On April 23, Xinwei Communication (300136. SZ) released its 2023 annual report, during the reporting period, the company's operating income was 7.548 billion yuan, down 12.13% year-on-year, the net profit attributable to the parent company was 521 million yuan, down 19.65% year-on-year, and the non-net profit was 440 million yuan, down 12.61% year-on-year.
As for the reasons for the change in performance, Xinwei Communication said that in 2023, affected by geopolitics, high inflation and other factors, the downward pressure on the demand side will be obvious, and the consumer electronics industry represented by smart phones will enter a period of stock adjustment after a period of rapid development, and the cyclical pressure of the industry will affect the company's operating performance in the short term.
In the secondary market, as of the close of trading on April 24, the company's share price closed at 18.14 yuan, an increase of 5.65%, and the current total market value is 17.55 billion yuan.
In 2023, Q4 net profit will decline by more than 9%.
According to public information, Xinwei Communication's main business includes antennas and modules, wireless charging and modules, EMI\EMC devices, high-precision connectors, automotive interconnection products, passive components, etc., and the company's products can be widely used in consumer electronics, Internet of Things/smart home, commercial satellite communications, smart cars and other fields.
In terms of quarters, from Q1 to Q4 of 2023, the company's revenue will be 1.737 billion yuan, 1.608 billion yuan, 2.248 billion yuan, and 1.954 billion yuan respectively, with year-on-year changes of -9.24%, -9.61%, -9.5%, and -19.01%, respectively, and net profit will be 145 million yuan, 48.3613 million yuan, 324 million yuan, and 4.0863 million yuan, respectively, and the year-on-year changes will be 19.92%, -23.13%, -22.42%, and - 91.41%。
It can be seen that the company's profit fell in the second quarter and continued until the fourth quarter. Among them, the company's performance in the fourth quarter declined significantly, and the net profit shrank by more than 9%.
From a regional point of view, Xinwei Communication's sales market is mainly overseas, and the proportion of overseas revenue is more than 8%. According to the 2023 annual report, during the reporting period, the company's domestic and foreign revenues declined, with revenues of 1.409 billion yuan and 6.139 billion yuan respectively, a year-on-year decrease of 24.68% and 8.62%, of which the revenue of the domestic market declined significantly.
In addition to industry factors, the decline in Xinwei Communication's net profit is related to the decrease in the company's investment income. In 2023, the company's investment income will decrease by 193 million yuan from the same period of the previous year to -70.5433 million yuan, mainly related to the recognition of the investment profit and loss of the joint ventures Deqing Qingying and Yiyang Electronic Technology in the reporting period, as well as the profit and loss generated by the forward foreign exchange contract, which has a certain impact on the company's net profit.
However, in the first quarter of 2024, Xinwei Communication's performance has picked up. During the reporting period, the company's revenue and net profit were 1.858 billion yuan and 152 million yuan respectively, a year-on-year increase of 6.97% and 4.49% respectively, and both revenue and net profit increased.
The net profit of the company acquired at a premium soared by more than 5 times year-on-year
In the second half of 2023, in order to accelerate the industrial layout of key electronic components, Xinwei Communications spent 990 million yuan to acquire 96.84% of the shares of Weishi Technology Co., Ltd. (hereinafter referred to as Weishi Technology) from 10 counterparties including Peng Hao and Xie Youjun.
It is reported that Weishi Technology was established in 2014 and is mainly engaged in the production of consumer electronics speakers, receivers, speaker modules and audio and frequency modules. It should be noted that as of June 30, 2023, the appraised value of all shareholders' equity of Weishi Technology is 1.025 billion yuan, which is calculated with its net assets of 208 million yuan, and the appreciation rate is as high as 393%. After negotiation between all parties, the company finally determined that the price of this transaction is 990 million yuan.
In addition, among the counterparties, Peng Hao and Xie Youjun are both related parties of Xinwei Communication Technology, of which Peng Hao, as the largest shareholder and actual controller of Xinwei Communication, holds 3.1579% of the equity of the target company, and Xie Youjun, as the chairman of Xinwei Communication, holds 29.6947% of the equity of the target company.
At the time of the acquisition, the counterparty promised that the net profit of Weishi Technology from 2023 to 2025 would not be less than 44.06 million yuan, 71.65 million yuan and 103 million yuan respectively.
In 2023, Weishi Technology will achieve a net profit of 103 million yuan, with a completion rate of 235.55%. It is worth noting that from January to June 2023, the net profit of Weishi Technology will be 19.0427 million yuan, which means that the company's net profit in the second half of the year will reach 84.2985 million yuan, an increase of 343% compared with the first half of the year. Going back to 2022, Weishi Technology achieved a net profit of 17.0635 million yuan that year. In other words, Weishi Technology's net profit in 2023 will soar by 505% year-on-year.
As for the reason for the sharp increase in the performance of the target company, the company did not explain it in the 2023 annual report.
In addition, after analyzing the main subsidiaries of Xinwei Communication and the shareholding companies that have an impact of more than 10% on its net profit, Titanium Media APP found that in 2023, the net profit of three of the four subsidiaries will decline. Among them, the subsidiary Xinwei Chuangke Communication Technology (Beijing) Co., Ltd. suffered a loss, and in 2023, its net profit will be -21.3649 million yuan, turning a profit into a loss year-on-year.
The other two subsidiaries with declining performance were Xinwei Communication (Jiangsu) Co., Ltd. and Shenzhen Yalisheng Connector Co., Ltd., during the reporting period, the net profit of the above two companies was 157 million yuan and 102 million yuan respectively, down 19% and 14% year-on-year respectively.
On the day of the issuance of the annual report, Xinwei Communication also disclosed the announcement on the transfer of minority shareholders' equity and related party transactions of the holding subsidiary, and the company plans to transfer Li Kang's 7.5% equity of Jiangsu Xinwei Intelligent Vehicle Interconnection Technology Co., Ltd. (hereinafter referred to as "Smart Car") at a price of 1 yuan.
It is reported that the smart car was established in 2019, jointly funded by Xinwei Communication, Tang Yanmin and Li Kang, and the company mainly provides wireless chargers, wired chargers, vehicle antennas, millimeter wave radar products, etc. for automotive customers. Among them, Xinwei Communication holds 68% of the equity of smart cars.
In view of the fact that Li Kang has not yet paid in the capital contribution, the company proposed an acquisition plan and assumed the follow-up capital contribution obligation of the corresponding equity. It should be noted that the current financial situation of smart cars is not optimistic, and the asset-liability ratio is high. In 2023, the revenue and net profit of smart cars will be 459 million yuan and -20.6395 million yuan, respectively, and they will be in a state of loss. As of the end of December 2023, the total assets of smart cars were 519 million yuan, and the total liabilities were 458 million yuan, with an asset-liability ratio of 88%. (This article was first published in Titanium Media APP, author|Li Ruohan)