 billion yuan in 2015, and 1.654 billion yuan from January to June 2016. , Has increased by 48.43% compared with the whole year of 2015. Net profits for the same period were -1.7467 million yuan, 101 million yuan, and 179 million yuan.

When Dongfang Precision Co., Ltd. was preparing to acquire Pride in 2016, China's new energy vehicle industry was in a golden opportunity period of rapid development.

The transaction report of that year stated that China's new energy vehicle industry has entered a period of rapid development. Benefiting from the continuous and rapid development of domestic new energy vehicles and the steady increase of the energy storage market capacity, the lithium ion power battery system market has a bright future. Pride specializes in the design, research and development, production, sales and service of PACK, the core component of the new energy vehicle power battery system, and will fully benefit from the high growth of the new energy vehicle industry.

In addition, as of the end of March 2016, Pride has signed contracts and is executing orders and intentional orders totaling approximately 4.121 billion yuan. Pride's 2016 performance commitments are strong. With the completion of Pride Changzhou Liyang and Guangzhou Zengcheng production bases, Pride's customized power battery system production capacity and research and development capabilities continue to increase, and Pride has a solid guarantee for the realization of future performance commitments.

As a result, the counterparty in this transaction promised that Pride's net profit after non-deduction in 2016, 2017, 2018, and 2019 will not be less than 250 million yuan, 325 million yuan, 423 million yuan, and 500 million yuan, with a compound growth rate. It is 25.99%, which matches Pride's expected growth.

In fact, in 2017, Pride performed well. Oriental Seiko's 2017 annual report disclosed that Pride has been included in the company's consolidated statement scope since April 2017. From April to December 2017, Pride achieved operating revenue of 2.862 billion yuan and net profit of 274 million yuan. Oriental Seiko said that Pride's cumulative net profit data for 2016 and 2017 has achieved the performance commitment amount and is operating well. Pride consolidated the company's operating performance during the reporting period.

However, in Orient Seiko's 2018 annual report, Pride's performance has plummeted. According to the annual report, Oriental Seiko's full-year operating income in 2018 was 6.621 billion yuan, a year-on-year increase of 41.34%; but its net profit was a substantial loss of 3.876 billion yuan, a 89.22% year-on-year decrease.

In 2018, Pride achieved operating revenue of 4.244 billion yuan and a net profit loss of 219 million yuan. Pride's cumulative non-deducted net profit from 2016 to 2018 was 377 million yuan, which was not in line with the performance commitment requirements compared with the counterparty's promised cumulative non-deducted net profit amount of 988 million yuan from 2016 to 2018.

Orient Precision said that the main reason for the net profit loss was Pride's loss. At the same time, goodwill formed due to the acquisition of 100% of Pride's equity showed significant impairment. Therefore, goodwill impairment provision of 3.848 billion yuan was required.

Regarding the reason for Pride's performance decline, Dongfang Seiko mentioned in the announcement on December 9 this year that the structural overcapacity of the power battery industry since 2017 is relatively obvious, and the high-quality capacity of the leading companies in the industry is sought after by downstream customers. Insufficient production capacity, at the same time, the production capacity of other manufacturers in the industry is difficult to digest, the return on large investment is low, and business development is facing greater challenges. At the same time, in recent years, the new energy vehicle subsidy policy has been continuously adjusted, and financial subsidies have continued to decline, objectively increasing the operating pressure of the new energy vehicle industry and the upstream power battery industry.

Pride's main business has undergone a series of changes under the influence of the above-mentioned factors. On the one hand, subsidies for new energy commercial vehicles have been greatly reduced, which has greatly affected the PACK commercial vehicle power battery PACK business. As a result, Pride's commercial vehicle business has declined year by year. On the other hand, the survival pressure of third-party PACK manufacturers has continued to increase, and gross profit margins have been continuously reduced.

"Pride's performance has a strong presence of industry giants. When the performance of industry giants fluctuates, the performance of Pride bundled with the giants will also be greatly affected." New energy lithium cobalt analyst Zhu Mingzhe Xiang Xinjing According to the analysis of the reporter, the acquisition of Pride by Orient Seiko coincided with 2016-2017, which was the "outbreak period" and "blowout period" of the domestic new energy industry, but in 2018, the market dividends were exhausted Later, industry companies began to compete with real swords.

Zhu Mingzhe said that during the outbreak, industry giants such as the Ningde era were essential to Pride's growth and growth, and thus brought a lot of revenue to Pride, but entered a brutal phase-out phase, and subsidies for the new energy industry were reduced. In the short term, there has been a huge decline in production and sales of enterprises, and fewer market orders have affected Pride's performance.

"Starting in the second half of 2018, the mid-to-low-end product bubble in the new energy industry began to recede, and the industry is no longer in an era of making money with closed eyes. Rising corporate revenues and declining profits are precisely the major companies' efforts to reduce prices and maintain volume The manifestation of maintaining the market position, "Zhu Mingzhe said, the decline in performance in 2018 is a more common phenomenon in the new energy industry.

Dongfang Precision also said that at present, Pride's sales and procurement have relied heavily on BAIC New Energy and the Ningde era. The fairness and necessity of a high proportion of connected transactions between Pride and the original shareholders also directly caused the company and Pride The trigger for the dispute over Pride's performance compensation among the original German shareholders.

In fact, since the publication of this annual report, Oriental Seiko and the original shareholders of Pride have had many disputes regarding Pride's performance.

Foton Motor said on April 19 that there was a significant difference between the 2018 financial statements approved by Pride and Pride's results disclosed by Oriental Precision.

On April 22, Ningde Times stated that "Pride's 2018 annual results announced by Dongfang Seiko do not conform to actual conditions. The judgment of the fairness of Pride and the company's related party transactions is not objective and will seriously damage