On the evening of July 30th, Weiwan Sealing (301161. SZ) announced that the company is planning to purchase controlling shares of Shanghai Jianuo Sealing Technology Co., Ltd. (hereinafter referred to as "Shanghai Jianuo") and Guangzhou Jiast Sealing Technology Co., Ltd. (hereinafter referred to as "Guangzhou Jiast") through cash payment. The specific acquisition ratio is subject to further discussion and negotiation. After the completion of this transaction, Shanghai Jianuo and Guangzhou Jiashi will become the controlling subsidiaries of the company.
Weiwan Sealing stated that the target companies Shanghai Jianuo and Guangzhou Jiashi are engaged in the research and development, production, and sales of industrial seals. Through this transaction, the company will gain control of the target company, which is conducive to enriching the company's different sealing material technologies and product types, expanding sales channels and covering more business areas, enhancing the company's product market share and business scale, and enhancing the company's comprehensive competitiveness, In line with the company's development strategy.
In the research activity in May, Weiwan Sealing revealed that one of the company's future development plans is to promote multiple business models and seek cooperation with relevant enterprises in segmented industries or new materials to build the entire sealing industry chain.
Referring to the mature international seal market, the market share of leading enterprises can reach 30% and 40%. During a recent investor survey, Weiwan Sealing stated that the company currently has a coverage rate of less than 5% in the domestic market. With the further promotion of testing and verification of the company's products on the client side, and the further acquisition of a share of import substitution, the company is confident in expanding its coverage in the domestic market.
It is worth noting that the planned major asset restructuring is less than a year away from Weiwan's sealed listing.
According to data, Weiwan Sealing was established in 2008 and is one of the earliest companies in China to enter the hydraulic and pneumatic sealing product industry. The company's main products include hydraulic sealing products such as hydraulic seals and hydraulic sealing packages, as well as other sealing products such as pneumatic seals, oil seals, and track seals. It is mainly used in industries such as engineering machinery, coal mining machinery, agricultural machinery, and industrial automation.
On September 14, 2022, Weiwan Sealed went public on the Growth Enterprise Market, with an issuance price of 18.66 yuan. The total amount of funds raised was 560 million yuan, with a net amount of 491 million yuan raised after deducting issuance fees.
In the year of its listing, Weiwan Seal experienced a double decline in revenue and net profit. According to the financial report, the company achieved a total operating revenue of 340 million yuan in 2022, a year-on-year decrease of 17.11%; The net profit attributable to the parent company was 46.2049 million yuan, a year-on-year decrease of 22.53%.
Taking construction machinery as an example, in 2022, the construction machinery industry was affected by many factors such as the domestic economic environment, real estate investment, and the decline in the growth rate of new construction areas. The overall market demand was in a sluggish state, and about 70% of the company's products were used in the construction machinery field. In the view of Weiwan Sealing, the decline in performance was mainly affected by changes in downstream market demand, but overall, the changes in indicators are in line with the laws of the hydraulic and pneumatic sealing industry.
As of now, the aforementioned market unfavorable factors are still continuing to ferment. In the first quarter of 2023, the company achieved a total operating revenue of 101 million yuan, a year-on-year decrease of 16.13%; The net profit attributable to the parent company was 17.2608 million yuan, a year-on-year decrease of 23.03%.
Weiwan Seal stated that the decline in the company's performance in the first quarter was mainly due to the industry fluctuations in the downstream engineering model field. The verification of the company's import substitution in this field requires time and cannot support the significant fluctuations in the industry with the speed of substitution in a short period of time. Other main areas of the company: coal mining machinery, agricultural machinery, and industrial automation have all experienced varying degrees of growth in 2022 compared to 2021, and are expected to continue to develop well in the future.
According to industry insiders, the construction machinery industry has a clear periodicity. From 2012 to 2016, the construction machinery industry experienced a long downward cycle; From 2017 to 2020, the industry maintained an upward cycle of about 4 years. Starting from 2021, due to overcapacity, sluggish sales, rising raw materials, and repeated outbreaks... the construction machinery industry has once again entered a downward cycle.
Titanium Media App has noticed that Weiwan Seals has been experiencing inventory backlog in recent years. According to Wind data, in 2022, despite a year-on-year decrease of 17.11% in revenue, the company's inventory did not decrease but instead increased, from 129 million yuan at the end of 2021 to 132 million yuan at the end of 2022, a year-on-year increase of 2.7%. As of the first quarter of 2023, the inventory scale has further expanded to 135 million yuan.
Since its listing, the stock price of Weiwan Seal has fluctuated, and in October 2022, it once fell below the issuance price. Affected by the restructuring news, as of the close on July 31, Weiwan Sealed rose by over 8.24% to 23.9 yuan (previously reinstated), with a total market value of 2.868 billion yuan.
