Daily Financial News reports that according to the official website of the Shanghai Stock Exchange, Beijing Hibusi Chuang Technology Co., Ltd. (hereinafter referred to as: Hibusi Chuang) is scheduled to go public on the Science and Technology Innovation Board on October 17th.

Hibusi Chuang's high-speed growth in performance and its sustainability are being questioned. The company has a dispersed equity structure with an unclear identification of the actual controller, and its main procurement comes from some business competitors, such as CATL.

The sustainability of high-speed growth in performance is questionable.

Hibusi Chuang is a leading provider of electrochemical energy storage system solutions and technical services in China, focusing on the research and development, production, and sales of electrochemical energy storage systems. The company applied for an IPO on the Science and Technology Innovation Board in June 2023, received inquiries the following month, replied to the second round of inquiries in April 2024, and is scheduled to go public on October 17th.

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From 2021 to the first half of 2024, Hibusi Chuang achieved operating revenues of 838 million yuan, 2.626 billion yuan, 6.982 billion yuan, and 3.687 billion yuan, respectively. The net profits attributable to the parent company were 11.2605 million yuan, 177 million yuan, 578 million yuan, and 282 million yuan, respectively, indicating a relatively fast growth rate.

Further analysis shows that Hibusi Chuang's main business income mainly comes from the production and sales of energy storage systems. During the reporting period, the company's energy storage system revenue was 653 million yuan, 2.456 billion yuan, 6.927 billion yuan, and 3.65 billion yuan, accounting for 78.52%, 94.61%, 99.30%, and 99.04% of the main business income, respectively. The average annual compound growth rate from 2021 to 2023 reached 225.62%, showing a high-speed growth trend in the main business.

This has attracted the attention of the regulatory authorities, which require Hibusi Chuang to conduct a quantitative analysis of the reasons for changes in the sales amount and sales structure of segmented products, and to comprehensively analyze the reasons for the rapid increase in revenue during the reporting period; to analyze the sustainability of revenue growth in combination with downstream market demand and the situation of orders on hand.

However, according to the winning bid prices of similar products of comparable companies of Hibusi Chuang and relevant statistics from CNESA, the product prices in the electrochemical energy storage system industry have shown an overall decline since 2023.

Data shows that the average tax-inclusive winning bid price in the energy storage system industry has dropped from 1.52 yuan/Wh in January 2023 to 0.74 yuan/Wh in June 2024. During the reporting period, the sales prices of Hibusi Chuang's electrochemical energy storage system products were 1.07 yuan/Wh, 1.16 yuan/Wh, 1.11 yuan/Wh, and 0.81 yuan/Wh, respectively, also showing a downward trend since 2023. In other words, if the selling prices of electrochemical energy storage system products continue to decline, it may have an adverse impact on the company's operating performance, thereby affecting the company's profitability, leading to a slowdown in performance growth or a decline in performance.

During the aforementioned period, the gross profit margin of Hibusi Chuang's main business was 20.49%, 20.79%, 19.80%, and 19.47%, respectively. Among them, the gross profit margin of the energy storage system business was 24.80%, 23.05%, 20.02%, and 19.00%, respectively. In 2023, the company's energy storage system gross profit margin decreased significantly year-on-year, and the decline slowed down in the first half of 2024.In response to this, Haibo Si Chuang's explanation is that the decline in the gross margin of the company's energy storage systems since 2023 is mainly due to the downward trend in the market price of domestic energy storage systems. However, the company's gross margin decline is lower than the decline in the price of domestic energy storage systems.

In fact, at the end of 2021, Haibo Si Chuang still had a loss of 5.70 million yuan. Thanks to China's energy storage industry gradually entering a stage of large-scale and rapid development, the company achieved a rapid growth from loss-making to profit-making.

Tiantian Finance also noticed that from 2021 to the first half of 2024, the debt-to-asset ratio of Haibo Si Chuang was 25.09%, 44.62%, 63.64%, and 57.29%, respectively. The company's compound annual growth rate of operating income in the past three years was as high as 188.67%, and the debt-to-asset ratio also doubled. It is inevitable to doubt whether Haibo Si Chuang has a situation of obtaining market share by reducing prices for sales, and whether the company's market position and competitive strategy are stable and sustainable?

In this IPO, Haibo Si Chuang plans to raise 783 million yuan, of which 150 million yuan will be used to supplement working capital, and the rest will be used for the annual production of 2GWh energy storage system construction projects, energy storage system R&D and industrialization projects, digital intelligent laboratory construction projects, and marketing and after-sales service network construction projects. As of June 30, 2024, Haibo Si Chuang had 1.954 billion yuan in monetary funds, and the exact use of this 150 million yuan for supplementing liquidity is unknown.

Equity structure is dispersed, purchasing from competitors such as CATL

The prospectus shows that the equity structure of Haibo Si Chuang is relatively dispersed. The actual controller, Mr. Zhang Jianhui, directly holds 36.091.9 million shares of the company, accounting for 27.08% of the total number of shares before this issuance and listing. The actual controller, Ms. Xu Rui, does not directly hold shares of the company. Zhang Jianhui, as the executive partner of Jiaxing Haibo, actually controls 5.25% of the company's shares held by Jiaxing Haibo through the partnership agreement of Jiaxing Haibo.

In summary, the actual controllers, Mr. and Mrs. Zhang Jianhui and Xu Rui, directly hold and actually control a total of 32.33% of Haibo Si Chuang's shares through Jiaxing Haibo.

Qian Hao and Shu Peng each hold 3.49% and 2.23% of Haibo Si Chuang's shares, respectively. They are co-founders of the company with Zhang Jianhui and are also directors nominated by Zhang Jianhui. They have undertaken gambling obligations to external shareholders with Zhang Jianhui. The application materials did not recognize the two as the actual controller's consistent action persons or joint controllers.

The regulatory authorities require Haibo Si Chuang to analyze whether Qian Hao and Shu Peng have a consistent action relationship with the actual controller or constitute joint control, combining the actual situation in the company's business decision-making, such as the nomination of directors and the joint undertaking of gambling obligations.

It is worth mentioning that the actual controller and its consistent action persons of Haibo Si Chuang transferred company shares to the outside twice in February 2016 and December 2019. Due to the valuation corresponding to the eighth increase in December 2019 being less than the valuation of the seventh increase in February 2016, the actual controller, Zhang Jianhui, gave some shareholders a share compensation of 1.3628 million yuan in capital contributions.The determination method for the price of the 8th capital increase in December 2019, corresponding to the valuation being lower than that of the 7th capital increase in February 2016, has raised concerns. Additionally, the specific direction of the proceeds from the transfer of shares by the actual controller and its concert parties, whether they flow to the company's customers, suppliers, and their related parties, are also matters of interest.

Furthermore, in November 2022, Haibosichuang established a restricted stock plan and an option plan to provide equity incentives to employees, with a fair price of 47.28 yuan per share, which was based on the share price of the last external institution's investment in September 2021. The accuracy of this price determination has also been questioned.

Haibosichuang's main product is the electrochemical energy storage system, and the main raw materials purchased externally include battery cells, structural parts, electrical components, PCS and voltage-boosting converters, and electronic components, among others.

During the reporting period, the amount Haibosichuang purchased raw materials from its largest supplier, CATL and its subsidiaries, was 665 million yuan, 2.82 billion yuan, 3.444 billion yuan, and 304 million yuan, respectively. These amounts accounted for 60.57%, 80.97%, 63.33%, and 20.91% of the total raw material purchases for each period, respectively. The amount spent on purchasing battery cells from them accounted for 87.05%, 98.56%, 89.00%, and 36.92% of the total battery cell purchases for each period, respectively. In the first half of 2024, the company's procurement proportion from CATL decreased, mainly due to the decline in the market price of battery cells and the increased procurement of battery cells from EVE Energy.

Haibosichuang stated that the purchase price of battery cells from CATL has a certain discount compared to the market price. The reason is, on the one hand, the company purchased some battery cell products that will be updated and iterated, and on the other hand, CATL provided a certain discount based on long-term friendly cooperation.

However, there is a certain competitive relationship between CATL and Haibosichuang. From 2021 to 2023, the revenue proportion of CATL's energy storage battery business (including energy storage batteries and systems) was 10.45%, 13.69%, and 14.94%, respectively.

When asked about "whether there is a direct competitive relationship, whether there are supply chain risks, and what measures are taken to address and resolve them," Haibosichuang stated that the two parties have a strong synergistic effect in terms of business cooperation and expansion in the energy storage market, and both parties continue to maintain a good strategic supply cooperation relationship.