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Yangtze Business Daily News● Yangtze Business Daily reporter Xu Jia

Under the leadership of Ningxia State-owned Assets, Baota Industry (000595.SZ) actively carried out restructuring and promoted business transformation.

Recently, Baota Industry released a restructuring plan, and the listed company will acquire 100% of the equity of Ningxia Diantou New Energy Co., Ltd. (hereinafter referred to as "Diantou New Energy") held by an affiliated party through asset replacement.

The Yangtze Business Daily reporter noted that Baota Industry completed its restructuring in 2020 and Ningxia state-owned assets took over. After resolving the crisis and eliminating the debt burden, actively introducing restructuring investors and injecting high-quality assets at the right time, adjusting the business structure of the listed company in a timely and phased manner, and realizing the transformation and upgrading of the listed company's business are key steps in the restructuring plan.

Therefore, through this reorganization, Baota Industry will dispose of the loss-making bearing business assets and place in new energy power generation and energy storage business assets with broad market prospects and strong profitability, realize the industrial transformation from bearing business to new energy business, and enhance the core competitiveness and profitability of the listed company. At the same time, Ningxia State-owned Assets also fulfilled its commitment to inject high-quality assets related to the restructuring investment.

The restructuring plan shows that as an injected asset, Diantou New Energy is the only autonomous region-level state-owned wind power, photovoltaic and energy storage new energy industry platform in Ningxia Hui Autonomous Region. From 2022 to the first half of 2024, Diantou New Energy's operating income and net profit totaled 987 million yuan and 232 million yuan respectively.

As of the end of June 2024, Power Investment New Energy had total assets of 4.289 billion yuan, total liabilities of 3.351 billion yuan, and total shareholders' equity of 939 million yuan.

Plans to place new energy assets under the controlling shareholder

The restructuring of Baota Industrial will be divided into two parts: major asset replacement and issuance of shares to purchase assets.

Specifically, Baota Industry intends to use the assets and liabilities related to the bearing business, except for some retained assets and liabilities, as the disposal assets, and exchange them with the equivalent portion of the 100% equity of Power Investment New Energy held by the counterparty, which is the disposal assets. The disposal assets will be taken over by Ningxia Power Investment or its designated entity.

At the same time, Baota Industry will purchase the difference between the transaction price of the assets to be placed in and the assets to be disposed of from the counterparty by issuing shares. Currently, the audit and evaluation of the assets to be disposed of and placed in have not been completed.

A reporter from the Yangtze Business Daily noticed that this restructuring is essentially an asset transfer led by Ningxia State-owned Assets, and its purpose is to help Baota Industry achieve business transformation and improve sustainable profitability.

According to data, Baota Industry was formerly the Northwest Bearing Factory founded in 1965. In 1996, the company was restructured and listed, becoming the first listed company in China's bearing industry. In 2007, China Great Wall Asset Management Company acquired a total of 37.78% of Baota Industry's shares through a judicial ruling, becoming the company's largest shareholder.

In 2011, China Great Wall Asset Management Co., Ltd. transferred part of its shares to Ningxia Baota Petrochemical Group Co., Ltd. (hereinafter referred to as "Baota Petrochemical"), giving up its position as the largest shareholder.

But even after the change of ownership, Baota Industrial's main business has been relatively sluggish. From 2008 to 2023, Baota Industrial suffered a net loss after deducting non-operating income for 16 consecutive years.

In early 2020, Baota Industry was filed for bankruptcy reorganization and completed the reorganization plan at the end of the year. After the reorganization, the company's controlling shareholder was changed to Ningxia State-owned Capital Operation Group Co., Ltd. (hereinafter referred to as "Ningguoyun"), and the company changed from private holding to state holding, and the People's Government of Ningxia Hui Autonomous Region became the actual controller of the company.

It is worth mentioning that the restructuring plan shows that the listed company will take the restructuring as an opportunity to actively introduce restructuring investors and inject high-quality assets in a timely manner after resolving the crisis and eliminating the debt burden, adjust the business structure of the listed company in a timely and phased manner, and realize the transformation and upgrading of the listed company's business; after completing the restructuring and achieving a smooth and orderly transition, the restructuring investor will inject high-quality assets that comply with industrial policies into the listed company in a timely manner to enhance and improve the sustainable operating ability and profitability of the listed company.

As the first asset restructuring after the reorganization of Baota Industrial, the counterparty in this transaction, Ningxia Electric Investment, is a wholly-owned subsidiary of Ning Guoyun, the controlling shareholder of Baota Industrial, and is an affiliated party of the listed company.

Therefore, this transaction is essentially a specific arrangement for Ning Guoyun, the controlling shareholder of Baota Industry, to actively fulfill its commitment to inject high-quality assets related to restructuring investment.

China Power Investment New Energy has made a profit of 232 million in two and a half years

Under the background of "dual carbon", old-fashioned bearing listed companies will achieve transformation to new energy industry through the injection of high-quality assets.

It is understood that in this transaction, the target company, Power Investment New Energy, is mainly engaged in the investment, development and operation management of photovoltaic power generation, wind power generation and energy storage power station projects. At present, the total grid-connected scale of photovoltaic and wind power generation is about 780MW, and the total grid-connected scale of energy storage power stations is about 200MW/400MWh.

The restructuring plan shows that as the only autonomous region-level state-owned wind power, photovoltaic and energy storage new energy industry platform in Ningxia Hui Autonomous Region, on the basis of the existing 780MW grid-connected wind power and photovoltaic scale, the Autonomous Region Development and Reform Commission has agreed to include the 3GW new energy project undertaken by Power Investment New Energy into the annual construction and development plan. On this basis, Power Investment New Energy will actively promote relevant industrial planning, feasibility studies, land use, grid access and other preparatory work, and it is expected that the subsequent grid-connected scale and power generation will steadily increase.

Before this transaction, Baota Industry's main business was the production and sales of bearings and marine electrical appliances. After the completion of this transaction, Baota Industry's existing bearing business will be divested, and its main business will be changed to the investment, development and operation of wind power, photovoltaic and energy storage power stations, as well as the production and sales of marine electrical appliances.

In addition, Diantou New Energy currently has relatively stable profitability. Data shows that from 2022 to the first half of 2024, Diantou New Energy achieved operating income of 357 million yuan, 406 million yuan, and 224 million yuan, respectively, and net profit of 83.2731 million yuan, 99.9151 million yuan, and 49.1654 million yuan. In the past two and a half years, Diantou New Energy's operating income and net profit totaled 987 million yuan and 232 million yuan, respectively.

As of the end of June 2024, Power Investment New Energy had total assets of 4.289 billion yuan, total liabilities of 3.351 billion yuan, and total shareholders' equity of 939 million yuan.

Baota Industry believes that in recent years, the bearing industry has been affected by factors such as the slowdown in macroeconomic growth and intensified market competition, and the competitiveness and profitability of listed companies have been relatively weak. Through this transaction, the listed company will dispose of the loss-making bearing business assets and place in new energy power generation and energy storage business assets with broad market prospects and strong profitability, realizing the industrial transformation from bearing business to new energy business, and enhancing the core competitiveness and profitability of the listed company.

In addition, Baota Industry also stated that this restructuring, through the issuance of shares to acquire high-quality assets and implement supporting financing, will play the main channel role of mergers and acquisitions in the capital market, which will help listed companies improve their financial conditions and reduce financial risks while realizing the injection of high-quality assets and the transformation of their main businesses.