Meiliyun said that based on the recent changes in the market environment and other factors, the parties to the transaction believe that there is great uncertainty in continuing to promote this major asset restructuring at this stage. In order to effectively safeguard the interests of the company and all shareholders, after careful study, the company and all parties to the transaction agreed to terminate the material asset restructuring. In fact, as early as the beginning of February, Meiliyun issued an announcement on the termination of asset restructuring. The situation in the lithium battery industry has taken a sharp turn for the worse, and the failure of this transaction has also been revealed. As of March 1**, the stock price of Meiliyun was 909 yuan shares, compared with the previous high has been cut in half.
Two target companies underperformed
In 2022, Meiliyun, which was losing money at that time, was in urgent need of high-quality asset injection and was actively seeking performance growth points. The data shows that from 2021 to 2022, the net profit of Meiliyun will be -01.7 billion yuan, -23.2 billion yuan. Coinciding with the popularity of the lithium battery track, Meiliyun threw out the transaction plan of the reorganization, planning to place Galaxy Technology, the main body of the papermaking business, and Tianjin Juyuan and Suzhou Lishen, the target companies of consumer batteries. At the same time, Meiliyun plans to raise additional funds to vigorously promote lithium battery projects. The company plans to raise no more than 3 billion yuan, of which 500 million yuan will be used for the construction project of large polymer battery automatic fast charging production line, and 1.3 billion yuan will be used for an annual output of 73GWh cylindrical lithium-ion battery new project, 1.2 billion yuan to supplement working capital or repay debts. According to the revised draft of the transaction disclosed by Meiliyun on November 15, 2023, the proposed asset Galaxy Technology 100% equity transaction** is 8294070,000 yuan, the proposed company Tianjin Juyuan, Suzhou Shenli Trading** were 234.6 billion yuan, 139.8 billion yuan, a total of 374.4 billion yuan. At that time, Meiliyun said that it would use the capital platform function of listed companies to promote the development of the consumer lithium-ion battery business segment at a higher level, wider range and deeper level. After the news was released, Meiliyun once harvested six consecutive price limits that year. However, the deal did not go smoothly after that. In May 2023, the Shenzhen Stock Exchange issued an inquiry letter on mergers and acquisitions, involving business changes of listed companies, especially on intra-industry competition, related party transactions, asset valuation and other aspects of the company. 
In June of the same year, the Shenzhen Stock Exchange suspended the review of the company's transaction because the financial data recorded in the transaction application documents of Meiliyun had expired and needed to be supplemented. In August, Meiliyun received another audit inquiry letter, which involved the decline in the performance of the underlying assets during the reporting period, the reasonableness of asset valuation, and the commercial reasonableness of related party transactions.
The outside world speculated from the inquiry letter of the Shenzhen Stock Exchange that one of the reasons for the termination of the transaction was the poor profitability of the underlying assets. Affected by the destocking of the lithium battery industry, from January to October 2023, the unaudited net profit of Tianjin Juyuan and Suzhou Lishen was 3762880,000 yuan, 2598390,000 yuan; In the first half of 2023, the consolidated gross profit margin of the target company is only 895%。The performance of the two underlying assets did not meet expectations, mainly due to the continuous impact of the market environment since 2023, and the downstream equipment manufacturers of consumer batteries were in the inventory clearance cycle in the first half of the year, and the demand for upstream consumer batteries declined. In addition, Suzhou Lishen has a large inventory of commodities at the end of 2022, and according to the procurement cycle of the target company, the raw materials used in these inventory commodities are generally purchased during the high period of raw materials, which makes the book cost higher and the gross profit margin decreases, resulting in a more obvious decline in performance. At the same time, Meiliyun's own performance is still not satisfactory, and the company expects a net profit loss of 10.5 million yuan to 15 million yuan in 2023, deducting a non-net profit loss of 27 million yuan to 38 million yuan. So far, Meiliyun has been losing money for three consecutive years.
Where is cross-border lithium battery heading?
Meiliyun is only one of the many listed companies that have crossed over into the lithium battery industry. Since 2023, there has been a sharp increase in the number of failed cases of listed companies that have taken advantage of the popularity to enter the market across borders. There are more cross-border investors in the lithium battery industry, and the investment at the high point of the industry cycle and the first half of 2023 is the peak. According to incomplete statistics, since 2021, there have been more than 80 companies in the cross-border lithium battery industry chain. Among them, 58 will be in 2021 and 2022, and 23 in 2023. From the perspective of the entry field, more cross-border funds are invested in the cathode and power battery sectors. At present, most companies are progressing smoothly, but more than a dozen have announced that they will abandon cross-border, and the shortest cross-border time is only 10 months. For example, in July 2023, Lily announced the cancellation of the previously planned "40,000 tons of battery-grade lithium iron phosphate project" and "3,000 tons of battery-grade lithium carbonate project per year"; For example, Mingguan New Materials said that the company completely divested the lithium battery cathode material business, and Ribo Fashion and *ST Garden City also announced the termination of the cross-border lithium battery plan. It can be seen that since 2023, the soaring price of lithium carbonate, the slowdown in terminal market demand, the orders are less than expected, the overcapacity in all links is significant, the suspension of production and idle capacity are frequent, and the cross-border exit rate of lithium ore and midstream material enterprises is the highest. And the rest of the crossovers who are still on the track are not resting. Starting point lithium battery is expected to enter 2024, destocking may still be the main tone of the lithium battery industry this year, and the production capacity will be cleared to further eliminate backward enterprises. Cross-border players will face even more severe tests. The first is the overcapacity of batteries. By 2025, the production capacity planning of the top six power battery head enterprises such as CATL, BYD, and EVE will reach 2970GWh, far exceeding the supporting capacity required for the first sales of domestic new energy vehicles in 2025. On the material side, taking lithium iron phosphate as an example, according to the statistics of the starting point lithium battery, the production capacity of lithium iron phosphate at the end of 2023 will be about 4.3 million tons at the end of 2023. According to the plans of each company, the total production capacity that has not yet been put into operation and is under construction has reached 10 million tons. It can be seen that the progress of some cross-border entrant projects is slow. For example, the Southern Black Sesame Group, SAINT ANGELO, and overclocking, which claim to deploy lithium batteries and have not announced the termination of "cross-border".
3. Yuntu Holdings and Taihe Technology did not release recruitment information related to lithium batteries. On the other hand, with the intensification of competition in the industry, the concentration of various lithium battery segments continues to increase, leaving fewer and fewer opportunities for cross-border players. In addition, under the tightening of the general environment, the financing difficulty of the lithium battery capital market has increased, the financing scale has been reduced, and the risk of cross-border players has intensified. With the advent of the trough of the cycle, under the disadvantages of less technical advantages, less cost advantages, fewer scale advantages, and fewer customer orders, the starting point lithium battery believes that most cross-border enterprises may eventually be out of the game. Only enterprises with technology accumulation and channel cost advantages can truly gain a firm foothold and continue to survive. For cross-border enterprises, a good entry point is to aim at the latest technology direction of the next generation of lithium batteries, especially the emerging technologies in the subdivided field, after all, "the first to eat crabs" often occupy the first opportunity. 