Haohua Technology's 7.2 billion restructuring completes the layout of fluorine chemical industry, sets multi-dimensional performance commitments, and the revenue scale may increase by 80%.

Yangtze River Business Daily News ● Yangtze River Business Daily reporter Xu Jia

In the context of accelerating the supply-side structural reform, transformation and upgrading of the chemical industry, Haohua Technology (600378. SH) completed a major asset restructuring and gave full play to the role of a state-owned listing platform.

Recently, Haohua Technology acquired 100% of the shares of Sinochem Blue Sky Group Co., Ltd. (hereinafter referred to as "Sinochem Blue Sky") and completed the transfer registration. At present, the company is also promoting the raising of supporting funds for restructuring with a scale of no more than 4.5 billion yuan. In this transaction, Sinochem Blue Sky made an overall price of 7.244 billion yuan.

The Yangtze River Business Daily reporter noted that as a leading fluorine chemical company in mainland China, Haohua Technology has realized the deep integration of fluorine chemical business through the acquisition of Sinochem Blue Sky. This acquisition will not only further improve Haohua Technology's fluorine chemical business layout, but also expand its revenue sources and improve profitability.

According to the pro forma review report, based on the financial data in 2023, after the completion of this transaction, Haohua Technology's operating income and net profit attributable to the parent company will increase to 14.38 billion yuan and 1.023 billion yuan respectively, an increase of 83.12% and 13.67% respectively compared with before the transaction.

It is worth mentioning that this transaction also sets differentiated performance commitments at multiple levels, such as Sinochem Blue Sky's merger, holding and joint venture companies, and intangible assets, which has reference significance for the setting of the VAM plan for the restructuring of central state-owned enterprises.

Completed the acquisition of 100% equity of Sinochem Blue Sky

The restructuring of Haohua Technology has been carried out for more than a year.

As early as February 2023, Haohua Technology launched a restructuring plan, announcing that it would acquire 100% of the shares of Sinochem Blue Sky by issuing shares and raise matching funds.

After completing the reply to the exchange's review inquiry, on March 27 this year, Haohua Technology's restructuring was reviewed by the Shanghai Stock Exchange's Mergers and Acquisitions Review Committee, and nearly three months later, the company obtained the approval of the China Securities Regulatory Commission for registration.

On July 23, Haohua Technology announced that the 52.81% equity of Sinochem Blue Sky held by Sinochem Group and the 47.19% equity of Sinochem Blue Sky held by Sinochem Assets have all been transferred and registered under the company's name, and Sinochem Blue Sky has become a wholly-owned subsidiary of the company. On July 26, the new shares of the issuance of shares to purchase assets were registered at the Shanghai Branch of China Securities Depository and Clearing Co., Ltd.

According to the restructuring plan, while acquiring 100% of the equity of Sinochem Blue Sky, Haohua Technology will also raise funds from no more than 35 specific targets including Foreign Trade Trust and Sinochem Capital Venture Capital, with a total amount of no more than 4.5 billion yuan, which will be invested in a number of projects including the new 20,000 tons/year PVDF. At present, the above-mentioned fixed increase is still in progress.

The Yangtze River Business Daily reporter noted that the restructuring of Haohua Technology is essentially an important measure for China National Chemical Group to fulfill its commitment to reduce competition in the same industry. In September 2021, Sinochem Holdings acquired 100% of the equity of ChemChina through the free transfer of state-owned shares, thereby indirectly holding 64.21% of the shares of Haohua Technology.

After the completion of the above-mentioned transfer, Haohua Technology's fluorine chemical business is similar to that of the relevant enterprises under Sinochem Group (a wholly-owned subsidiary of Sinochem Holdings), and in order to regulate and eliminate intra-industry competition, Sinochem Holdings has made a commitment to steadily promote the integration of relevant assets or businesses that meet the conditions for injection into listed companies within five years to solve the problem of intra-industry competition.

Therefore, this restructuring is an important measure for Sinochem Holdings to actively fulfill its commitment to the capital market, which is conducive to reducing and regulating the competition in the fluorine chemical business in Sinochem's system.

Not only that, it is understood that Sinochem Blue Sky is mainly engaged in the research and development, production and sales of fluorine-containing lithium battery materials, fluorocarbon chemicals, fluoropolymers and fluorine-containing fine chemicals, and high-end fluorine materials are not only one of the core businesses of Haohua Technology, but also the main business areas of Sinochem Bluesky.

As a result, this transaction will promote the in-depth integration of Haohua Technology and Sinochem Blue Sky Fluorine Chemical business, further enhance the synergistic effect, and give full play to the utility of the capital operation platform of the listed company, further enhance the vitality and operational efficiency of the state-owned economy, and realize the preservation and appreciation of state-owned assets.

Performance appraisal indicators are set at three levels

After receiving the injection of high-quality assets, Haohua Technology will not only further improve the business layout of fluorine chemicals, but also expand revenue sources and improve profitability.

According to the restructuring plan, in 2022 and 2023, Sinochem Blue Sky will achieve total operating income of 9.415 billion yuan and 6.677 billion yuan respectively, net profit attributable to the parent company of 820 million yuan and 123 million yuan, and net profit attributable to the parent company of 784 million yuan and 182 million yuan after deducting non-recurring gains and losses.

In this transaction, the appraised value of 100% equity of Sinochem Blue Sky was 8.26 billion yuan, and the value-added rates of the consolidated and parent companies were 103.71% and 378.73% respectively. After considering the cash dividend of 1.016 billion yuan after the assessment base date, the transaction price of 100% equity of Sinochem Blue Sky is 7.244 billion yuan.

The Yangtze River Business Daily reporter noticed that the fluorine chemical market is still weak, and the overall profitability of Haohua Technology has also fluctuated due to the impact of new production capacity and insufficient downstream demand. In 2023 and the first half of 2024, Haohua Technology will achieve operating income of 7.852 billion yuan and 3.459 billion yuan respectively, a year-on-year decrease of 13.4% and 19.63%; The net profit attributable to the parent company was 900 million yuan and 370 million yuan, a year-on-year decrease of 22.76% and 26.32%.

However, from a single quarter point of view, in the second quarter of 2024, Haohua Technology achieved operating income of 1.846 billion yuan and net profit attributable to the parent company of 234 million yuan, although the quarter-on-quarter growth rate still decreased by 17.8% and 15.07% respectively, but the decline rate has been significantly narrowed compared with 21.62% and 39.87% in the first quarter, and the operating income and net profit attributable to the parent company in the second quarter increased by 14.48% and 70.47% respectively compared with the first quarter.

According to the pro forma review report, based on the financial data in 2023, after the completion of this transaction, Haohua Technology's operating income and net profit attributable to the parent company will increase to 14.38 billion yuan and 1.023 billion yuan respectively, an increase of 83.12% and 13.67% respectively compared with the pre-transaction period, and the total assets and owner's equity at the end of the period will also increase to 25.348 billion yuan and 12.219 billion yuan respectively, an increase of 60.82% and 42.78% respectively compared with the pre-transaction period.

It is worth noting that this transaction sets differentiated performance commitments to ensure the smooth realization of performance commitments from multiple levels. Among them, the committed net profit of the holding company and the joint venture company evaluated and priced by the income method from 2024 to 2026 shall not be less than 293 million yuan, 443 million yuan and 633 million yuan respectively, and the intangible assets of the holding company priced by the asset basis method will realize the revenue share of not less than 30.3185 million yuan, 26.9133 million yuan and 22.0231 million yuan respectively from 2024 to 2026.

In addition to the above-mentioned performance commitments, the parties to the transaction will also make performance commitments based on the consolidated net profit of Sinochem Blue Sky, that is, the promised consolidated net profit of Sinochem Blue Sky shall not be less than 1.389 billion yuan when the commitment period expires from 2024 to 2026.