The author | Deepwater Finance and Economics Agency He Li
The buyer of the 25% stake in Yueda Kia Motors transferred by Dongfeng Group has finally surfaced.
Yueda Investment (600805) announced on the evening of December 21 that Dongfeng Motor Group Co., Ltd. will publicly list its 25% equity interest in Dongfeng Yueda Kia Automobile Co., Ltd. (hereinafter referred to as Company) through the Shanghai United Equity Exchange from November 19, 2021 to December 16, 2021, with a listing price of 297 million yuan.
Since then, Yueda Automobile Group and Yueda Investment, as the same actual controller, have collectively held 50% of the shares of Yueda Kia Automobile, which is equal to the shareholding ratio of South Korea's Kia, and Yueda Kia Automobile has also entered the era of "dual-head reciprocal control".
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01
Entering the "Two-Headed Era"
At the end of the listing, Jiangsu Yueda Automobile Group Co., Ltd. ("Yueda Automobile Group") was the sole bidder. As a shareholder of, Yueda Investment waived the right of first refusal of the equity transfer in consideration of DYK's subsequent capital increase needs and the company's own operating conditions, and the proposal was passed by the board of directors of Yueda Investment on December 21.
Since Yueda Automobile Group is an affiliated legal person of the company, Yueda Investment waived its right of first refusal to form a joint investment with related parties, constituting a related party transaction. According to the data, the shareholders of Yueda Automobile Group are Jiangsu Yueda Group and Yancheng State-owned Assets Investment Group, holding 70% and 30% of the shares respectively.
Before the completion of the equity transfer, the shareholding structure of Company was: Kia Co., Ltd., Dongfeng Motor Group Co., Ltd., and the company held 50%, 25% and 25% each. After the completion of the equity transfer, the shareholding structure of Company is: Kia Co., Ltd., Yueda Automobile Group, and the company hold 50%, 25% and 25% each.
After the completion of the transfer, Dongfeng Yueda Kia Automobile will be renamed "Yueda Kia Automobile", and the total shareholding of the two shareholders of Yueda will be the same as that of Kia of South Korea, and Yueda Kia Automobile will officially enter the "double-headed era".
Dongfeng Yueda Kia was founded in 1992, jointly invested by Dongfeng Group, Yueda Investment and Hankia Automobile, with a joint venture period of 30 years and will expire in September 2022. But Dongfeng Group obviously can't wait to get rid of this "baggage".
Previously, it was rumored that South Korea's Kia would take over the 25% stake of Dongfeng Group, but this time the former did not participate in the auction, and what kind of game arrangement behind this is not yet known.
02
Sales fell off a cliff
However, due to the serious decline in sales and losses of Yueda Kia automobiles in recent years, Dongfeng Group has retreated. As early as August 2021, there will be rumors that Chefeng wants to sell its 25% stake in the joint venture, which was officially confirmed with the November 2021 listing transfer announcement.
According to the data, as of June 30, 2021, had total assets of 13.419 billion yuan and net assets of 842 million yuan. In the first half of 2021, the unaudited main business income was 7.130 billion yuan, and the net profit attributable to the parent company was -1.371 billion yuan (data unaudited).
According to media reports, in 2016, Dongfeng Yueda Kia sold 646,000 vehicles, ranking 11th in China's passenger car brand sales at that time. However, since then, it has declined year after year, and in 2020, Dongfeng Yueda Kia sold only 249,300 vehicles, down 62% from its peak, and the ranking of manufacturers has dropped to 20th. From January to November this year, Dongfeng Yueda Kia sold only 137,900 vehicles. Almost fell out of the mainstream brand ranks.
The consecutive years of huge losses of Yueda Kia Automobile have also affected the listed company Yueda Investment.
Judging from the performance trend of the past 20 years, Yueda Investment hit a peak of nearly 1.3 billion yuan in net profit in 2013, and has since declined all the way, with large losses in 2017 and 2020.
To a certain extent, the profitability of Yueda Investment is closely related to the performance of Yueda Kia Automobile. Whether Yueda Kia Automobile can usher in a turnaround in the future is also the key to whether Yueda Investment can get rid of the downturn in performance.
03
How to reverse the decline?
It is a fact that not only has the sales of Yueda Kia cars declined, but the entire Korean car has suffered a cold winter in recent years.
Take, for example, Yueda Kia's sibling, Hyundai Auto Giant, who turned from prosperity to decline in almost the same year as Yueda Kia.
Statistics show that in 2017, Hyundai China's annual sales were 785,000 units, down 31.3% year-on-year, 790,000 units in 2018, 716,000 units in 2019, down 5.7% year-on-year, and fell to 502,000 units in 2020. The cumulative sales volume in the first 11 months of 2021 was 320,100 units, and the annual target of 560,000 units is still far behind, and it has been ironclad that it has not been able to complete the set task.
Similarly, Yueda Kia and Beijing Hyundai have also experienced frequent executive changes, and since 2015, Dongfeng Yueda Kia has experienced 6 general managers. Since September 2019, Li Feng, the first Chinese CEO of Yueda Kia, has taken office and is fully responsible for dongfeng Yueda Kia's production, management, marketing and other businesses, which has been interpreted as South Korea's Kia seeking to appoint local executives who understand Chinese consumers better to reverse the decline.
But Li Feng also worked for only a year and a half before retiring, and in March this year, Li Feng was suddenly transferred away, and the baton of Yueda Kia returned to the hands of South Korean executive Yoo Chang-seung.
As soon as Liu Changsheng took office, he offered a new strategy, and he publicly stated that the Kia brand should abandon the cost-effective label, take the high-end route, continue to invest in new products and new technologies, reduce the inventory pressure of dealers, make dealers profitable, and gain consumer recognition.
First of all, starting from 2022, Kia will speed up the discontinuation of low-end entry-level models priced at less than 100,000 yuan in the Chinese market and take the high-end brand route. Stabilize the market competition of high-priced products, put an end to the previous low-price competition strategy, and resist the market pressure of "price for volume".
Secondly, in order to seize the outlet of new energy vehicles, Kia will accelerate the introduction of new technologies and new products such as hybrid and pure electricity, including mass production of Kia hybrid HEV and plug-in hybrid PHEV models comparable to Japanese hybrids.
Third, the dealer system will be adjusted, and a global unified dealer operation, management and assessment system will be introduced in the Chinese market, breaking the previous practice of manufacturers achieving short-term sales growth by pressing the dealer warehouse, and replacing it with a retail-centric business model.
After these years of decadence, Yueda Kia automobile frozen three feet is not a day of cold, it is understood that the company will give up the sales assessment target in the next two years, the company will enter a longer period of bone scraping and detoxification stage.
With the withdrawal of Dongfeng Group, the two-party control is always more efficient than the communication efficiency of the three-party control, but because the two major shareholders formed by Yueda Kia Automobile have the same shareholding ratio, neither party has an absolute right to speak, and how the two sides coordinate and make decisions in the business strategy of Yueda Kia Automobile in the later period is worthy of attention.
However, we speculate that according to the areas in which both sides are good at, Yueda Group will focus more on production and quality control, while the Korean side will continue to dominate the design and development, brand and market, and if the two sides can cooperate tacitly, the restart and rise of Yueda Kia Automobile is also worth looking forward to.
(Exclusively released by the global market value research institute Deepwater Finance and Economics, please indicate the source when reprinting the citation)