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"Investor.com" Jordan
In Wanfeng Aowei (002085. SZ) encountered a series of serious challenges at the critical moment of the transition of the old and new management. Chen Bin, the son of Chen Ailian, as the new actual controller, may not have expected to face the double test of business operation and market credibility so quickly.
In the early morning of December 3, 2023, a safety accident unfortunately occurred at Wanfeng Aowei's steam turbine factory in Xinchang, Zhejiang. The incident had an impact on the company's operations and reputation. Subsequently, on April 19, 2024, Wanfeng Aowei announced the "Announcement on Receiving the Administrative Penalty Decision of the Work Safety Supervision and Management Department", which openly and transparently informed the public of the progress of the accident and the corresponding measures taken by the company.
In the same critical period, Wanfeng Aowei also encountered a dilemma in information disclosure. The company was alerted by the SFC for a "misleading statement" in the low-altitude flight business. This incident has aroused widespread concern in the market, which has had a certain impact on the company's reputation and investor confidence. At the same time, the company's profitability is also facing a severe test, how to maintain steady profit growth in the fierce market competition, has become a major problem in front of the company and managers.
The secretary of the board of directors was warned for his "misleading statement".
On April 20, Wanfeng Aowei issued a clarification announcement in response to rumors in the market that it would cooperate with Tesla to set up an eVTOL project team. The company made it clear that the rumors were not true.
Wanfeng Aowei also revealed that the company is cooperating with the head office of a well-known automobile OEM set up in China to jointly establish a joint venture in the field of eVTOL, but due to commercial confidentiality reasons, the specific name of the partner has not been disclosed. The company promises to fulfill its information disclosure obligations in a timely manner according to the important progress of cooperation.
On the same day, Wanfeng Aowei received the "Decision on Issuing Warning Letters to Zhejiang Wanfeng Aowei Steam Turbine Co., Ltd. and Li Ya" issued by the Zhejiang Securities Regulatory Bureau. The CSRC pointed out that the company had misleading statements in its replies to investors' questions on the interactive platform of the Shenzhen Stock Exchange, which violated the relevant provisions of the Administrative Measures for Information Disclosure of Listed Companies, and Li Ya, secretary of the board of directors, was primarily responsible.
According to the regulations, the Zhejiang Securities Regulatory Bureau took the regulatory measures of issuing warning letters to Wanfeng Aowei and Li Ya, and required them to record the matter in the integrity file of the securities and futures market, and at the same time submit a written report within the specified time.
In addition, the Shenzhen Stock Exchange also issued a "Regulatory Letter" to Wanfeng Aowei, pointing out that the company's reply on the interactive platform violated the relevant provisions of the Stock Listing Rules (Revised in August 2023), and pointed out that Li Ya, the secretary of the board of directors, failed to perform his duties and violated the duty of good faith and diligence.
Or affected by this news, on April 22, the relevant concept stocks performed poorly after the opening, including Wanfeng Aowei, there were many stocks falling to the limit.
Although the stock price fluctuates greatly in the short term, Wanfeng Aowei, as a concept stock in the field of low-altitude flight, has achieved significant stock price growth since the beginning of the year. The company's share price was less than 5 yuan at the beginning of the year, but as of the close of trading on April 23, it had risen to 13.81 yuan per share. From the beginning of 2024 to that date, Wanfeng Aowei's cumulative increase is about 180%, with a total market value of 29.3 billion yuan.
Rapid expansion through mergers and acquisitions
Since its inception, Wanfeng Aowei has taken the auto parts business as the core, and gradually expanded outward, involving motorcycle wheels, chemical coatings, casting machines and other fields, and even boldly set foot in the aircraft manufacturing business. Most of these business extensions have been achieved through mergers and acquisitions, and many have been purchased at high premiums from the controlling shareholder Wanfeng Group, including the above-mentioned low-altitude flight business that has caused regulatory and stock price fluctuations.
In June 2011, Wanfeng Aowei acquired 75% of the equity of Wanfeng Motorcycle from Wanfeng Group by issuing shares, priced at 830 million yuan, with an appraised value-added rate of 105.8%, and the company increased its motorcycle wheel business. In November 2013, Wanfeng Aowei acquired Shanghai Dacromet Tufu Industrial Co., Ltd. for 454 million yuan in cash, and as of September 30, 2023, the net assets of the subject were only 19.33 million yuan, increasing the environmental protection Dacromet coating business.
In the following years, Wanfeng Aowei's mergers and acquisitions have not stopped. In December 2015, the company raised 1.35 billion yuan in cash through non-public issuance of shares, acquired 100% of the equity of Wanfeng Magnesium Redding, and incorporated the lightweight magnesium alloy business into its subsidiary. The company was acquired by Wanfeng Group in 2013 for 188 million Canadian dollars (about 1.1 billion yuan).
On June 1, 2018, Wanfeng Aowei made another move and acquired 95% of the equity of Wuxi Xiongwei Seiko Technology Co., Ltd., with an appraised value-added rate of 55.6%, further expanding the high-strength steel stamping business.
On April 16, 2020, Wanfeng Aowei acquired 55% of the equity of Wanfeng Aircraft from Wanfeng Group, with a consideration of 2.418 billion yuan in cash, and an appreciation rate of 47.99%.
The above-mentioned series of acquisitions not only increased the business diversity of Wanfeng Aowei, but also enabled the company to achieve rapid growth in asset scale and performance. Judging from the data, Wanfeng Aowei's total assets have increased significantly from 1.48 billion yuan at the beginning of listing to 18.4 billion yuan at the end of September 2023, the revenue scale has also jumped from 1.5 billion yuan to 11.6 billion yuan, and the net profit has also increased from 57 million yuan to 536 million yuan.
However, although the M&A strategy has driven performance growth to a certain extent, the effect has not been long-lasting and stable.
In recent years, Wanfeng Aowei's net profit performance has shown a certain degree of volatility, which reflects the changes in the market environment and the fierce competition in the industry. Specifically, from 2018 to 2022, the company's net profit was 959 million yuan, 896 million yuan, 566 million yuan, 333 million yuan and 809 million yuan respectively, with large fluctuations. In addition, these frequent M&A activities also place a goodwill burden on the company. From 2013 to September 2023, the company's goodwill increased from $236 million to $1.478 billion, which undoubtedly increased the financial risk.
The management ushered in the transition between the old and the new
Wanfeng Aowei's control structure presents obvious characteristics of a family business. The company's development history is closely linked to the Chen Ailian family. Since the company's listing in 2006, Chen Ailian has served as the chairman, leading the company to achieve significant growth in performance and asset scale, and the business area has expanded from auto parts to diversified development paths.
The aircraft business is undoubtedly one of the highlights of Wanfeng Aowei's diversification. Although the domestic general aviation industry has been slow due to a variety of factors, with the support of national policies and the improvement of infrastructure, the industry has ushered in new development opportunities.
According to the report released by the China Business Industry Research Institute, at the end of 2022, the total number of registered aircraft in general aviation reached 3,186, a year-on-year increase of 5.57%, and it is expected to further increase to 3,253 in 2023 and 3,394 in 2024. The number of general airports under registration and management in the country has also shown a steady growth trend, reaching 399 in 2022, a year-on-year increase of 7.84%. It is expected to increase to 421 by 2023 and 444 by 2024.
In this context, Wanfeng Aowei has made certain achievements in the field of general aviation aircraft through its subsidiary Wanfeng Aircraft, and has shown potential in the field of eVTOL (electric vertical take-off and landing aircraft), becoming a new growth point for the company. In 2022, Wanfeng Aircraft ranked second in the world in terms of deliveries of piston fixed-wing aircraft.
By 2019, Chen Ailian had retired. Leaving the leadership in the hands of the next generation. Chen Bin, the son of Chen Ailian, then took over as chairman, but his tenure was short-lived. Although his term was originally scheduled to expire in June 2023, he opted to end his term early in March 2022. During his tenure from 2019 to 2022, Wanfeng Aowei's net profit also experienced a period of volatility.
After Chen Bin left office, Zhao Yahong took over as the new chairman. Zhao Yahong's resume is very impressive, and the information shows that he not only holds important positions within Wanfeng Group, such as director and vice president of the group, but also serves as a director of external companies such as Hangzhou-Shaoxing-Taiwan Railway Co., Ltd., and serves as an executive director of Shaoxing Wanlin Investment Management Co., Ltd. Zhao Yahong also has a background in the financial industry, having served as the director of the business department of the Xinchang branch of the Bank of China and the assistant to the general manager of the business department of the Shaoxing branch of the Industrial Bank.
After stepping down as a director, Chen Bin held key positions in Wanfeng Aowei's subsidiaries, including as chairman of Diamond Aircraft Industries Co., Ltd. (Canada). On November 17, 2023, Wanfeng Aowei announced that Chen Bin was officially listed as one of the company's actual controllers, which marked his return to the company's core management.
So far, there are currently four actual controllers of the company, and the other three are Chen Ailian, Wu Liangding, and Wu Jie. The company once introduced the relationship between them in the financial report, Chen Ailian, Wu Liangding is husband and wife, Wu Liangding and Wu Jie are father and son, and Chen Ailian and Chen Bin are mother and son.
In addition to Wanfeng Aowei, the influence of the Chen Ailian family in the capital market should not be underestimated, and the family also has control over other listed companies. Wu Liangding and Wu Jie are the members of Rifa Seiki (002520. SZ), and Chen Ailian is one of the actual controllers of Paislin (600215.SH). In addition, Wu Jinhua, the son of Chen Ailian and Wu Liangding, served as the chairman of Paislin. As of the close of trading on April 23, the market value of Rifa Precision Machinery and Paislin was 3.91 billion yuan and 3.98 billion yuan respectively. It can be seen that his family has extensive influence in the capital market and strong business operation ability.
The addition of Chen Bin as the new actual controller has also brought new opportunities and challenges to the future development of Wanfeng Aowei. The market generally expects the company's management to continue to achieve greater development, especially in the direction of new industries, such as low-altitude flight, to achieve innovation and breakthroughs. (Produced by Thinking Finance)■