The "100 billion boss" also can't take Xiaopeng and the ideal account period?

Written by Junqun Liu

Editor丨Liu Qinwen

Source: Bronco Finance

Inovance's "A split A" seeks to be listed, and the "former richest man in Yueyang" is expected to enjoy another capital feast.

Recently, Suzhou Inovance United Power System Co., Ltd. (hereinafter referred to as "Inovance United Power") submitted the Hong Kong Stock Exchange "Prospectus" to the Hong Kong Stock Exchange, planning to sprint for listing. The company is owned by the "industrial control giant" Inovance Technology (300124. SZ) to focus on the sales of new energy auto parts.

The parent company behind it, Inovance, is involved in a variety of industries, including new energy vehicles, rail transit, elevator systems, etc. As of January 20, 2025, the company's share price closed at 60.71 yuan per share, with a market value of 163.45 billion yuan.

This is the first time that Inovance Technology has spun off its subsidiaries to be listed, and if the spin-off is successful, Inovance Technology will have another son in the A-share market to further expand its capital territory, and behind the group is Zhu Xingming, the "former richest man in Yueyang".

But even such a "100 billion boss" cannot escape the dilemma of the account period being extended. At the end of 2024, Tao Lin, vice president of Tesla, released a comparison chart of the payment cycle of car companies to suppliers. She pointed out that Tesla's payment cycle has been shortened to about 90 days, which is much lower than that of its Chinese competitors. For a time, the problem of long account periods of domestic car companies was pushed to the hot search.

According to Wind data, in the third quarter of 2024, "Wei Xiaoli" ranked in the top five on the list of payment cycles. As an ideal supplier of Xpeng, Inovance United Power also had to face the problem of too long account period.

　　01

Supplier for Xiaomi SU7

The company's annual income is 9.4 billion yuan

With the emergence of new energy vehicle brands such as Xpeng, Ideal, NIO, Zeekr, and Xiaomi, the importance of motors has become prominent. The motor is the "heart" of new energy vehicles, determining the core performance such as acceleration, endurance and top speed.

In 2024, Lei Jun will shine in the field of new energy vehicles, and Xiaomi Auto will shock the market with its self-developed super motor V8s. With a speed of up to 27,200 RPM (the number of rotations per minute, the motor can spin 27,200 times in one minute), the motor allowed Xiaomi to set a new global motor speed record in just three years. The speed is amazing, but it also raises questions from the outside world.

There is speculation that Xiaomi's motors come from elsewhere. When public opinion fermented, the "industrial control giant" Inovance Technology stood up and said: "Inovance and Xiaomi have developed the V6s motor together, but the V8s motor is completely developed by Xiaomi. ”

Source: Canned Gallery

It is Suzhou Inovance United Power Systems Co., Ltd. (hereinafter referred to as "Inovance") that has cooperated with Xiaomi to produce motors.

Inovance United Power is a company focusing on the power system of new energy vehicles, and its products cover two core areas: electric drive system and power supply system. Specifically, the electric drive system includes core components such as electronic control, motor and three-in-one drive assembly; The power supply system covers key equipment such as on-board chargers, DC/DC converters and 3-in-1 power supply assemblies.

According to the prospectus, the electric drive system is the trump card business of Inovance United Power, contributing more than 80% of the revenue. from 2.796 billion yuan in 2021 to 7.746 billion yuan in 2023, accounting for 83.01% from 95.45%; Gross margin increased from 12% to 16.52%. This gross profit margin is much higher than the gross profit margin of comparable businesses of peers such as JEE Technology (6.8%), Inball (7.61%), Jingjin Electric (5.52%) and Wemax (10.29%).

In contrast, the power system business is slightly inferior, accounting for less than 17% of revenue, and the gross profit margin of power system products has decreased from 13.77% to 12.58%, which is lower than the average gross profit margin of comparable businesses of the above-mentioned peer companies of 21.56%, 16.83%, 17.84% and 16.45%.

Source: Canned Gallery

According to the prospectus, in the first half of 2024, in China's new energy passenger vehicle market, Inovance's electronic control products will have a market share of 11%, ranking first among third-party suppliers, second only to BYD for self-production and self-use.

From 2021 to 2023, the company's operating income climbed from 2.903 billion yuan to 9.365 billion yuan, and the net profit changed from a loss to a profit, achieving a net profit of 186 million yuan in 2023. In the first half of 2024, its revenue has reached 6.055 billion yuan, and its net profit has exceeded 285 million yuan, and its half-year profit has exceeded that of the whole year of 2023.

　　02

Under the customer's ultra-long account period

The company's accounts receivable rose

Behind the company's revenue rise, there are strong customer resources. Inovance's cooperation list can be called luxurious, from new forces such as Ideal, Xpeng Motors, and Xiaomi, to traditional brands such as GAC, Great Wall, and Geely, to international giants such as Volvo, Volkswagen, and Porsche, almost including the leading players in the automotive industry.

From 2021 to 2023 and the first half of 2024, the company's revenue from the top five customers accounted for 81.74%, 71.73%, 76.03% and 66.28%, respectively. In this regard, Inovance United Power said that the company's customer concentration is relatively high, mainly due to the relatively concentrated competition pattern of the downstream vehicle industry.

According to the prospectus, in 2021, Ideal, Xiaopeng and Weimar are the company's top three customers, bringing 1.526 billion yuan, 420 million yuan and 216 million yuan of revenue to the company, accounting for 52.58%, 14.48% and 7.44% of the company's total revenue.

Among them, the proportion of ideal is constantly changing: in 2022 and 2023, the proportion of revenue brought by ideal to the company will decrease from 29.01% to 19.93%, but in the first half of 2024, ideal will regain its position as the largest customer, accounting for 33.16%.

Source: Canned Gallery

At the same time, Xpeng's share fell from 13.18% to 5.9%, and fell out of the top five customer list in the first half of 2024. In its place, companies such as GAC, Changan, Great Wall and Geely have entered the top five customers during this period.

However, in recent years, the "price war" between automakers has transmitted competitive pressure to suppliers.

On November 26, 2024, BYD's email asking suppliers to cut prices by 10% sparked heated discussions on the Internet. Subsequently, on November 28, Tao Lin, vice president of Tesla, released a comparison chart of the payment cycle of car companies to suppliers. She pointed out that Tesla's payment cycle has been shortened to about 90 days, which is much lower than that of its Chinese competitors.

Source: Bloomberg

According to Wind data, in the third quarter of 2024, Xpeng's payment period to suppliers will be as high as 273 days, ranking first on the list; NIO is 194 days, Ideal is 193 days, and Tesla is only 64 days.

Source: "Caijing" We media

For a time, the ultra-long account period of domestic new energy vehicle companies has aroused widespread discussion. Some netizens lamented that the business of 300 days of arrears is still being done, which shows how serious the involution in the industry is.

Source: Weibo

According to Caijing, the average number of accounts payable turnover days of domestic car companies is 182 days, which is nearly twice the account period of international car companies. This cycle is still lengthening year by year, and the first three quarters of 2024 are generally one month longer than in 2023.

It is worth mentioning that Ideal (193.74 days), Xpeng (273.98 days), Changan (97.67 days), Great Wall (90.29 days) and Geely (117.8 days) with longer account periods in the list are the top five customers of Inovance United Power.

Source: Canned Gallery

From 2021 to 2023, United Power's accounts receivable turnover days are not short, with 134.69 days, 130.36 days and 120.46 days respectively. According to Wind data, the average number of accounts receivable turnover days of 204 A-share auto parts listed companies in 2020 was less than 100 days, but by the third quarter of 2023, this indicator has been extended to 107.76 days.

However, the company's accounts receivable turnover ratio has increased year by year, with 2.71 times/year, 2.8 times/year and 3.03 times/year, respectively. However, it is still lower than the average level of companies in the same industry, according to the prospectus, the average value of year-on-year companies is 3.11 times/year, 3.28 times/year and 4.27 times/year, that is, the company's payment collection speed is lower than that of peers.

At the same time, the prospectus shows that from 2021 to 2023 and the first half of 2024 (hereinafter referred to as the "same period"), the book value of the company's accounts receivable will be 1.425 billion yuan, 1.851 billion yuan, 3.613 billion yuan and 3.613 billion yuan respectively, accounting for 30.87%, 20.37%, 29.38% and 27.85% of the total assets respectively. The company explained that with the rapid growth of the business scale, the amount of accounts receivable is also increasing.

"Maintaining a high level of accounts receivable balance for a long time will have a more serious adverse impact on the company, and the cash flow will be under greater pressure, which will bring the risk of bad debts." Song Qinghui, a well-known economist, said.

According to the prospectus, during the same period, the company's bad debt provisions were 99 million yuan, 220 million yuan, 491 million yuan and 496 million yuan respectively.

Accounts receivable and bad debt provisions have also further increased the company's cash flow pressure.

The cash balances at the end of the period were RMB291 million, RMB884 million, RMB1.357 billion and RMB450 million, respectively. At the same time, debt levels continue to climb. The company's total liabilities increased from 3.25 billion yuan in 2021 to 8.802 billion yuan in 2024. During the same period, the company's asset-liability ratios were 70.42%, 65.3%, 68.45% and 67.86% respectively.

Source: Canned Gallery

　　03

Spun off from the 160 billion giant

The founder is "the richest man in Yueyang".

Despite the extension of the account period, tight cash flow and increased debt, the good thing is that there is an "industrial control giant" of 160 billion yuan behind Inovance United Power. According to the prospectus, Inovance Technology holds 94.67% of the shares of Inovance United Power, and Zhu Xingming, the founder of Inovance Technology, is the actual controller of Inovance United Power.

Song Qinghui introduced, "there are pros and cons to spin-off and listing, from the 'advantage' aspect: it can broaden financing channels, obtain equity secondary premium, etc., from the 'disadvantages' aspect: spin-off listing may dilute the parent company's profits from the subsidiary, while reducing the parent company's control over the subsidiary." The 'A splits A' policy and rules can be followed, which is relatively easy, but the time cost is high. ”

Source: Canned Gallery

Zhu Xingming, who realized the capital operation of "A split A", was born in Yueyang, Hunan Province in 1967 and was admitted to Yanshan University in 1985, majoring in radio. In 1997, he joined Huawei's electrical department and participated in the research and development of inverters. In 2001, Huawei spun off its electrical division due to economic pressure and sold it to Emerson, a "Fortune 500 company", for $750 million, and Zhu Xingming and other technicians joined Emerson.

In 2003, Xingming Zhu resigned from Emerson and founded Inovance. The company initially focused on the development of vector inverters. This type of inverter is widely used in the industrial field because it enables more efficient automation control by precisely controlling the speed and torque of the motor.

However, Zhu Xingming is not satisfied with a single product. In 2006, he saw a market opportunity and shifted the company's strategy to PLC (Programmable Logic Controller) and servo systems with higher technical thresholds. The PLC controller can realize the intelligent control of machinery and equipment through programming, and the servo system controls the movement of the equipment through accurate feedback, which is widely used in high-precision industrial equipment.

With these technological innovations, Inovance was successfully listed on the Shenzhen Stock Exchange in 2010, and its stock price soared to 168 yuan per share, with a market value of more than 200 billion yuan.

Source: Canned Gallery

In 2013, 2015, 2016 and 2019, the company acquired Nanjing Ruizhan Technology, Jiangsu Jingwei, Shanghai Laine and Shanghai Best respectively, and successively expanded its business in the direction of industrial vision, rail transit traction system, industrial transmission solutions, elevator electrical system and so on.

At the same time, Zhu Xingming aims at the field of new energy vehicles. In 2016, Inovance Technology established Inovance United Power, focusing on new energy vehicle parts. In 2024, Inovance will further strengthen its technical strength in the field of mechatronics design and simulation through the acquisition of the French company IRAI.

As of 2024, Inovance's business has been divided into four major sectors: general automation, new energy vehicles, smart elevators, and rail transit. Among them, the new energy vehicle business has become the company's most potential sector. According to the financial report, in the first three quarters of 2024, the revenue of new energy vehicle business increased by 96% year-on-year, far exceeding other sectors.

Overall, in the first three quarters of 2024, Inovance achieved operating income of 25.397 billion yuan, an increase of 26.22% over the same period of the previous year; The net profit was 3.415 billion yuan, an increase of 2.08% over the same period of last year.

Source: Canned Gallery

Not only that, Zhu Xingming also actively lays out a number of emerging industries and expands to many fields through personal investment.

According to the industrial and commercial information platform "Qichacha", Zhu Xingming invested in private equity funds - Suzhou Industrial Park Wa Niu Investment Co., Ltd. (hereinafter referred to as "Wa Niu Investment") and Shenzhen Hehui Sports Industry Management Co., Ltd. (hereinafter referred to as "Hehui Sports") in the field of sports. He holds 11% and 1% of the shares, respectively.

Wow Niu Investment is an investment institution focusing on pan-intelligent manufacturing. Its investment directions include semiconductors, industrial software, intelligent manufacturing, new materials and new energy.

According to the official public account "Wow Niu Investment", the companies invested by Wow Niu include NOVOSENSE (688052. SH), golden orange (688291. SH), Jinyi New Materials, Chuantu Micro, Shuming Semiconductor, Yadian Technology, Zhongke Microprecision, Tyco Tianrun, Xunxin Micro, Glubo Technology, Feiquan Semiconductor, Nissei Electronics and other companies.

Source: Canned Gallery

In addition to industrial technology, Zhu Xingming is also involved in the sports industry. Through Hehui Sports, he promotes the construction of sports industry incubation and innovation parks, and organizes salons, summits and other activities.

These capital maps have also made Zhu Xingming's wealth continue to rise. According to the data of the "2023 Hurun Global Rich List", Zhu Xingming and Zhu Hanyue's father and daughter rank 1181st on the global rich list with a wealth of 19 billion yuan, ranking first in Yueyang, Hunan, and is also known as the "richest man in Yueyang" in Hunan.

In addition, Zhu Xingming was also selected for the "2024 China's Best CEOs" list released by Forbes, and together with Wang Chuanfu, chairman of BYD, he became the only two CEOs to be selected for four consecutive years.

What do you think of the "richest man in Yueyang" and the "A split A" listing plan? Let's talk in the comment section!