On January 9, Matsui shares (688157. SH) announced that the company's application for convertible bonds has been accepted by the Shanghai Stock Exchange.
It is reported that the total amount of funds raised this time will not exceed 620 million yuan, which will be used for automotive coatings and special resin projects (phase I) and replenishment of working capital. In terms of specific fund-raising projects, the company plans to raise 442 million yuan of the amount for automotive coatings and special resin project (phase I), after the completion of the project, the company can achieve an annual production capacity of 33,000 tons of automotive coatings and supporting special resins, and the remaining 179 million yuan will be used to supplement working capital.
Titanium media APP noticed that the company's issuance of convertible bonds to raise investment projects focused on the automotive coatings industry, but the industry has overcapacity concerns, and the company's technical reserves in this field seem to be insufficient. In addition, behind the company's issuance of convertible bonds, its main business income continues to be under pressure, and the company urgently needs to find new profit growth points, so it has started a new layout.
There are concerns about overcapacity in fund-raising projects
It is understood that the construction site of this fund-raising project is located in Youxian High-tech Industrial Development Zone, Zhuzhou City, Hunan Province, and will be implemented in two phases. The raised funds are only used for the construction of the first phase of the project, with a total investment of 594 million yuan, and the planned use of raised funds does not exceed 44,200 yuan. After the completion of this project, the company can achieve an annual production capacity of 33,000 tons of automotive coatings and supporting special resins.
Driven by the incremental market of new energy vehicles, in the past year, "capacity expansion" has become a key word in the automotive coatings industry. There are many domestic companies such as Guangxin Materials and 3Trees that participated in the layout, as well as a number of international coating industry leaders such as Nippon Paint China and PPG with huge sums of money.
As more and more companies launch an impact on the automotive coatings market, the hidden concern of overcapacity in the industry may begin to spread. In 2023, the sales of automobiles in the mainland will be poor, and its growth rate will slow down, which will drive the demand for automotive coatings to decline simultaneously, and relevant data show that the demand for automotive coatings in the mainland will be 730,000 tons, a year-on-year decrease of 8.4%. According to incomplete statistics from the vertical media "Tujie", the total investment of domestic brands in the field of automotive coatings in recent years has exceeded 10 billion yuan, and the new production capacity of automotive coatings has exceeded 1 million tons, and the investment and production capacity scale have reached a record high.
From this point of view, if the sales growth rate of car companies slows down further in the future, it will inevitably lead to a slowdown in the sales growth rate of the automotive coatings market, which may be a major challenge for the company. When the automotive coatings industry is facing the risk of overcapacity, can the company's new production capacity be fully digested?
More critically, the company's technical reserves for automotive coatings and resins projects appear to be insufficient. As of September 30, 2023, the company's series of resin development projects in the field of automotive coatings and passenger cars are in the research stage.
Some industry insiders told Titanium Media APP that although automotive coatings are hot in the capital market, in fact, the automotive coatings industry has a high technical threshold, strong service attributes, and significant industry thresholds and customer stickiness. In the short term, it is difficult to say that this business has brought a substantial boost to the company's revenue.
In fact, the passenger car segment does not account for a large proportion of the company's revenue. According to the 2023 semi-annual report, the company's operating income in the passenger car field is only 39.9437 million yuan, accounting for 16.25% of the revenue.
Seek new growth points for performance
According to the data, the company started with 3C (high-end consumer electronics field) coatings, leveraged well-known terminal brands at home and abroad, including Apple, Huawei, Google, Microsoft, etc., and achieved the goal of listing on the Science and Technology Innovation Board with its sharp performance in the field of 3C coatings.
However, since its listing in 2020, the company's high growth momentum has suddenly stopped. According to the 2022 annual report, the company's operating income was 499 million yuan, a year-on-year decrease of 1.8%, and the net profit attributable to the parent company was 82.2509 million yuan, a year-on-year decrease of 15.55%. In the first quarter of 2023, the company's revenue and net profit decreased by 19.5% and 84.85% respectively.
Titanium media APP found that the company's performance was mainly due to the fact that its downstream customers are mainly distributed in the field of high-end consumer electronics, accounting for more than 85%, and the weakness of the external 3C consumer market last year led to a year-on-year decline in the company's annual business revenue in the field of high-end consumer electronics.
In view of the hindrance in the performance growth of high-end consumer electronics, the company has to find a possible supplementary track, and the automotive coatings business began to deploy in this context.
Although the company's performance has declined and it is difficult to break through, its dividend ratio is still not low. From 2020 to 2022, the amount of cash dividends of the company was 26.268 million yuan, 29.452 million yuan and 24.7417 million yuan respectively, accounting for 30.13%, 30.24% and 30.08% of the net profit attributable to shareholders of listed companies in that year, and the cumulative cash dividend amount in three years was 80.4617 million yuan.
Most of the dividends flowed into the "pocket" of the controlling shareholder Changsha Maosong Technology Co., Ltd. As of September 30, 2023, Changsha Maosong Technology Co., Ltd. held 48.22% of the company's shares, and the company was wholly owned by Ling Yunjian, the actual controller of the company.
It is worth noting that after the large dividend, the company has 179 million yuan in this fundraising to supplement liquidity.
In fact, the company's financial side does not seem to be tight. As of September 30, 2023, the company's monetary funds were 185 million yuan, trading financial assets were 175 million yuan, and short-term borrowings were 21 million yuan. From 2020 to 2022, the company's net cash flow from operating activities was 72 million yuan, 57 million yuan and 141 million yuan respectively.
So, why the company still needs to raise funds to replenish the flow in the case of large dividends and abundant cash flow, the reasonableness and necessity of which are debatable. (This article was first published on the Titanium Media App, by Zhai Zhichao)