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In the past week, the continuous decline of Shanshan Shares, the "leading negative electrode", has stung the nerves of many investors, forcing shareholders to "complain" on the interactive platform: the company's stock has been falling for several years, and more than 98% of the shareholders in the market are in a state of loss.

Shanshan shares said that the decline in stock prices was affected by multiple factors. Affected by the changes in the industry cycle, the company's profit level has been under pressure since 2023, but the company continues to focus on its core business and adjusts its business strategy in a timely manner according to market changes. Overall, the company's two core businesses, negative electrode materials and polarizers, continue to maintain a leading level.

In the future, the company's management will continue to do a good job in various business management tasks to achieve stable operations. It will also continue to implement share repurchases in accordance with the company's share repurchase plan within the repurchase period, based on market conditions, and fulfill information disclosure obligations in a timely manner.

As of the morning closing on July 26, the stock price was quoted at 7.36 yuan per share, with a total market value of 16.59 billion yuan.

Performance under pressure

As a representative of the fifth generation of "Yong merchants", Zheng Yonggang revitalized the Yonggang Garment Factory and founded the "Shanshan" brand in 1989. He quickly became popular with the phrase "Shanshan suits, don't be too casual".

In 1996, Shanshan Co., Ltd. was successfully listed on the Shanghai Stock Exchange, becoming the "No. 1 clothing stock". Since then, under the leadership of Zheng Yonggang, Shanshan Co., Ltd. has continuously transformed and adjusted, and completely de-clothing.

Currently, Shanshan Holdings Group has two main businesses, negative electrode materials and LCD polarizer business.

Among them, the negative electrode material business mainly includes the research and development, production and sales of negative electrode materials for lithium-ion batteries. The main products include artificial graphite, natural graphite, silicon-based negative electrodes, etc. The downstream application terminals are new energy vehicles, consumer electronics and energy storage industries. Polaroid terminals are widely used in consumer electronic products such as TVs, monitors, laptops, tablets, mobile phones, commercial displays, etc.

Driven by the two owners, the company ushered in a leapfrog development in 2021.

However, the good times did not last long. In recent years, the negative electrode material industry has seen rapid expansion of production capacity, resulting in a periodic and structural overcapacity and intensified market competition. The polarizer industry has also seen weak terminal demand and intensified competition within the industry.

In 2023, Suning Holdings Group achieved operating income of 19.07 billion yuan, a year-on-year decrease of 12.13%; net profit attributable to the parent was 765 million yuan, a year-on-year decrease of 71.56%; net profit attributable to the parent excluding non-recurring items was 219 million yuan, a year-on-year decrease of 90.6%.

Among them, the revenue of negative electrode material business fell by 9.82% year-on-year to 7.267 billion yuan, and the gross profit margin of the business dropped by 10.36 percentage points to 11.77%. Similarly, the company's polarizer business is also facing the dilemma of declining revenue and declining profitability.

In the first quarter of 2024, Shanshan Co., Ltd.'s operating performance was still not ideal. The company achieved a total operating income of 3.752 billion yuan, a year-on-year decrease of 15.67%; the net profit attributable to the parent company was a loss of 73.2818 million yuan, compared with a profit of 573 million yuan in the same period last year; the non-net profit was a loss of 73.3539 million yuan, compared with a profit of 166 million yuan in the same period last year.

Since last year, Shanshan Co., Ltd. has divested a number of non-core businesses. The company completed the transfer and delivery of 51% of the equity of Quzhou Shanshan, a subsidiary of electrolyte business, in February 2023, and completed the sale of 100% of the equity of Dongguan Shanshan in July 2023; completed the sale of 90.035% of the equity of Shanxin Photovoltaic, a subsidiary of photovoltaic power station, in April 2023; and completed the sale and delivery of 90.035% of the equity of Ningbo Eureka, a subsidiary of photovoltaic business, in January 2024.

Regarding the future development prospects of negative electrode materials, Shanshan Co., Ltd. stated that the company's silicon-based negative electrode products have continuously achieved technological breakthroughs, continued to be recognized by customers at home and abroad, and achieved mass supply. Silicon-oxygen products have been supplied in batches to overseas leading customers and have been installed on vehicles. At the same time, the problem of second-generation silicon-oxygen low-temperature circulation has been overcome, and related products have been introduced to overseas leading power tool companies; silicon-carbon products are constantly iterating, and the new generation of silicon-carbon products remain ahead in the tests of leading customers. The relevant core technologies have obtained patent authorizations in the United States and Japan.

A basket of shit

Zheng Yonggang is a recognized tycoon in the Zhejiang business circle, not only because of his wealth, but also because of his amazing business vision and courage. It is said that Zheng Yonggang actually controls more than 420 companies with a total market value of more than 52 billion yuan, collectively known as the "Shanshan Group". He describes himself as "a Northeastern man's boldness, a soldier's swiftness and decisiveness, and a Zhejiang businessman's sensitivity and shrewdness."

In February 2023, Zheng Yonggang died of a sudden heart attack at the age of 65. Since he did not leave a will, his son Zheng Ju and his widow Zhou Ting had a "rich family farce" over the inheritance.

Zheng Ju is the son of Zheng Yonggang and his ex-wife Zhou Jiqing. He was born in 1991 and studied in the UK. Before becoming the chairman of Shanshan Co., Ltd., Zheng Ju had been in a key position at Shanshan Co., Ltd. Zhou Ting is Zheng Yonggang's current wife. She worked as a reporter and anchor at Zhejiang Satellite TV, Dragon TV, and China Business Network. After marrying Zheng Yonggang, she has three underage children.

In the end, the two sides reached a compromise and both entered the board of directors, with Zheng Ju becoming the chairman of the listed company.

For this "post-90s chairman", after the equity dispute has temporarily come to an end, the company is still facing "internal and external troubles" and faces a series of risks in business and management.

On July 22, Shanshan Holdings Group Co., Ltd. issued an announcement on the judicial freezing and marking of some of the shares of the controlling shareholder. Shanshan Holdings Co., Ltd. (hereinafter referred to as "Shanshan Holdings"), the controlling shareholder of the company's controlling shareholder Shanshan Group, holds 72,212,189 shares of the company, accounting for 3.20% of the company's total share capital. Shanshan Holdings' recent cumulative judicial freezing/marking of 72,212,189 shares, accounting for 100% of the total number of shares held by it and 3.20% of the company's total share capital; the cumulative number of shares frozen in turn is 9,154,276 shares, accounting for 12.68% of the total number of shares held by it and 0.41% of the company's total share capital.

On June 27, Shanshan Holdings issued an announcement on receiving the administrative supervision measures decision letter from the Ningbo Regulatory Bureau of the China Securities Regulatory Commission. The company has the following violations: 1. The controlling shareholder has occupied non-operating funds and failed to disclose it in a timely manner. 2. Some related transactions have not gone through the review procedures and have not been disclosed to the public in a timely manner.

A series of issues are reflected in the stock price. Since June, the company's stock price has fallen by more than 20%, and its market value has evaporated by nearly 5 billion yuan. The "leading negative electrode" seems to be close to falling back to the 6 yuan era.