How to realize TBEA’s goal of “stalling” 40 billion?

In the first half of this year, TBEA achieved a revenue of 17.966 billion yuan, a year-on-year increase of 5.36%; the net profit attributable to its parent company was 920 million yuan, a year-on-year decrease of 12.2%. In fact, since 2017, the overall fluctuation of its operating income and net profit has declined, and there will be a “double decline” in 2019. < p > < p > in the capital market, the performance of TBEA is hardly optimistic. Its share price has been hovering below 10 yuan / share from the highest level of over 17 yuan / share in 2015. At the same time, TBEA also had the problems of senior management reduction and resignation. As of September 24, the company’s executives have just completed a round of reduction. < p > < p > more than 30 years ago, Zhang Xin, the “helmsman” of TBEA, started his business as transformer of power transmission and transformation equipment. As early as June 1997, he led the company to go public. He opened up new territory and expanded its territory all the way, making rapid progress, forming a business map with power transmission and transformation, new energy and energy as the main body. In June 2015, the market value of TBEA exceeded 60 billion yuan, and its business income exceeded 40 billion yuan in 2016. However, the wind is always blown away by the rain and wind. Under the background of growth bottleneck, TBEA set a “small target” to return 40 billion yuan of revenue in 2020. In this regard, TBEA told China Business Daily that TBEA put forward a plan at the beginning of the year to realize 40 billion yuan of business income this year. As of the first half of 2020, it has realized 17.966 billion yuan of business income (consolidated statements), and completed 44.92% of the annual plan. In the macro context of the impact of the epidemic, all staff have been working hard to achieve the planned objectives. TBEA was formerly a special transformer factory. In 1988, it was insolvent and was on the verge of bankruptcy. At that time, Zhang Xin, who had planned to go to a large state-owned enterprise for a raise in salary and promotion, took the initiative to shoulder the heavy burden. Without any salary, he borrowed money, rebuilt the factory buildings, and engaged in contracting. Finally, he led the staff to break through the difficulties and turned losses into profits in that year. By 1992, the contract bonus that can be exchanged by the factory has reached 1.97 million yuan. In June 1997, TBEA was listed on the market, and then gradually expanded to form a business map of power transmission and transformation (transformers, wires and cables, complete power transmission and transformation projects, etc.), new energy (polysilicon, inverter, new energy system integration) and energy (coal) industries. Under the background of accelerated development of power market, the development of TBEA has opened a fast lane. According to the financial report, the business income of TBEA increased from 3.674 billion yuan in 2004 to 17.777 billion yuan in 2010, a nearly four fold increase; the net profit attributable to its parent company increased from 95 million yuan in 2004 to 1.611 billion yuan, achieving a nearly 16 fold increase. However, since 2011, TBEA’s performance growth has slowed down, and its net profit has shown a short-term negative growth, but its operating revenue has reached the peak of 40 billion yuan in 2016. From 2011 to 2016, TBEA achieved revenue of 18.165 billion yuan, 20.325 billion yuan, 29.175 billion yuan, 36.75 billion yuan, 37.452 billion yuan and 40.017 billion yuan in each reporting period, and the net profit attributable to parent company was 1.229 billion yuan, 981 million yuan, 1.328 billion yuan, 1.649 billion yuan, 1.888 billion yuan and 2.190 billion yuan respectively. In addition to the epidemic factors in the first half of 2020, the reporter compared the power transmission and transformation, new energy and energy related business of TBEA from 2017 to 2019, and found that its transformer business income fell below 10 billion yuan to 9.096 billion yuan, and its gross profit rate decreased by 10.15%; the electric wire%; the business income of the complete power transmission and transformation project decreased by 1.159 billion yuan to 3.868 billion yuan, and the gross profit rate increased by 2.28%; the new energy industry and The operating income of supporting projects fell below 10 billion yuan to 7.584 billion yuan, and the gross profit rate decreased by 6.25%; the operating income of coal increased by 2.144 billion yuan to 4.384 billion yuan, and the gross profit rate increased by 2.34%. In this regard, TBEA told the reporter that from 2018 to 2019, affected by the slowdown of national power grid construction investment and intensified market competition, the company’s transformer product order structure fluctuated, the proportion of high gross profit orders decreased, and the gross profit rate declined; wire and cable belong to the traditional material heavy industry light industry, with short production period and raw material price fluctuations affecting the fluctuation of product gross profit rate Xiangda, the wire and cable business of the company is a conventional power cable product, and its benefit is poor due to the significant fluctuation of raw material prices from 2017 to 2018. < p > < p > for the performance in the new energy field, TBEA mentioned in the financial report the “May 31” new policy, the decline of photovoltaic installed capacity and the decline of polysilicon price. However, the reporter found that under the situation that the industry is increasingly focusing on the leading enterprises, TBEA is also facing challenges from its competitors. For example, in the field of photovoltaic, solar power has a fierce performance in the power station integration business, and Tongwei shares and Daquan new energy also put pressure on the expansion of polysilicon production capacity. < / P > < p > “in recent years, the market demand of the whole power industry has been basically saturated, and there is not much growth. It is good not to fall behind.” An industry person familiar with TBEA gave an example to analyze in an interview with the reporter that the investment of State Grid is basically about RMB 4.5 billion, as there are so many new projects of UHV every year. Under the epidemic situation in 2020, UHV will bring certain driving effect, and its diversified business can also make up for and support each other. In addition to the domestic market, TBEA’s other important market is overseas. The reporter noted that as of 2019, TBEA’s overseas business income was 5.250 billion yuan, a year-on-year decrease of 25.12%, accounting for about 14% of the total business income. < p > < p > due to the flat stock price, the directors and management shareholders did not make much profit by reducing their holdings, that is, about 274600 shares were reduced, with the amount of only about 2.2 million yuan. < p > < p > on May 16, TBEA announced that due to the need of personal funds, Guo Junxiang, Hu Youcheng and Wu Wei, directors and senior managers, planned to reduce their holdings by no more than 86700 shares, 86700 shares and 101200 shares respectively through centralized bidding from June 8 to December 4, 2020. < p > < p > on July 24, TBEA disclosed that Guo Junxiang and Wu Wei reduced their holdings of 86700 shares and 101100 shares respectively through centralized bidding, and realized RMB 667700 and RMB 782200 respectively. On September 24, TBEA disclosed that Hu Youcheng reduced his holding of 86700 shares through centralized bidding and realized 755600 yuan. However, it is worth noting that due to the flat share price, the directors and management shareholders did not make much profit through the above reduction, that is, about 274600 shares were reduced, and the amount was only about 2.2 million yuan. < p > < p > for the reduction, TBEA said that the shares held by the directors, supervisors and senior management personnel of the company were all the stocks purchased by individuals during the first restricted stock incentive plan in 2014, and the holding time has been more than 6 years. Some directors and senior managers of the company reduced their holdings of the company’s shares in accordance with the regulations due to their personal capital needs such as house purchase, children’s education, etc The holding behavior is reasonable and compliant, which has nothing to do with the development expectation of the company. < / P > < p > it is worth noting that TBEA’s share price has basically hovered below 10 yuan / share since 2017. Wind data shows that as of September 25, 2020, the stock price of TBEA was 8.42 yuan / share, the total market value was 31.3 billion yuan, PE was 16.542 times, and Pb was 1.011 times. TBEA told reporters that no industry has been in a period of rapid development. In recent years, due to the slowdown of domestic grid power investment, new energy parity, and the advent of bidding era, the prices of upstream polysilicon and other links have been greatly reduced. The profitability of some industries of the company has been affected, and the stock price performance has shown certain volatility. And said that it will continue to do a good job in investor management, improve business performance and return investors. However, as for the reasons for the long-term downturn in stock prices, some people believe that this is related to the company’s financing behaviors such as several additional issues and share allotments. On the snowball platform, some market participants said, “the issuance of additional shares has diluted the original low equity ratio of the controlling shareholders and reduced the reasons for maintaining the stock price; the number of stocks has been increased continuously through allotment of shares, which has greatly increased the number of retail investors; after capital financing, the profit does not increase, which makes the fund lose the reason to buy; the excessively high securities holding prevents hot money.” The reporter saw on the wind data platform that since its listing, TBEA has raised funds through multiple rights issues, additional issues, and issuance of short-term financing bonds, medium-term notes and corporate bonds, and its share capital has continuously expanded to 3.714 billion shares. On February 17, LV Liushan, deputy general manager of TBEA, resigned. According to the data, LV Liushan has been the deputy general manager of TBEA since April 13, 2018, and also served as the deputy general manager and chief engineer of TBEA International Engineering Co., Ltd. In addition, Ms. Bu Xiaoxia, former supervisor of TBEA, resigned on April 8, 2019. In the following three months, Wang Songwei, deputy general manager, resigned from the post of deputy general manager and took the post of senior manager of the branch. In this regard, TBEA told reporters that from 2018 to now, except for the change of directors, supervisors and senior management personnel caused by the change of shareholders, only two of the company’s directors, supervisors and senior management members left their posts due to personal reasons, and the turnover rate of senior executives was normal. TBEA has a wide range of business, but it has been frequently “named” in the past few years due to product quality problems in power transmission, transformation and energy fields, involving Shenyang transformer, Hengyang transformer, Luneng Taishan cable, Deyang cable and Tianchi energy company. < p > < p > for example, in August 2020, the e-commerce platform of State Grid Corporation of China issued a notice on the treatment of supplier’s bad behavior by State Grid Anhui Electric Power Co., Ltd. (hereinafter referred to as “Anhui Company”), and it was found that the distribution transformer in the 10kV pole mounted transformer complete equipment supplied by Hengyang transformer in Anhui company failed to pass the short-circuit withstand capacity test in May 2020, which is a serious quality problem From August 1, 2020 to January 31, 2021, the bidding qualification of Anhui company was suspended. < p > < p > in January 2018, the e-commerce platform of State Grid Corporation of China issued a notice on suppliers with bad behavior from State Grid Hebei Electric Power Co., Ltd., and Luneng Taishan cable was suspended for 2 months due to unqualified sampling inspection of power cable supplied to Xingtai Power Supply Company. < p > < p > in August 2017, the e-commerce platform of State Grid Corporation of China issued a notice on the treatment of supplier’s bad behavior. The 10kV power cable supplied by Deyang cable was suspended from July 31, 2017 to January 31, 2018 in the power cable package stored in the company’s distribution network equipment agreement library from July 31, 2017 to January 31, 2018. < p > < p > the reporter noted that the State Grid will irregularly report the supplier’s bad behavior in view of the quality problems of the bidding procurement suppliers of power grid projects, and the State Grid will give the corresponding treatment results for the supplier’s bad behavior in different situations, including those who have been suspended for several months and even have been blacklisted. < / P > < p > “suspension of the bid winning qualification will definitely cause certain loss to the company’s performance within the State Grid system, and the reputation will also be discounted. Some state grid bidding has strict requirements on quality accidents, which may have a greater impact. However, this will not have a significant impact on performance outside the system. ” A local state grid company employee told reporters. In addition to the power transmission and transformation field, TBEA also has quality problems in the energy field. In April 2020, Shaanxi provincial market supervision and Administration Bureau announced the results of special supervision and random inspection on the product quality of civil bulk coal and civil briquette. From November 2019 to March 2020, special supervision and random inspection on product quality of civil bulk coal and civil briquette were carried out, including Xinjiang, a subsidiary of TBEA