According to the 'Science and Technology Innovation Board Daily' on September 6th, with the intensification of competition in the power battery industry, many companies are expanding their consumer battery business.

On September 5th, Yuchen Intelligence announced that it has signed a 'Conditional Effective Equity Acquisition Agreement' with Zhang Hua (transferor 1) and Hou Xianlu (transferor 2) regarding Shenzhen Jiayang Battery Co., Ltd. (referred to as Jiayang Battery), intending to purchase 60% of the equity of the target company, which corresponds to 6 million yuan of the registered capital of the target company (out of 10 million yuan) for a total of 10 million yuan in cash. Among them, it plans to purchase 5.93 million yuan (representing 59.3% of the equity) held by Zhang Hua and 0.07 million yuan (representing 0.7% of the equity) held by Hou Xianlu.

According to the announcement, Yuchen Intelligence intends to carry out the assembly of consumer lithium-ion battery PACKs by acquiring the equity of Jiayang Battery.

According to the 'Asset Valuation Report', as of the evaluation base date, the assessed value of the target company is 328.06 million yuan. Based on the assessed value, the final transaction price for 60% of the equity of the target company in this transaction is determined to be 0.15 billion yuan.

Yuchen Intelligence's main products are smart equipment for lithium-ion battery production and intelligent manufacturing equipment for consumer electronics, which are located upstream in the battery production sector. Since 2023, its performance has continued to decline due to increased competition in the lithium battery equipment industry and other factors. In the first half of this year, its revenue was 0.291 billion yuan, a decrease of 47.39% year-on-year, and its net loss was 45.2658 million yuan, a decrease of 231.33% year-on-year.

Jiayang Battery, which was established in 2006, and its subsidiaries are mainly engaged in the research, development, production, and sales of consumer electronic product battery PACKs.

The announcement mentioned that Jiayang Battery and Yuchen Intelligence are now both part of the lithium-ion battery industry chain, with Jiayang Battery in the battery application end and Yuchen Intelligence in the upstream battery production end. Yuchen Intelligence stated that this acquisition is based on Jiayang Battery's comprehensive strength in the consumer battery PACK field, and it can form strategic synergy with the company in terms of technology, talent, products, and supply chain.

The reporter of the "Science and Technology Innovation Daily" noticed that going abroad may become one of Yu Chen Intelligent's key focuses. Because in the announcement, Jiayang Battery has always focused on export sales, with a sound overseas operation system, which is in line with Yu Chen Intelligent's strategy of "going abroad" for equipment. After the acquisition, Jiayang's rich experience in overseas market operation can help the company's overseas system construction and accelerate the expansion of the company's overseas business.

Industry insiders believe that this layout not only strengthens the horizontal layout of consumer lithium battery business, but also expands the industry chain to the PACK segment vertically. Combined with a focus on expanding overseas operations, the company's competitiveness is expected to strengthen.

"For the battery market used in consumer electronic products, there are currently only a few major cell suppliers, and the ones dealing with end customers are generally PACK manufacturers," said Moke, the founder of True Lithium Research, to the reporter of the "Science and Technology Innovation Daily".

Further, Zhang Xiang, Secretary-General of the International Intelligent Carrying Technology Association, said that it can be seen that the company will expand its business downstream of the industry chain, making the industry chain layout more complete, thereby strengthening its bargaining power and competitiveness.

"However, the lithium battery market for consumer electronic products has a relatively stable market structure and stable profitability. The overall market demand growth rate is also not high. It's a bit idealistic to expect the acquisition of this lithium battery enterprise to help them get rid of the loss state," said Moke, the founder of True Lithium Research, to the reporter of the "Science and Technology Innovation Daily".

The announcement shows that the payment for this transaction will be made in five installments, with funds raised by the company itself. Looking back at the performance of Yu Chen Intelligent, the company's net loss in the first half of the year, while the net cash flow from operating activities was -0.164 billion yuan, increasing the pressure on cash flow.

At the same time, the contract also includes performance commitments, compensation, and excess performance rewards.

Among them, Party B (Jiayang Battery) undertakes that the net profit of the target company in 2024 will not be less than 33 million yuan, the net profit in 2025 will not be less than 36 million yuan, and the net profit in 2026 will not be less than 40 million yuan. The cumulative net profit in the three years will not be less than RMB 0.109 billion. If the target company fails to achieve the performance commitment, the compensation plan will be implemented according to the equity transfer agreement.

According to the financial data of Jiayang Battery, the company's net profit as of May 31, 2024 was 14.8215 million yuan, and the net profit for 2023 was 67.9288 million yuan.

"The target company acquired by Yuchen Intelligent has an annual revenue of 0.511 billion yuan, with a moderate scale. However, considering the performance in the first five months of this year, there are still challenges to achieve the goal of continuous growth in the coming years." said an industry insider to the reporter of "Kechuangban Daily".