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Shen Yourong, reporter of Yangtze Business Daily Pentium News

The operating performance of industry leader Mega Holdings (300695.SZ) has declined.

On the evening of August 18, Zhaofeng shares disclosed its 2024 semi-annual report. In the first half of the year, the company achieved operating income of 325 million yuan, a year-on-year decrease of 3.64%; net profit attributable to shareholders of the parent company (hereinafter referred to as "net profit") was 66.3079 million yuan, a year-on-year decrease of 13.22%; net profit after deducting non-recurring gains and losses (hereinafter referred to as "net profit after deducting non-recurring gains and losses") was 59.2915 million yuan, a year-on-year decrease of 10.95%.

The reporter of Yangtze Business Daily Pentium News found that the last time Zhaofeng shares saw a decline in both revenue and net profit in the first half of the year was in 2019, four years ago. In the first half of 2019, the company's operating income and net profit were 215 million yuan and 80.2555 million yuan, respectively, down 7.85% and 11.99% year-on-year.

Zhaofeng Co., Ltd. is a high-tech enterprise specializing in the production of automobile wheel hub bearing units and chassis system related products. Its main business covers the research, development, production and sales of various types of automobile wheel hub bearing units, release bearings and other automobile bearings, commercial vehicle chassis system parts and automotive electronic and electrical products. The company has developed more than 5,200 types of various types of automobile wheel hub bearing units, and its products cover the world's major mid-to-high-end passenger cars, commercial vehicle series and various new energy vehicles including Mercedes-Benz, BMW, Audi, Ford, GM, etc.

Public information shows that Zhaofeng Co., Ltd. is a leading manufacturer in China's automotive wheel hub bearing unit industry, with its product sales and export volume ranking among the top in the country.

Why did Zhaofeng’s operating performance decline in the first half of this year?

According to the data disclosed in the financial report, the company's credit impairment losses and asset impairment losses were 4.0757 million yuan and -1.7734 million yuan, respectively, down 212.75% and 47.76% year-on-year, mainly due to the reduction in accounts receivable, which led to a corresponding reduction in bad debt reserves and inventory impairment reserves. In addition, the company's non-operating expenses decreased and non-operating income increased. These changes have a certain positive impact on operating income and net profit.

Zhaofeng shares explained that the current automobile industry is accelerating its development in the direction of the "new four modernizations". The industry has entered a new development stage with diversified demands and optimized structure. The automobile parts-related industries are also facing many changes and requirements. The industry competition is becoming increasingly fierce, and the company is facing various difficulties and challenges.

According to the semi-annual report, in the middle of this year, Zhaofeng shares unexpectedly announced a cash dividend. The total share capital registered on the equity registration date for the implementation of the equity distribution will be deducted from the share balance in the company's repurchase special securities account as the base, and a cash dividend of 7 yuan (including tax) per 10 shares will be distributed to all shareholders. It is expected to distribute a cash dividend of 49.4047 million yuan, accounting for 74.51% of the net profit in the first half of the year.

The dividend frequency of Zhaofeng shares is not stable. In the four years from 2020 to 2023, the company only distributed cash dividends of 12.7674 million yuan in 2021, accounting for 10.12% of the net profit of the year. In these four years, the company realized net profits of 160 million yuan, 124 million yuan, 165 million yuan, and 184 million yuan, respectively, all of which were profitable.

It is worth mentioning that Zhaofeng shares have a good financial situation and have been at a low debt level in recent years. As of the end of 2023, the company's debt-to-asset ratio was only 18.59%.