On the evening of October 27, Daotong Technology released its third-quarter performance report, and the company's revenue and net profit both declined in the first three quarters. Among them, the company achieved revenue of 511 million yuan in the third quarter, a year-on-year de

Image source @Visual China

On the evening of October 27, Daotong Technology released its third quarter performance report, and the company's revenue and net profit both declined in the first three quarters. Among them, the company achieved revenue of 511 million yuan in the third quarter, a year-on-year decrease of 13.21%; net profit attributable to shareholders was 16.5782 million yuan, a year-on-year decrease of 85.07%; net profit excluding non-network was 8.5479 million yuan, a year-on-year decrease of 91.93%.

Since the third quarter of last year, Daotong Technology's performance has been under pressure. The stock price has been falling since July 2021, with a drop of more than half this year. Ti Media App noticed that Daotong Technology had planned to transfer its loss-making assets to management not long ago to increase the company's performance and thus meet the equity incentive conditions. Later, due to regulatory intervention, the above plan was finally failed.

Q3 net profit declined 85% , and the stock price of has halved in the year

According to the third quarter report, from January to September this year, Daotong Technology (688208.SH)'s main business income was 1.544 billion yuan, a year-on-year decrease of 5.55%; net profit attributable to shareholders was 102 million yuan, a year-on-year decrease of 70.13%; net profit excluding non-network was 82.5703 million yuan, a year-on-year decrease of 72.41%.

Among them, in the third quarter of 2022, the company's main business income in a single quarter was 511 million yuan, a year-on-year decrease of 13.21%; the net profit attributable to shareholders in a single quarter was 16.5782 million yuan, a year-on-year decrease of 85.07%; the net profit excluding non-operating items in a single quarter was 8.5479 million yuan, a year-on-year decrease of 91.93%; the debt ratio was 39.97%, investment income was 6.4164 million yuan, financial expenses were -54.3149 million yuan, and gross profit margin was 58.38%.

revenue and net profit, source: Third quarter report

new product research and development investment, and the increase in marketing expenses caused by the marketing promotion of charging pile products, may be an important reason why Daotong Technology's performance continues to be under pressure. From January to September this year, the company's R&D investment totaled 440 million yuan, and increased by year-on-year, accounting for 28.51% of operating income, an increase of 6.3 percentage points year-on-year. In addition, the company's sales expenses in the first three quarters were 255 million yuan, a year-on-year increase of 56.2%. According to the regional situation of

, in the first three quarters of this year, except for the European market's operating income increased by 13.33%, the operating income of North American market, China region and other markets all declined year-on-year. Among them, the main business revenue of the North American market decreased by 15.91% year-on-year, and the main business revenue of the China and other markets decreased by 2.49% year-on-year.

Daotong Technology stated that the decline in revenue in North America was mainly due to a certain decline in ADAS products and battery detection products during the reporting period (the promotion of ADAS pre-installed large customers decreased); while the growth in revenue in the European market was mainly due to the rapid growth of comprehensive automotive diagnostic products, TPMS products and software cloud services during the reporting period.

As of September 30, the net cash flow generated by Daotong Technology's operating activities was -365 million yuan, a year-on-year decrease of 337.45%. The company explained: "It is mainly due to the increase in resources and stockings related to the new energy business."

In fact, since the third quarter of last year, Daotong Technology's performance has been under pressure. As of now, the company's operating income has shrunk for two consecutive quarters, and its net profit has declined for five consecutive quarters.

data shows that Daotong Technology was founded in 2004. The company focuses on intelligent automobile diagnosis, the company focuses on the research, production, sales and services of intelligent automobile diagnosis, detection and analysis systems and automotive electronic components. It is one of the world's leading comprehensive solutions providers of intelligent automobile diagnosis, detection and TPMS ( tire pressure monitoring system ) products and services.

On February 13, 2020, Daotong Technology was listed on the Shanghai Stock Exchange Science and Technology Innovation Board. Since hitting a historical high of 97.13 yuan per share (previous re-rights) in July last year, Daotong Technology's stock price has been falling continuously. As of the close of October 28, it was 37 yuan per share, with a year-on-year decline of 53.27%.

Daotong Technology's stock price, source: Wind

Premium Transfer loss-making assets, wanting to increase company profits? Under pressure on performance, clearing out "loss" assets can increase profits , thereby unlocking equity incentives. However, with the intervention of supervision, this plan failed halfway.

According to the announcement disclosed by Daotong Technology on September 3, the company plans to transfer 65% of the equity of the company to Li Hongjing, Nong Yingbin, Daohetongluo, Daohetongwang and Daohetongxing to Li Hongjing, Daohetongwang and Daohetongxing for a price of 79.625 million yuan. After the completion of this equity transfer, Daotong Intelligent will no longer be consolidated.The equity transfer is expected to generate investment income of 134 million yuan, accounting for approximately 30.54% of the company's audited net profit attributable to shareholders of listed companies in 2021.

It is reported that Li Hongjing is the actual controller of Daotong Technology and is currently the chairman and general manager of a listed company; Nong Yingbin is currently the deputy general manager and director of a listed company; Daohetong, Daohetongwang, and Daohetongxing are all employees of the company, and hold shares in the platform.

This move aroused the attention of regulatory authorities. The Shanghai Stock Exchange immediately sent an inquiry letter to Daotong Technology, asking to explain whether the transaction has increased the company's net profit attributable to the parent and improved the company's performance; the reasons and main considerations for the loss of the equity of the subsidiary, whether there is an external transfer of interests of the listed company; whether the target company is out of the statement and whether the operating costs within the scope of the consolidated financial statements of the listed company have been reduced, and the gross profit of the company is increased, so as to achieve the goal of the assessment of the equity incentive plan in the early stage.

data shows that Daotong Intelligent has been in losses since its establishment on April 8, 2020 and has been in a state of insolvency for a long time. The semi-annual report shows that Daotong Intelligent's net profit lost 25.0603 million yuan from January to June 2022; it lost 103 million yuan for the whole year last year. As of June 30, 2022, Daotong Intelligent's total assets were 39.4446 million yuan and its net assets were -67.0032 million yuan.

Even so, Daotong Intelligent still obtained a high evaluation premium. After evaluation, as of May 31 this year, the book value of all shareholders of Daotong Smart Car was -63.0882 million yuan, the rated value was 66.1163 million yuan, the rated value was 129 million yuan, and the value-added rate reached 204.7%.

Titanium Media App noticed that at the beginning of this year, Daotong Technology announced the adjusted 2021 restricted stock incentive plan, and plans to grant 6.182 million restricted stocks to 211 incentive targets at a price of 52 yuan per share. According to the company-level performance assessment conditions, listed companies must achieve the assessment goal of "operating income increased by 30% compared with 2021 or gross profit increased by 30% compared with 2021" in 2022, so that the incentive targets can obtain the ownership rights of 50% of restricted stocks.

According to the current performance pressure, it is difficult for Daotong Technology to achieve the equity incentive assessment target.

Equity incentive performance evaluation target, source: Announcement

Perhaps due to regulatory pressure, Daotong Technology finally revised its asset transfer plan. On September 20, Daotong Technology disclosed the adjusted equity transfer plan, and the equity transfer share of Daotong Intelligent was adjusted from 65% to 49%, and the transferees remained unchanged. In an interview with the media, the relevant person in charge of

Daotong Technology said, "The company originally planned to hope that through this transfer, the overall burden of listed companies can be reduced. However, in order to comply with relevant regulations, the revised plan will still be held by listed company to hold 51%, so it will not be out of the table, which will basically have no impact on the listed company. It is just that the entire team of subsidiaries will be researched and developed in a new direction." (This article was first published on Titanium Media App, author丨Ma Qiong, editor丨Sun Cheng)