Seeking strategic transformation? Tianfu Energy plans to invest 200 million yuan to participate in Tianke Heda's capital increase

On the evening of December 4, Tianfu Energy issued an announcement regarding the company's participation in the capital increase and related transactions of Beijing Tianke Heda Semiconductor Co., Ltd.

The announcement shows that Tianfu Energy's main business is electricity and heat production and supply, natural gas supply, etc., mainly providing comprehensive urban energy services such as electricity, heat, and natural gas to Shihezi, Xinjiang. The company's main products such as electricity, heat, and gas are all priced by the market. In recent years, factors such as national energy price policies and rising prices of production raw materials such as coal have led to a low overall profit margin for the company.

In view of the above situation, based on the consideration of strategic transformation and relying on the advantageous resources of the controlling shareholder, the company plans to invest RMB 200 million to participate in the capital increase of its related party Tianke Heda. After the capital increase is completed, the company will hold 3.7068% of the shares of Tianke Heda.

The total scale of Tianke Heda's capital increase is RMB 799.5 million, the number of newly added shares is 31.98 million shares, the capital increase price is RMB 25.00 per share, and the total share capital of Tianke Heda is 215.82 million shares after the capital increase. The company invested RMB 200 million and subscribed for 8 million shares of Tianke Heda, accounting for 25.0156% of the capital increase.

The IPO process of the Science and Technology Innovation Board was terminated

According to information, Tianke Heda is a leading domestic manufacturer of silicon carbide wafers, a third-generation semiconductor material. The company is mainly engaged in the research and development, production and sales of products related to silicon carbide. Its main products include silicon carbide wafers, other silicon carbide products and silicon carbide single crystal growth furnaces, among which silicon carbide wafers are the company's core products.

From 2017 to 2019, Tianke Heda achieved operating income of RMB 24.0661 million, RMB 78.1306 million and RMB 155.1616 million, respectively, and the net profit attributable to the owners of the parent company was RMB -20.3498 million, RMB 1.9440 million and RMB 30.0432 million, respectively. After deducting non-recurring gains and losses, the net profit attributable to the owners of the parent company was RMB -25.7206 million, RMB -4.2011 million and RMB 12.1921 million, respectively.

On July 14, 2020, Tianke Heda submitted an application for its initial public offering and listing on the Science and Technology Innovation Board to the Shanghai Stock Exchange and was accepted; on October 15, 2020, Tianke Heda applied to withdraw its application for its initial public offering and listing on the Science and Technology Innovation Board, and the Shanghai Stock Exchange decided to terminate its review of Tianke Heda's initial public offering and listing on the Science and Technology Innovation Board.

Seeking strategic transformation?

It was disclosed that Xinjiang Tianfu Group, the controlling shareholder of Tianfu Energy, was the largest shareholder of Tianke Heda before the capital increase, holding 24.1537% of the shares of Tianke Heda, and Mr. Liu Wei, the chairman of the company and Tianfu Group, was also the chairman of Tianke Heda. Therefore, according to the relevant provisions of the "Shanghai Stock Exchange Listing Rules", Tianke Heda is a related legal person of the company, and this investment constitutes a related transaction. At the same time, Tianfu Group does not participate in the capital increase of Tianke Heda.

The status of Tiankeheda shareholders before this capital increase is as follows:

At present, the total annual demand for conductive substrates of power electronic device lines built in China is about 1 million pieces. Due to the friction between China and the United States, most manufacturers are unable to purchase substrates from the United States. Beijing Tianke Heda Semiconductor Co., Ltd. is the only domestic mass production supplier of conductive substrates. At present, the annual production capacity of this type of product is only 80,000 pieces, which is in short supply. With the rapid development of 5G, the global demand for semi-insulating substrates is about 100,000 pieces per year, and China's demand exceeds 50,000 pieces per year. Beijing Tianke Heda Semiconductor Co., Ltd. is one of the few suppliers in China, and the domestic market is also in short supply.

Tianfu Energy said that participating in the capital increase of Tianke Heda is a preliminary attempt of the company's strategic transformation. The company's main products such as electricity, heat and gas are all priced by the market. In recent years, the national energy price policy factors have caused the company's main business to maintain a low profit margin for a long time. In order to improve the company's profitability, it is necessary to cultivate new profit growth points; under the premise of ensuring the normal operation of the existing main business, the company attempts to seek the possibility of strategic transformation, comprehensively improve the profitability of the listed company, and provide shareholders with more generous returns.