Selling a Subsidiary Again - Wanfeng Auto, Core Supplier for Zhang Xue's Motorcycle Business, Plans to Sell Profitable Subsidiary for 500 Million Yuan, Resulting in Over 16.84 Million Yuan Reduction in Net Profit This Year

After more than a decade of transformation into emerging industries such as environmentally friendly new materials and new processes, Wanfeng Auto Holding Group Co., Ltd. (002085.SZ), a core supplier of Zhangxue motorcycles, is going to "slim down".

On the evening of June 8th, Wanfeng Auto Holding announced that it plans to sell 100% equity of its wholly - owned subsidiary, Shanghai Dacromet Coating Industry Co., Ltd. (hereinafter referred to as "Shanghai Dacromet") to Dakemai Materials Technology (Hangzhou) Co., Ltd. (hereinafter referred to as "Dakemai") for 500 million yuan.

Wanfeng Auto Holding acquired Shanghai Dacromet in November 2013 for 454 million yuan at a premium rate of over 22 times. According to the announcement of Wanfeng Auto Holding, Shanghai Dacromet achieved a net profit of 47.4291 million yuan in 2025 and 7.0574 million yuan in the first quarter of this year respectively.

Wanfeng Auto Holding said that this transaction will reduce the company's net profit by 16.8453 million yuan in 2026, but it can further focus on the main business and optimize the company's asset structure.

Regarding the operating conditions of Shanghai Dacromet and the company's future development plan, a reporter from Time Weekly sent an interview letter to Wanfeng Auto Holding on June 9th. As of the time of publication, no reply has been received.

On June 9th, the stock price of Wanfeng Auto Holding rose 0.57% to 12.38 yuan per share, with a market value of 26.29 billion yuan.

01

Selling a profitable subsidiary after 12 years of acquisition

According to the announcement of Wanfeng Auto Holding, the company signed an agreement with Dakemai on June 8th to sell 100% equity of Shanghai Dacromet to Dakemai for a consideration of 500 million yuan.

In this transaction, the total equity value of Shanghai Dacromet's shareholders was evaluated at 528 million yuan using the income approach. After deducting the distributed cash dividends of 25 million yuan, the evaluated value was 503 million yuan, and the final negotiated transaction price was 500 million yuan.

Wanfeng Auto Holding said that after the closing date, Shanghai Dacromet will no longer be included in the company's consolidated financial statements. After preliminary calculations, this transaction is expected to generate a profit or loss of approximately 16.8453 million yuan, which will reduce the company's net profit by 16.8453 million yuan in 2026.

In 2013, Wanfeng Auto Holding acquired 100% equity of Shanghai Dacromet from natural person Li Guansheng for a consideration of 454 million yuan. At that time, Wanfeng Auto Holding said that the acquisition of Shanghai Dacromet could realize the company's transformation and upgrading from the automotive parts industry to emerging industries such as environmentally friendly new materials and new processes.

It is worth noting that Shanghai Dacromet achieved a net profit of 64.8702 million yuan in 2012. After being incorporated into Wanfeng Auto Holding, its performance generally showed a trend of rising first and then falling, and reached a peak net profit of 122 million yuan in 2017. However, in 2019, due to the overall decline of the automotive market leading to a decrease in sales, and the construction of a new production base in Jiaxing, which increased operating costs such as depreciation, Shanghai Dacromet's net profit dropped significantly by 62.1% to 40.4934 million yuan. Since then, the company's annual net profit has never exceeded 60 million yuan.

In 2020, Wanfeng Auto Holding did not list Shanghai Dacromet as a major subsidiary, and did not disclose its operating performance. Excluding the data of 2020, from 2014 to 2025, Shanghai Dacromet accumulated a net profit of over 800 million yuan.

△Source: Drawn by a reporter from Time Weekly

The reporter from Time Weekly noticed that even though Shanghai Dacromet's performance has been on a downward trend for many years, its net profit margin is still higher than that of the listed company. The net profit margins of Shanghai Dacromet in 2025 and the first quarter of this year were 17.05% and 12.52% respectively; while the net profit margins of Wanfeng Auto Holding in the same period were 7.14% and 9.22% respectively.

Shanghai Dacromet is mainly engaged in the surface coating processing of metal parts. Wanfeng Auto Holding said that selling the equity of Shanghai Dacromet this time can further focus on the main business, optimize the company's asset structure, reduce the management scope, and lower the asset - liability ratio.

This is the second time for Wanfeng Auto Holding to sell a subsidiary in the past three years.

In December 2023, also for the reason of focusing on the core main business, Wanfeng Auto Holding planned to sell 100% equity of its wholly - owned subsidiary, Wuxi Xiongwei Precision Technology Co., Ltd. (hereinafter referred to as "Wuxi Xiongwei") for 1.1 billion yuan. This company is mainly engaged in the design, manufacturing, and sales of automotive stamping parts and automated stamping dies.

Previously, Wanfeng Auto Holding acquired 95% and 5% equity of Wuxi Xiongwei in 2018 and 2021 for 1.254 billion yuan and 66 million yuan respectively. However, in the year when Wuxi Xiongwei was consolidated (2018), the company's performance declined year - on - year. The annual net profit was 98.5315 million yuan, only 61.58% of the transferor's performance commitment of 160 million yuan. According to the announcement at that time, the sale of Wuxi Xiongwei was a discounted sale, which would result in a loss of 117 million yuan.

02

Nearly 2 billion yuan in cash on the books, the popularity of Zhangxue motorcycles brings incremental business

Wanfeng Auto Holding is an international company centered on advanced manufacturing in the large - transportation field. The company's main business consists of two major sectors: the lightweight business of automotive metal parts centered on "aluminum alloy - magnesium alloy", and the professional general aircraft manufacturing business integrating independent R & D, design, manufacturing, and sales services. The company is also a core supplier of Zhangxue motorcycles.

In recent years, Wanfeng Auto Holding's revenue has been relatively stable, with the overall scale hovering around 16 billion yuan. Due to factors such as the company receiving a total of 141 million yuan in government subsidies and other revenues throughout the year, and obtaining non - operating income of approximately 111 million yuan from the acquisition of the core assets of Volocopter GmbH and compensation income, Wanfeng Auto Holding's net profit attributable to the parent company increased by 51.11% year - on - year to 987 million yuan in 2025.

In the first quarter of this year, Wanfeng Auto Holding's revenue decreased slightly by 3.04% to 3.458 billion yuan. Due to factors such as the increase in raw material costs and exchange losses, the company's net profit attributable to the parent company in that quarter decreased by 11.64% year - on - year to 243 million yuan.

It is worth noting that Wanfeng Auto Holding's cash - flow data is good. As of the end of the first quarter, the balance of Wanfeng Auto Holding's monetary funds was 1.953 billion yuan.

According to the reply of Wanfeng Auto Holding during an institutional research on May 13th, the company continues to focus on the lightweight parts of automotive metals and the general aviation aircraft manufacturing business, and increases the R & D of new aircraft such as fixed - wing aircraft, eVTOL, and drones to explore the global low - altitude market. At the same time, the company will increase R & D investment in new models of general fixed - wing aircraft and eVTOL through business integration and promote the airworthiness certification of relevant models.

Wanfeng Auto Holding said in the announcement that in this transaction, the company will receive the equity sale price as agreed in the agreement, which can be used to repay bank loans and supplement the working capital required for production and operation to support the development of the company's core business.

Wang Peng, an associate researcher at the Beijing Academy of Social Sciences, analyzed to a reporter from Time Weekly on June 9th: "Realizing high - quality non - core assets indicates a very high capital expenditure expectation for Wanfeng Auto Holding. Although the company has nearly 2 billion yuan in cash on its books, considering that the general aviation manufacturing and eVTOL airworthiness certification require continuous and huge investment, the company is actively stockpiling 'ammunition'. This kind of behavior of'selling high - quality assets to supplement new businesses' usually means that the company believes that the long - term valuation premium of new businesses will exceed the contribution of current stable profits."

It is worth noting that the popularity of Zhangxue motorcycles has brought incremental business to Wanfeng Auto Holding. Wanfeng Auto Holding said during an institutional reception that the company is a core supplier of Zhangxue motorcycles, empowering Zhangxue motorcycles in aluminum alloy lightweight technology. While providing core component support for the 820RR - RS high - performance racing motorcycle, it also provides aluminum alloy wheels, swing arms, and frames for models such as the Zhangxue 500RR, 500F, and 820RR.

"The championship of Zhangxue motorcycles has directly increased its brand awareness and sales volume, and also brought corresponding incremental business orders to the company." However, Wanfeng Auto Holding also said that this business currently accounts for a relatively small proportion of the company's overall revenue.

This article is from the WeChat official account "Time Weekly" (ID: timeweekly), author: Song Yiting, Han Xun, editor: Huang Jiaxiang. Republished by 36Kr with authorization.