Leveraging the flying car concept, the market value soars by 20 billion, making Wanfeng Auto become the most dazzling stock in the A-share market. Amidst the capital frenzy, however, insurance shareholders are looking to cash out their paper profits at high levels.

The long-dormant "Wanfeng Group" has once again set off a market explosion.

Wanfeng Auto's stock price has soared recently due to the flying car concept, surging nearly 260% in just two months. As the stock price skyrockets, Century Life, which entered eight years ago, has also taken the opportunity to announce a plan to reduce its holdings.

On March 31, Wanfeng Auto issued an announcement stating that Century Life, the second-largest shareholder, plans to reduce its holdings by no more than 9 million shares, or no more than 0.42% of the company's total share capital, within one month after 15 trading days, through a centralized bidding transaction method. According to the closing price of Wanfeng Auto's shares on that day, which was 16.9 yuan per share, the market value of 9 million shares exceeded 150 million yuan.

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Regarding the shareholding arrangements beyond the reduction of 9 million shares, Century Life has not yet provided clear information. In the list of the top ten shareholders of the listed company, there is another "stock trading maniac" who has been lying low for a long time, Shanghai Rais, who has not yet proposed a plan to reduce holdings.

In terms of asset quality, Zhejiang's private enterprise giant Wanfeng Group, which once owned several listed companies, has faced increasing debt repayment pressure in recent years due to the poor performance of its auto parts main business and the overly aggressive expansion into the aviation business.

With bloodthirsty capital hunting from the outside and the worry of selling at a loss from within, whether the listed company can support the story of a 30 billion flying car remains to be further verified.

After "lying low" for 8 years, Century Life reduces its holdings at a high level.

Since entering eight years ago, Century Life has initiated a reduction for the first time.

Regarding the holding cost, according to Wanfeng Auto's disclosure in October 2015, Century Life bought Wanfeng Auto's shares through centralized bidding transactions in the Shenzhen Stock Exchange securities trading system from August 25 to September 30 of that year, reaching the 5% threshold for a stake increase. Looking at the two purchase price ranges disclosed by Century Life at that time, one was between 16.39 yuan and 16.53 yuan, and the other was between 13.38 yuan and 30.11 yuan.It is worth mentioning that during the period of holding the signboard for Wanfeng Auto Wheel, the company had implemented a ten-for-twelve stock split (with the stock registration date being August 28, 2015). Subsequently, Wanfeng Auto Wheel carried out two more stock bonus and transfer actions: in May 2016, the company implemented the 2015 rights distribution plan, offering all shareholders a "ten-for-two transfer eight"; the following May, the company again offered all shareholders a "ten-for-two".

As of the end of September last year, Centennial Life Insurance held two seats among the top five shareholders of Wanfeng Auto Wheel. Among them, Centennial Life Insurance Co., Ltd. - Traditional Insurance Products ranked as the second largest shareholder of the company, with a holding ratio of 6.72%; Centennial Life Insurance Co., Ltd. - Dividend Insurance Products was the fifth largest shareholder of the company, with a holding ratio of 2.07%.

As the second largest shareholder of Wanfeng Auto Wheel, Centennial Life Insurance currently holds more than 188 million shares, with a holding ratio of 8.87%, corresponding to a market value of over 3.1 billion yuan, all obtained through block trading.

In the fifth, sixth, and seventh board of directors of Wanfeng Auto Wheel, directors with experience in Centennial Life Insurance had appeared. However, in the latest eighth board of directors, Centennial Life Insurance has completely faded out.

Centennial Life Insurance stated that the reduction was decided based on its asset allocation needs and related investment decisions, and the reduction price was determined according to the secondary market price at the time of reduction. Data shows that Centennial Life Insurance has a close relationship with Wang Jianlin, and Dalian Wanda Group currently holds 11.55% of the shares of Centennial Life Insurance.

The background of the reduction is that Wanfeng Auto Wheel, which has been "low-key" for five or six years, suddenly soared in the first three months of 2024, leading the A-share market with a surge of 242%.

The main reason for the sharp increase in stock prices is the hot "low-altitude economy" concept this year.

On the evening of February 5, Wanfeng Auto Wheel took the initiative to "reveal" that its subsidiary, Wanfeng Aircraft Industry Co., Ltd., and its strategic partners plan to jointly establish a joint venture to carry out in-depth cooperation in the field of electric vertical take-off and landing aircraft (eVTOL).

As soon as this news came out, the stock price of Wanfeng Auto Wheel soared all the way, with consecutive trading days hitting the daily limit, rising from 4.7 yuan on February 5 to 16.9 yuan on March 29, with the highest market value close to 37 billion, more than doubling.

Although Wanfeng Auto Wheel has issued multiple risk warnings during this period, it has not disclosed more information except for the above cooperation matters.In terms of business, within the automotive aluminum alloy wheel industry, Wanfeng Auto Wheel has established cooperative relationships with major manufacturers such as BYD, Chery, Seres, and Volkswagen in the field of new energy vehicles. In the low-altitude field, Wanfeng Diamond Aircraft holds a leading position in the global flight training sector, with its DA20, DA40, and DA42 models being star models in the global flight training field, and it has a relatively high market share in the domestic flight training market.

In recent investor relations activities, Wanfeng Auto Wheel further mentioned that the company will accelerate the development and application of the pure electric aircraft eDA40, and it is expected to become the world's first pure electric commercial operation aircraft; at the same time, with low-altitude economy rapidly developing as a strategic emerging industry, the company will accelerate the layout of the eVTOL industry.

Financial reports show that in the first three quarters of 2023, Wanfeng Auto Wheel's general aviation aircraft innovative manufacturing business achieved a business income of 1.848 billion yuan, a year-on-year increase of 26.51%, accounting for only 16% of the company's revenue.

From the actual business progress, the previous surge may have a speculative bubble, so after the announcement of the reduction news, Wanfeng Auto Wheel's stock price also fell by more than 12% for two consecutive days.

In fact, Wanfeng Auto Wheel also has a significant background, behind which is the well-known Zhejiang businessman couple Chen Ailian and Wu Liangding.

As a well-known family business in Xinchang, it once had Wanfeng System (Wanfeng Auto Wheel, Wanfeng Jin Yuan) and RIFA System as the main body, controlling three listed companies: Wanfeng Auto Wheel, Changchun Economic Development, and RIFA Precision Machinery. In addition, RIFA System also has another company, RIFA Textile Machinery, which has passed the initial public offering and is planned to be listed on the Shenzhen Stock Exchange's Growth Enterprise Market, but was ultimately withdrawn in 2021.

In recent years, due to the significant increase in raw material prices, Wanfeng Group's main business has been greatly affected, the net cash flow from operating activities has significantly decreased, coupled with a large investment in the aviation sector, the debt pressure is relatively large, the market value of the listed company has significantly shrunk, and thus it has become the target of capital operations.

In addition to the high-position reduction of Bai Nian Life Insurance, there is another capital hunter in Wanfeng Auto Wheel's shareholders - Shanghai RAAS, which is burdened with a "billion-dollar goodwill."

In 2018, "stock trading madman" Shanghai RAAS's heavy stock positions, Xingyuan Environment and Wanfeng Auto Wheel, fell sharply after resumption, resulting in a significant loss of 1.518 billion yuan that year. After 10 consecutive trading day limit-downs, tens of billions of market value vanished into thin air. As of the end of the third quarter of 2023, Shanghai RAAS still holds 1.87% of Wanfeng Auto Wheel's shares, ranking as the sixth-largest shareholder.Against the backdrop of the aforementioned "internal and external troubles," the capital operations of Wanfeng Auto Wheel Co., Ltd. (hereinafter referred to as "Wanfeng Auto Wheel") appear particularly complex, with frequent mergers and acquisitions in recent years.

In 2018, the company planned a 2 billion yuan private placement and acquired 100% of the equity of Wuxi Xiongwei at a premium from its major shareholder, Wanfeng Group. According to the income method evaluation at that time, the appreciation rate for the acquisition of Wuxi Xiongwei Precision Industry reached 55.6%.

It is understood that Wuxi Xiongwei mainly engages in the business of high-strength steel stamping parts for automobiles. In June 2018, Wanfeng Auto Wheel acquired 95% of the equity of Wuxi Xiongwei for a transaction price of 1.254 billion yuan, forming a goodwill book value of 291 million yuan at that time. In October 2021, Wanfeng Auto Wheel acquired the remaining 5% of the minority shareholder's equity in Wuxi Xiongwei, with the net asset value of this part of the equity being 49.89 million yuan.

However, the company's private placement was not smooth, and the performance of Wuxi Xiongwei did not meet expectations. As a result, Wanfeng Auto Wheel "cut its losses" and exited after just five years.

After being acquired by Wanfeng Auto Wheel, the performance of Wuxi Xiongwei also showed a clear downward trend. From 2019 to 2022, its revenue was 823 million yuan, 753 million yuan, 880 million yuan, and 993 million yuan, respectively, while its net profit was 147 million yuan, 117 million yuan, 86.99 million yuan, and 73.95 million yuan, respectively.

From the perspective of the impact on the listed company, in the first half of 2023, Wanfeng Auto Wheel provided a goodwill impairment provision of 149 million yuan for Wuxi Xiongwei, which led to a reduction in the net profit attributable to the shareholders of the listed company in the semi-annual consolidated statement.

Wanfeng Auto Wheel also stated in the mid-2023 report that the recovery of the high-strength steel stamping parts business of Xiongwei Precision Industry was not as expected, and the management of Wanfeng Auto Wheel expected that the future operations of Wuxi Xiongwei would have a certain gap from the original forecast. After careful judgment by the company's management, it was believed that there were certain signs of impairment in the asset group of Wuxi Xiongwei.

In December 2023, the company announced the sale of 100% of the equity of Wuxi Xiongwei. The expected loss for the company due to this transaction is about 117 million yuan.

According to the announcement, Wanfeng Auto Wheel signed a share purchase agreement with Wuxi Xiongwei Enterprise Management Co., Ltd. and other related parties, agreeing to sell 100% of the equity of Wuxi Xiongwei at a price of 1.1 billion yuan, as well as through direct equity transfer and the method of repurchasing equity and reducing capital within three years. The buyer is a newly established company, whose shareholders involve the State-owned Assets Supervision and Administration Commission of Yibin City and the Sichuan Provincial Department of Finance.

Wanfeng Auto Wheel explained that this asset divestment is to achieve a lighter load for corporate operations, reduce the scope of management, and focus on developing the "aluminum, magnesium alloy" lightweight core business. In addition, through this transaction and the dividend distribution of Wuxi Xiongwei, Wanfeng Auto Wheel will obtain 1.15 billion yuan in funds, which will be used to repay bank loans, supplement working capital, and support the development of the company's core business.Soaring Debts

In addition to the controversial practice of purchasing assets from its parent group at a premium and selling them at a discount, the company has also sparked market debate due to its multiple share buybacks amidst a continuous rise in debt.

According to public announcements, Wanfeng Auto Wheel disclosed share repurchase plans for the years 2018, 2019, and 2020. In 2019, the company planned to repurchase shares with an amount no less than 300 million yuan and no more than 600 million yuan, with a repurchase price not exceeding 11 yuan per share. For 2020, the repurchase amount was set to be no less than 150 million yuan and no more than 300 million yuan, with a repurchase price not exceeding 10 yuan per share.

Regarding the actual implementation, the repurchase amount for 2019 was 332 million yuan, with transaction prices ranging from 6.75 to 8.54 yuan per share; in 2020, the company completed repurchases worth 240 million yuan. In January 2021, the company issued another repurchase announcement, and for the first time, repurchased shares through a dedicated securities account, with transaction prices between 6.74 and 6.91 yuan per share, totaling 13.97 million yuan in transaction amount.

Share buybacks are a method used by listed companies to boost stock prices and strengthen investor confidence, which is not inherently wrong. However, Wanfeng Auto Wheel carries a growing debt burden. Since 2018, the company's long- and short-term debts have increased by 1.306 billion yuan, while its cash and cash equivalents have decreased by 642 million yuan. During this period, the rapid increase in liabilities and the significant slowdown in operating cash inflows indicate obvious debt repayment pressure.

As of the end of September 2023, Wanfeng Auto Wheel's liabilities stood at 9.416 billion yuan, of which current liabilities totaled 8.043 billion yuan. Interest-bearing debt exceeded 5.3 billion yuan, while cash and cash equivalents were only 2.147 billion yuan, less than half. In the absence of significant improvements in operating performance, the company's financial pressure cannot be ignored.

Currently, the actual controller of Wanfeng Auto Wheel is a family of four, led by Chen Ailian. According to incomplete media statistics, since its listing in 2006, Chen Ailian and others, as well as Wanfeng Group, have cashed out more than 4 billion yuan through share reductions and the issuance of exchangeable bonds.

In September 2018, the equity pledge ratio of Wanfeng Group was 79.88%, and it has been maintained at nearly 80% for the following three years. The equity pledge ratio of the company's actual controller, Chen Ailian, exceeded 80%. The market believes that the listed company's repurchase of shares may be more about supporting stock prices to prevent major shareholders from facing the risk of margin calls due to falling stock prices.

The third-quarter report for 2023 shows that the pledge ratio of the shares held by Wanfeng Group, the controlling shareholder of Wanfeng Auto Wheel, is 33.64%.