Weifu Hi-Tech plans to participate in the company's net profit of 215 million yuan and increase the radar business for 4 consecutive quarters

Yangtze River Business Daily News ● Yangtze River Business Daily reporter Pan Ruidong

Auto parts company Weifu Hi-Tech (000581. SZ) established a joint venture to increase its radar business.

On the evening of May 14, Weifu Hi-Tech announced that the company plans to set up a joint venture company for intelligent perception business with four other institutional investors, with a total investment of 350 million yuan to promote the technology research and development and market application of radar products. Among them, Weifu Hi-Tech invested a total of 215 million yuan with assets of 137 million yuan and monetary funds of 78 million yuan.

Since the second quarter of 2023, Weifu Hi-Tech's net profit attributable to the parent company has grown at a high rate for four consecutive quarters, with growth rates of 44.17%, 112.64%, 144.88% and 32.39% respectively.

In the first quarter of this year, Weifu Hi-Tech's gross profit margin reached 18.53%, an increase of 4.15 percentage points from the first quarter of 2023.

Two joint ventures are planned

Weifu Hi-Tech accelerates the pace of investment.

According to the latest announcement, Weifu Hi-Tech plans to jointly invest 350 million yuan with Boyuan Private Equity, J Fund, Xinqin Investment and A Partnership (not yet established) to establish Wuxi Weifu Zhixing Perception Technology Co., Ltd.

Among them, Weifu Hi-Tech invested a total of 215 million yuan with assets of 137 million yuan and monetary funds of 78 million yuan, accounting for 61.43%, after the completion of this transaction, the above joint venture company will become the company's holding subsidiary, included in the company's consolidated financial statements. Boyuan Private Equity, J Fund, Xinqin Investment and A Partnership contributed 50 million yuan, 50 million yuan, 10 million yuan and 25 million yuan respectively, accounting for 14.29%, 14.29%, 2.86% and 7.13% respectively.

The actual controller of Bosch (Shanghai) Investment Consulting Co., Ltd., the main shareholder of Boyuan Private Equity, is Robert Bosch Co., Ltd., which currently holds 14.25% of the company's equity.

For the establishment of the joint venture, Weifu Hi-Tech said that this transaction is in line with the strategic layout of the company's intelligent electric business, and will help accelerate the technical research and development and market application of the company's radar products such as 3D radar, 4D imaging radar, vehicle cabin radar, security radar, and mining radar.

It is understood that with the increasing role of perception technologies such as millimeter-wave radar in future automobiles, Weifu Hi-Tech has officially launched the R&D and business incubation of millimeter-wave radar technology since the beginning of 2018 and entered the commercialization acceleration stage from 2022. At present, the development of 3D radar and 4D imaging radar is steadily advancing, and on-board cabin radar, security radar, and mining radar have entered the market in small batches.

On the same day, Weifu Hi-Tech also issued an announcement on the establishment of a joint venture. Specifically, on February 22, 2024, the company signed a "Memorandum of Cooperation" with Voith Group, intending to carry out in-depth strategic cooperation in the R&D and industrialization of Type IV high-pressure (70MPa) hydrogen storage system products.

Recently, the company decided to set up a German joint venture company and increase its capital, and Weifu Hi-Tech is to purchase the equity of the counterparty company to form a joint venture. Specifically, SPV, a wholly-owned subsidiary of Weifu Hi-Tech, purchased a 40% stake in HySTech for 33 million euros and increased its capital by 22.4 million euros. HySTech is a wholly owned subsidiary of the Voith Group.

The joint venture will drive the development of the company's green hydrogen business.

Gross margin for the first quarter of 2024 was 18.53%

According to the data, Weifu Hi-Tech, formerly known as Wuxi Oil Pump Nozzle Factory, was founded in 1958 and currently has four major business sectors: energy conservation and emission reduction, green hydrogen energy, intelligent electric, industrial and others. In 2023, the revenue of fuel injection system, after-treatment system, other auto parts products, and air intake system will account for 45.77%, 30.73%, 16.03%, and 5.98% respectively.

In 2023, the company's revenue will decline by 12.86% to 11.093 billion yuan. Regarding the decline in revenue, the company said that it was mainly affected by the decline in precious metal prices and the decline in the revenue of the company's core products due to the decline in commercial vehicle market demand.

Although the revenue of core products declined, in the emerging business area, Weifu Hi-Tech accelerated the landing.

In terms of emerging business, Weifu Hi-Tech takes hydrogen energy and drive and intelligent networking as the two main strategic directions, although it has not announced specific revenue data at present, but in the 2023 annual report, the company disclosed that in terms of hydrogen fuel cell core components, it has completed the domestic production capacity construction and trial production of 1.1 million pieces/year membrane electrodes, and the stable supply of hydrogen injectors and isolation valves for low-pressure hydrogen subsystems; Exhaust valves and electric superchargers began to be supplied in small quantities. In terms of intelligent perception, in 2023, the company will complete the construction and acceptance of the cabin radar production line; Completed the prototype design and trial production of corner radar; Complete the design of barrier radar B sample and customer sample delivery; Completed the design verification of 4D imaging forward radar B sample and the design of cost reduction scheme.

It is understood that Weifu Hi-Tech's other auto parts products mainly include hydrogen fuel cell parts products, 4D imaging radar products, etc. According to the data, in 2023, Weifu Hi-Tech's business will achieve an operating income of 1.778 billion yuan, and the proportion of operating income will jump from 3.55% in the previous year to 16.03%.

The gross profit margin of other auto parts products will turn positive in 2023 to 5.58%, an increase of 13.23 percentage points from the same period in 2022. The gross profit margin of other core products has also increased to varying degrees, driving Weifu Hi-Tech's gross profit margin to increase to 17.51% in 2023, an increase of 4.05 percentage points from 2022.

In the first quarter of 2024, the company's gross profit margin was 18.53%, an increase of 4.15 percentage points from 14.38% in the same period of 2023.

From the perspective of performance, in the first quarter of 2024, Weifu Hi-Tech's revenue fell by 7.66% to 2.903 billion yuan, but the net profit attributable to the parent increased by 32.39% to 549 million yuan. In fact, Weifu Hi-Tech's net profit has grown rapidly for four consecutive quarters.

According to the data, in the previous three quarters, that is, from the second quarter of 2023 to the fourth quarter of 2023, the net profit attributable to the parent company of Weifu Hi-Tech was 534 million yuan, 373 million yuan, and 515 million yuan respectively, a year-on-year increase of 44.17%, 112.64%, and 144.88%.