EVE Energy (300014.SZ) is gearing up for another round of financing.

After the market closed on October 10th, EVE Energy released a revised draft of the convertible corporate bond issuance to unspecified objects on the ChiNext board. The announcement shows that the company plans to raise a total of no more than 5 billion yuan through this convertible bond issuance, investing in the "23GWh cylindrical lithium iron phosphate energy storage power battery project" and the "21GWh large cylindrical passenger car power battery project."

The revision of this convertible bond is not far from the previous one.

A reporter from Time Weekly noticed that last month EVE Energy issued a revised draft of the convertible bond and responded to the relevant inquiry letter from Shenzhen Stock Exchange. From 2019 to 2023, EVE Energy initiated multiple rounds of refinancing, raising a total of 14 billion yuan. However, in the current industry environment, EVE Energy's continued financing and expansion clearly requires a better reason.

EVE Energy stated in the announcement, "The company's future capacity expansion is quite large, with a decline in capacity utilization in the first quarter of 2024, but it has rebounded in the second quarter."

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According to the company's announcement, the "23GWh cylindrical lithium iron phosphate energy storage power battery project" invested in by EVE Energy through this fundraising is expected to add about 23GWh of cylindrical lithium iron phosphate battery capacity after completion, mainly used in passenger cars, household energy storage and other fields; the "21GWh large cylindrical passenger car power battery project" invested in by the fundraising is expected to add about 21GWh of 46 series large cylindrical battery capacity after completion, mainly used in the field of passenger cars.

Regarding convertible bonds and other issues, a reporter from Time Weekly called the secretary's office of EVE Energy, and the relevant staff member stated that everything should be based on the announcement.

The capacity will be expanded by about 3 times in 4 years

Behind the 5 billion yuan convertible bond financing of EVE Energy is a huge capacity plan.

According to EVE Energy's capacity calculation at the end of 2023, the existing capacity is 84GWh, and it is expected to reach 126GWh by 2025 when the company's production projects are released. The sum of existing capacity and newly released capacity will reach 210GWh, expanding the capacity by about 2 times in 2 years, with a large expansion scale. It is expected that by 2027, the sum of existing capacity and newly released capacity will reach 328GWh, expanding the capacity by about 3 times in 4 years.EVE Energy has stated that the company's expansion projects are all built in response to the needs of downstream customers, and the company's capacity planning and construction progress are relatively consistent with customer demand. By the end of 2023, the company's cylindrical lithium iron phosphate batteries have obtained an aggregate customer indicative demand of approximately 88GWh for the next five years, and the ternary large cylindrical batteries have obtained an aggregate customer indicative demand of approximately 486GWh for the next five years.

It should be noted that general indicative demand is divided into two forms. One form is proposed in a non-written manner during business negotiations, and the other form is in writing, including signing cooperation agreements,定点 notices or定点 letters, project books and scale requirements, inquiry letters, and various other media and methods.

Reporters from Times Weekly have noticed that the above demands are all indicative demands, and the actual purchase demands are still subject to the formal orders sent by downstream customers to the company. This means that there are variables in the above indicative demands.

In addition to this, EVE Energy's cash flow is slightly tight.

In the first half of 2024, EVE Energy's operating income was 21.659 billion yuan, a year-on-year decrease of 5.73%; the net profit achieved was 2.148 billion yuan, a year-on-year decrease of 15.14%; and the net profit attributable to the parent company was 2.137 billion yuan, a year-on-year decrease of 0.64%. However, the company's net cash flow from operating activities in the first half of 2023 was 3.3 billion yuan, and this indicator plummeted to 312 million yuan in the first half of 2024. Therefore, financing has become an important source of funds for the company's expansion.

Before this 5 billion yuan convertible bond financing plan, EVE Energy has repeatedly asked the market for money. In 2019, it raised 2.5 billion yuan through a private placement, and in 2020, it raised another 2.5 billion yuan through a private placement. In 2022, it raised 9 billion yuan through a private placement. In addition, reporters from Times Weekly have noticed that there is a discrepancy between the actual investment amount and the promised investment amount of the investment projects raised in the 2022 private placement. In response to this, EVE Energy stated, "The main reason is that the fundraising projects are being built in an orderly manner according to the progress plan."

Stock Incentive Plan Focusing on Shipments

The 5 billion yuan convertible bond financing for expansion is understandable, but a stock incentive plan focusing on shipments has attracted market attention.

The announcement shows that the draft of EVE Energy's sixth phase of restricted stock incentive plan plans to grant a total of 619 people, and plans to grant no more than 70.65 million restricted stocks to these incentive objects. The incentive objects mainly include the company's directors, senior management, middle and senior management personnel, and other personnel that the company's board of directors believes need to be incentivized.

However, this restricted stock incentive plan does not assess profit and other profit indicators, but instead focuses on shipments.According to the announcement, the incentive plan's assessment period covers two fiscal years, 2024-2025, with an evaluation conducted each year. Specifically, the performance target for the first vesting period is "a combined shipment of power batteries and energy storage batteries of not less than 71GWh in 2024," and for the second vesting period, it is "a combined shipment of power batteries and energy storage batteries of not less than 101GWh in 2025." Interestingly, the performance indicators for EVE Energy's previous five stock incentive plans were all centered around net profit and other key profitability metrics.

Some market observers believe that EVE Energy's performance has not been satisfactory, but setting shipment volume as a target for assessment might be more achievable. The announcement shows that EVE Energy shipped 13.54GWh of power batteries and 20.95GWh of energy storage batteries in the first half of 2024, totaling 34.49GWh. This is 36.51GWh short of the 71GWh target, with a completion rate of 48.6%.

Furthermore, the incentive plan grants restricted stocks to the incentive recipients at a price of 22.76 yuan per share, which is approximately 30% lower than the disclosed stock price of 32.34 yuan. Currently, after a significant rebound in the A-share market, EVE Energy's stock price has also risen accordingly.

iFind data from Tonghuashun shows that from September 24 to October 11, EVE Energy's stock price surged by 47.24% over nine trading days, reaching a peak of 58.54 yuan per share. On October 11, EVE Energy closed at 46.13 yuan per share, down by 7.65%.