GMT EIGHT - Company

SAIC Motor Corporation (600104.SH): Car sales in the first quarter reached 945,000 units, a year-on-year increase of 13.3%.

In the first quarter of 2025, SAIC Motor Corporation (600104.SH) sold a total of 945,000 vehicles, an increase of 13.3% year-on-year. The cumulative deliveries to end customers exceeded 1.08 million, and channel health continued to improve. In March, SAIC sold 386,000 vehicles, an increase of 1.14% year-on-year and a significant increase of 30.8% month-on-month. Since the beginning of this year, SAIC's monthly sales have maintained a continuous upward trend in both year-on-year and month-on-month data, and the recovery of production and sales has further strengthened. In terms of new energy vehicles, a total of 273,000 vehicles were sold from January to March, an increase of nearly 30% year-on-year. In March, sales of new energy vehicles reached 126,000, with growth rates exceeding 40% both year-on-year and month-on-month.

01/04/2025

Bestore Co., Ltd.: Multiple crises lead to halving of market value, how can the new "novice" chairman break the deadlock?

Recently, the domestic leading enterprise in leisure snacks, Bestore Co., Ltd. (603719.SH), has been caught in a whirlwind of public opinion. On one hand, the company has been warned by regulatory authorities for violations by major shareholders. It is worth noting that Bestore Co., Ltd. hastily disclosed an equity change announcement under the regulatory warning letter, but did not disclose the fact that the company's major shareholder received a warning letter from the regulatory authorities. On the other hand, Bestore Co., Ltd. is facing the embarrassing situation of its first annual loss since its listing, and shortly after the announcement of the expected loss in performance, the Chairman and General Manager who had previously led the price reduction and reform of Bestore Co., Ltd., Yang Yinfen, announced her resignation. The situation faced by the newly appointed Chairman, Cheng Hong, does not seem optimistic. What is even more worrying for investors is that the newly appointed Chairman, Cheng Hong, who is also acting as the General Manager, has no prior experience as a manager of a listed company. Before taking office, her main job was as the director of the Wuhan University Institute for Quality Development Strategy. From academic leadership to senior management in a listed company is almost like a "novice" executive. It remains uncertain whether she can adapt to the role change and how she will lead Bestore Co., Ltd. out of its performance slump, face compliance challenges, and market tests. 1. Major shareholder's violation warning letter reveals governance concerns On March 14, the Hubei Securities Regulatory Bureau issued a warning letter to six shareholders of Bestore Co., Ltd., including the controlling shareholder Ningbo Hanyi Entrepreneurship Investment Partnership. The warning letter shows that Ningbo Hanyi, Ningbo Liangpin, Ningbo Hanliang, Ningbo Hanlin, Ningbo Hanning, and Ningbo Hanliang, six companies, collectively hold 44.22% of the company's shares. According to the announcement made by Bestore Co., Ltd. on March 7, 2023, Ningbo Hanliang, Ningbo Hanlin, Ningbo Hanning, and Ningbo Hanliang (hereinafter referred to as Ningbo Hanliang and its concerted actors) have terminated their concerted action relationship with Ningbo Hanyi and Ningbo Liangpin (hereinafter referred to as Ningbo Hanyi and its concerted actors). In the period from May 17 to December 5, 2023, these shareholders reduced their holdings in Bestore Co., Ltd. by 3.42% through block trading or concentrated bidding. After the above changes, the stakes held by Ningbo Hanyi and its concerted actors in Bestore Co., Ltd. decreased from 44.22% to 38.36%, with an equity change ratio of 5.86%; while the stakes held by Ningbo Hanliang and its concerted actors in Bestore Co., Ltd. decreased from 44.22% to 2.43%, with an equity change ratio of 41.79%. When the stake held by these shareholders in Bestore Co., Ltd. changed by 5%, they did not timely disclose the equity change report. In addition, on June 18 and 19, 2024, Ningbo Hanyi reduced its holdings by 584,300 shares through concentrated bidding, accounting for 0.15% of the total share capital of the company. When reducing its stake in Bestore Co., Ltd. from May 2023 to June 2024, the shareholders did not timely disclose the report when the equity change ratio reached 5%. The actions of the six shareholders mentioned above violated the provisions of Article 14 and Article 15 of the "Regulations on the Acquisition of Listed Companies" (CSRC Order No. 166), and therefore, the Hubei Securities Regulatory Bureau issued an administrative supervision measure in the form of a warning letter. It is worth noting that the fact that the major shareholder of the listed company has been subjected to administrative supervision measures has not been disclosed by the company. Among the six shareholders of Bestore Co., Ltd., Ningbo Hanyi and its concerted actors are still the controlling shareholders of the listed company. According to the disclosure in the equity change announcement by Bestore Co., Ltd., the main person in charge of Ningbo Hanyi is Pan Meihong, and the main persons in charge of Ningbo Liangpin are Yang Hongchun, Pan Meihong, and Yang Yinfen, all of whom are the actual controllers or related persons of the listed company. The violations of equity changes in this instance have exposed the weak compliance awareness of the major shareholders of the listed company, which may further erode investors' trust. 2. Performance shows the first annual loss since listing, price reduction strategy backfires on gross profit margin The 2024 performance forecast of Bestore Co., Ltd. shows that the net profit attributable to the parent company for the full year is expected to be a loss ranging from 25 million to 40 million yuan, while the non-net profit is expected to be a loss of 50 million to 70 million yuan, marking the first annual loss since Bestore Co., Ltd.'s listing in 2020. However, it should be noted that Bestore Co., Ltd.'s performance in each quarter of 2024 has been consistently disappointing. Following a loss of 11.02 million yuan in the fourth quarter of 2023, the net profit attributable to the parent company for the first to third quarters of 2024 were 62.48 million yuan, -38.59 million yuan, and -4.50 million yuan respectively, indicating a significant loss in the fourth quarter as well. Behind the performance "waterloo" is the failure of the "price reduction without reducing quality" strategy that the company launched to cope with competition. In 2023, under the leadership of the former Chairman Yang Yinfen, Bestore Co., Ltd. announced an average price reduction of 22% for 300 products, with a maximum reduction of 45%. Although this stimulated short-term sales, it led to a decline in gross profit margin from 27.75% in 2023 to 26.84% in the first three quarters of 2024. Combined with factors such as reduced government subsidies, Bestore Co., Ltd.'s profit margin has been severely squeezed, making its loss in performance in 2024 unsurprising. In addition, the company's revenue has been shrinking in recent years, with a 14.76% year-on-year decrease in 2023, and an 8.66% decrease in the first three quarters of 2024, totaling only 5.48 billion yuan. In other words, the strategy of "exchanging price for quantity" attempted by Bestore Co., Ltd. has not been effective. This has made the already declining profit scale of Bestore Co., Ltd. even more severe. The net profit attributable to the parent company of Bestore Co., Ltd. increased by -46.26% in 2023, further expanding in 2024.89.86% by the end of the first three quarters of 2024.As a result, the performance of Bestore Co., Ltd. further "collapsed". 3. The former chairman Yang Yinfen resigned, and the prospect of amateur Cheng Hong "rescuing" is unclear Strategic mistakes have led to a sharp decline in the company's performance, and a person must be held accountable for this in a listed company. Just over a month after Bestore Co., Ltd. issued a profit warning for 2024, on March 3rd, Bestore Co., Ltd. announced that Chairman and General Manager Yang Yinfen resigned due to "personal reasons". Although the company's announcement praised Yang Yinfen, even stating: "The company and the Board sincerely thank Mr. Yang Yinfen for his hard work and contributions during his tenure, and specially award him the title of Honorary Chairman of the company." However, there is no doubt that Yang Yinfen also bears responsibility for Bestore Co., Ltd.'s current dismal performance. What surprised the market and investors even more was that the announcement from Bestore Co., Ltd. stated that the 62-year-old director of the Quality Development Strategy Research Institute of Wuhan University, Cheng Hong, would take over as chairman and act as CEO. However, Cheng Hong has not previously operated the management of a listed company, mostly serving as an independent director of other listed companies or as a director of Bestore Co., Ltd. Not only does he lack experience in company management, but he may also lack an understanding of the strategies and tactics in the fast-moving consumer goods industry. To have such an "amateur" take over as the leader of Bestore Co., Ltd. in the face of the current operational difficulties, it is likely that most people will hold a skeptical attitude. 4. Multiple crises compounded with shareholders reducing their holdings, causing the stock price market value to be "halved" With the operational and performance crises, coupled with the turmoil in senior management, another major shareholder of the listed company, Deyang Limited, with a 19.16% stake, announced a reduction of up to 12.03 million shares within three months in February of this year. It really is a "leaking ship facing headwinds", if even one's own major shareholder doesn't have confidence in the listed company? According to public information, since the peak stock price of 87.24 yuan/share in 2020, the market value of Bestore Co., Ltd. has evaporated by over 90%. As of the closing price on March 28, 2025, it was only 12.42 yuan/share, with a total market value of less than 5 billion yuan. Previously, Bestore Co., Ltd.'s shareholders had reduced their holdings multiple times, such as nearly selling off by Gao Ling Capital, and Deyang Limited cumulatively reducing its holdings by over 14%. The reduction in holdings by major shareholders has formed a vicious cycle with negative performance news. The positioning of "natural healthy snacks" proposed by the new chairman Cheng Hong, how to balance between low-price competition and quality positioning, is still unknown. This article is reproduced from the WeChat public account "Observation Number Nine", GMTEight editor: Chen Yufeng.

31/03/2025

Ye Guofu: In the next three years, Yonghui (601933.SH) will incubate 100 products worth over one billion yuan.

On March 29, Yonghui Superstores (601933.SH) held the 2025 Global Supplier Conference in Xuchang, Henan. The theme of the conference was "Going back to the essence and embracing quality", bringing together hundreds of Yonghui Superstores' global core supplier representatives to discuss the path of high-quality development in the retail industry. Founder, Chairman, and CEO of MNSO Group, as well as leader of the Yonghui Superstores reform team, Ye Guofu, stated that Yonghui Superstores will focus on core suppliers, core flagship products, and long-termism to drive Yonghui's transformation and upgrade. Yonghui Superstores will firmly follow the quality retail route of "Pangdonglai model" and become a national supermarket more suitable for mainstream Chinese families. Pangdonglai founder and chairman Yu Donglai stated at the conference that companies should continuously improve product research and development, product functionality, and product quality around the standard baseline to accumulate energy and spread beauty in the retail industry. Over the next three years, Yonghui will incubate 100 billion-yuan flagship products. Ye Guofu emphasized focusing on core suppliers, core flagship products, and long-termism, while strongly opposing the practice of changing suppliers with each new procurement officer. He announced that Yonghui Superstores will selectively screen its first batch of 200 core suppliers and establish an annual dialogue mechanism with the suppliers' chairpersons. During the roundtable forum, executives from MENGNIU DAIRY Group, XINRONGMAO Fruit Technology Group, YIHAIKALI Food Marketing Limited Company, Guangdong Yihao Food Company, and the Liansheng Donglai Business Research Institute engaged in deep discussions on topics like transforming the supply chain relationship and developing quality retail. They unanimously agreed that both parties in the supply chain need to establish a symbiotic relationship based on value co-creation, and build a long-term trust mechanism. Yonghui plans to adjust and convert 200 stores this year. As a retail "myth", Pangdonglai is dedicated to creating a "path of beauty" and has initiated a new trend in commercial excellence. On the morning of March 29, participants visited Pangdonglai to learn about its management and cultural philosophy. During the conference, Yu Donglai stated, "Products also have a life and need to be respected, nurtured, cared for, motivated, and praised." He suggested that enterprises should strengthen team building, enhance the stability and improvement of research and development quality and product quality to offer consumers higher quality products. In May 2024, with the support of Yu Donglai and his team, Yonghui Superstores underwent adjustments and conversions through two modes, namely, Pangdonglai assistance and independent adjustments. The feedback from the revamped stores showed significant growth in reputation, quality, customer flow, and sales, effectively promoting high-quality consumer development. Yonghui Superstores will firmly follow the quality retail route of the Pangdonglai model and bring the values of a happy supermarket to a larger consumer base. It is reported that on March 28, Yonghui Superstores had 5 converted stores in Beijing, Nanning, Lanzhou, Dongguan, and Wenzhou, which were all well-received. As of March 29, Yonghui Superstores completed the conversion of 47 stores nationwide, and it is expected that by mid-year, the total number of converted stores will reach 100, with a target of 200 by the end of the year.

31/03/2025

The CSRC-related agencies plan to impose administrative penalties on Dongxu Group: 43 responsible parties will be fined a total of 1.7 billion yuan.

On March 28th, the Hebei Securities Regulatory Bureau issued an advance notice of administrative penalties for securities violations against Dongxu Optoelectronics Technology Co., Ltd. (referred to as Dongxu Optoelectronics, delisted) and its controlling shareholder Dongxu Group Co., Ltd. (referred to as Dongxu Group, bond issuer). On the same day, the Shenzhen Securities Regulatory Bureau issued an advance notice of administrative penalties for securities violations against Dongxu Blue Sky New Energy Co., Ltd. (referred to as Dongxu Blue Sky) and other relevant entities. The Hebei and Shenzhen Securities Regulatory Bureaus plan to impose a total fine of 1.7 billion yuan on 43 responsible parties, including Li Zhaoting, and impose securities market entry bans of five years or more, including lifetime bans, on 19 key personnel. The original text is as follows: China Securities Regulatory Commission's Relevant Branches to Issue Administrative Penalties for Securities Violations by Dongxu Group On March 28th, the Hebei Securities Regulatory Bureau issued an advance notice of administrative penalties for securities violations against Dongxu Optoelectronics Technology Co., Ltd. (referred to as Dongxu Optoelectronics, delisted) and its controlling shareholder Dongxu Group Co., Ltd. (referred to as Dongxu Group, bond issuer). On the same day, the Shenzhen Securities Regulatory Bureau issued an advance notice of administrative penalties for securities violations against Dongxu Blue Sky New Energy Co., Ltd. (referred to as Dongxu Blue Sky) and other relevant entities. According to the investigation, firstly, in 2017, Dongxu Optoelectronics did not meet the conditions for stock issuance, deceived for approval, and illegally raised 7.565 billion yuan; in 2018, Dongxu Group did not meet the conditions for corporate bond issuance, deceived for approval, and illegally raised 3.5 billion yuan. Secondly, from 2015 to 2019, Dongxu Group inflated its revenue by a total of 47.825 billion yuan, inflated its profit by 13.001 billion yuan, and inflated its cash by 44.79 billion yuan (the highest). Dongxu Optoelectronics inflated its revenue by 16.76 billion yuan and inflated its profit by 5.627 billion yuan. Thirdly, Dongxu Group and related entities non-operatively occupied cash from Dongxu Optoelectronics, Dongxu Blue Sky, with a total outstanding amount of 16.959 billion yuan. Fourthly, Dongxu Optoelectronics and Dongxu Blue Sky did not disclose their 2023 annual report on time. The Hebei and Shenzhen Securities Regulatory Bureaus plan to impose a total fine of 1.7 billion yuan on 43 responsible parties, including Li Zhaoting, and impose securities market entry bans of five years or more, including lifetime bans, on 19 key personnel. According to regulations, the relevant parties have the right to make statements, defenses, and request a hearing in accordance with the law. The Hebei and Shenzhen Securities Regulatory Bureaus will formally issue administrative penalty decisions after completing the regulatory enforcement procedures in accordance with the law. Currently, investigations into illegal practices by relevant intermediary agencies are ongoing. The Hebei and Shenzhen Securities Regulatory Bureaus will continue to urge the directors and senior management of Dongxu Optoelectronics and Dongxu Blue Sky to lawfully recover funds illegally occupied by Dongxu Group and related entities. For any securities crimes related to the violations, the evidence will be transferred to the public security organs in accordance with procedures. This article is selected from the "CSRC Announcement" public account, edited by GMTEight: Li Fo.

28/03/2025

Top-level event WTT creates the highlight moments for the world-renowned brand.

In March of this year, WENJIE reached a strategic cooperation with the international top sports event WTT World Table Tennis Professional League, becoming the presenting partner of the WTT Chongqing Grand Prix. This partnership allowed the WENJIE brand to gain widespread exposure on a global scale. During the event, WENJIE achieved comprehensive marketing coverage through diversified brand displays. From brand exposure on the event broadcast to immersive experience areas around the venue, WENJIE seamlessly integrated the brand into the event scene, allowing global audiences to subconsciously build brand recognition while enjoying the exciting matches. This brand placement method created a promotional effect beyond traditional advertisements. It is worth noting that the WTT Chongqing Grand Prix 2025 gathered the core lineup of the Chinese national table tennis team, including players like Wang Chuqin and Sun Yingsha. Against the backdrop of a continuous surge in national enthusiasm for sports, the event attracted unprecedented attention. WENJIE leveraged this high-profile event to achieve geometric growth in brand exposure. This event collaboration is not an isolated action, but a key move in the overall brand strategy of WENJIE. In August of last year, Chongqing Sokon Industry Group Stock (601127.SH) officially joined the CCTV "Brand Powerhouse Project," with WENJIE becoming the "Central Radio and Television General Automobile Powerhouse Strategic Partner." At the 2025 CCTV Spring Festival Gala, the innovative performance of 780 WENJIE M9 vehicles with the National Artistic Gymnastics Team and the Times Youth Group achieved a perfect integration of technology, art, and sports, enhancing the brand value of WENJIE to an unprecedented level. Market research shows that high-end automobile consumers value both the technical strength of a product and the brand's spiritual value. Through the combination of "international sports events + national-level platforms" in high-impact marketing strategies, WENJIE has built a systematic brand upgrade path, continuously promoting its brand essence of "exploration and advancement, pushing boundaries, and breaking new ground" to deepen brand identity through spiritual resonance. In the fiercely competitive new energy vehicle market, WENJIE's "high-level" marketing combination is the key to its ability to "win big."

27/03/2025

CSRC: Strict administrative penalties will be imposed on Hainan Poly Pharm (300630.SZ) for major financial fraud.

On March 21, the China Securities Regulatory Commission (CSRC) strictly imposed administrative penalties on Hainan PuLi Pharmaceutical Co., Ltd., a company listed on the Growth Enterprise Market of the Shenzhen Stock Exchange (referred to as ST Puli, 300630.SZ). ST Puli's annual reports for 2021 and 2022 contained significant false records, with a total profit overstatement of more than 500 million yuan in two consecutive years, accounting for over 50%, triggering a major violation leading to mandatory delisting. Today, the Shenzhen Stock Exchange will initiate the delisting process for *ST Puli in accordance with the rules. For listed companies and relevant parties involved in serious financial fraud, administrative penalties and mandatory delisting are not the end. The CSRC will work with relevant departments to implement comprehensive and multi-dimensional accountability. For possible criminal clues, the principle of transferring responsibility will be strictly followed, and cases will be transferred to public security organs in accordance with the provisions of the Criminal Law and the standards for public security organs' jurisdiction over criminal cases established by the Supreme People's Procuratorate and the Ministry of Public Security. For eligible investors who suffer losses due to financial fraud by listed companies, the China Securities Investment Protection Fund Corporation will actively play a professional role, using various methods such as litigation support, exemplary judgments, professional mediation, and representative litigation to help investors safeguard their rights in accordance with the law. At the same time, the CSRC will also investigate the professional conduct of relevant intermediary agencies. This article is compiled from the official website of the China Securities Regulatory Commission. Editor: Liu Jiayin at GMTEight.

21/03/2025

Jiangsu Hengrui Pharmaceuticals (600276.SH) has obtained approval for the listing of type 1 new drug SHR0302, for the treatment of ankylosing spondylitis.

On March 21st, the latest announcement on the official website of the National Medical Products Administration (NMPA) of China stated that Jiangsu Hengrui Pharmaceuticals (600276.SH) has received approval for the market application of a Class 1 new drug, SHR0302 (Imexonib sulfate tablets). This drug is suitable for adult patients with active ankylosing spondylitis who have ineffective or intolerant responses to one or more TNF inhibitors. According to public information from Jiangsu Hengrui Pharmaceuticals, this is a JAK1 inhibitor developed independently by the company. Ankylosing spondylitis (AS) is an autoimmune disease characterized by chronic inflammation in the axial joints without a clear cause. AS mainly affects the sacroiliac joints, spinal accessory joints, adjacent soft tissues of the spine, and peripheral joints. In severe cases, spinal deformities and stiffness can occur. Nonsteroidal anti-inflammatory drugs (NSAIDs) are first-line drugs for treating AS. For AS patients who still have active symptoms or cannot tolerate NSAIDs, biologic drugs are recommended. However, some active AS patients still have poor treatment outcomes. JAK inhibitors can block the JAK-STAT signaling pathway, directly or indirectly blocking the signaling of various cytokines related to AS, thereby suppressing inflammation and relieving the disease. They are considered effective treatment methods for AS in recent years. JAK1 inhibitors have higher selectivity, so they have fewer potential side effects and are more effective. Imexonib is a highly selective JAK1 inhibitor developed independently by Jiangsu Hengrui Pharmaceuticals. It can inhibit JAK1 signaling, exerting biological effects that have anti-inflammatory and immunosuppressive effects, and reducing side effects such as anemia caused by JAK2 inhibition.

21/03/2025

Imeik Technology Development (300896.SZ) Annual Report for 2024: Revenue breaks 3 billion for the first time, generous dividends to investors.

On the evening of March 19, 2025, Imeik Technology Development (300896.SZ) released its annual report for 2024, with both revenue and profit reaching a record high. The operating income was approximately 3.026 billion yuan, a year-on-year increase of 5.45%; the net profit attributable to equity holders was approximately 1.958 billion yuan, a year-on-year increase of 5.33%. At the same time, the company plans to distribute a cash dividend of 38 yuan (including tax) per 10 shares to all shareholders, totaling 1.145 billion yuan (including tax), the highest cash dividend amount in history, accounting for 58.51% of the full-year net profit. In 2024, Imeik Technology Development followed market consumption trends, utilized its advantages in product line richness and efficient resource allocation, deepened cooperation with customers, continuously enhanced market visibility and influence, and promoted simultaneous growth of solution and gel injection products. Among them, "Hai Ti" has sold over 20 million units in the neck wrinkle repair field, helping solution injection products achieve revenue of approximately 1.744 billion yuan, a year-on-year increase of 4.40%; with "Double Angel" as its flagship, gel injection products achieved revenue of approximately 1.216 billion yuan, a year-on-year increase of 5.01%. In recent years, through continuous strengthening of research and development and technological innovation, Imeik Technology Development has established a complete research and development system in the medical beauty industry, with outstanding research and development innovation capabilities and efficient commercialization abilities in the field of dermal fillers. In the past year, the company invested approximately 304 million yuan in research and development, accounting for 10.04% of total revenue. As of the end of 2024, it owned 163 valid authorized patents, including 49 invention patents. In terms of technological applications, Imeik Technology Development has applied multiple patented technologies to molded products, including the first commercialized PVA microsphere long-lasting filling effect dermal filler, the first commercialized dermal filler containing lidocaine, the first dermal filler containing L-peptide and amino acids, and the first dermal filler containing PLLA microspheres. The research and development innovation capabilities have been highly recognized by the market. In terms of commercialization, the company has successfully industrialized a series of dermal fillers based on hyaluronic acid sodium, dermal fillers based on polylactic acid, and PDO face embedding lines, while also developing biological medical products such as recombinant proteins and peptides. Currently, the company's Simu Gelatine peptide injection solution, deoxycholic acid injection solution, and recombinant hyaluronidase have obtained clinical trial approvals from the National Medical Products Administration; applications for the market approval of injectable type A botulinum toxin, minoxidil lotion, and lidocaine prilocaine cream have been accepted and entered the review stage. Furthermore, by the end of 2024, Imeik Technology Development's total cash, bonds, and trading financial assets amounted to approximately 6 billion yuan, with an asset-liability ratio reduced to 4.68%, further optimized from 2023, laying a solid financial foundation for its domestic and international strategic mergers and acquisitions and long-term sustainable development. Looking ahead, the growth potential of the Chinese medical beauty consumer market remains immense, with the industry maintaining steady growth momentum. According to Frost & Sullivan data, the size of the Chinese medical beauty market is expected to reach 638.2 billion yuan by 2030, with a compound annual growth rate of 14.5% from 2021 to 2030. According to the company's plan, in the future, Imeik Technology Development will seize opportunities, actively expand market coverage, continuously optimize service quality, increase research and development investment, enhance production efficiency, and actively promote digital transformation, embrace the industry's wave of change, and comprehensively promote the steady development of the company.

20/03/2025

Yonghui Superstores: Firmly following the "pangdonglai" model of quality retailing, development requires self-innovation.

On March 17th, Yonghui Superstores held its first interim shareholders' meeting for the year 2025. According to the announcement of the meeting resolution released that evening, the Yonghui Board of Directors completed its tenure, and MNSO Board Chairman and CEO Ye Guofu was elected as the new director. In response to the changes in Yonghui's management team, Yonghui stated that it is currently in a period of transformation and in order to develop, it must undergo deep self-renewal. Over the past three years, Yonghui has been in a state of loss and, based on its quality retail route of firming up the "Pang Donglai" mode, the company has made corresponding adjustments to its organizational structure. Through deep organizational transformation, it aims to address more development challenges. There will be pains in the transformation process, but Yonghui will remain firm in its belief, give its all, complete its self-transformation, break free from its cocoon, and present to all consumers and investors a "New Yonghui".

17/03/2025

Contemporary Amperex Technology (300750.SZ): Double squat! Is it really that scary this time?

On the evening of March 14, 2025, Contemporary Amperex Technology (300750.SZ) announced its performance for the fourth quarter of 2024. Due to an accounting adjustment made in the 2024 annual report by Ningwang, which included warranty deposits in the cost of sales (leading to an increase in cost of sales and a decrease in selling expenses), Dolphin made an adjustment for 4Q24 before the accounting change to track Ningwang's marginal quarterly changes. Here are the key points: 1) Revenue fell short of expectations mainly due to lower shipment volumes than market expectations this quarter, with the main issue being in energy storage: despite battery unit prices being slightly higher than market expectations this quarter, the reason for the revenue falling short of expectations is mainly due to a significant decline in "second curve" energy storage shipments compared to the previous quarter. Dolphin's estimated energy storage shipments for this quarter were 31 GWh, but they plummeted by 50% to 16 GWh this quarter, while the market expected an increase in energy storage shipments for the quarter. 2) Power battery shipments exceeded market expectations, but still could not make up for the sharp decline in energy storage shipments: this quarter's power battery shipments were good, around 130 GWh, a 38.4% increase compared to the previous quarter and significantly higher than the market's expected 114 GWh. However, this still could not compensate for the sharp decline in energy storage shipments. Battery shipments this quarter were about 145 GWh, still below the market's expectation of 150 GWh. Dolphin believes that Ningwang's significant decline in energy storage shipments is due to factors including: 1) domestically, the cancellation of China's mandatory storage policy affecting domestic large storage shipments in the short term; 2) overseas, a double impact of mismatched shipment cycles and export tax rebate policies. 3) Battery unit prices have not decreased significantly, but due to a rise in costs per Wh this quarter, the gross profit margin has declined by 4.6 percentage points compared to the previous quarter, falling short of market expectations: after adjusting for the warranty deposit accounting change, the actual gross profit margin for this quarter is 26.5%, a 4.6 percentage point decrease from the previous quarter. Dolphin believes this is due to the combination of Ningwang's high-margin energy storage shipments declining and upstream raw material price increases affecting the gross profit. 4) However, capacity utilization in the second half of the year is relatively full: looking at the key capacity utilization indicator in each financial report (strongly correlated with Ningwang's stock price, a core operating indicator for the manufacturing industry), Ningwang's capacity utilization rate in the second half of 2024 was around 86%, an 8 percentage point increase compared to the second half of 2023, showing a marginally positive operational indicator. Overall, due to Ningwang's early performance forecast, the actual performance of this quarter falls within the guidance, but overall performance falls short of market expectations. Dolphin breaks down the points that fell short of expectations, mainly due to the significant decline in the growth rate of the second curve energy storage shipments, dragging down the overall shipment volume and causing the revenue to fall short of expectations. Additionally, the higher-margin energy storage business saw a sharp decline this quarter, coupled with upstream price increases, squeezing Ningwang's gross margin. Therefore, both revenue and gross margin fall short of market expectations, but the miss is not significant. Looking ahead, several indicators stand out: 1) Capital expenditures continued to increase in the fourth quarter, and Ningwang is still on track for expansion: starting from the third quarter of this year, Ningwang began to increase capital expenditures, reaching 9.9 billion in the fourth quarter, an increase of 2.5 billion from the previous quarter. The expansion of production capacity in the fourth quarter of Ningwang has indeed seen a short-term trend of good industry prosperity, especially in the first quarter of this year, where there is government subsidies for power batteries, and the subsidy intensity has increased, with seasonal sales not showing a significant decrease as in previous years. 2) Contract liabilities in the fourth quarter also showed a high increase: contract liabilities can be seen as an approximate indicator of changes in Ningwang's order volume. Looking at Ningwang's contract liabilities in the fourth quarter, they were 27.8 billion, an increase of 5.1 billion from the previous quarter, showing a marginal improvement, indicating that Ningwang's short-term operational perspective is still positive. 3) Inventory saw a significant increase in the fourth quarter: although inventory continued to increase in the fourth quarter, growing by 4.6 billion to 59.8 billion compared to the previous quarter, over 60% of the inventory is products in transit that have not yet reached customer handover points. Since there are more sales regions overseas, longer logistics times, and a higher proportion of sea transport cycles, about 60-70 GWh, this portion of in-transit goods will be converted into revenue in the first quarter of 2025, providing assurance for Ningwang's shipments in the first quarter. Therefore, unlike the industry overstock due to declining industry prosperity and excess capacity, this is a sign of Ningwang's operational improvement, and as a result, the first quarter of 2025 is expected to have stronger performance certainty. Added to this is the announced 20 billion dividend distribution, with a dividend yield of 1.7% for 2024, accounting for 39% of the net profit attributable to shareholders, and a dividend of 4.55 yuan per share, in line with market expectations. Although it falls short of the 22 billion dividend at the end of 2023, considering Ningwang's current signs of improving demand and increasing capital expenditures for expansion, this move is understandable to the market. However, from the perspective of the lithium battery industry, unlike the rapid upward trend seen in the power battery industry sales/production in the fourth quarter of 2023, which indicated a clear turning point, Ningwang's last round of stock price rebound started from a low point in the cycle (Ningwang's stock price began to rebound around March 2024, reflecting the rise in Ningwang's key operating indicators, capacity utilization), and the industry's sales/production has been fluctuating around 70% since then. Although the industry prosperity is still acceptable, indicating that the turning point for the lithium battery industry may still be early, further attention is needed.To continue tracking.the market currently expects a shipment volume of 574 Gwh in 2025, an increase of 21% year-on-year. Dolphin Jun expects that the current stock price corresponds to a PE multiple of 18-19 times Ninkwang in 2025. Dolphin Jun believes that with relatively high certainty in Ninkwang's performance in the first quarter of 2025, the current stock price is still not considered expensive. However, if there is no significant turning point in the power battery industry and with the short-term fluctuations in energy storage, the upside potential may be relatively limited. Here is a detailed analysis: 1. From the performance in the fourth quarter, both revenue and gross profit margin were slightly below market expectations. 1. Revenue: Below expectations mainly due to a significant decline in energy storage shipments, but battery prices remained stable. Operating income this quarter was 103 billion, slightly lower than the market's expectation of 104.6 billion. Dolphin Jun identified the main reason for falling short of expectations in the shipment volume. 2. Profit margin: Also slightly below market expectations due to the impact of the shipment structure and upstream price increases. 2. Capacity utilization rate is full in the second half of the year, with a decrease in the proportion of sales rebates. - Capacity utilization rate in the second half of the year is full, with an expected rate of over 90% in the fourth quarter. Overall, the analysis shows that while the company's performance was slightly below market expectations in the fourth quarter, there are factors contributing to this and reasons for optimism in the future.Due to the fact that the first half of the year is generally a low season for shipments, the comparability is relatively weak.However, compared to a capacity utilization rate of 79% in the second half of 2023, it has still increased by 8 percentage points year-on-year, and the capacity utilization rate in the second half of the year remains relatively high. It is expected that the capacity utilization rate in the fourth quarter will be above 90%, still signaling an improvement in business conditions. Although production in the fourth quarter exceeded sales (with full capacity utilization), there has been an accumulation of inventory, which is also a positive sign. This increases the certainty of Ning Wang's performance in the first quarter of 2025, as mentioned later in this document. 2. Lithium carbonate prices have stabilized, with the overall proportion of sales rebates in 2024 decreasing compared to 2023: Looking at the year-on-year change in estimated liabilities, it is expected that by the end of 2024 the liabilities will reach 71.9 billion, an increase of 20.3 billion compared to 51.6 billion at the end of 2023. Of this increase in estimated liabilities, 11.8 billion is due to quality assurance deposits confirmed in 2024, while the rest is mainly sales rebates provided to downstream customers based on the price linkage mechanism of lithium carbonate. Sales rebates confirmed in 2024 are around 8.4 billion (offsetting as income), accounting for approximately 2.3% of income before offsetting. In contrast, quality assurance deposits confirmed in 2023 were about 17 billion, accounting for about 4.1% of income before offsetting. As lithium carbonate prices stabilized in 2024 (especially showing a slight increase in the fourth quarter), the proportion of sales rebates to income before offsetting also decreased. In 2025, as business conditions are observed to be improving marginally, there is little room left for further decline in lithium carbonate prices in the short term (prices are already relatively low), and the proportion of sales rebates to income for Ning Wang in 2025 may continue to decrease. 3. Asset impairment risks are still decreasing: In the third quarter, Ning Wang recognized a significant impairment loss of about 4.7 billion (2.3 billion from inventory write-downs and 4.5 billion from long-term asset impairments, which are related to mineral resource assets directly linked to lithium carbonate prices.) In fact, the market is most concerned about the high increase in inventory write-downs, especially a significant increase in finished goods/raw materials inventory write-downs - indicating that battery prices may continue to decline significantly. The impairment of assets in the fourth quarter has decreased to about 1.8 billion, with around 0.8 billion from inventory write-downs and around 1.0 billion from long-term asset impairments. Although implied unit prices may continue to decline in the first quarter, the downside risk is manageable (the proportion of inventory write-downs to income is still relatively small). 3. High shipment increases, Ning Wang's market share stabilizes: Looking at the shipment volume for this quarter, a total of approximately 145Gwh was shipped in the fourth quarter, an increase of about 20Gwh from the previous quarter, but still below the market expectation of 150Gwh. Of this, around 130Gwh were for power batteries and 16Gwh for energy storage batteries, with a decreasing proportion of energy storage. 1. Looking at the market share of power batteries: Domestically: In the fourth quarter, Contemporary Amperex Technology's market share of power batteries decreased slightly compared to the previous quarter, from 44.9% to 43.8%. If the installation volume of BYD Company Limited is excluded, Ning Wang's market share also decreased from 59.1% in the previous quarter to 58.2% in the fourth quarter, a decrease of about 1 percentage point, which is a normal fluctuation. Looking at the market share of ternary and LFP batteries in Ning Wang's domestic market, Contemporary Amperex Technology's market share of ternary batteries has been stable, reaching 70% in the fourth quarter. Considering LFP batteries, the total installation volume in the industry reached 80% in the fourth quarter, an increase of 6 percentage points from the previous quarter. Ning Wang's domestic market share of LFP batteries also increased in this quarter, with a 0.7 percentage point increase to 37.3%. This increase was small, and if the installation volume of BYD Company Limited is excluded, it only increased by 0.2 percentage points. Behind this, as mentioned in a detailed analysis of Contemporary Amperex Technology by Dolphin Jun, Ning Wang's position in the high-end vehicle models remains stable (the market share of ternary batteries with higher prices continues to steadily increase). However, in the LFP market, there is a trend of consumption downgrading due to price wars in the new energy vehicle industry, which may limit the space for Ning Wang's market share to increase in LFP batteries. 2. Looking at energy storage batteries: In the short term, there may be pressure, but in the long term, the domestic energy storage market is returning to market-driven competition, and the increase in AI computing power has led to a surge in data center demand, requiring uninterrupted power supply, which will increase the demand for energy storage and is expected to drive Ning Wang's long-term energy storage sales volume. However, it may take some time for data center energy storage to take off. Ning Wang's outlook for the energy storage market is also optimistic. Ning Wang believes that looking at a 3-5 year perspective, the growth rate of the energy storage market is faster than that of power batteries, closer to the 25%-30% range. 4. However, forward-looking indicators imply that Ning Wang's short-term business operations may continue to improve: Looking at several forward-looking indicators of Ning Wang's performance in the fourth quarter, the short-term business conditions in the battery market still seem favorable, alleviating concerns about a downside risk in Ning Wang's short-term operations: 1. Capital expenditures continued to increase in the fourth quarter, and Ning Wang remains on a path of expansion.From the perspective of expenditure cycle, although Ning Wang has already passed the intensive investment period of capacity expansion (2021-2022), due to market competition saturation and overcapacity, capital expenditure has been in a downward cycle since the fourth quarter of 2022, and even reached a temporary low of 6.7 billion yuan in the fourth quarter of 2023.However, starting from the third quarter of this year, Ningwang began to increase its capital expenditure, reaching 9.9 billion yuan in the fourth quarter, an increase of 2.5 billion yuan compared to the previous quarter. Looking at Ningwang's capacity under construction, the battery system's capacity under construction is expected to reach 219GWh by the end of 2024, increasing from 153GWh in the middle of 2024. The amount of capacity under construction also increased from 25.2 billion in the third quarter to 29.8 billion, an increase of 4.6 billion. This means that Ningwang's expansion in the fourth quarter did see a positive short-term outlook for the lithium battery industry, especially as there is support from government subsidies for power batteries in the first quarter of this year. Moreover, the subsidies have increased, and the off-season sales volume is not significantly lower than in previous years. As for Contemporary Amperex Technology's power battery products, Shenxing batteries and Qilin batteries are expected to ramp up their deliveries this year, with their market share increasing from 30-40% last year to 60-70% this year. Meanwhile, the hybrid battery XiAo was released at the end of last year and has been adapted to more than 30 models. By 2025, vehicles equipped with XiAo batteries will be launched, indicating a positive trend for Ningwang's operations in the short term. Looking at Ningwang's current contract liabilities, there was a significant increase in the fourth quarter: As Ningwang mainly conducts business-to-business transactions, there may be situations where advance payments have been received from downstream customers but goods have not been delivered yet. Therefore, contract liabilities can be seen as an approximate indicator of changes in Ningwang's order volume. Looking at Ningwang's contract liabilities in the fourth quarter, they amounted to 27.8 billion yuan, an increase of 5.1 billion yuan compared to the previous quarter, showing a marginal improvement trend. Therefore, from the perspective of its short-term operational outlook, Ningwang is still in a positive trajectory. Regarding Ningwang's inventory: Although inventory in the fourth quarter increased by 4.6 billion yuan compared to the third quarter, reaching 59.8 billion yuan, corresponding to a stock level of 106 GWh, some market concerns may arise about Ningwang accumulating excess inventory again. However, there is no need to worry too much, as nearly 40% of Ningwang's inventory consists of goods that have already been shipped (products that have been shipped but revenue has not been confirmed) and 18% of stocked goods (goods that have not been shipped but may have been ordered and prepared in advance). Ningwang also explained that over 60% of the inventory is goods in transit that have not yet reached the customer's handover point. Because of increased overseas sales areas and longer logistics times, with a higher proportion of ocean shipping cycles, approximately 60-70 GWh is in transit. These goods in transit will be converted into revenue in the first quarter of 2025, providing assurance for Ningwang's shipment volume in the first quarter. Therefore, unlike the excessive inventory accumulation caused by a downturn in industry conditions and excess capacity, Ningwang's operational performance continues to show signs of sustained improvement, with greater certainty in its performance in the first quarter of 2025. This article is reprinted from the "Dolphin Investment Research" public account, edited by GMTEight: Jiang Yuanhua.

17/03/2025

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