In 2009, Zhou Peng, the former senior hardware engineer of Intel Corporation and the former chief powertrain engineer of Tesla Model S, decided to establish Miyuan Technology Holdings *** referred to as "Miyuan Technology") in view of the huge development potential of China's electric vehicle market, focusing on the research and development and sales of power battery system products.
After 14 years of development, Miyuan Technology has officially launched a sprint to the capital market with its position as the third largest business in China's pure power battery system industry. On December 8, Miyuan Technology submitted a prospectus to the Hong Kong Stock Exchange, planning to be listed on the main board of the Hong Kong Stock Exchange, with HSBC and CICC as joint sponsors.
Since its establishment, Miyuan Technology has been receiving the attention and support of capital, and in the past two years, with the rapid development of the domestic new energy vehicle industry, it has made great progress. However, in the first half of this year, the company's performance suddenly declined, which seemed to hint at the company's potential operating risks.
With a valuation of 5 billion, SoftBank and SAIC will assist
Miyuan Technology Co., Ltd. is a company focusing on the design, manufacture and sales of customized battery systems for electric vehicles, as well as providing energy storage solutions and battery management systems (BMS). Its business scope covers the Chinese, Indian and American markets.
In 2022, the company designed 108 sets of customized power battery systems, covering passenger, commercial, and transportation of goods.
The power battery system is a battery, and the power battery system is a rechargeable power storage system that provides driving energy for electric vehicles, which is composed of battery cells, BMS and battery modules, thermal management systems, electrical components and other components, designed for specific vehicle models.
In the entire new energy vehicle industry chain, third-party power battery system providers such as Miyuan Technology play a role in linking upstream and downstream participants, that is, helping upstream battery cell manufacturers sell their batteries to customers through power battery systems, and providing power battery system products to downstream electric vehicle manufacturers.
For CATL (300750SZ) and other battery cell manufacturers, their ability to provide customized solutions to downstream automakers is limited, so they often prefer to outsource customization to third-party power battery system providers. Since 2021, it has chosen Miyuan Technology to provide cylindrical battery systems and technologies for its designated automotive OEM customers, and in 2023, it will further hire Miyuan Technology to develop power battery systems for square cells.
It is worth mentioning that some well-known investment institutions have targeted the track of customized battery system solutions, and have thrown an olive branch to Miyuan Technology.
According to the prospectus, since March 2010, Miyuan Technology has received multiple rounds of financing, with a cumulative financing amount of about 1$4.9 billion.
In the last round of investment in September 2022, Miyuan Technology was valued at 69.8 billion US dollars, equivalent to about 5 billion yuan. These investors include experienced and established venture capital and private equity** in the U.S., China, South Korea and elsewhere, including SoftBank China Capital**, SAIC Motor (600104SH) and KB Investment, a South Korean venture capital firm, among others. In addition to this, the investor base also includes the semiconductor company NXP Bv. Sanjiang Chemical (02198.)HK) actual controller, Guan Jianzhong, etc.
With the blessing of capital, Miyuan Technology has come to the forefront. In 2022, in terms of shipments, Miyuan Technology is the third largest power battery system supplier of passenger pure electric vehicles in China, with a market share of 96%。In the passenger pure electric vehicle market, in terms of shipments, Miyuan Technology is the largest power battery system supplier of A00 class passenger car pure electric vehicles in China.
Isn't large customer dependence a "disease"?
Judging from the production and sales data, China's new energy vehicles will officially start the outbreak mode in 2021. The efforts of traditional car companies in the field of new energy vehicles and the rise of new forces in car manufacturing have given the upstream and downstream growth soil and development confidence of the industry.
During 2021 and 2022, the demand of downstream customers of Miyuan Technology has increased significantly, especially its cylindrical LFP power battery system has been bound to best-selling models, which has promoted the soaring shipments and revenue scale of Miyuan Technology's products.
According to the prospectus, from 2020 to 2022, the sales volume of Miyuan Technology will increase from 8630,000, an increase of more than 500% to 52830,000, driving revenue by 101.5 billion is a significant increase to 557.4 billion yuan. In terms of profits, due to the high cost of raw materials such as battery cells, the profitability of Miyuan Technology is not outstanding, with losses of 8894 in 2020 and 2021 respectively30,000 yuan and 659160,000 yuan, and the loss will be turned around in 2022, with a profit of 10.8 billion yuan.
In the first half of 2023, Miyuan Technology's performance suddenly changed face, and the current sales volume and revenue were cut in half, and turned from profit to loss, with a loss of 37730,000 yuan.
As for the reasons for the change in performance, there are not only market factors, but also reasons why the customer structure of Miyuan Technology needs to be optimized.
In terms of market factors, due to the expected decline of subsidies in 2023, the customer demand of downstream manufacturers will be lower in 2023 compared with 2022. According to data from the China Automotive Power Battery Industry Innovation Alliance, from January to June this year, the cumulative loading volume of power batteries in China was 1521GWh, a cumulative year-on-year increase of 381%, an increase of 1098% saw a sharp slowdown.
Under the influence of the market, the shipment volume of Miyuan Technology has not narrowed, but has experienced negative growth. In other words, the operational performance of Miyuan Technology is significantly inferior to the overall market. The reason behind it lies in the risk brought about by the high concentration of customers of Miyuan Technology.
As of the end of June this year, Miyuan Technology has designed power battery systems for 116 electric vehicle OEM customers, and in 2022, it also maintains close business ties with 13 of the top 15 Chinese battery manufacturers in terms of shipments. Since 2020, the company's revenue from the top five customers has accounted for more than 90%, and in 2022, the proportion will even reach 974%, of which the largest customer accounted for 46%.
As we all know, relying too much on a small number of customers is a considerable operational risk, which can easily lead to large fluctuations in business performance. In the first half of this year, one of the company's major customers (customer A) reduced the purchase orders issued to it, because the customer's business strategy was adjusted to focus more on the new A0 BEV passenger car market, and the customer brought only 23.6 billion yuan, while the annual income brought by the previous year was as high as 256.3 billion yuan.
In addition, customer B is also one of the main customers of Miyuan Technology, and according to the background introduction of the prospectus, it is speculated that customer B may be an important partner of Miyuan Technology, JAC Motors (600418sh)。In February 2017, Miyuan Technology and JAC Motors established a power battery system manufacturing joint venture, JAC Huating, with each party holding 50% of the shares.
As both a customer and a partner, Miyuan Technology believes that the demand for JAC's products will be strong and stable in the future.
In the first 11 months of this year, the production and sales of pure electric passenger cars of JAC fell twice, of which sales fell by 1 year-on-year96% to 16960,000 units, which led to the purchase order from Miyuan Technology was also affected. In 2022, Miyuan Technology's revenue from customer B reached 174.6 billion yuan, but only 39.9 billion yuan, and there is almost no suspense that the revenue brought by the whole year of 2023 will decline compared with the whole year of 2022.
It is not difficult to see that the change in the procurement plan of the "gold owner" or the poor sales volume has led to a decline in the purchase amount, which is a huge blow to the power source technology, which is due to the excessive dependence of the power source technology on large customers, and the customer structure still needs to be optimized.
However, Miyuan Technology does not believe that the potential risks brought by relying on large customers also believe that the company's business is sustainable when the concentration of the top five customers is high.
Miyuan Technology explained: "The company has stable cooperation with the top five customers, because the power battery system is usually customized according to the proprietary technology of the first supplier, and it takes a considerable time for the new supplier to develop and deliver the power battery system, so the power battery system supplier faces a relatively low risk of substitution, and interdependence creates a stable and sustainable business relationship." "The company's largest customers account for a large portion of the EV market. By focusing on customer depth rather than breadth, we can provide better service and build strong relationships with our key customers. "The company's successful expansion and expansion of its customer base over the past five years demonstrates the company's ability to reduce reliance on existing customers and attract new ones. ”
The A00 powertrain overlord also seeks to transform
Miyuan Technology is still a hegemon-level existence in a subdivided field.
In the passenger pure electric vehicle market in 2022, in terms of shipments, Miyuan Technology is the largest power battery system supplier of China's A00 passenger pure electric vehicles. According to the Frost & Sullivan report, as of June 30, 2023, Miyuan Technology's battery system has powered more than 1 million electric vehicles in China, including about one-tenth of China's pure electric vehicles and more than one-third of A00 class passenger pure electric vehicles in 2022.
A00 class car, refers to a wheelbase in 2-2A micro car between 2m, a car of this class is the smallest. China's A00 models are more representative brands such as Wuling Hongguang MINI, Changan New Energy-Benben EV, JAC IEV6E Sport, Chery, BYD F0, etc.
A00 cars occupy an important position in the charging electric vehicle market, accounting for about 26% of the total passenger electric vehicle sales in China in 2022, although this proportion was as high as 66% in 2017, which means that the A and B+ size pure electric vehicles are more popular in the domestic market.
Judging from the current consumer trends, pure electric vehicles of A and B+ sizes are the first choice of consumers. According to Frost & Sullivan data, it is expected that by 2027, the sales proportion of B+ and A-size pure electric vehicles is expected to be 35% and 23% respectively, and the proportion of A00 pure electric vehicle sales will narrow to 15%, although the proportion is relatively stable, but compared with 2017, it has lost most of the market.
Miyuan Technology is also aware of the problems brought about by market consumption trends, and said in the prospectus that it intends to expand the diversified applications of the company's battery system, and enhance the product matrix provided by the company for the fast-growing plug-in hybrid electric vehicles and hybrid electric vehicle segments, as well as the smaller but underserved non-passenger pure electric vehicle sector. At the same time, it is also planned to replicate the success of China's A00 class passenger pure electric vehicles to the A0 and A segments.
Summary:In the past few years, Miyuan Technology has gained the attention of capital and has also enjoyed the huge dividends brought by China's new energy vehicle market. However, after the boom, Miyuan Technology has also exposed problems such as serious customer dependence and insufficient diversification of product portfolio.
This time, if it can land in the Hong Kong market and broaden the financing channels, it may give Miyuan Technology a chance to breathe and change.
Author: Far away