Photo source: Visual China

Blue Whale financial reporter Wang Xiaonan

In 2023, Jingsheng Electromechanical (300316.SZ) achieved a record high performance, and the company delivered the highest dividend of over 900 million yuan. Among them, Meijing New Materials, a holding subsidiary that is sprinting into GEM, contributed more than 1 billion yuan in profits to Jingsheng Electromechanical, and is a veritable “cash cow.”

In September of last year, Jingsheng Electromechanical spun off Meijing New Materials and went public on the GEM. If successfully listed, it would mean that the profitability of listed companies would be diluted, causing questions from investors. After the disclosure of the spin-off of Meijing New Materials, the company's stock price began to fall continuously after reaching a record high, and the market value has evaporated by nearly 60 billion yuan.

Performance reached a record high, and “Cash Cow” Meijing New Materials may be released

Recently, Jingsheng Electromechanical released its 2023 annual report. The company achieved operating revenue of 17.983 billion yuan, a year-on-year increase of 69.04%; net profit to mother was 4.558 billion yuan, an increase of 55.85% over the previous year.

Since entering the capital market in 2012, apart from a brief decline in performance for two consecutive years in 2012 and 2013, Jingsheng Electromechanical's performance has continued to grow for ten consecutive years since 2014. The company's revenue has risen all the way from 245 million yuan in 2014 to 17.983 billion yuan in 2023, and net profit to mother has increased from 66 million yuan to 4.558 billion yuan.

By product, in the company's main business in 2023, revenue from equipment and services was 12.812 billion yuan, up 51.29% year on year, accounting for 71.24% of revenue; material revenue was 4.163 billion yuan, up 186.15% year on year, accounting for 23.15% of revenue. The scale of the new materials industry has increased rapidly, further enriching Jingsheng Electromechanical's performance.

Meijing New Materials, a subsidiary of Cash Cow, is sprinting to the GEM IPO.

Established in 2017, Meijing New Materials is mainly engaged in the processing and sale of quartz crystals and other products. As a subsidiary of Jingsheng Electromechanical Holdings, an A-share listed company, it directly holds 57.84% of Meijing New Materials and is the shareholder of Meijing New Materials Holdings. Cao Jianwei and Qiu Minxiu are the joint actual controllers of Meijing New Materials. Together, the two and their co-actors control 62.81% of the company's shares and corresponding voting rights.

In 2022, with the rapid development of the photovoltaic industry and semiconductor industry, silicon wafer manufacturers accelerated the expansion of production capacity. Market demand for quartz crucibles and diamond wires grew rapidly as core consumables in the silicon wafer production process. Meijing New Materials also took the lead, and its operating income and net profit to mother all showed an upward trend.

In 2023, Meijing New Materials achieved operating income of 3,671 billion yuan, up 242.15% year on year; net profit to mother was 1,778 billion yuan, up 491.1% year on year. According to Jingsheng Electromechanical's holding ratio, Meijing New Materials contributed more than 1 billion yuan in profits to listed companies in 2023 and became the company's “cash cow.”

In September of last year, Meijing New Materials's application for the GEM IPO was accepted, and it has now entered the inquiry stage. If the listing application is successful, the listed company will run the risk that its profitability will be diluted.

Does Jingsheng Electromechanical have its own “ambition”? The market value evaporated by nearly 60 billion yuan in less than a year

Jingsheng Electromechanical was established in December 2006. The company's main business products are crystal growth and processing equipment used in the upstream photovoltaic and semiconductor integrated circuit industries. At the same time, it also extends the layout of sapphire materials, silicon carbide materials, and auxiliary materials and consumables at the core of the related industrial chain, such as quartz crucibles, diamond wires, and precision components. In May 2012, Jingsheng Electromechanical was officially listed and traded on the Shenzhen Stock Exchange.

Qiu Minxiu, the main founder and actual controller of Jingsheng Electromechanical, and Cao Jianwei have a teacher-student relationship. Qiu Minxiu is a typical “technical background.” In 1999, Qiu Minxiu served as Party Secretary of the School of Mechanical and Energy Engineering of Zhejiang University until his retirement in 2005. In 2006, when Qiu Minxiu was 61 years old, he led student Cao Jianwei to switch to business and began a new experiment in founding Jingsheng Electromechanical.

From retiring and starting a business in 2006 to resigning as chairman in 2016, Qiu Minxiu led Jingsheng Electromechanical for ten years. Over the past ten years, Jingsheng Electromechanical's overall performance has improved. Four years after Jingsheng Mechatronics went public, in 2016, 71-year-old Qiu Minxiu chose to step down from behind the scenes and resign as chairman, “passing on” the company's management rights to student Cao Jianwei rather than his son He Jun or daughter He Jie, who works for Jingsheng Electromechanical and has shares.

Cao Jianwei was born in 1978. He is a senior engineer and Doctor of Engineering. Since Qiu Minxiu took the helm of Jingsheng Electromechanical, Cao Jianwei has been the company's general manager and is a “successor” cultivated by Qiu Minxiu.

By the end of 2023, Qiu Minxiu, Cao Jianwei, and He Jie, children of Qiu Minxiu, held a total of 59.07% of the shares of Jingsheng Investment, the controlling shareholder of Jingsheng Electromechanical. Meanwhile, Qiu Minxiu and Cao Jianwei directly held 2.91% and 2.72% of the company's shares respectively. Therefore, Qiu Minxiu and Cao Jianwei are the ultimate co-controllers of Jingsheng Electromechanical. Qiu Minxiu has a mother-son, mother-daughter relationship with He Jun and He Jie, and they act in concert.

In 2023, Jingsheng Electromechanical plans to distribute a cash dividend of 7 yuan (tax included) to all shareholders for every 10 shares, the highest dividend of 915 million yuan since listing. Since its launch in 2012, Jingsheng Electromechanical's dividends have reached 12 times, with a cumulative cash dividend of 1,802 billion yuan.

However, at a time when performance was improving, Jingsheng Electromechanical's stock price declined. In April 2023, Jingsheng Electromechanical revealed plans to spin-off its holding subsidiary. At that time, the company's stock price had reached 74.68 yuan/share, and the market value was close to 100 billion yuan. However, by February 2024, Jingsheng Electromechanical's stock price hit a new low in recent years, at 29.5 yuan/share, with a market value of less than 40 billion yuan. The company's market value evaporated by nearly 60 billion yuan in less than a year.