news

한어Русский языкEnglishFrançaisIndonesianSanskrit日本語DeutschPortuguêsΕλληνικάespañolItalianoSuomalainenLatina

Author: Wen Yu, Editor: Xiao Shi Mei

On July 24, Yongtai Energy’s stock price hit the daily limit during intraday trading, with its lowest price reaching 1.01 yuan, just one step away from the par value delisting warning line.

Yongtai Energy has reached its most critical moment. If it fails to overcome the crisis this time, its boss Wang Guangxi will probably completely lose the chance to make a comeback in the A-share market. However, Wang Guangxi will not give up so easily. He has never been a person who accepts his fate.

【To live is to toss】

He is a low-key person who does not flaunt his wealth, so people do not know much about Wang Guangxi. In fact, he is also a legendary invisible rich man.

In 2015, Wang Guangxi ranked 37th on the Hurun Rich List with a net worth of 37 billion yuan, surpassing Ren Zhengfei, Cao Dewang, Pan Shiyi and others at the time. What's more rare is that it has only been 13 years since he started his business; what's even more rare is that in these ten years, he has crossed over into many industries.

In 2002, Wang Guangxi left Jiangsu Guoxin System (a financial holding platform in Jiangsu Province) and chose real estate as his first entrepreneurial direction. At that time, China's real estate industry had begun to grow rapidly, and it was believed that focusing on the main business would have a very good development prospect, but Wang Guangxi's nature has never been to focus on other things. His life creed is to keep trying.

In 2005, he acquired Nanjing Xiaoying Pharmaceutical Co., Ltd. from the Nanjing Military Region Air Force Command and entered the pharmaceutical field. Since then, his pharmaceutical territory has been expanding. In 2012, Wang Guangxi took over 44.2% of the shares of Lianyao Group from a subsidiary of the Yangzhou State-owned Assets Supervision and Administration Commission, thereby indirectly controlling 17% of the shares of the listed company Lianhuan Pharmaceutical; in 2016, Wang Guangxi joined CITIC Securities, Sichuan Pension Fund and other institutions to jointly invest in China's largest private assisted reproductive company Jinxin Reproductive.

Compared with medical care, coal is the foundation of Wang Guangxi’s wealth empire.

In 2007, Wang Guangxi's Yongtai Group signed an equity transfer agreement with the major shareholder of the listed company Lurun Shares (later Yongtai Energy), and the former acquired 94.14 million shares of Lurun Shares for 187 million yuan (holding 55.18% of the shares after the transaction was completed), becoming its controlling shareholder. Subsequently, Wang Guangxi quickly took over Huaying Shanxi, which has the qualification of the subject of merger, reorganization and integration of coal resources in Shanxi Province, of which Lurun Shares acquired 40% of Huaying Shanxi's shares and its parent company Yongtai Investment acquired 30% of the shares.

With the shell and the operating entity in place, Wang Guangxi began to acquire coal mines everywhere.At its peak, Yongtai Energy had a market value of over 100 billion yuan, making it the largest private coal listed company in China.

But the identity of "coal boss" could not satisfy Wang Guangxi's appetite at all. What he wanted was an energy empire.

In 2014, Wang Guangxi bought 100% of the shares of Huizhou Daya Bay Huaying Petrochemical Co., Ltd. (hereinafter referred to as "Huaying Petrochemical") and officially entered the petrochemical field; the following year, Wang Guangxi acquired Beijing Sanjili Energy (later renamed it Huachen Power) and officially entered the power industry.

Whatever you wanted came true; whatever you wanted was yours. It was truly an intoxicating period of time.

When I bought shares in Lurun in 2007, the company's assets were only 830 million. By 2017, the company's total assets had reached 107.2 billion. In ten years, it has increased more than 100 times. It's incredible just to think about it.

From Heaven to Hell

In 2018, there was a thunderclap in the A-share market: Yongtai defaulted.

Immediately afterwards, United Credit Rating continuously downgraded Yongtai Energy's credit rating, with its long-term credit rating downgraded from A to CC, and the rating outlook was negative, directly putting Yongtai into the list of companies that "cannot repay their debts".

In order to pay back the money, Wang Guangxi sold everything he could.

Huizhou petrochemical project, UK nuclear power project, Zhonghui P&C insurance project, Jincheng Bank and other projects unrelated to the main business were put on the shelf first. These projects were acquired at a high price. The most regrettable thing is that Jinxin Fertility’s equity was successfully listed on the Hong Kong Stock Exchange in the second year after Wang Guangxi transferred it.

While selling assets, seek external help.

In August 2018, Yongtai Energy's controlling shareholder Yongtai Group signed a restructuring intention agreement with Beijing Energy Group. If an agreement could be reached in the end, the debt problem would be greatly alleviated, but the plan ultimately failed. By 2020, seeing that the situation was irreversible, the creditor Yu Coal Mine Machinery decisively applied to the court for bankruptcy reorganization of Yongtai Energy. A few months later, Wang Guangxi gave a reorganization plan, which roughly said:

Among ordinary claims, the portion of RMB 500,000 or less for each creditor will be repaid in cash. The portion exceeding RMB 500,000 will be retained for 12 years at a rate of 20.78%, and the rest will be converted into equity.

The pain of winter is often the price paid for the mistakes of summer. Looking back at Yongtai’s expansion history, many of Wang Guangxi’s decisions during the craziest years are worth reflecting on.

For example, the acquisition of Huaying Petrochemical in 2014 cost 4 billion yuan, with a premium of nearly 600%. However, that year Huaying Petrochemical's operating income was zero and its net profit was as low as -5.8797 million yuan.

Another thing is that they have gotten involved in finance, and their hands are too long.

In just a few years, Wang Guangxi bought a bunch of banks including Jincheng Bank, Zaozhuang Bank, Jilin Yanbian Rural Commercial Bank, etc. In addition, he also obtained an AMC license to specialize in non-performing asset disposal; he established Zhonghui Property Mutual Insurance Society and entered the insurance industry.

To do these things in a short period of time, it is impossible to rely on its own blood production, so it can only borrow heavily from outside. By the end of 2018, Yongtai Energy's debt had reached 78 billion, of which more than 62 billion was interest-bearing debt. That year, Yongtai Energy's total revenue was only 22.33 billion, and financial expenses alone required 4.463 billion. Until now, the company's long-term and short-term loans have added up to nearly 20 billion.

It is no surprise that companies desperately increased leverage, but ran into macroeconomic deleveraging and ended up in such a situation.

Fortunately, Wang Guangxi is a man who dares to act and take responsibility. At a media communication meeting, he once made a very impressive statement:

"I can't run to the sky or jump from the building. At worst, I'm out."

This is what Wang Guangxi said and did.

[Desperately redeem oneself]

In 2022, Yongtai Energy released an extremely ambitious transformation roadmap:

The energy storage industry will achieve substantial breakthroughs within 1 year, form scale within 3 years, and enter the first echelon of the energy storage industry within 5-8 years.

Wang Guangxi has obviously thought carefully about this transformation. He did not choose the lithium battery route where thousands of troops were competing for a single plank bridge, but instead made a differentiated layout of vanadium batteries, which is very far-sighted from a strategic perspective.

First of all, China's vanadium battery technology leads the world. From core key raw materials to equipment technologies such as battery stacks, basically 100% localization can be achieved. There is no technical risk of being stuck, so the country will definitely vigorously develop this industry.

Secondly, although the initial investment of all-vanadium liquid flow batteries is higher than other competing products, its cycle times reach more than 20,000 times, which can support the stable operation of wind and solar power generation projects for 25 years without the need for additional investment costs.

Finally, vanadium battery equipment still has a residual value of more than 30% after the end of its life cycle. From the perspective of the entire life cycle, the cost per kilowatt-hour of all-vanadium liquid flow batteries has dropped to less than 0.2 yuan, which is very competitive in the long run.

Yongtai has basically formed a full industrial chain layout of all-vanadium liquid flow batteries, including vanadium ore resource integration, mining and smelting, electrolyte preparation, fuel cell and key material production, and system integration. In June 2023, the company's 6,000 tons/year high-purity vanadium pentoxide beneficiation production line (3,000 tons/year in the first phase) and 1,000MW all-vanadium liquid flow battery energy storage equipment manufacturing base (300MW in the first phase) have started construction as scheduled. According to the plan, the first phase of the project will be officially put into production in the fourth quarter of this year.

Some institutions have predicted that by 2030, the penetration rate of all-vanadium flow batteries in new energy storage may exceed 30%. The only thing Wang Guangxi needs now is time. As long as he can wait until this day, he will see the light at the end of the tunnel. But the situation is not waiting for anyone.

Due to a large number of fixed increases in the early stage and a large proportion of debt-to-equity swaps later, Yongtai Energy's equity has expanded greatly in the past few years. Up to now, the total share capital has reached 22.218 billion shares, and the equity value has been seriously diluted. In 2023, the company created 2.266 billion net profit attributable to the parent company. In theory, profitability is not bad, but if divided by the total share capital, the EPS per share is only about 0.1 yuan. Even with a 20 times price-earnings ratio, the stock price is only 2 yuan.

What's worse is that the overall capital market environment has been relatively poor in recent years, and companies like Yongtai Energy have difficulty attracting financial attention. In order to support the stock price, Wang Guangxi can only call on management to increase holdings, but compared with the company's huge share size, this amount of money is really a drop in the bucket.

On the morning of July 24, Yongtai Energy was directly pressed to the limit down, with the share price at 1.01 yuan. Wang Guangxi finally could not sit still anymore, and the company made an emergency decision to increase the previously established repurchase amount of 150 million to 300 million to 500 million to 1 billion, and change the purpose of share repurchase from "for employee stock ownership plans or equity incentives" to "for cancellation to reduce registered capital."According to the calculation of "Market Value Observation", Yongtai Energy repurchased nearly 100 million yuan on July 24 alone.

In the evening, Yongtai Energy announced that the company's stock would be suspended from the opening of the market on July 25 (Thursday) on the grounds of planning a major asset reorganization.

This combination of measures is obviously aimed at maintaining Yongtai Energy's status as a listed company. At this point, Wang Guangxi has no way out. He must show enough sincerity to impress the capital market, otherwise he may face an even more severe market crash after the resumption of trading, and then he will be really powerless to recover.

In China's business community, there are many people who dare to gamble, and even more who dare to win, but it is not common to find people who dare to lose. After the truth is revealed, he did not run away or give up, but had the courage to face the bleak life. No matter how many wrong things Wang Guangxi had done before, no matter what his future fate will be, just based on this point, he is a man, better than many people.

Disclaimer

The content of this article related to listed companies is the author’s personal analysis and judgment based on the information disclosed by listed companies in accordance with their legal obligations (including but not limited to interim announcements, regular reports and official interactive platforms, etc.); the information or opinions in the article do not constitute any investment or other business advice, and Market Value Observation shall not bear any responsibility for any actions arising from the adoption of this article.