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Yaguang Technology (300123), which has been on a downward trend since 2020, is about to "shed its burden" again. On July 25, Yaguang Technology disclosed an announcement stating that the company agreed to transfer 100% of the equity of its third-level wholly-owned subsidiary Zhuhai Fengchao Yacht Manufacturing Co., Ltd. (hereinafter referred to as "Zhuhai Fengchao"). Beijing Business Daily reporters noted that this is the second time this year that Yaguang Technology has reduced its financial pressure by divesting its subsidiaries. Behind this, Yaguang Technology has suffered net losses for three consecutive years, and its stock price has also fluctuated downward since August 2020.

Divestiture of subsidiaries again

After canceling a subsidiary, Yaguang Technology is going to transfer the equity of another subsidiary.

On July 25, Yaguang Technology disclosed an announcement that its second-level wholly-owned subsidiary Guangdong Baoda Yacht Manufacturing Co., Ltd. (hereinafter referred to as "Guangdong Baoda") transferred 100% of the equity of Zhuhai Fengchao to Zhuhai Sanxiang Construction Foundation Engineering Co., Ltd. (hereinafter referred to as "Sanxiang Construction") and Fu Liting at a price of approximately RMB 28.7233 million, of which Sanxiang Construction acquired 60% of the equity and Fu Liting acquired 40% of the equity. As of the date of the announcement, Guangdong Baoda has received the first installment of the equity transfer payment of RMB 10 million.

It is understood that the business scope of Zhuhai Fengchao, which is transferred by Yaguang Technology this time, includes the design, manufacture, and sales of self-produced yachts, ship models, marine supporting equipment and furniture, fishing gear, fiberglass products, and provision of after-sales services for the above products.

From the performance point of view, Zhuhai Fengchao's performance is not ideal. The announcement shows that in 2023 and the first quarter of 2024, Zhuhai Fengchao's net profit continued to be in the red, and the company's net profit was approximately -2.4954 million yuan and -67,000 yuan respectively.

Beijing Business Daily reporter noted that this is the second time that Yaguang Technology has divested its subsidiaries this year. In addition to Zhuhai Fengchao, Yaguang Technology also "dumped" its wholly-owned subsidiary Chengdu Yaguang Maiwei Technology Co., Ltd. (hereinafter referred to as "Chengdu Maiwei").

In June this year, Yaguang Technology disclosed an announcement stating that the company had completed the cancellation of Chengdu Maiwei and received the "Registration Notice" issued by the Administrative Approval Bureau of Chenghua District, Chengdu City. The cancellation registration procedures for Chengdu Maiwei have been completed.

Economist and new finance expert Yu Fenghui told Beijing Business Daily that listed companies' continuous divestiture of subsidiaries may be to improve overall operational efficiency and market competitiveness, or to reduce financial burdens and improve financial conditions and reported profits by divesting subsidiaries. These measures may have a positive impact on the company's future financial status and operational stability, help improve the company's financial performance and reduce debt burdens, and thus benefit the company's long-term development.

Net profit has been in the red for three consecutive years

Yaguang Technology "abandoned" its subsidiaries twice in order to reduce costs and increase profits.

Regarding the reason for the transfer of Zhuhai Fengchao, Yaguang Technology stated that it was to further revitalize boat assets to optimize the company's industrial structure and business layout. If the transaction is successfully completed, it will have a positive impact on the company's consolidated profits. The company's transfer of equity is in line with the company's actual operating conditions and is conducive to the company's future development.

When canceling the registration of Chengdu Maiwei, Yaguang Technology also mentioned that since Chengdu Maiwei currently has no actual business operations, the cancellation of Chengdu Maiwei is intended to further optimize resource allocation and reduce management costs.

As it continues to divest its subsidiaries, Yaguang Technology is facing operational pressure.

The financial report shows that Yaguang Technology's performance plummeted in 2020, with the net profit attributable to shareholders falling sharply from about 280 million yuan in 2019 to about 35.1154 million yuan. Yaguang Technology said that the sharp decline in performance was mainly due to the large losses in its boat business due to a number of factors such as the industry downturn.

In addition, the controlling subsidiary Chengdu Yaguang Electronics Co., Ltd. (hereinafter referred to as "Yaguang Electronics") has sufficient military product orders on hand, but some high-quality orders, such as a batch of missile supporting orders from a certain institute, were not delivered and revenue was not recognized during the reporting period. However, the company's main business, core competitiveness, and main financial indicators have not undergone major adverse changes, which are consistent with industry trends.

Subsequently, Yaguang Technology's net profit turned to loss in 2021 and has been in the red for three consecutive years, and it has not yet turned a profit in the first quarter of this year. The financial report shows that from 2021 to 2023 and the first quarter of 2024, Yaguang Technology's attributable net profit was approximately -1.199 billion yuan, -1.201 billion yuan, -283 million yuan, and -12.5241 million yuan, respectively.

In the secondary market, the share price of Yaguang Technology has also been falling. As of the close of July 25, 2024, the share price of Yaguang Technology was 4.43 yuan per share.

The fixed increase fundraising failed this year

In addition to unsatisfactory performance, Yaguang Technology's planned capital increase also failed this year.

It is understood that the planning of Yaguang Technology's private placement began in June 2022. At that time, the company disclosed a plan showing that it planned to issue shares to specific objects to raise a total of approximately 673 million yuan. After deducting issuance expenses, it plans to use it for the construction project of the Microelectronics Research Institute, to supplement working capital and repay bank loans. The planned use amounts of the raised funds are approximately 150 million yuan and 523 million yuan, respectively.

Regarding the reason for the fundraising, Yaguang Technology stated that with the continuous development of the company's business, it is difficult to meet the company's rapid development funding needs by relying solely on its own funds and bank loans. The funds raised from this issuance will effectively alleviate the financial pressure caused by the company's rapid development. At the same time, it will help to enhance the company's capital strength, reduce the company's financial expenses, enhance financial stability, reduce financial risks, and further enhance the company's core competitiveness.

In March this year, because Yaguang Technology applied to withdraw its application documents, the Shenzhen Stock Exchange decided to terminate the review of the company's application to issue shares to specific objects.

Regarding the reason for terminating the private placement, Yaguang Technology stated that after comprehensively considering many factors such as the current changes in capital market policies, the company's development plans and the market financing environment, after full communication and careful analysis by all relevant parties, the company decided to terminate the issuance of shares to specific objects. The company's current production and operation activities are proceeding normally.

Chen Zhenhui, senior partner of Beijing Jingshi Law Firm, told Beijing Business Daily that if a listed company is in financial distress, it is recommended to adopt active financial strategies, such as optimizing asset structure, reducing debt, and improving operational efficiency. It can also consider seeking external help, such as seeking government support, strategic cooperation with other companies, and introducing new investments. If asset divestiture is to be carried out, short-term financial pressure and long-term development strategy should be weighed. At the same time, transparency and communication should be maintained with stakeholders to explain the motivation and impact of divestiture in order to build investor confidence and market trust.

Regarding the relevant issues, a Beijing Business Daily reporter sent an interview letter to Yaguang Technology, but as of press time, no reply was received.

Beijing Business Daily reporter Ma Huanhuan and Ran Lili