Produced by | At the forefront of entrepreneurship
Author | Duan Nannan
Edit | Feng Yu
American Editor | Li Yufei
Audit | Ode
As the second largest wind turbine blade manufacturer in China, Times New Materials has been growing in performance in the past two years, and seems to have gotten rid of the earlier dilemma of sometimes making profits and sometimes losing money. However, if the time is extended, the net profit attributable to the parent company of Times New Materials in 2023 will only increase by less than 20% compared with 2020, and the compound annual growth rate will be less than 6%.
Due to the slowdown in the growth rate of net profit attributable to the parent company, the company's market value has "stood still" for more than 10 years. However, recently caught up with the concept of "low-altitude economy", and the stock price of Times New Materials has risen by more than 70% in the past two months. But can the low-altitude economy bring new opportunities for the new materials of the times?
1. Profit growth is slow, and the company's market value has stood still for 13 years
According to public information, Times New Materials can be traced back to 1984 at the earliest, and the company was formerly known as the rubber laboratory of Zhuzhou Electric Locomotive Research Institute of the former Ministry of Railways.
In 1988, with the support of the Zhuzhou Municipal System Reform Commission, the predecessor of Times New Materials carried out the shareholding reform, and at the same time issued shares to internal employees to raise funds, and it is reported that 263 employees purchased the company's shares at that time.
At this time, Times New Materials is still an enterprise mainly engaged in rubber production. In 1994, Zhuzhou Times Rubber & Plastic Industry Co., Ltd., the predecessor of Times New Materials, was formally established, and the company received 75 product orders from GE in the United States.
(Photo / Times New Material Official WeChat)
In 1997, CRRC Railway Industry and Trade Co., Ltd. took the lead in uniting 15 OEMs to become shareholders, and the controlling shareholder of Times New Materials became the current CRRC Group, and the company was renamed Zhuzhou Times Rubber and Plastic Co., Ltd. (hereinafter referred to as "Times Rubber").
In 2001, Times Rubber officially changed its name to Zhuzhou Times New Material Technology Co., Ltd., and completed its listing on the main board of the Shanghai Stock Exchange in 2002.
Since then, through a number of capital operations and foreign mergers and acquisitions, Times New Materials has continued to grow bigger and stronger, and the company's sales revenue officially exceeded 10 billion yuan in 2015. As of 2023, the operating income of Times New Materials will reach 17.538 billion yuan, an increase of more than 6 times from 2.321 billion yuan in 2010.
Interestingly, although the operating income of Times New Materials continued to rise, the company's market value did not grow. In 2010, the market value of Times New Materials exceeded 10 billion yuan.
As of April 22, 2024, the market value of Times New Materials is still more than 10 billion yuan. This is also caused by the company's stock price rise in the past two months, two months ago, the market value of Times New Materials was even less than 6 billion yuan.
The company's revenue continues to expand, but its market value stagnates, which is rare in the capital market. The change in market value has a lot to do with the profitability of Times New Materials.
In 2010, when the operating income of Times New Materials was only 2.321 billion yuan, the net profit attributable to the parent company was as high as 200 million yuan. In 2023, when the revenue of Times New Materials is as high as 17.538 billion yuan, the net profit attributable to the parent company will only be 386 million yuan, and even in 2021, the net profit of Times New Materials will only be 218 million yuan.
The increase in revenue and no increase in profits is an important reason why the market value of Times New Materials is stagnant, and the company's increase in revenue and not profits stems from the company's business layout. In 2010, the main revenue of Times New Materials came from polymer vibration and noise reduction elastic components, which were mainly used in locomotives, trucks, buses and other fields.
(Photo / Photo Network, based on VRF protocol)
At that time, there were not many domestic enterprises engaged in the research and development and production of this product, so Times New Materials could maintain a high gross profit margin for this product. According to the data, in 2010, the gross profit margin of the business of Times New Materials was as high as 33.55%, and the gross profit margin of the business dropped to 17.49% in 2015.
Since then, since Times New Materials did not disclose the business separately, there is no way to know the gross profit margin of this business. However, judging from the company's overall gross profit margin, the gross profit margin of this business is likely to continue to decline.
In addition, the failed capital layout of Times New Materials is also an important reason for the company's net profit attributable to the parent company.
In 2013, Times New Materials acquired the rubber and plastics business of BOGE, a subsidiary of the German ZF Group, for 290 million euros, resulting in 726 million yuan of goodwill. For many years since then, the company has been losing money, and up to 726 million yuan of goodwill has also been fully accrued.
The gross profit margin of the original main business continued to decline, coupled with the continuous loss of the newly acquired business, resulting in the operating income of Times New Materials increasing by more than 6 times in the past 13 years, but the net profit attributable to the parent company increased by less than 1 time.
2. Continue to increase clean energy and aim to be the industry leader
Even so, Times New Materials has not slowed down the pace of external expansion.
In December 2023, Times New Materials announced a fixed increase plan of 1.3 billion yuan, of which CRRC Financial Holdings, a subsidiary of CRRC Group, the controlling shareholder of the company, intends to subscribe for no more than 660 million yuan.
Times New Materials has set an increase of 1.3 billion yuan mainly to invest in innovation centers and intelligent manufacturing base projects, clean energy equipment quality improvement and expansion projects, and new energy vehicle vibration reduction product capacity improvement projects.
(Photo / Private placement fundraising project)
In this regard, Times New Materials said that if the three major projects are successfully raised and put into production, it will bring about 500 million yuan of net profit to the company. In fact, in addition to this private placement to raise funds to expand production, Times New Materials has been expanding externally, especially in the field of clean energy, and the investment of Times New Materials has been increasing.
Times New Material's clean energy equipment is mainly based on wind power blades, and this business is also the second largest main business of Times New Material. In the past few years, stimulated by the "dual carbon" policy, the installed capacity of wind power has grown rapidly.
(Photo / Times New Material Official WeChat)
Aware of the development opportunities of the wind power industry, Times New Materials continues to increase its investment in wind power. At present, Times New Materials has production bases in Xinjiang, Harbin, Inner Mongolia and other places.
The new base of Times New Materials, Jilin Songyuan Factory, and Harbin Binxian Factory have entered the production ramp-up stage. The projects raised and put into operation by the company are mainly the second phase of the wind turbine blade Sheyang project, the second phase of the wind turbine blade Mengxi project and the supporting project of the wind turbine blade Binxian factory.
After years of investment and expansion, the income of wind turbine blades of Times New Materials has continued to increase. In 2019, the company's wind power blade and service revenue was 2.325 billion yuan, and in 2023, the revenue of wind power-related products of Times New Materials has reached more than 6.7 billion yuan.
In terms of shipments, as of 2022, Times New Material's shipments of wind turbine blades are second only to Sinoma Technology, ranking second in the industry. If the above projects are successfully put into operation, Times New Materials will become a leading enterprise in the field of wind power blades.
In the past few years, the company's wind turbine blade revenue has increased significantly, which is also the main reason for the increase in the operating income of Times New Materials. It is worth noting that although the company's wind turbine blade revenue continues to grow, it has brought rapid growth in accounts receivable.
In 2020, the balance of accounts receivable and notes receivable of Times New Materials was 2.664 billion yuan, which will increase to 4.472 billion yuan in 2023. In this regard, Times New Materials said that due to the continuous expansion of the company's wind power generation business and automobile business, the company's accounts receivable balance continued to grow.
In addition, Times New Materials also said that due to the large number of customers, accounts receivable face the risk of recovery. At present, most of the accounts receivable of Times New Materials are within 1 year, and the amount of bad debts is not large. However, customers taking too much of the company's money can also lead to a shortage of cash flow for the company.
3. Riding the "low-altitude economy", the stock price rose by more than 70%
Interestingly, the wind power blade and automobile business of Times New Materials has not made the company's stock price rise, but the "low-altitude flight economy" that is still in the conceptual stage has made the stock price of Times New Materials soar.
In 2024, the low-altitude economy will be written into the government work report, and since then, the low-altitude economy concept stocks in the secondary market have been speculated by funds. Andawell, a leading company in the low-altitude economic market, has seen its share price rise by more than 150% in less than two months.
Times New Materials is no exception, because of the concept of "low-altitude economy", since February 2024, the share price of Times New Materials has risen by more than 70%. It is reported that Times New Materials can mainly provide sound insulation materials and technologies for low-altitude flying cars.
(Photo / Photo Network, based on VRF protocol)
Compared to existing cars, low-flying cars, although unusually popular, are still in the concept stage. At present, there are many manufacturers of flying cars, and well-known automobile manufacturers such as Xpeng, Geely, and Guangzhou Automobile Group are developing flying cars, but most of them are still in the concept stage, and there are very few companies that can really launch products.
In addition, the commercialization prospects of flying cars remain in question. At present, the commercialization direction that is much discussed in the market is the air taxi.
The biggest challenges in this direction are security and high costs. Jiang Jun, the founding partner of Shi Technology, has publicly said that the current price of flying cars is still relatively expensive, the price of a one-way ten minutes is 2,000 yuan, and the riding experience is not good, and some small machines even need to wear headphones.
In addition, due to the current imperfect regulatory policy for flying cars, flying cars have a lower tolerance for accidents compared to ground cars, which will inevitably bring challenges to existing traffic regulation.
From both perspectives, there is still a long way to go to explore the commercialization of flying cars. Even if aerial cars can be commercialized, it is almost impossible to reach the market size of ground vehicles.
As a supplier of traditional automotive sound insulation materials, under such a huge market scale of ground cars, the revenue and profits brought by flying car products are not ideal, and Times New Materials may need to rely on other products and businesses to continuously improve the company's performance.
(Photo / Times New Material Official WeChat)
In the history of A-shares, there has never been a shortage of hype about new concepts, such as the metaverse in 2022 and Internet+ in the early years. But after the concept ebbs, most of the stock prices will return to the original point.
If listed companies want to go through the cycle in the capital market, it is the first priority to work hard to improve performance, and the stock price hyped up by "rubbing the concept" will not last after all.
The same is true for Times New Materials, taking advantage of the "low-altitude economy" may allow you to enjoy the wealth on paper, but I am afraid it will not bring any improvement to the company's operation. If the market value of Times New Materials wants to surpass 2010, only by working hard to improve the company's performance is the long-term strategy.
*Note: The title image in the article is from the photo network and is based on the VRF protocol.