Wanhua Chemical plans to purchase 300 million yuan in Anada to improve the industrial chain

After more than 3 months of preparation, Anada controlling shareholders ushered in new progress in planning major issues. According to the latest announcement from Wanhua Chemical and Anada, the wholly owned subsidiary of Wanhua Chemical will transfer 15.20% of Anada's shares to 9.15 yuan per share, totaling about 300 million yuan, as its controlling shareholder, and the actual controller of Anada will be changed to Yantai SASAC.

The reporter noted that Anada's performance has been poor in recent years, as the market demand for major products continues to be weak and prices continue to decline, and Anada's performance has continued to decline since last year. The announcement shows that after the completion of the deal, Anada will form a synergy with Wanhua's existing business.

The concession price is 9.15 yuan per share.

On the evening of February 26, Anada disclosed the progress of major matters in the planning of the controlling shareholder and the proposed change of the controlling shareholder and the actual controller.

According to the announcement, on the same day, Anada controlling shareholder Tongling Chemical Industry Group Co., Ltd. (referred to as "Tonghua Group" or "transferor") and Wanhua Chemical Group Battery Technology Co., Ltd., a wholly owned subsidiary of Wanhua Chemical Co., Ltd. (referred to as "Wanhua Battery" or "transferee") signed the share transfer Agreement and the Agreement for concerted Action. Tonghua Group intends to transfer its 32683040 shares (accounting for 15.20% of the company's total shares) to Wanhua Battery by agreement. The price of equity transfer is 9.15 yuan per share, and the total transfer price is 299049816 yuan. After the completion of the transfer of 15.20% stake in Anada to Wanhua Battery, Tonghua Group still holds 31822744 shares in Anada, accounting for 14.7999% of Anada's total shares. Tonghua Group and Wanhua Battery are all shareholders of Anada, with a total of 64505784 shares, accounting for 29.9999% of Anada's total shares.

The announcement shows that both parties have reached a consensus that the transferor shall act in concert with the assignee in the voting matters of the shareholders' meeting of the listed company, and the directors nominated by the transferor shall act in concert with the directors nominated by the transferee in the voting matters of the board of directors of the listed company. After this change of rights and interests and the agreement of the actors, the controlling shareholder of the company will be changed to Wanhua battery, and the actual controller will be changed to Yantai Municipal people's Government State-owned assets Supervision and Administration Commission (referred to as "Yantai SASAC").

The change of Anada real controller has been prepared for more than 3 months, and it is only part of the foreign investment of Wanhua Chemical, the leader of chemical industry.

According to the announcement on the progress of the "Framework Agreement on Equity change" disclosed by Wanhua Chemical on February 26, on November 7, 2023, Wanhua Chemical signed the "Equity change Framework Agreement" with Copper Chemical Group and its stock Dongfang. Wanhua Chemical and its related parties first adopted to purchase part of the shares of the existing shareholders of the Copper Chemical Group, and then the Copper Chemical Group separated the company and kept the chemical business affiliated companies in the existing company. This plate contains Anada.

After on-site adjustment, the parties to the transaction reached a consensus and signed an agreement on February 26th, 2024, Wanhua Chemical will no longer accept part of the shares of Tonghua Group, but through Wanhua Battery, a wholly owned subsidiary of Wanhua Chemical, it directly transfers part of the shares held by Anada and Anhui Liukuo Chemical Co., Ltd. (referred to as "Liukuo Chemical"), with a total transaction amount of 414845016 yuan. After the completion of the transaction, Wanhua Battery will hold 26080000 shares in Liukuo Chemical, accounting for 5.00% of the total share capital of Liukuo Chemical. Wanhua Chemical promises that Wanhua Chemical and its controlled companies will not become the controlling shareholders and actual controllers of Liukuo Chemical in the next 12 months.

On February 27th, Anada opened sharply higher, closing up 4.99% on the day. Anada rose by the daily limit on November 8 last year, the day after it was announced that the company's controlling shareholder had signed an agreement with Wanhua Chemical.

Form industrial synergy effect

Public data show that Anada is mainly engaged in the research and development, production and sales of titanium dioxide products, the main products are rutile titanium dioxide, anatase titanium dioxide and other products, with a sulfuric acid process titanium dioxide production capacity of 80,000 tons per year, is one of the few titanium dioxide listed enterprises in China. Anada holding subsidiary Tongling Nayuan material Technology Co., Ltd. is engaged in the research and development, production and sales of iron phosphate products, the main products are iron phosphate series products, iron phosphate production capacity of 150000 tons / year.

Wanhua Chemical's business covers polyurethane, petrochemical, fine chemicals and new materials industry clusters. Wanhua Battery is a wholly owned subsidiary of Wanhua Chemical. Its business scope includes investment activities with its own funds, R & D, manufacturing and sales of electronic special materials, and so on.

Prior to the deal, Anada's controlling shareholder, Tonghua Group, held 64505784 shares, accounting for 29.9999% of Anada's total share capital; Wanhua Battery did not hold Anada shares. After the completion of the transaction, Wanhua Battery will hold 32683040 shares of Anada, accounting for 15.20% of the total share capital of Anada. Tonghua Group will still hold 31822744 shares of Anada, accounting for 14.7999% of Anada's total share capital, making it the largest shareholder of Anada. And Tonghua Group will sign a unanimous actor agreement with Wanhua Battery, Wanhua Battery will become the controlling shareholder of Anada, and Yantai SASAC will be the actual controller of Anada.

Anada said that if the transaction is successfully completed, it will contribute to the stable development of the company in the future, enhance the ability of corporate governance and anti-risk, and do not harm the interests of the company and other shareholders, especially minority shareholders.

Wanhua Chemical pointed out in the announcement that Wanhua Chemical nurtures the battery industry as the company's second growth curve. After the completion of this transaction, Wanhua Battery will improve the upstream raw material industry chain and enhance the core competitiveness of the battery industry, especially the lithium iron phosphate industry. Anada titanium dioxide is in the forefront of the industry. Wanhua Chemical also has a good cooperative relationship with many major customers in the fields of coatings, plastics and printing inks. at the same time, Wanhua Chemical has a perfect sales system all over the world. After Wanhua Battery controls Anada, this business has a strong complementary and synergistic effect with Wanhua Chemical's existing business. Relying on many years of experience and accumulation, Wanhua Chemical also has the operational capabilities of strategic procurement, engineering integration construction, lean manufacturing, sales network layout and so on. it can provide strong support and guarantee for the existing and future new base construction and operation of the target company.

The performance fell sharply last year.

Benefiting from the rising prosperity of China's new energy materials market, iron phosphate products are in short supply, the overall titanium dioxide market shows an upward trend, and the market price remains high. Anada's performance exploded a few years ago. According to Wind data, Anada's operating income in 2020, 2021 and 2022 was 1.1217071 billion yuan, 2.0469651 billion yuan and 2.7142647 billion yuan respectively, with year-on-year increases of 8.09%, 82.49% and 32.6% respectively, while the net profit of homecoming in the same period was 65.110 million yuan, 185.2823 million yuan and 268.21 million yuan respectively, up 101.06%, 184.57% and 44.76% respectively.

However, since 2023, the production capacity of the previous layout of various iron phosphate manufacturers in China has been released one after another, the price of lithium carbonate, the main raw material in the battery industry, has dropped sharply, and the terminal market has digested the previous inventory of battery cathode materials at the beginning of the year, the price of iron phosphate has continued to decline, the market demand for titanium dioxide has remained weak, and Anada's performance has continued to decline. In the first three quarters of 2023, Anada realized operating income of 1.6372543 billion yuan, down 17.7% from the same period last year, and realized a net profit of 90.0907 million yuan, down 55.22% from the same period last year. In the same period, the net cash flow generated by operating activities also dropped sharply, to-111816904.3 yuan, down 148.06% from the same period last year.

According to the company's previous performance forecast, the net profit attributed to shareholders of listed companies is expected to be 54.9831 million yuan to 80.463 million yuan in 2023, down 79.5% to 70% from the same period last year. Anada said that during the reporting period, iron phosphate prices continued to decline during the year, with a large year-on-year decline, and the corresponding part of inventory also showed signs of impairment. The impairment loss of inventory provision for the current period increased, the gross profit of iron phosphate products declined significantly, and the sharp decline in profits of subsidiary iron phosphate products compared with the same period last year was the main factor leading to the decline in performance in the current period. At the same time, during the reporting period, the market demand for titanium dioxide products was weak, the sales price of titanium dioxide products decreased compared with the same period last year, and the gross profit margin of titanium dioxide products decreased slightly.

However, since the beginning of the year, Chinese titanium dioxide enterprises have frequently raised product prices, which may have a positive impact on performance. On February 21, Anada issued a notice on the price adjustment of the company's main products, saying that according to the recent demand in China's international titanium dioxide market and the rise in raw material prices, the company decided to raise the sales prices of its main products from February 22, 2024. Rutile titanium dioxide and anatase titanium dioxide sales base prices in China are increased by 700 yuan / ton, foreign trade sales base price is increased by 100 US dollars / ton. So far, on the basis of the price increase on January 20, 2024, the company has once again raised the prices of its main products. The sales base prices of rutile titanium dioxide and anatase titanium dioxide in China have been increased by 1400 yuan / ton, and the foreign trade sales base price has increased by 200 US dollars / ton. Anada said that the company's increase in the sales price of its main products will have a positive impact on the company's operating results.