After three years of losses totaling 1.7 billion, this leading hydrogen energy company is planning to go public on the Hong Kong Stock Exchange

On September 2nd, the leading company in the hydrogen energy track, Shanghai Reshuffle Energy Group Co., Ltd. (hereinafter referred to as "Reshuffle Energy"), made a move towards a Hong Kong IPO. Compared to when Reshuffle Energy first submitted its documents in February this year, it was still sponsored by CICC as the main sponsor and BNP Paribas as the financial advisor. However, this time, the list of sponsors added BNP Paribas and CMB International as joint sponsors. According to Frost & Sullivan's statistics based on the sales output power of hydrogen fuel cell systems, Reshuffle Energy is already the leader in China's hydrogen fuel cell systems, with a market share of 23.8% in 2023. Reshuffle Energy's hydrogen fuel cell systems are mainly used downstream in hydrogen energy heavy trucks, buses, ships, and distributed power generation. If calculated based on the "total sales output power of hydrogen fuel cell systems carried by terminal hydrogen energy heavy trucks," Reshuffle Energy's market share further rises to 42.4%. In recent years, under policy calls, several provinces and cities have introduced hydrogen energy industry development plans and subsidy details. For example, Shandong Province aims to exceed a hydrogen energy industry scale of over 100 billion yuan by 2025, planning to promote fuel cell vehicles to 10,000 units and build 100 hydrogen refueling stations. Since September this year, Shaanxi Province has provided financial subsidies to hydrogen refueling stations, with a maximum of 3 million yuan, and exempted hydrogen vehicles from highway tolls. Policy stimulation has driven Reshuffle Energy's performance to achieve rapid growth. From 2021 to 2023, Reshuffle Energy achieved revenues of 524 million yuan, 605 million yuan, and 895 million yuan respectively, with sales of hydrogen fuel cell systems and components contributing over 95% of the revenue. However, the outlook for Reshuffle Energy's performance is not optimistic. In terms of profitability, due to the significantly higher raw material costs of hydrogen battery systems compared to lithium batteries, with raw material costs accounting for nearly 80%, battery manufacturers still face severe profitability challenges. The prospectus shows that the average selling price of Reshuffle Energy's fuel cell systems in 2023 was 2629 yuan/kW. However, lithium battery pack prices are also bottoming out simultaneously. According to Bloomberg New Energy Finance data, during the same period, the price of lithium battery packs in China reached a low of 82 USD/kWh (approximately 583 yuan/kWh). From 2021 to 2024, Reshuffle Energy recorded net losses of 654 million yuan, 546 million yuan, and 578 million yuan respectively, totaling nearly 1.778 billion yuan in losses. In the first five months of this year, Reshuffle Energy's losses increased, with a loss of 409 million yuan in the first five months alone. This is not an isolated case. Competitors such as Guohong Hydrogen Energy (9663.HK) and Yihuatong (688339.SH) are also deeply mired in losses. Reshuffle Energy expects its net loss for the full year of 2024 to increase, mainly due to continued research and development investment and other expenses to gain market share and enhance product competitiveness. In an industry heavily reliant on policy subsidies, the volume that Reshuffle Energy can obtain is not stable. In the first five months of this year, Reshuffle Energy's sales of fuel cell systems plummeted, selling only 13 units, a year-on-year decrease of 94.52%, leading to a significant 85.78% year-on-year drop in revenue to 12.52 million yuan. Reshuffle Energy attributes this to fluctuations in order delivery times. "Fuel cell vehicle manufacturers generally place orders after evaluating production and sales plans, which are influenced by factors such as the timing of government-related incentive projects." Excessive reliance on government subsidies in terminal procurement is behind the difficult cash flow restructuring of Reshape Energy. From 2021 to 2023, the operating cash flow of Reshape Energy was in a net outflow state, with amounts of -768 million yuan, -728 million yuan, and -718 million yuan respectively. The reason may lie in the excessively large accounts receivable, putting pressure on cash flow. As of the end of 2021, 2022, and 2023, the balances of accounts receivable and notes receivable of Reshape Energy were 924 million yuan, 1.266 billion yuan, and 1.583 billion yuan respectively. In 2023, the accounts receivable and notes balance accounted for 176.87% of total revenue. However, impairment losses related to accounts receivable, notes, and contract assets were recorded at 373 million yuan, 400 million yuan, and 461 million yuan respectively, accounting for over 70% of the net losses for the year. Reshape Energy stated that the delayed settlement of trade accounts receivable was mainly due to the current government policy, where there is a significant time lag for automotive manufacturers to receive subsidies. The fuel cell vehicle industry is still in the early stages of development and is heavily influenced by government subsidy policies. On a global scale, there remains significant uncertainty about the prospects for hydrogen fuel vehicles. In 2023, global sales of hydrogen fuel vehicles amounted to 14,642 units, a year-on-year decrease of 21.4%. At the beginning of the year, U.S. energy giant Shell permanently closed 7 passenger car hydrogen refueling stations in California due to cost considerations. The lack of infrastructure, in turn, affects the sales of hydrogen fuel cell vehicles. Given this situation, the growth potential for Reshape Energy in the future is uncertain. However, the good news is that the current Chinese market is showing a high enthusiasm for investing in hydrogen fuel vehicles. In 2023, the sales of hydrogen fuel vehicles in the Chinese market increased by 72% to 5,805 units, making it the largest single market globally