#聚光创作大赛#
Author / Avocado under the stars
Edit/Spinach's Starry Sky
Typesetting/Leeks under the stars
Everyone in the world knows how hot the low-altitude economy is?
Recently, Watson Technology (605180) (listed on April 30, 2021), which has just landed on the Shanghai Stock Exchange for less than three years, has been repeatedly classified by the market as a hot concept such as low-altitude concepts and parachutes. As a manufacturer of plastic composite materials, the company has repeatedly clarified that the materials produced by Watson are not related to parachute materials. Despite this, it could not extinguish the frenzy in the market, and the stock price rose wildly. The data shows that since March 21, Watson has been on nine consecutive boards. As of now, the stock price has doubled. It can be seen that it is not related, and it can also be fried hard.
Source: Oriental Fortune official website Watson Technology (as of April 3, 2024)
Not only has it nothing to do with hot spots, Watson has no performance.
First, the performance of the "knee chop", the reason to avoid the important is light
According to Qichacha data, Watson Technology was founded in 2006 and is headquartered in Haining, Zhejiang. On April 30, 2021, it was successfully listed on the Shanghai Stock Exchange, less than three years ago.
According to the 2023 semi-annual report, Watson is mainly engaged in the research and development, production and sales of plastic composite materials. According to the airtightness standard, the products mainly include two categories: airtight materials and flexible materials. Among them, airtight materials include brushed air cushion materials and inflatable yacht materials (the performance of brushed air cushion materials is better than that of inflatable yachts), which are mainly used in sports and leisure fields such as paddling boards, gymnastics mats, and inflatable yachts, and flexible materials include canopy materials (such as truck canopy covers) and light box advertising materials, which are mainly used in transportation logistics and print advertising fields.
From the perspective of income structure, airtight materials such as brushed air cushions and inflatable yachts are Watson's main source of income. In the first half of 2023, airtight materials will account for about 60% of revenue, and flexible materials will account for 33%.
来源:同花顺iFinD—历年营业收入
In terms of trends, 2021 is a watershed year for Watson's performance. Before 2021, although the scale of revenue was less than 500 million, it was still rising steadily. In 2021, Watson's revenue will exceed 600 million, but the apex is the end, and it has since begun to decline all the way. In 2022, revenue has fallen by nearly 57% year-on-year.
来源:同花顺iFinD—历年营业收入
The 2023 performance forecast shows that Watson's performance continues to decline.
Source: Company announcement (31 January 2024)
According to the performance forecast: In 2023, Watson's net profit attributable to his mother will be between 25 million and 29 million yuan, compared with 180 million yuan in 2021.
Regarding the decline in performance, Watson said that it was mainly affected by the macro environment, which led to a decline in downstream demand, especially in the overseas markets of Europe and the United States for airtight materials. In this regard, the author does not deny that Watson will definitely be affected by the macroeconomic downturn. After all, there are no eggs under the nest.
Source: Company announcement (31 January 2024)
But this is only one of the reasons, and it is by no means the main one. After all, Watson's export sales account for less than 28%, and even if it is sluggish, it will not be able to cause the result of "knee chopping". Watson's explanation is a bit evasive.
来源:同花顺iFinD—历年营业收入
2. "Lying camp" cannot "lie down"
In fact, there are two main points for Watson's crux:
1►Single product
As a material manufacturer, its products should be diverse and widely used. However, Watson's products are mainly concentrated in brushed air cushion materials and inflatable yacht materials, and the downstream application scenarios are also mainly concentrated in marine outdoor products (paddling boards and inflatable yachts, etc.), which is inevitably too concentrated.
2► Limited customers
In addition to the single product, Watson's customer resources are also very limited. In 2022, among Watson's top five customers, the largest sales volume is only more than 30 million, and there is an obvious lack of large customers. Judging from Watson's top five customers, Watson has a strong dependence on the Weihai market. In addition, from the perspective of sales expenses, for Watson, which is still in the growth period, the proportion of sales expenses (= sales expenses / operating income) is only 1%+, which shows that the market development efforts are limited.
Source: "Announcement on the Reply to the Regulatory Work Letter on Information Disclosure of Zhejiang Huasheng Technology Co., Ltd. in the 2022 Annual Report"
Whether it is a product or a market, Watson is interpreting what it means to "lie down". If the economic environment is good, it may be possible to get rich and secure, but once the economy and industry go down, underwater problems will surface.
Since the beginning of 2022, the macro economy has fallen short of expectations, and the demand for offshore outdoor has decreased, and Watson Technology's business has declined significantly. In addition, the downstream life is not good, and Watson's payment is also a problem.
As of the third quarter of 2023, Watson's accounts receivable was about 141 million yuan, while the operating income in the first three quarters of 2023 was only 159 million yuan. Large accounts receivable, combined with a single business structure, are inevitable in the event of a market downturn.
The 2023 performance forecast and company announcement show that in 2023, Watson has begun to make impairment provisions for accounts receivable, with an amount of about 13 million.
Source: Company announcement (31 January 2024)
3. New investment, new way out?
In the face of continuous performance declines, Watson also seems to be looking for a new way out.
On November 14, 2022, Watson announced: In order to expand product categories, provide the company's comprehensive competitiveness, and develop new profit growth points, the company plans to invest in the construction of a new energy ultra-thin special capacitor film construction project with an annual output of 5,700 tons, with a total investment of about 470 million yuan. Public information (Haining Daily) shows that the company will introduce two imported ultra-thin special capacitor film production lines and other equipment, mainly producing ultra-thin special capacitor film products of 3 microns and below.
According to the company's announcement at the end of 2023, the company has obtained the land use right related to the production line, and has completed the signing of key equipment contracts and the formation of key technical teams.
Source: Company announcement (29 December 2023)
So, can capacitive films help break the game?
From the perspective of the industrial chain, with the development of photovoltaic and new energy vehicles, the market demand for film capacitors is increasing, and capacitor film is the core raw material of film capacitors. And with the development of new energy industries such as new energy vehicles, photovoltaics and wind power, the demand for ultra-thin special capacitor films is increasing.
Source: Founder Securities
Although the market is good, the industry concentration is high. The data shows that in 2022, the market share of the top five manufacturers will be about 68%. In addition, most of them are foreign companies. In such a competitive landscape, it is more difficult for outsiders to enter the game.
来源：QR research
In addition, according to Watson's reply to the "Regulatory Work Letter on Foreign Investment Matters": as a cross-border student, Watson's equipment is sourced, talents are introduced, patents are not, and customers need to expand in the future. It seems that Watson only has an idea, which is his own.
Note: This article does not constitute any investment advice. The stock market is risky, and you need to be cautious when entering the market. There is no harm in buying and selling.