① Yueda Investment continues to “sell” the family, and this time it is the “son” Yueda Zhi Xing; ② Like selling highway assets before, the reason given by Yueda Investment is still to focus on the “new energy, new materials, and intelligent manufacturing” industry layout; ③ Analysts say that the fuel vehicle market has been poor in recent years, demand has shrunk, and sales have experienced negative growth.
Financial Services Association, May 30 (Reporter Wang Bin) Yueda Investment (600805.SH) continues to “sell” the family, and this time it is its “son”, Shanghai Yueda Zhixing Auto Service Co., Ltd. (“Yueda Zhixing”). However, the market seems to have been mentally prepared for this for a long time.
Yesterday evening, Yueda Investment announced that it plans to transfer 100% of its shares in Yueda Zhixing to Jiangsu Yueda Automobile Group Co., Ltd. (hereinafter referred to as “Yueda Automobile Group”), with a total transaction price of 27,900 yuan. Like the sale of highway assets before, the reason given by Yueda Investment this time is still to focus on the “new energy, new materials, and intelligent manufacturing” industrial layout.
Since Yueda Automobile Group is a subsidiary directly controlled by Jiangsu Yueda Group Co., Ltd., the parent company of Yueda Investment, this transaction forms a related transaction.
Great expectations were placed on him, but now he is an abandoned child
Yueda Zhixing was once highly anticipated, but now it has been reduced to being “sold.”
According to public information, in November 2018, Yueda Investment registered a wholly-owned subsidiary, Yueda Zhixing, with 100 million yuan in cash. The latter's main business is automobile sales services. In 2021, Yueda Zhixing's registered capital increased to 200 million yuan.
Yueda Investment drew a blueprint for this investment in its 2018 annual report: building a “new sales” brand, “Yue Zhi Xing”, changing the traditional profit model of 4S stores, turning 4S stores into a terminal car service provider integrating vehicle sales, spare parts maintenance and boutique services, online car-hailing, car-sharing (travel) hubs, used car services, auto finance, parts logistics and warehousing centers, and information service interactive stations; and selected the used car industry and auto parts industry as key projects to enter at an opportunity.
What impressed Yueda Zhixing the capital market the most was the acquisition of shares of five automobile sales and service companies held by Yueda Auto Sales & Service Co., Ltd. for 26.564,600 yuan in 2019, including 100% of Jiangsu Yueda Junchi Auto Sales Co., Ltd., 65% of Guangzhou Yueda Huichuang Auto Sales & Service Co., Ltd., 70% of Shaoxing Yuetai Auto Sales & Service Co., Ltd., 60% of Zaozhuang Yuecheng Auto Sales & Service Co., Ltd., and 60% of Tengzhou Yueya Auto Sales & Service Co., Ltd.
All five companies are engaged in automobile sales business and sell Dongfeng Yueda Kia brand cars as agents. According to Tianyan investigation, Shaoxing Yuetai and Tengzhou Yueya are currently in a state of cancellation, while the remaining three companies are still under Yueda Zhixing.
Yueda Zhixing's scale peaked in 2021. According to Yueda Investment's financial data, in 2021, Yueda Zhixing's revenue and net assets reached record highs of 1,252 billion yuan and 117 million yuan respectively.
(Picture source: Company Announcement)
However, a Finance Association reporter combed through past financial data and found that although Yueda Zhixing contributed a significant share of revenue to Yueda Investment, it has been in a state of loss for a long time. According to the latest asset evaluation report issued by the company, Yueda Zhixing is currently insolvent and its net assets are negative. Perhaps because of this, the market was not surprised by Yueda Zhixing's transaction price of 27,900 yuan.
In fact, as early as June of last year, investors asked Yueda Investment on the Shanghai Stock Exchange e-Interactive: Will the company's Zhixing Auto (Yueda Zhixing) be sold?
At the time, Yueda Investment did not respond. In the 2023 annual report, Yueda Investment even detailed the business plan for Yueda Zhixing, specifically: establishing a profit-oriented scientific business philosophy, seeking efficiency, putting efficiency first, achieving the same improvement in quantity and quality, concentrating on developing incremental markets... making every effort to promote EV5 sales, strengthen EV5 new energy strategic model marketing, increase the sales scale and gross profit contribution of each store... Based on the existing large-scale development network, re-segmented models and formulated special expansion plans.
However, investors seem to have long lost patience in the face of Yueda Zhixing's successive losses.
On April 19 of this year, at Yueda Investment's 2023 annual results and cash dividends briefing, investors also suggested that the company's main business (Yueda Textile/Yueda Zhixing/Yueda Smart Agricultural Equipment/Yueda Special Vehicle) all lost or made small profits. Instead, the profits were all thermal power generation and road charges that were not the main focus. How can they be improved? Please give investors an explanation.
More than a month later, Yueda Zhixing was “sold”.
The decline in the main business is hard to hide
In 1994, Yueda Investment was listed on the Shanghai Stock Exchange. Currently, it has formed major businesses in seven different industries, including new energy, new materials, agricultural machinery, textiles, special vehicles, machine tool manufacturing, and passenger car sales.
Among them, Yueda's most successful investment was an investment in Dongfeng Yueda Kia Motors Co., Ltd. (“DYK”).
According to public information, DYK is a Sino-foreign joint venture automobile manufacturer with a registered capital of 1,224 million US dollars. It is a joint venture between domestic companies such as Korea's Kia Corporation and Yueda Investment. Among them, Yueda Investment owns 25% of Yueda Kia's shares.
In 2016, DYK sold 650,000 units in China, making it the best performance. However, with the gradual rise of new energy vehicles in the domestic market, DYK Motor experienced its first sharp drop in sales in the Chinese market in 2017, with annual sales falling 44% year over year. Since then, DYK's sales have taken a sharp turn, and there is still no improvement.
Affected by this, Yueda Investment lost money in its main business for many years from 2017 to 2022. In 2023, Yueda Investment's revenue did not increase: the company achieved revenue of 3.127 billion yuan, an increase of 1.76% year on year; however, net profit was only 38.3441 million yuan, a decrease of 59.44% year on year. It should be pointed out that in 2023, Yueda Zhixing sold 9,660 cars and achieved revenue of 1,047 billion yuan, but lost 48.96 million yuan in net profit (as disclosed in the annual report of the listed company).
In response, Zhang Xiang, Secretary General of the International Association for Intelligent Vehicle Technology, told the Finance Association reporter: “The fuel vehicle market has not been very good in recent years. The market has been shrinking and sales have shown negative growth. In April of this year, domestic sales of new energy vehicles surpassed fuel vehicles for the first time. It is a major trend for fuel vehicles to be replaced by new energy vehicles in the future. For joint ventures, things are not going well now. Like Mitsubishi and Kia, some have stopped production and others have closed their factories.”
Zhang Xiang analyzed that according to relevant rules, fuel vehicle companies need to invest a lot of money to develop new products, and most fuel vehicles get negative points, so car companies also have to spend a lot of money every year to buy new energy credits from BYD, Tesla, etc. to offset negative points. This is also a financial burden. At the same time, the level of intelligence of new energy vehicles is generally higher than that of fuel vehicles. At the same time, there are also subsidies and green license policies, which meet the preferences of young consumers, and young people are becoming the main consumers of automobiles.