In the midst of a major reshuffling in the lithium battery industry, some companies have already reached their breaking point.
A 13-year-old Hunan-based veteran lithium battery enterprise, Sangton New Energy, has recently been subjected to a bankruptcy reorganization application by its creditors. The news was disclosed by Sangton New Energy's shareholder, Tus Environment (SZ: 000826), in an announcement on September 23rd.
Huaxia Energy Network (public account hxny3060) noticed that Sangton New Energy's official WeChat public account has stopped updating since June this year. Previously, it would publish holiday greetings for every festival, but it did not post any content during the just-concluded National Day holiday.
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In recent years, the Matthew effect in the lithium battery industry has intensified, with market share being monopolized by several leading companies. In the first half of 2024, three companies, CATL, BYD, and Zhongxin New Energy, accounted for 79% of the market share for pure electric passenger vehicle power batteries. The remaining 20% of the market share was fiercely competed for by 15,000 power battery companies, making the competition extremely brutal. This "lithium battery dark horse" was one of the many contenders in this race.
The former "lithium battery dark horse," which once ranked in the top ten among China's power battery enterprises, is now heading towards bankruptcy reorganization. What exactly has it experienced?
"Lithium Battery" Dark Horse Troubled
Sangton New Energy was established in 2011, with its headquarters in Xiangtan, Hunan. It is the main lithium battery business entity under the Sangde Group, focusing on the production of ternary and lithium iron phosphate battery cells, as well as automotive and energy storage battery systems. It is an emerging enterprise that has won the honor of being a "national high-tech enterprise."
Tus Environment, a listed company on the Shenzhen Stock Exchange, is the second-largest shareholder of Sangton New Energy. Its predecessor is the well-known "Tsinghua University" enterprise, Tus Technology. These two companies can be considered "siblings" since before 2015, both companies had the same controlling shareholder, Sangde Group.
In March 2015, the well-known "Tsinghua University" enterprise, Tus Technology, acquired Sangde Environment for 7 billion yuan and became the controlling shareholder, obtaining 29.8% of the shares, and was later renamed Tus Environment.
Sangton New Energy, as another subsidiary of the Sangde Group, received investments from Tus Environment on two occasions. The two investments were: the A round of financing in August 2014, and a new round of financing in August 2019.Currently, the top three shareholders of Thornton New Energy are Sand Group, Tus Environment, and Yuna Capital, with respective shareholding ratios of 53.12%, 22.77%, and 18.27%, totaling over 94%.
The company's current situation is indeed not optimistic. According to the Tianyancha App, Thornton New Energy is involved in a cumulative total of 388 judicial cases, with more than 70% as the defendant, involving case amounts reaching as much as 2.6 billion yuan; there are also 2 records of being an untrustworthy executor and 5 records of being an executor, involving amounts of 1.033 billion yuan.
Not only is Thornton New Energy itself in trouble, but its founder and chairman, Wen Yibo, has also been entangled in cases for a long time.
Wen Yibo, who is 59 years old this year, serves as a doctoral supervisor at several universities and was ranked 1941st on the 2019 Forbes Global Billionaires List and 309th on the 2019 Hurun Rich List.
Wen Yibo is adept at capital operations, and the aforementioned series of investments and acquisitions serve as evidence. He has successfully promoted Sand Environment (the predecessor of Tus Environment) to go public through a reverse merger, and his "EPU International" went public in Singapore and was renamed Sand International, which then achieved a Hong Kong listing.
Wen Yibo himself has a total of 7 final cases, with an unpaid total amount reaching 1.62 billion yuan. As the legal representative of Thornton New Energy, from 2022 to the present, Wen Yibo has successively received 13 consumption restriction orders.
In fact, Thornton New Energy, which has absorbed Wen Yibo's efforts and is now "troubled," has been struggling in the lithium battery industry for more than ten years and has not failed to prove its value.
The highlight moment was in 2018
Two years after its establishment, in 2013, Thornton New Energy completed and put into operation its first lithium battery production line. Although Thornton New Energy was established early enough, it really started to make significant strides into the lithium battery industry from 2015 when the new energy automobile market began to grow in volume.
In 2016, Thornton New Energy planned to build the largest and most comprehensive lithium battery new energy industry base in the Central South region, and planned three phases of the project, which is expected to achieve an annual output value of more than 30 billion yuan, including an annual production of 4 billion ampere-hours of power lithium batteries, 2 billion ampere-hours of energy storage lithium batteries, 500,000 tons of battery cathode materials, and 300,000 sets of motor assemblies.By 2018, it can be said that the company welcomed its moment of glory.
In this year, Thornton New Energy's third phase project with a total construction area of 80,000 square meters was completed and put into production, with an annual production capacity of 5GWh. The R&D team reached 1,000 people, and the establishment of the Thornton Research Institute was also planned, forming a team scale of 3,000 people.
Thornton New Energy also laid out the integrated development of upstream and downstream businesses, involving the entire industrial ecological chain from lithium-ion battery material precursors, cathode materials, single cells, battery cloud platforms to "Internet+" battery recycling, waste battery regeneration, etc.
In terms of technology, Thornton New Energy chose ternary materials. At that time, the energy density of the mainstream nickel-cobalt-manganese ternary material batteries in China was generally 160-200wh/kg, while the energy density of Thornton New Energy's ternary pouch single cell reached up to 260wh/kg, expecting to achieve mass production of 300Wh/kg pouch cells in the first half of 2019.
Correspondingly, in this year, the company's public revenue data also reached a peak in 2018, and business development also yielded fruitful results: Thornton New Energy's cathode materials ranked in the top three in the country, and it entered the top ten in the power battery ranking. According to data from the High-Tech Industry Research Institute of Lithium Batteries (GGII), in 2018, the total installed electricity of new energy vehicle pouch power batteries was about 7.62GWh, CATL ranked only 8th, while Thornton New Energy ranked 5th in the market, with an installation volume of 541.4MWh, and a market share of about 7.1%.
Wen Yibo, Chairman of Thornton New Energy
In this year, Wen Yibo, Chairman of Thornton New Energy, bought a house in Xiangtan, with great ambition and determination to make a big splash in the vast land of Xiaoxiang. He proposed to extend the industrial chain, create a hundred billion-level new energy industry cluster, and plan to build the first smart factory in 2020, achieving intelligent production and intelligent products, and fully realizing Industry 4.0.
However, reality eventually pierced the plump ideal.
In the six years from 2018 to now, Thornton New Energy's energy density of 260wh/kg has not been broken through, and the goal of "achieving mass production of 300Wh/kg pouch cells in 2019" has not been followed up, but the more technically challenging sodium-ion battery technology has reached this level.
In terms of market share, according to statistics from the China Power Battery Industry Innovation Alliance, after 2019, Thornton New Energy's power battery installation completely fell out of the top ten in the industry.What's more bizarre is that the production capacity of Thornton New Energy is "intermittent," mainly due to significant discrepancies in the disclosure standards of various parties.
In August of this year, Thornton New Energy officially stated, "Currently has a comprehensive production capacity of 6GWh lithium batteries and systems," providing various types of power lithium battery system packages for nearly 120,000 new energy vehicles.
However, according to the shareholder Tus Environment, Thornton New Energy's annual lithium battery production capacity had already reached 9GWh in 2018. Assuming both sets of data are correct, does this mean that Thornton New Energy's production capacity not only failed to expand over the next six years but actually shrank by 3GWh?
What's even more puzzling is that Thornton New Energy has launched energy storage products for large-scale energy storage, commercial and industrial energy storage, and household energy storage scenarios, "regressively" adopting the lithium iron phosphate technology that was abandoned earlier.
The confusing financial statements reflect all the issues on the books.
From 2015 to 2018, Thornton New Energy's revenue increased sixfold in four years, from 240 million to 1.75 billion, showing a rapidly expanding trend, and thus the industry dubbed it the "dark horse of lithium batteries."
However, its net profit only increased from 26.27 million to 73.28 million, growing only 1.8 times in four years, far behind the revenue growth rate.
It is worth noting that after its revenue reached a peak in 2018, its performance has been "ups and downs" until a cliff-like decline in 2023.
According to the financial reports of Tus Environment over the years, Thornton New Energy's revenue in 2019 was 1.48 billion, and it shrank to 630 million yuan in 2021. Among the single-sided decline in the revenue curve, the data for 2022 is very abrupt, with revenue soaring to 3.3 billion yuan and net profit reaching 700 million yuan.The momentum, however, did not last, and the story took another turn. By 2023, the revenue plummeted to 260 million yuan, returning to the level of eight years prior. This time, not only was there no profit, but there was also a net loss of 520 million yuan.
In the first half of this year, its revenue further decreased to 84.45 million yuan, with a net loss of 183 million yuan.
Based on these calculations, Thornton New Energy has achieved a total revenue of 9.9 billion yuan over nine and a half years, with a total profit of about 350 million yuan. This is not only incomparable to second-tier lithium battery companies that often have annual revenues of tens of billions and profits in the billions, but it is also far from its own goal of "an annual output value of 30 billion yuan."
Additionally, as competition in the lithium battery industry intensifies, Thornton New Energy's assets continue to shrink, and its debt continues to rise.
At the end of 2023, Thornton New Energy's total assets were 6.57 billion yuan, and its net assets were 2.78 billion yuan. By the first half of 2024, the total assets had shrunk to 6.09 billion yuan, and the net assets had shrunk to 2.41 billion yuan. In terms of debt, its debt at the end of 2023 was 3.79 billion yuan, and currently, the total debt is about 4 billion yuan.
Due to the decline in profitability and the continuous shrinkage of assets, shareholders' investment returns continue to suffer losses. According to the disclosure by Tsinghua Environment, the investment loss in Thornton New Energy in the first half of 2024 was 84.088 million yuan. At the same time, Tsinghua Environment's receivables from Thornton New Energy were 75.81 million yuan, with a bad debt provision of 74.59 million yuan.
Due to the overwhelming debt and increased difficulty in financing, creditors eventually voted for "bankruptcy restructuring."
Fortunately, it has not yet reached the point of insolvency. Even though it is deeply mired, Thornton New Energy still owns certain intellectual property assets, including 272 patents and 34 trademarks.
Therefore, regarding the bankruptcy application, the court believes that although Thornton New Energy cannot pay off the due debts and obviously lacks the ability to pay, it has the reasons for bankruptcy. "However, the company is in the field of lithium battery production with mature operation and management, stable operation, and has certain economic value, and is expected to resolve risks through the restructuring process."
Moreover, Thornton New Energy is also eager to revitalize its assets and improve the debt repayment rate through the restructuring process. Therefore, Thornton New Energy has the value of restructuring and the possibility of restructuring, which meets the conditions for bankruptcy restructuring.Once Bold "Vows" Hard to Anticipate Today's Predicament
On August 27th, Thornton New Energy published an investor recruitment announcement on its public account "Thornton New Energy Technology Co., Ltd. Administrator". The day after, a letter titled "To All Staff" was sent out, in which the arrangements for debt and salary processing were disclosed, officially starting the path to bankruptcy restructuring.
Thornton New Energy's "To All Staff" Letter
Looking back on the 13-year development process, Wen Yibo once hoped to lead Thornton New Energy to an IPO and confidently stated that although the company had met the listing requirements of the Science and Technology Innovation Board, he "still wanted a larger scale" and wanted to "create a blue-chip company".
However, with the bankruptcy restructuring underway, the bold "blue-chip" vows may no longer be fulfilled.
Looking back at Wen Yibo's interview in 2019, he had already anticipated that the new energy market was at a critical period of competition for "positioning". "If we can't rank in the top ten of the industry this year, and can't enter the top five next year, then it will be more difficult later on." He was keenly aware that the characteristic of the new energy industry is "the strong get stronger", and companies either become oligarchs or die.
The subsequent industry trends have confirmed his judgment.
The lithium battery industry's production capacity expanded rapidly, and prices fell sharply. According to statistics from the 24 Tide Industry Research Institute (TTIR), the production capacity plan for only 20 power/storage battery companies in 2025 has reached 6188GWh. However, due to supply and demand imbalance and insufficient capacity utilization, costs have risen, prices have fallen, that is, quantity increased while prices fell, and profitability has been squeezed.
However, the fortunes of Thornton New Energy took a turn after 2019.
In the industry's reshuffling, the competitive landscape changed rapidly. It is regrettable that this high-tech enterprise, which started with a high profile and invested the efforts of the founding team, ultimately failed to break through the competitive siege and become a "survivor" or a "victor".