“Our factory went crazy in March. The output was set very high and worked overtime very late every day.” Recently, an insider of Ningbo Cixing Co.Ltd(300307) (hereinafter referred to as ” Ningbo Cixing Co.Ltd(300307) “, Ningbo Cixing Co.Ltd(300307) . SZ) told the 21st Century Business Herald that the company’s output increased significantly in March, but there are few schedules (orders) at present.
According to its disclosure, the company’s computer flat knitting machine suddenly increased its production target in March to 2500. At present, the production line is in a state of continuous overtime. “We won’t let the repair machine go to our hands. Let’s try our best to do the new machine.”
It also mentioned that the output in January and February was not high.
Statistics show that Ningbo Cixing Co.Ltd(300307) 2012 was listed on the gem, mainly engaged in the R & D, production and sales of knitting machinery. The main products are intelligent knitting machinery equipment, which is used for the production of sweaters and uppers. In 2020, the total revenue was 1.233 billion yuan, of which the flat knitting machine business revenue accounted for 53.9%.
On April 1, Yang Xuelan, Secretary of Ningbo Cixing Co.Ltd(300307) board of directors, responded in an interview with our reporter that more than 2000 units were actually delivered in March, but the company would not prepare the goods blindly.
The reporter noted that the company’s main business computer flat knitting machine has gradually warmed up since 2021, but under the installment mode, the recovery of accounts receivable deserves attention. In addition, due to the obvious periodicity of the computer flat knitting machine industry, Ningbo Cixing Co.Ltd(300307) recently planned cross-border mergers and acquisitions again. Before that, it had tried extension mergers and acquisitions for many times.
Recovery of main business pushes up accounts receivable
“The company will not blindly prepare a lot of goods without orders.” Ningbo Cixing Co.Ltd(300307) Secretary of the board of directors said that the company produces according to the demand and according to the actual needs of customers. For example, if the customer’s order is fine needle pitch, it must be fine needle pitch during production.
Ningbo Cixing Co.Ltd(300307) Secretary introduced that the flat knitting machine output did not increase suddenly in March. The company’s own sales were seasonal, and the first half of the year was slightly better than the second half. Because sweaters sell well mainly when the weather is cold in the second half of the year, the purchase demand of manufacturers will be relatively strong in the first half of the year.
According to the information on the official website, Ningbo Cixing Co.Ltd(300307) ‘s computerized flat knitting machine products include four series: SF / new HP vamp machine, cx1-52ec, ge3-72s collar machine and new HP / Ge. A Ningbo Cixing Co.Ltd(300307) salesperson said, “at present, there is no stock. Now they are produced according to orders, and the orders received have been scheduled to about the middle of May”.
In contrast, Ningbo Cixing Co.Ltd(300307) the production and sales of computerized flat knitting machines in March this year were close to the same period last year.
Ningbo Cixing Co.Ltd(300307) previously, the semi annual report of 2021 showed that the flat knitting machine business revenue of the company in the first half of last year was 897 million yuan, an increase of 110.5% year-on-year. Based on the average price of 70 Faw Jiefang Group Co.Ltd(000800) 00 yuan, the average monthly sales volume in the first half of last year was about 18 Yunnan Yuntou Ecology And Environment Technology Co.Ltd(002200) units.
From the industry level, the overall market of computerized flat knitting machine has warmed up in the past year. According to the statistics of China Textile Machinery Association, the sales volume of flat knitting machines was 74000 in the first three quarters of 2021, an increase of 184.6% year-on-year.
“The flat knitting machine industry (2021) experienced a phased recovery in the first three quarters and basically recovered to the same period in 2019.” At the end of last year, Shao Hong, deputy director of the Third Industry Department of China Textile Machinery Association, pointed out at the National Symposium on the production and operation of textile machinery industry.
Shao Hong said that on the one hand, due to the continuous development of the epidemic in Southeast Asia and other places, some orders of sweater and shoe products returned to China, and the demand for purchasing machines in the downstream market increased; On the other hand, the popularization and use of new technologies such as smart running yarn nozzle has further improved the production efficiency of flat knitting machine and effectively promoted the renewal of new and old equipment.
With the halo of “the market share of computer flat knitting machine ranks first in the industry”, the sales of Ningbo Cixing Co.Ltd(300307) ‘s computer flat knitting machine business also continued to recover.
In January of this year, Ningbo Cixing Co.Ltd(300307) released the performance forecast. In 2021, the company’s operating revenue increased year-on-year, and the net profit attributable to the shareholders of the listed company is expected to be 130170 million yuan; The net profit after deducting non recurring profit and loss is RMB 90 million to RMB 130 million.
As for the reasons for the performance growth, Ningbo Cixing Co.Ltd(300307) said that the flat knitting machine industry experienced a trough in the past three years and the market recovered in 2021. The market has maintained the continuous upgrading of new and old equipment. At the same time, the backflow of some orders has increased the demand for Chinese flat knitting machine equipment in the downstream market. In addition, the market recognition and demand of the first-line forming equipment launched by the company have gradually increased.
At the same time, the growth of flat knitting machine sales has also led to the rise of the company’s accounts receivable, and the subsequent collection is worthy of attention. By the end of the third quarter of 2021, Ningbo Cixing Co.Ltd(300307) accounts receivable had reached 834 million yuan, a record high, accounting for 21.44% of total assets.
The reporter learned that the sales collection of the company’s computerized flat knitting machine business mainly adopts installment collection within two to three years, and the purchase mainly adopts monthly settlement and three-month payment. According to the salesperson of the company, at present, about 70% of Ningbo Cixing Co.Ltd(300307) flat knitting machines are sold in installment, and the down payment ratio is generally 20-30%.
Ningbo Cixing Co.Ltd(300307) said in the announcement on December 27, 2021 that the accounts receivable formed in 2021 will be gradually recovered in the next three years. It is estimated that the recoverable payment for goods between December 2021 and June 2022 will be about 780 million yuan.
Calculation of boosting effect of cross-border acquisition
The 21st Century Business Herald reporter noted that while the main business of computer flat knitting machine ushered in the “spring”, Ningbo Cixing Co.Ltd(300307) recently planned cross-border M & A again. Before that, it had paid a lot of “tuition fees” for cross industry M & A.
In December 2021, Ningbo Cixing Co.Ltd(300307) announced that it planned to use its own capital of 200 million yuan to increase the capital of Wuhan Minsheng New Technology Co., Ltd. (hereinafter referred to as “Wuhan Minsheng”). After the capital increase, the company is expected to hold 12.5% equity of Wuhan Minsheng.
Wuhan Minsheng was founded in January 2019, and its operating revenue from January to November 2021 and 2020 was 0.5% As an enterprise established for more than two years and not yet commercialized, why do you give a valuation of 1.4 billion yuan? The cross-border acquisition quickly attracted the attention of regulators.
Shenzhen Stock Exchange pointed out that the audit report showed that a number of accounting subjects of Wuhan Minsheng had changed significantly compared with 2020. Ningbo Cixing Co.Ltd(300307) was required to explain the determination method of Wuhan Minsheng’s valuation of 1.4 billion yuan, as well as the reasons and necessity for the company to implement the transaction.
SZSE also requested Ningbo Cixing Co.Ltd(300307) to supplement the source of funds for this transaction and to explain the preconditions required to achieve the production and commercial sales objectives in view of the fact that Wuhan Minsheng’s operating income was 0 as of November 2021.
As for the valuation, Ningbo Cixing Co.Ltd(300307) replied that the net assets of Wuhan Minsheng (audited) were 110 million yuan at the end of November 2021. The investment in Wuhan Minsheng is valued at 1.4 billion yuan, which is mainly based on the company’s good expectation of the development prospect of Wuhan Minsheng and the valuation of Wuhan Minsheng’s previous capital and share increase, which shall be determined by both parties through negotiation.
According to Ningbo Cixing Co.Ltd(300307) introduction, Wuhan Minsheng’s long-term goal is to realize large-scale mass production of high-end RF filters in China based on IDM operation mode. The loss in 2020 is about 830000 yuan, mainly the administrative expenses after formal operation. The loss from January to November 2021 is about 38.85 million yuan, mainly the administrative expenses and R & D expenses.
For the reasons of cross-border acquisition, Ningbo Cixing Co.Ltd(300307) pointed out that “in view of the large number of traditional models in the current computer knitting machinery market, the renewal of new models takes a certain time, and the market periodicity is obvious, so the company considers exploring and cultivating new business growth points to realize the sustainable development of the company.”
At present, the above acquisition of Ningbo Cixing Co.Ltd(300307) is proceeding in an orderly manner. On February 9, the company said on the investor interaction platform that it had completed the first phase of investment in Wuhan Minsheng, and the second phase was implemented according to the project progress according to the agreement.
In fact, this is not Ningbo Cixing Co.Ltd(300307) the first attempt to cross the border. Before setting foot in the semiconductor industry chain, it also entered the Internet, military and other industries.
In February 2021, Ningbo Cixing Co.Ltd(300307) plans to spend 140 million to acquire 35% equity of North Guangwei Technology Co., Ltd. (hereinafter referred to as “North Guangwei”) and undertake corresponding creditor’s rights of 708204 million yuan to enter the infrared night vision imaging industry. The semi annual report of 2021 shows that the industrial and commercial change of this part of equity has not been completed.
Earlier, in April 2016, Ningbo Cixing Co.Ltd(300307) acquired 100% equity of Hangzhou youtou Technology Co., Ltd. (hereinafter referred to as “youtou technology”) in cash of 600 million yuan and 100% equity of Hangzhou duoyile Network Technology Co., Ltd. (hereinafter referred to as “duoyile network”) in cash of 400 million yuan.
However, youtou technology and duoyile network quickly “changed their faces” after the end of the three-year performance commitment period, which eventually led to the continuous provision for large amount of goodwill and intangible assets impairment in Ningbo Cixing Co.Ltd(300307) 2019 and 2020.
Ningbo Cixing Co.Ltd(300307) why do you frequently try to cross the border? Some industry analysts told the 21st Century Business Herald reporter, “the listing of companies with computer flat knitting machine as the main business is the peak, and they can’t do without transformation. However, the success rate of industrial transformation is actually less than 30%. Every time they fail, there is a ‘tuition fee’, and they pay it again and again.”
Some investors are cautious and wait-and-see about the diversification exploration of the company.
On March 31, 2022, the stock price of Ningbo Cixing Co.Ltd(300307) hit an intraday low of 5.46 yuan, a new low since January 8, 2021. Over the past year, Ningbo Cixing Co.Ltd(300307) has decreased by 30.93%. As of the closing on April 1, Ningbo Cixing Co.Ltd(300307) closed at 5.56 yuan, up 1.65%.
