is located in the traditional silk production area of Jiangsu and Zhejiang . The silk-related products produced by Wanshili have been widely recognized in Zhejiang. The company's scarves, combination sets and home textiles are also favored by enterprises and tourism groups, and are often selected as welfare or tourism souvenirs distributed to employees by enterprises. However, silk products are not very suitable and are sold at a higher price than similar products. Therefore, as employee benefits and travel souvenirs, Wanshili's products do not seem to be widely accepted by the public on a larger scale.
From 2017 to 2019, Wanshili's silk cultural creative products only provided the company with about 50% of its revenue, and the remaining revenue relies on providing services such as silk fabrics, OEMs and digital printing and processing to other textile and clothing companies. In the first half of 2020, due to the impact of the epidemic, the cultural and travel industry was hit, and silk cultural creative products were unsalable, and 44.74% of Wanshili's income came from mask-related products. The company's continued operation and business development capabilities were therefore questioned by Shenzhen Stock Exchange .
In addition, Wanshili's controlling shareholder is Wanshili Group Co., Ltd. (hereinafter referred to as " Wanshili Group "). As an old enterprise with a history of more than ten years, Wanshili Group itself has had nearly 100 lawsuits and has had to bear joint and several liability for the guaranteed company due to debt defaults.
products partially rely on OEM, and their core competitiveness is unknown
Wanshili's predecessor was Wanshili Investment, which was established by Wanshili Group in September 2007. After its establishment, Wanshili mainly inherited Wanshili Group's silk-related product business. As of the first half of 2020, Wanshili's business segments mainly include the silk cultural creative products segment that uses independent brands, the silk textile products segment that does not use independent brands as an OEM and the mask business segment.
It is worth mentioning that although Wanshili has a silk textile product business that is manufactured by other companies, there are not many processes for the company's products to be produced independently by Wanshili. In addition to some design and printing and dyeing processing, Wanshili's silk cultural creative products business and silk textile products business have a large number of processes completed through outsourced production, commissioned processing and even outsourcing models. Even Wanshili only has some of the printing and dyeing processing steps for downstream textile and clothing companies to complete by the company. Wanshili subcontracts them and handes them over to outsourced manufacturers, entrusted processors and outsourced outsourcers. Although the company has formed a number of patented technologies, the core technology that the company claims is that it has mastered, CNC equipment used for processing still needs to be purchased from other companies. Wanshili's leading double-sided digital printing technology is mainly reflected in patents and color galleries. Although new entrants have difficulty mastering digital printing color management technology in the short term, as a relatively mature technology, double-sided digital printing technology may still be copied by other companies. When the exchange responded to the benefits, it also questioned the sustainability of the company's advanced digital printing technology.
lacks core sustainable leading technology on the production side and fails to build its own capacity moat, and Wanshili’s layout on the sales side is not strong. As of the end of June 2020, Wanshili had only 3 direct stores and only 36 franchisees. In addition to the significant growth of Wanshili's franchisees in 2018, the number of new franchisees added to the company in 2019 and the first half of 2020 was basically the same as the number of lost franchisees. Therefore, at the end of 2019, Wanshili's franchisees were still 34 in 2018.
In the three years from 2017 to 2019, Wanshili's total sales volume to franchisees increased by only 11.16%, while the inventory of these franchisees accounted for a higher and higher proportion of the corresponding sales of the current period, from 22.89% in 2017 to 33.61% in 2019, an increase of more than 10 percentage points in three years.
At the same time, affected by the epidemic in 2020, in the first half of 2020, Wanshili's franchisees generally suffered losses and inventory backlogs. The inventory of these franchisees accounted for 268.25% of the corresponding sales of the current period. The unsalable product sales on the franchisee side will undoubtedly increase the risk of Wanshili franchisees losing or franchisees applying for large-scale returns and exchanges. Wanshili's distribution and agency sales channels only provide the company with a small amount of distribution and sales revenue, which is difficult to support the company's main revenue. At the same time, Wanshili's store layout is mainly concentrated in Zhejiang, and the sales channel layout has not effectively left Zhejiang.
Data source: Wind
The production side has no core competitiveness and weak sales channel layout, which has caused Wanshili's revenue and net profit to rarely increase during the period from 2017 to 2019. In the three years from 2017 to 2019, Wanshili's total operating income increased by only 2.24%, and the net profit attributable to shareholders increased by only 9.90%. In the first half of 2020, due to the impact of the epidemic, except for the impact of masks on Wanshili's income, the company's business income of silk cultural creative products and the business income of silk textile products both decreased by more than 30% year-on-year. In the exchange's reply, the main difficulties and obstacles faced by Wanshili's business development and performance growth were also questioned.
Regarding issues related to Wanshili's core business and core competitiveness, "Investors Network" also consulted Wanshili's secretary's office, but failed to get a reply from the other party.
controlling shareholders have many related risks, and the necessity of fundraising is questionable. Wanshili Group controls 54.58% of Wanshili's equity and is the controlling shareholder of the company. Wanshili Group's shareholders Tu Hongyan , Tu Hongxia, Li Jianhua, Wang Yunfei and Shen Baijun signed the "Consensus Action Agreement" in May 2019, jointly forming the actual controller of Wanshili.
As Wanshili's controlling shareholder and actual controller, Wanshili Group and one of the actual controllers Tu Hongyan and Li Jianhua have provided guarantees for Wanshili and its subsidiaries in recent years. However, in addition to providing guarantees for Wanshili and its subsidiaries, Wanshili Group also provides loan guarantees for Zhejiang Hangbao Group Co., Ltd. (hereinafter referred to as "Hangbao Group") and its affiliates.
Qichacha information shows that in 2018, Hangbao Group and its affiliated parties experienced a debt crisis. Nanjing Bank Co., Ltd. (hereinafter referred to as " Nanjing Bank ", 601009.SH), Wenzhou Bank and China Minsheng Bank Co., Ltd. (hereinafter referred to as " Minsheng Bank ", 600016.SH) all filed lawsuits against Hangbao Group, its affiliates and guarantor Wanshili Group due to loan overdue issues. In the end, Hangbao Group and its affiliated parties lost the case, and Wanshili Group assumed joint and several liability, with a total liability of nearly 200 million yuan.
In addition to bear joint and several liability for guarantees, Wanshili Group also litigated with many companies due to equity transfer disputes or housing purchase and sale disputes. At the same time, Wanshili Group also has a large number of equity pledges. Between January 2018 and October 2019, Wanshili Group was enforced by the court five times, with the amount involved being nearly 100 million yuan.
It is worth mentioning that in this IPO, Wanshili plans to raise funds to invest in projects such as digital intelligent operation system construction projects, display and marketing center construction projects, digital printing production line technology transformation projects with an annual output of 2.8 million meters, and supplementary working capital. However, the amount of funds raised in expanding the digital printing production line accounts for only 18.46% of the total amount of funds raised. At the same time, Wanshili plans to raise 130 million yuan to supplement the company's working capital, accounting for 40% of the total amount of funds raised.
However, as of the first half of 2020, Wanshili's debt-to-asset ratio was less than 25%. A large part of the company's liabilities are contract liabilities and accounts payable, and Wanshili does not have interest-bearing liabilities such as short-term loans or long-term loans. At the same time, as of the first half of 2020, Wanshili also had 215 million yuan in cash. With the debt-to-asset ratio less than 25%, and the company still plans to raise 130 million yuan to supplement working capital, which inevitably makes the market doubt the necessity of Wanshili to raise funds to supplement working capital.
For the above issues, Investors Network also consulted the Secretary of the Board of Directors of Wanshili, but failed to get a reply from the other party.
This article is from Investors Network
