Faced with the pressure of losses for two consecutive years, the Xingmin Intelligent Transportation Systems (Group) Co.Ltd(002355) (002355, SZ), which has just changed the actual controller, ended a merger and acquisition planned nine months ago when the path to turnaround has not been clear.
On February 22, Xingmin Intelligent Transportation Systems (Group) Co.Ltd(002355) disclosed that the company decided to terminate the acquisition of part of the equity of Wuhan Zhongke Xinwei Information Technology Co., Ltd. (hereinafter referred to as “Zhongke Xinwei”) and the raising of supporting funds.
For the reasons for the termination of the transaction, Xingmin Intelligent Transportation Systems (Group) Co.Ltd(002355) said that due to the heavy workload of audit and evaluation involved in the transaction, it has not been completed so far, and the 180 transaction date agreed by the counterparty expires, but the parties are unable to reach an agreement on the extension of the signing agreement.
It is worth noting that Zhongke Xinwei is not a strange face in the capital market. In 2018, the listed company Letong Chemical Co.Ltd(002319) planned to acquire 100% equity of Zhongke Xinwei, but lost its halberd in 2020, which is also the failure of Zhongke Xinwei’s second “transfer” of a shares.
In addition, the reporter of the daily economic news found that, as the target company, China Science and technology Xinwei has only a small amount of business since its establishment, and has no business since 2018. At present, China Science and technology Xinwei is a shareholding company, mainly holding 100% equity of pCPL headquartered in Singapore. PCPL is one of the world’s largest manufacturers of precision components of mechanical hard disk.
termination of kexinwei in “marriage”
Nine months later, Xingmin Intelligent Transportation Systems (Group) Co.Ltd(002355) the transaction of “marrying” zhongkexinwei came to an end after all parties failed to reach an agreement.
On February 21, Xingmin Intelligent Transportation Systems (Group) Co.Ltd(002355) at the 30th meeting of the 5th board of directors and the 20th meeting of the 5th board of supervisors, the proposal on terminating the issuance of shares to purchase assets and raising supporting funds and related party transactions was deliberated and adopted.
In this transaction, Xingmin Intelligent Transportation Systems (Group) Co.Ltd(002355) plans to issue shares to Beijing Bohai Rim Zhenghong enterprise management center (limited partnership) (hereinafter referred to as “Bohai Rim”) and Xinyu saihe Investment Management Center (limited partnership) (hereinafter referred to as “Xinyu saihe”) to purchase 50.29% equity of zhongkexinwei held by them. Meanwhile, the listed company plans to raise supporting funds from the controlling shareholder Qingdao chuangjiang environmental protection and New Energy Technology Co., Ltd. (hereinafter referred to as “Qingdao chuangjiang”) (now renamed “Qingdao Fengqi environmental protection and New Energy Technology Co., Ltd”, hereinafter referred to as “Fengqi environmental protection”)
Zhongke Xinwei equity structure, picture source: screenshot of announcement of listed companies
According to the plan released by Xingmin Intelligent Transportation Systems (Group) Co.Ltd(002355) at the end of May last year, the listed company plans to issue shares to buy 50.29% equity of Zhongke Xinwei held by Zhenghong and Xinyu saihe around Bohai Sea, and the initial price of the underlying assets is 1.106 billion yuan; In addition, it is planned to raise matching funds of no more than 923 million yuan from Qingdao chuangjiang’s non-public offering of shares.
As the target company, Zhongke Xinwei has been mainly engaged in the sales, installation, maintenance and technical services of computer software, network and communication system integration since its establishment. However, the reporter of the daily economic news found that Zhongke Xinwei has only a small amount of business since its establishment, and has no business since 2018.
According to the plan released by Xingmin Intelligent Transportation Systems (Group) Co.Ltd(002355) , zhongkexinwei is a shareholding company, mainly holding 100% equity of pcpl1. Headquartered in Singapore, pCPL is one of the largest manufacturers of mechanical hard disk precision components in the world. Its main business is the R & D, production and sales of HDD precision components.
In the trading plan released in May 2021, Xingmin Intelligent Transportation Systems (Group) Co.Ltd(002355) said that after the completion of this restructuring, the listed company will enter the HDD precision parts manufacturing industry and cut from the traditional industrial manufacturing field to the high-end precision manufacturing field, so as to realize the strategic upgrading of the listed company in the manufacturing field.
However, nine months later, Xingmin Intelligent Transportation Systems (Group) Co.Ltd(002355) did not expect the “upgrade”, and the highly expected transaction was finally terminated due to the expiration of the term.
As for the reason for terminating this transaction, Xingmin Intelligent Transportation Systems (Group) Co.Ltd(002355) said that due to the heavy workload of audit and evaluation involved in this transaction, it has not been completed so far. In view of the above situation, according to the relevant provisions of Article 8 of the equity transfer framework intention agreement signed by the company and the counterparty on May 16, 2021, unless both parties agree to extend it, 180 trading days from the date of signing this agreement, if both parties fail to sign a formal equity transfer agreement through consultation, this Agreement shall be terminated.
Xingmin Intelligent Transportation Systems (Group) Co.Ltd(002355) pointed out that at present, 180 trading days have expired. After communicating with the counterparty, the parties are unable to reach an agreement on the extension of the signing agreement. Therefore, according to the above agreement, the equity transfer framework intention agreement shall be terminated.
On the afternoon of February 22, the reporter of the daily economic news contacted the Xingmin Intelligent Transportation Systems (Group) Co.Ltd(002355) securities department for many times, but no one answered the phone.
zhongkexinwei failed to “transfer” A shares twice
Although it was once favored by Xingmin Intelligent Transportation Systems (Group) Co.Ltd(002355) , as the main targets involved in the transaction, zhongkexinwei and pCPL are not new faces in the A-share market. The performance of pCPL has “changed” since 2019, which also made the transaction quite questioned at the beginning.
PCPL is mainly engaged in the R & D, production and sales of HDD precision components. Its main customers are Seagate, western data and Toshiba and other well-known mechanical hard disk manufacturers. In the HDD Hard disk market, the main competitors at present are Seagate, Western Digital and Toshiba.
PCPL was favored by Letong Chemical Co.Ltd(002319) (002319, SZ) as early as 2018. On September 10, 2018, Letong Chemical Co.Ltd(002319) released the reorganization plan. The company plans to purchase 100% equity of Zhongke Xinwei by issuing shares and paying cash, and the price of the underlying assets is 2.4 billion yuan.
According to the information disclosed by Letong Chemical Co.Ltd(002319) , pCPL was established in March 2007, registered in Singapore, with a registered capital of US $245 million and a registered share of 247900 shares. According to the financial data, the operating revenue of pCPL in 2016, 2017 and the first half of 2018 was US $501 million, US $500 million and US $301 million respectively, and the net profit was US $13.039 million, US $41.351 million and US $25.349 million respectively.
However, Letong Chemical Co.Ltd(002319) chose to terminate this transaction in 2020. The reasons given are: as the subject company of this major asset restructuring is located in Wuhan, the headquarters and main business entities of the target company pCPL are located in Singapore, Thailand and other regions, and the main suppliers and customers are located in North America and the Asia Pacific region, which are affected by the new coronal pneumonia epidemic at home and abroad Due to the expectation of global economic recession, Sino US trade friction and other factors, there is uncertainty in the future operation and development of the underlying assets, and it is decided to terminate this major asset restructuring.
After the failure of “marriage” with Letong Chemical Co.Ltd(002319) , zhongkexinwei became the acquisition object of Xingmin Intelligent Transportation Systems (Group) Co.Ltd(002355) in May 2021. However, compared with before, the 100% equity of zhongkexinwei was 2.2 billion, a decrease of 200 million yuan compared with two years ago.
For this acquisition, Xingmin Intelligent Transportation Systems (Group) Co.Ltd(002355) also took great pains. In order to highlight the strong profitability of pCPL, the relevant plans disclose as follows: from January to December 2020, the unaudited operating revenue of pCPL was 508 million US dollars, and the net profit attributable to the owner of the parent company was 12.03 million US dollars, which has strong profitability.
However, according to the audit of Deloitte, the operating revenue of pCPL in 2019 was US $512 million and the net profit attributable to the owner of the parent company was US $220 million. At the end of 2019, the net assets of pCPL were – 5.26 million US dollars.
For the change of pCPL performance, Xingmin Intelligent Transportation Systems (Group) Co.Ltd(002355) mentioned in the plan that from 2012 to 2020, the HDD market was impacted by SSD, resulting in the decline of HDD shipments. According to trendfocus’s forecast, global HDD shipments are expected to decline at an average CAGR of 4% from 2017 to 2021. However, the growth rate of near line storage HDD shipments in the same period is 7.2%, which effectively supports the total HDD shipments.
However, the reporter of the daily economic news found that compared with Xingmin Intelligent Transportation Systems (Group) Co.Ltd(002355) , the overall HDD shipment in 2020 decreased by 45% compared with that in 2012, close to the “waist cut”.
Perhaps it is for this reason that after Xingmin Intelligent Transportation Systems (Group) Co.Ltd(002355) announced the plan to acquire part of the equity of zhongkexinwei, the transaction does not seem to be favored by investors. On May 31, 2021, Xingmin Intelligent Transportation Systems (Group) Co.Ltd(002355) disclosed the reorganization plan. The company’s share price staged a “sky floor” on the same day, and finally fell sharply by 8.21%. Then, on June 1, 2021, Xingmin Intelligent Transportation Systems (Group) Co.Ltd(002355) closed at the limit.
the new actual controller faces the heavy task of turning losses
No matter what the quality of the underlying asset pCPL is, before the termination of the equity acquisition of Zhongke Xinwei, we kept looking for the underlying Xingmin Intelligent Transportation Systems (Group) Co.Ltd(002355) and handed over the loss report card again in 2021.
On January 29, 2022, Xingmin Intelligent Transportation Systems (Group) Co.Ltd(002355) released the performance forecast for 2021, which shows that the company is expected to realize a net profit loss of 340-480 million yuan attributable to the shareholders of the listed company in 2021. This is also the performance loss of Xingmin Intelligent Transportation Systems (Group) Co.Ltd(002355) for two consecutive years. The company’s performance in 2020 was -355 million yuan.
For the reasons for the pre loss in 2021, Xingmin Intelligent Transportation Systems (Group) Co.Ltd(002355) explained that the adverse effects caused by macroeconomic factors outside China still continued, the rising price of raw materials and the phased reduction of downstream demand damaged the company’s business to a certain extent, especially in the fourth quarter; The company conducted impairment test in combination with the actual situation and in accordance with accounting policies, and made a large amount of impairment provision.
According to the data, Xingmin Intelligent Transportation Systems (Group) Co.Ltd(002355) landed in the A-share market in February 2010. At present, the company mainly has three business segments: steel wheel business, on-board information system and service, and Internet of vehicles operation service. Financial data show that the performance of this listed company involving multiple business sectors has been quite sluggish in recent years.
Financial data show that the performance of Xingmin Intelligent Transportation Systems (Group) Co.Ltd(002355) in recent years is not optimistic. In 2018, Xingmin Intelligent Transportation Systems (Group) Co.Ltd(002355) suffered its first loss after listing, and achieved an attributable net profit of – 260 million yuan in that year. Later, it reversed the loss in 2019 and achieved an attributable net profit of 11.99 million yuan. However, it lost again in 2020, and the attributable net profit in 2020 was about – 355 million yuan.
The continuous downward performance since 2018 also directly made Xingmin Intelligent Transportation Systems (Group) Co.Ltd(002355) hand over the old capital accumulated previously. The reporter of the daily economic news noted that since its listing in 2010, by the end of 2020, Xingmin Intelligent Transportation Systems (Group) Co.Ltd(002355) has achieved a cumulative net profit of – 63 million yuan.
It is worth noting that Xingmin Intelligent Transportation Systems (Group) Co.Ltd(002355) has just completed the change of actual controller before announcing the performance forecast of 2021. How to reverse the performance decline of Xingmin Intelligent Transportation Systems (Group) Co.Ltd(002355) has become a major challenge for the new actual controller.
On January 8 this year, Xingmin Intelligent Transportation Systems (Group) Co.Ltd(002355) disclosed the announcement on the change of actual controller. Shenzhen chuangjiang Investment Holding Co., Ltd. (hereinafter referred to as “Shenzhen chuangjiang”), the indirect shareholder of Fengqi environmental protection, the controlling shareholder of the company, signed the equity transfer agreement with Shenzhen Fengqi Holding Group Co., Ltd. (hereinafter referred to as “Fengqi holding”) on June 11, 2021, Shenzhen chuangjiang plans to transfer 100% equity of Qingdao chuangjiang Investment Management Co., Ltd. to Fengqi holdings.
After this equity change, Xingmin Intelligent Transportation Systems (Group) Co.Ltd(002355) is still the controlling shareholder of Fengqi environmental protection, Fengqi holding becomes the indirect controlling shareholder of the company, and the actual controller of the company is changed from Wei Xiang to Zhao Feng.
In addition to being the legal representative of Fengqi holdings, Zhao Feng has already set foot in the capital market. On January 16, 2020, Netposa Technologies Ltd(300367) the board of directors elected Zhao Feng as the chairman of the Fourth Board of directors of the company for a term of three years.
Relevant information shows that since July 2008, Zhao Feng has worked as a senior manager of China Merchants Securities Co.Ltd(600999) investment bank headquarters, and applied for registration as a China Merchants Securities Co.Ltd(600999) sponsor representative in July 2014. The sponsorship projects he has participated in include Guangdong Ellington Electronics Technology Co.Ltd(603328) and Beijing Kingee Culture Development Co.Ltd(002721) .
According to the information disclosed by Xingmin Intelligent Transportation Systems (Group) Co.Ltd(002355) , Zhao Feng seems to be full of confidence in this enterprise, which is mainly engaged in steel wheel business, on-board information systems and services, and Internet of vehicles operation services.
In the detailed equity report disclosed on June 17 last year, Fengqi Holdings said that the purpose of this equity change is to obtain the control of the listed company through this equity change based on the confidence in the internal value and future development prospects of the listed company, effectively integrate resources by using the listed company platform, improve the operation of the listed company and improve the asset quality of the listed company, Enhance the sustainable profitability of listed companies and bring good returns to all shareholders.
