Behind Geely's 2.43 billion yuan sale of 900 million shares of Lifan Technology, there is a looming "steel boss" Wu Yaofang

Text/Wang Wenguang

Wu Yaofang, the "steel boss" who rarely appears in the secondary market, has intersected with Lifan Technology, which is deeply related to Geely. After accompanying Lifan Technology for nearly 4 years, Geely Technology sold 900 million shares of Lifan Technology for 2.43 billion yuan, but it also wanted to take over 687 million shares from the controlling shareholder partner. Geely's desire to reduce its direct stake in Lifan Technology has led to speculation in the market. However, what is more conspicuous in comparison is that among the companies that took over Geely's transfer of 900 million shares, Wu Yaofang, the "steel boss", is impressively listed, and he is quite low-key in the industry.

The former motorcycle king has been favored by new capital.

On July 2, Lifan Technology announced that Geely Industrial Investment had obtained 50.94% of the property share of the company's largest shareholder, Manjianghong Fund, and officially announced the announcement that Jianghe would smoothly acquire 900 million shares of Jianghehui, the "Geely Department".

It is worth noting that Jiangheshun, which "ate" 900 million shares of Jianghehui, was established in early July this year, and from this point of view, this company is more like it was established to take this part of the shares.

After the equity penetration, it was found that Wu Yaofang, the "steel boss", was the second-generation successor of Yonggang Group.

However, Wu Yaofang's previous investment actions at the secondary market level were not much, so what is special about Lifan Technology that he has taken a fancy to this time? Focusing on Lifan Technology, the company, which was originally a motorcycle-based company, once encountered debt problems due to its entry into the new energy vehicle industry. After the integration of Li Shufu's "Geely Department", the current operation is gradually stable.

"Steel Boss" Wu Yaofang takes a fancy to Lifan Technology

There has been a change in the shareholders of Lifan Technology.

On July 2, Lifan Technology announced that Geely Industrial Investment plans to spend 1.953 billion yuan to obtain 50.94% of the property share of Manjianghong Fund, the largest shareholder of Lifan Technology, and indirectly hold 687 million shares of the company.

At the same time, Geely Technology plans to transfer 100% of its shares in Jianghehui to Jiangheshun, with a total transfer price of 2.43 billion yuan, and after the completion of the transaction, Jiangheshun will "take over" 900 million shares of Lifan Technology held by Jianghehui, accounting for 19.72% of the total share capital.

So far, Geely Industrial Investment and Jianghe Shun have become the new recipients of Lifan Technology's equity. Among them, Geely Industrial Investment will surpass Liangjiang Industrial Development Group, Juli Zhanye No. 2, Advanced Manufacturing Fund, and Manjianghong Enterprise Management (GP) to become the shareholder who indirectly holds the largest number of shares in Lifan Technology through Manjianghong Fund; Jianghe Shunsui became the second largest shareholder of Lifan Technology through direct investment.

Geely Industrial Investment, which is about to "enter", and Jianghehui, which is about to withdraw, both belong to Li Shufu, which means that the "Geely Department" is only a structural adjustment of Lifan Technology's holdings. On the whole, Geely's actions have reduced its shareholding in Lifan Technology.

On the other hand, the smooth appearance of the river seems a little "mysterious".

According to the data, on July 1, the day before Lifan Technology announced that Jianghe Shunsui would acquire the equity of Jianghehui, Jiangheshun had just been established. In terms of shareholding structure, Jianghe Anlan holds 100% of the shares.

Further splitting Jianghe Anlan found that the company has three partners, Yinqi and Qianli Zhiqi, who have the same name as the founder of Megvii Technology, hold a total of 50.5% of the shares, and Yongzhuo Holdings holds 49.5% of the shares.

And Yongzhuo Holdings has a lot of background. According to the company's statistics, its controlling shareholder is Jonway Holdings, and the actual controller behind the scenes is Wu Yaofang, who owns 75% of the company's voting rights.

According to the derivation of the relationship between Jianghe Shunsui, Jianghe Anlan and Yongzhuo Holdings, it can be seen that Yongzhuo Holdings will indirectly harvest 446 million shares of Lifan Technology in the future, equivalent to about 9.9% of the total share capital.

What is Wu Yaofang's intention?

Wu Yaofang is a "steel boss". It is reported that he was named after Yonggang Group, a private steel enterprise in Jiangsu.

In 2002, Wu Yaofang led Yonggang to put into operation a million-ton steelmaking project, "saving" the struggling group due to the lack of steel raw materials at that time; Since then, he has led the transformation of the group from a single steel rolling enterprise to a full-process steel enterprise, and has become well-known to the public.

At present, Wu Yaofang has established a relatively large entity business relying on Yongzhuo Holdings.

In 2023, Yongzhuo Holdings' revenue will exceed 160 billion yuan, ranking 81st among the top 500 private enterprises in China that year. In that year, Wu Yi, the president of the company and the son of Wu Yaofang, also shouted the goal of "moving towards an operating income of more than 200 billion yuan".

Specifically, Yongzhuo Holdings has directly invested in more than 10 entity company platforms, including Yonggang Group, Excellence Technology, Yimi New Materials and other enterprises, covering steel, new energy, logistics, construction, intelligent manufacturing, environmental protection, finance and trade and other industries.

However, looking at the overall situation, Yongzhuo Holdings, which directly holds 33.68% of the shares, is still the core member. In 2023, the group's total assets will reach 71.064 billion yuan, and it will have a rebar production capacity of 5 million tons/year, and the proportion of excellent special steel will also exceed 70%.

However, Yonggang Group is relatively inferior in terms of performance. In 2023, the Group will achieve a total revenue of 78.263 billion yuan, a year-on-year decrease of 8.53%, and a net profit of 1.59 billion yuan, a year-on-year decrease of 48.69%; Cash flow from operating activities was RMB5,555 million, an increase of 11.3% over the previous year.

Therefore, in the context of the low prosperity of the steel industry in 2023, product upgrades seem to have failed to promote the group to hand over a beautiful report card for the time being.

Moreover, compared with the "strong" head peers, Yonggang Group can only be regarded as ordinary at the level of operating data.

In 2023, China Baowu Iron and Steel Group, with total assets of 1.36 trillion yuan, will achieve a total revenue of 1.11 trillion yuan, a year-on-year increase of 2.32%, a net profit of 23.791 billion yuan, a year-on-year decrease of 8.04%, and a cash flow from operating activities of 70.145 billion yuan, an increase of 19.5% year-on-year. During the same period, among the steel enterprises with assets of 100 billion yuan, Baotou Steel Group's revenue decreased by -2.51% year-on-year, net profit increased by 11% year-on-year, Shougang Group's revenue decreased by -3.99% year-on-year, and net profit increased by 59.72% year-on-year.

It is worth mentioning that the future prospects for the steel industry may remain hazy. Baosteel, an A-share listed company, said in its 2023 annual report that the overall downturn in real estate, the slowdown in exports, and the demand for steel are still not optimistic; Superimposed on the impact of the commissioning of domestic capacity replacement projects, the contradiction between supply and demand in the steel industry is still relatively prominent, and the downward cycle of the industry may last longer and the operating pressure will be greater.

Therefore, under the premise that the competitiveness of its important steel assets still needs to be improved and the environment of the steel industry is not clear, Wu Yaofang and Yongzhuo Holdings invested in automotive listed companies such as Lifan Technology, which is also a complementary choice on the industrial side.

At the secondary market level, Sunshine Insurance Group, a Hong Kong-listed company, is the target with the highest indirect shareholding ratio of Yongzhuo Holdings, holding 1.35% of the equity; In addition, a series of A-share companies such as 360, Fudan Fuhua, Yanhua Intelligence, and Aowei Cloud Network have indirectly held shares of Yongzhuo Holdings, but most of the equity ratios held by them are less than 0.1%, and the amount held is very small.

In other words, in the past period, Wu Yaofang and his Yongzhuo Holdings have not had a vast "listing territory". Therefore, this "takeover" of Lifan Technology may also be a step in Wu Yaofang's plan to expand the investment scope of its listed companies.

The former motorcycle king who was "reborn from a catastrophe".

Lifan Technology, which was "taken alike" by Wu Yaofang, was once famous for its motorcycles.

Lifan Technology was founded in 1992, originally mainly engaged in the production of motorcycles, and had a good experience of going to sea in the 90s of the last century. In 2005, after the company launched its first self-owned brand sedan "Lifan 520", it gradually involved in automobile manufacturing.

However, since entering the automobile trip, the business results shown by Lifan Technology have undergone "transformation".

According to the data, in 2007, the motorcycle engine and accessories business under Lifan Co., Ltd. (the original name of Lifan Technology) accounted for about 83% of the revenue, and the passenger cars and accessories accounted for only 21.76% of the revenue; Seven years later, in 2014, the company's passenger car and accessories business accounted for 69.23% of the total revenue, and the motorcycle and accessories business accounted for 26.14% of the total revenue. At the same time, in 2007, Lifan shares deducted non-net profit of 306 million yuan, and then the company in 2013 and 2014 successively achieved 393 million yuan, 344 million yuan of the best and second best non-net profit results compared with 2007 did not increase significantly.

On June 8, 2015, Lifan Co., Ltd. announced to the outside world on its own "Lifan Night" that it plans to launch 21 pure electric and hybrid products by 2020, with a target sales of 500,000 new energy vehicles, and put forward the "Zhilan Strategy" integrating new energy product research and development, battery swap operation and leasing services.

The high-profile increase in the new energy vehicle industry to "burn money" eventually put Lifan Technology in a predicament.

From 2016 to 2019, Lifan Technology deducted a non-net profit loss of nearly 7 billion yuan, and the asset-liability ratio also increased from 76.74% to 85.4%, and the current debt ratio was as high as 123.36%, 123.98%, 139.85% and 223.47% respectively at the end of the four years. In 2020, the company achieved revenue of 3.637 billion yuan, a year-on-year decrease of 51.18%; The huge loss of non-net profit was 6.334 billion yuan, a year-on-year decrease of 44.11%.

At this time, Lifan Co., Ltd., which was facing great pressure, introduced Manjianghong Fund and Jianghehui under Li Shufu's "Geely Department" for reorganization.

On December 15, 2020, Lifan Co., Ltd. announced that the company will implement the conversion of capital reserve into share capital at the ratio of 24.99695156 shares for every 10 shares, with a total of 3.214 billion shares. Among them, 965 million shares of the converted shares were used to pay off debts to the creditors of the company and its subsidiaries, Manjianghong Fund spent 3 billion yuan to receive about 1.349 billion shares, and Jianghehui received 900 million shares.

Soon after a series of "rescue measures" landed, Lifan shares were officially renamed Lifan Technology. Since then, Lifan Technology's operation has gradually stabilized, and in 2022, the company will achieve a non-net profit of 61.13 million yuan, which will turn positive again after seven years, and in 2023, the company will deduct a small loss of non-net profit of 134.9 million yuan.

In addition, Lifan Technology is further bound to the "Geely system". In January 2022, the company announced the establishment of Ruilan Automobile, a joint venture with Geely Automobile, to develop its new energy vehicle business by relying on "big manufacturers".

According to the production and sales report released by Lifan Technology, as of June 2024, the company has sold a total of 9,712 new energy vehicles during the year.

Interestingly, it is rumored in the market that the company is expected to acquire Gaohe Automobile, which is facing financial problems. In response, Lifan Technology responded that "no relevant information has been received for the time being". At present, Gaohe Automobile has obvious technical advantages in the fields of motor system and intelligent driving; If the rumors are true, then Lifan Technology is expected to achieve important resource replenishment in the future.

Combined with the actions of Lifan Technology after the "rebirth of the catastrophe" and the recent rumors, Wu Yaofang came to invest in the shares, in addition to considering his own "industrial complementarity" and "expanding the listing territory" factors, the potential shown by this company may also attract him.