After the dream of building a car is shattered, can Minshi Group realize its dream of the science and technology innovation board?

Minshi Group is afraid that it is not the "tone" of science and technology.

Text/Daily Earnings Report Li Jia

Dang Min Shi Group (0425. HK) after the car dream was shattered, the veteran traditional manufacturing company after a year, although the performance growth is in trouble, but recently stepped on the outlet of new energy vehicles. With 6 billion yuan of bank deposits in hand, Minshi Group wants to sprint to the science and technology innovation board and achieve A+H listing.

So this time, how high can the building of Minshi Group be built? Is it really the attribute of science and technology innovation that can be assumed?

Didn't rub into a hot spot

Turning over the history of Minshi Group, this veteran auto parts company, founded in 1992, has been focusing on the field of automotive exterior parts such as metal trim and door frames.

With the rapid development of China's auto market, Minshi Group began to expand its product categories to plastic parts, electroplated parts, grilles and other fields, and successively won orders from Volkswagen, Jeep, Volkswagen and Mercedes-Benz. With the continuous expansion of scale, Minshi Group's body trim products also successfully won the national laurel in 2018. However, Minshi Group did not focus on deepening the parts market like other auto parts manufacturers, but embarked on other paths to try to open up new growth points.

Since 2015, the development of domestic new energy vehicles has accelerated, and Minshi Group has looked at this Dongfeng and invested heavily in the acquisition of Jiangsu Min'an Electric Vehicle Co., Ltd., which has begun the road of new energy vehicle research and development.

However, seven years later, when new energy vehicle companies such as Tesla, Weilai, Xiaopeng and Ideal began to compete in the new energy vehicle market in an all-round way, Min An Automobile, which was pinned high hopes by Minshi Group, has gradually faded from the public's vision. Until now, Min An Auto has not yet entered the mass production stage, and in 2018, the turnover of Min Shi Group from the equity book of Min An Auto was only 32.33 million yuan, with a loss of nearly 30 million yuan. At the same time, minan automobile's current liabilities are as high as 1.082 billion yuan, and the current assets are only 230 million yuan. By 2019, the company's revenue from Min An Automobile was as low as 2.133 million yuan, and the loss was as high as 100 million yuan.

In the face of the reality of consecutive years of losses, Minshi Group had to "bow its head" and completely ended the dream of building cars. In 2019, Minshi Group carried out organizational transformation and re-established the four major product line organizations of plastic parts, aluminum parts, metal and trim strips, and battery boxes, which has revealed minshi Group's desire to revitalize in the field of auto parts.

It is difficult to hide the lack of performance

Judging from the financial report disclosed in the prospectus, since the beginning of 2018, the operating income of Minshi Group has been difficult to maintain the growth of the past 20%. Its revenue growth rate in 2018 and 2019 was 10.27% and 5.14%, respectively, and revenue in 2020 even showed negative growth. This means that from 2017 to 2020, the operating income growth rate of Minshi Group has entered "four consecutive declines".

Analyzing the reasons, on the one hand, with the auto market entering a cooling off period and the impact from new energy vehicles, Minshi Group seems to have entered a bottleneck by relying solely on auto trim, plastic parts and aluminum parts to achieve growth. On the other hand, it is precisely because of the bottleneck that Minshi Group wants to turn losses into profits by building cars, but the reality is not "beautiful".

For the reduction in performance, Minshi Technology said that in 2020, the global passenger car market is relatively sluggish, and at the same time, the impact of the new crown epidemic at home and abroad, especially the overseas business is greatly affected by the new crown epidemic, so that the overall sales of the global automotive industry in 2020 have declined to a certain extent.

The "Daily Financial Report" further found that metal trim, plastic parts and aluminum parts, as the three largest business revenue sources of Minshi Group, have also experienced weak performance growth in recent years. According to the latest financial report, the revenue of the three major businesses in 2020 totaled 12.47 billion yuan, compared with 13.20 billion yuan in 2019, a year-on-year decrease of nearly 5.54%, while in terms of net profit, the net profit in 2019 was 1.690 billion yuan, and by 2020, the net profit fell to 1.396 billion yuan, down 17.44% year-on-year.

In this regard, Minshi Group said that the epidemic has caused the operation of the automobile market and most enterprises in the same industry to suffer significant impact. OEMs have significantly reduced orders for a considerable period of time, bringing many challenges to enterprises in the same industry, including a significant reduction in capacity utilization. Although the company strictly controlled various costs and expenses during the epidemic period, the costs and expenses had a certain rigidity, and it was impossible to achieve that the reduction of costs/expenses was consistent with the decline in turnover.

From the above, it can be seen that Minshi Group is currently facing problems such as declining revenue and weak profitability, and it may also be a "pressured move" to seek listing in both places on the Science and Technology Innovation Board.

Uncorrected word of mouth

If the above problems are caused by the environmental factors of the entire automotive industry, and the poor management cannot be completely attributed to the Minshi Group, it is difficult to explain that the problems stemming from itself are constantly exposed.

Public information shows that Min An Automobile, a subsidiary of Minshi Group, has been listed as an executor a total of 31 times, and the total amount of execution is currently 17.0289 million yuan. Among them, from January to May 2021, there were 18 times listed as an executor record, not only that, Min An Automobile was also deeply involved in a number of contract disputes.

According to the prospectus, from 2018 to 2020 (reporting period), companies such as Jiaxing Minshi, Tianjin Xintai, Tianjin Minxin, Jiaxing Minde, Jiaxing Minhui, and other subsidiaries of Minshi Group have been subject to administrative penalties by the local environmental protection department.

In terms of foreign companies, the Mexican subsidiary was fined 58.2751 million yuan for storing temporary imported fixed assets/commodities in a place different from that authorized by the tax bureau; the Thai subsidiary was fined a total of 10.9436 million yuan for customs declaration, taxation and other issues.

In addition, Minshi Group also has 141,900 square meters of property with defective ownership, accounting for about 11.96% of the company's domestic real estate area. Its factory building in Jiaxing and Xin was punished with administrative penalties such as returning the land, confiscating illegal buildings, and imposing fines for illegally occupying the land in Bali Village, Daqiao Town, Nanhu District, which has yet to be resolved.

It can be seen that how to quickly solve these negative problems and make the reputation warm up is also the urgent task of Minshi Group.

Finally, as an enterprise that is about to go to the science and technology innovation board, how many% of the attributes of science and technology innovation does Minshi Group have?

According to relevant statistics, new material companies account for 16.7% of the 162 companies listed on the science and technology innovation board, of which inorganic non-metallic materials represented by silicon wafers and carbon materials account for the largest proportion. However, Minshi Group is more engaged in the business of traditional auto parts supply, which is essentially a traditional manufacturing enterprise, and more than 90% of the operating income comes from the production of automotive metal trim and plastic aluminum parts, which does not meet the advanced steel materials, advanced non-ferrous metal materials, advanced petrochemical and chemical new materials, advanced inorganic non-metallic materials, high-performance composite materials, and cutting-edge new materials included in the new material field in the listing guidelines of the Science and Technology Innovation Board.

In the final analysis, if Minshi Group really wants to create its own blueprint for science and technology innovation, it is bound to work scientific and technological innovation, rather than staying in the report. After all, only by framing yourself can you go on steadily.