On April 1st, the "flying car" concept stock, Wanfeng Auto (002085.SZ), announced that its second-largest shareholder, Centurion Life Insurance, intends to reduce its holdings by no more than 9 million shares, which is no more than 0.42% of the company's total share capital. It should be noted that Centurion Life Insurance holds a 6.72% stake in Wanfeng Auto, which means that although the proportion of the reduction is not significant, the expectation of the reduction has already been released.
However, for the "pig on the wind," this seems to be no big deal.
On the opening day of April 1st, Wanfeng Auto opened slightly lower, and although the decline expanded later, for a company whose stock price has nearly tripled within the year, this is almost negligible.
So, how do investors view the "flying car" concept? How do they view the company Wanfeng Auto?
Let's start with the low-altitude economy.
In December 2023, the "low-altitude economy" was listed as one of several strategic emerging industries, becoming a representative of "new quality productivity"; in February of this year, the fourth meeting of the Central Financial and Economic Affairs Commission emphasized the encouragement of developing new logistics models that combine platform economy, low-altitude economy, and unmanned driving; in March, the low-altitude economy was written into the government work report for the first time.
Combining this with the statements from the Civil Aviation Administration, 2024 is hailed as the inaugural year for the development of the low-altitude economy!
So, what is the relationship between Wanfeng Auto and the low-altitude economy?
Wanfeng Auto is an automotive parts enterprise, with its main business being the lightweighting of automotive metal parts and the specialized manufacturing of general-purpose aircraft.According to the company's statement, Wanfeng Auto-Welding is transitioning towards a low-altitude economy. As of now, Wanfeng Auto-Welding possesses 18 general aviation aircraft and a variety of all-electric aircraft, with plans to gradually commercialize eVTOL projects.
The term eVTOL, which stands for electric vertical takeoff and landing vehicles, is primarily used to address air transportation issues within urban spaces, between suburbs, and for intercity point-to-point travel. It offers significant time and cost benefits in various scenarios such as short-distance commuting, emergency rescue, cargo logistics, and scenic area sightseeing.
Focusing on the company, the eDA40 electric aircraft developed by Wanfeng Auto-Welding has become the world's first electric aircraft with direct current fast-charging capabilities to apply for EASA/FAA Part 23 certification. Additionally, as Wanfeng Auto-Welding is a component company, it also has a strong potential in the supply of components for electric aircraft.
However, all of this might merely remain in the conceptual stage.
Why do we say that?
Firstly, as early as 2020, Wanfeng Auto-Welding disclosed the sales revenue of "general aviation aircraft" separately, which is not a new business; secondly, from 2020 to the first half of 2023, the sales proportion from "general aviation aircraft" has not significantly increased, and the company remains an automotive metal components company.
In terms of performance, from 2020 to 2022, Wanfeng Auto-Welding's net profits were 566 million yuan, 333 million yuan, and 808 million yuan, respectively. In the first three quarters of 2023, this figure was 536 million yuan, a year-on-year decrease of 9.68%.
The key point is the stock price.
Starting from 2018, Wanfeng Auto-Welding's stock price has been in a slump and has been fluctuating between 6 and 7 yuan for a long time. What does this indicate? Firstly, the company's overall performance is stagnant, leading to a lackluster stock price; secondly, despite having an electric aircraft business, it fails to pique the interest of the capital market due to the limitations in commercialization progress.
So, the question arises, after this round of increase, Wanfeng Auto-Welding's stock price has approached the high point of 2017, and the company's price-to-earnings ratio is close to 50 times, nearing its highest since going public. Do you think the company can truly achieve a leap in performance with the boost of the "low-altitude economy"?From a developmental perspective, electric aircraft are somewhat akin to electric vehicles from a decade or fifteen years ago; no one would doubt their commercial prospects. However, precisely because of their strong resemblance to electric vehicles, two lessons can be drawn:
First, market competition will be extremely fierce, and without exception, the pioneers of the early batch have become "martyrs"; electric aircraft may follow suit. Second, the development of electric vehicles has largely benefited from the advancement of core components such as batteries; electric aircraft may also adhere to this pattern, only, electric aircraft may also require the enhancement of intelligence.
In a nutshell, while the industry is promising, for specific companies, at least at this stage, it is not a certainty opportunity. Of course, this is also where the charm of speculating on topics lies.
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