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Wonder Auto Technology (WATG) |
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WIKI ANALYSIS
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Business Overview
Wonder Auto Technology, Inc. (WATG), is a Nevada holding company with operating subsidiaries in China primarily engaged in the business of designing, developing, manufacturing and selling automotive electric parts, automotive safety products, suspension products and engine alternators, starters, engine valves and tappets, and rods and shafts for use in shock absorber systems. Company's prodcuts are used in wide range of passenger and commerical automobiles.WATG sells the products with the People’s Republic of China to original equipment manufacturers (OEMs), engine manufacturers and automotive parts suppliers. [1]
History
- On June 8, 2000, Wonder Auto Technology Inc were incorporated in the State of Nevada as “MGCC Investment Strategies Inc.”
- On June 22, 2006, the company acquired all of the capital stock of Wonder Auto in exchange for shares of its capital stock. This share exchange transaction resulted in a change of the ownership control of the Company.
- On August 25, 2006, the company changed its Articles of Incorporation and made a new name into “Wonder Auto Technology, Inc.” As a result of the acquisition, the business became the business of several indirect, wholly-owned Chinese subsidiaries: (1) Jinzhou Halla, (2) Jinzhou Dongwoo, (3) Jinzhou Wanyou, (4) Jinzhou Hanhua, (5) Jinzhou Karham, (6) Jinzhou Motor, (7) Jinzhou Equipment, (8) Fuxin Huirui, (9) Jinan Worldwide; (10) Jinzhou Jiade and (11) Jinzhou Lida.[1]
- On January 1, 2008, the Company acquired a 50% equity interest in Jinzhou Hanhua Electrical System Co., Ltd. (Jinzhou Hanhua), which designs, manufactures and sells armatures for automotive starters and oil pumps. Jinzhou Hanhua is a supplier to another operating subsidiary of its, Jinzhou Halla Electrical Equipment Co., Ltd. (Jinzhou Halla).
- On February 19, 2008, the Company acquired a 65% equity interest in Jinzhou Karham Electrical Equipment Co., Ltd. (Jinzhou Karham), which is engaged in the business of designing, manufacturing and selling carbon brush assemblies for automotive starters. Jinzhou Karham is a supplier to another operating subsidiary of its, Jinzhou Halla.
- On May 15, 2008, WATG acquired a 100% equity interest in Fuxin Huirui, which manufactures and sells rotors for automotive alternators. Fuxin Huirui is a supplier to another operating subsidiary of its, Jinzhou Halla.
- On September 22, 2009, WATG completed the acquisition of 100% of equity interest in Friend Birch Limited.
- On September 2010, the Company acquired Jinheng (BVI) Limited (Jinheng (BVI)), which is a manufacturer of airbags and seatbelts in China. The acquisition consisted of two transactions: the Company’s disposal of 38.36% interest in Applaud Group Limited to Jin Ying Limited and the other the purchase of 100% interest Jinheng BVI, a wholly owned subsidiary of Jinheng Holdings.
Business segments
Wonder Auto Technology Inc. operates in four business segments: alternators, starters, rods and shafts, and engine valves and tappets.
- Alternators
The alternators are manufactured by Jinzhou Halla. An alternator is part of a car engine’s electrical system which is connected to the engine belt of a vehicle and converts mechanical energy into electricity to recharge the battery. The battery, in turn, provides power to all electrical devices in the vehicle, such as the radio, power steering, headlights and windshield wipers. The Company has developed, manufactured and sold seven series of alternators, which are represented by different sizes and output rates, in over 230 models. The alternator’s electrical current flows range in size and output from 35A to 120A. .[2]
- Starters
The starters are manufactured by Jinzhou Halla. A starter is part of a car engine’s starting system, along with the starter solenoid. At ignition, the starter solenoid is activated and provides power for the starter. The starter then spins the engine a few revolutions to begin the internal combustion process. The starters produced by the Company are known as planetary type starters. These starters are small and lightweight due to their high speed motors combined with speed reduction systems.
- Rods and Shafts
The rods and shafts are manufactured by Jinzhou Wanyou Mechanical Parts Co., Ltd. (Jinzhou Wanyou). The rod and shaft products are used in shock absorber which is a key part in a vehicle’s suspension system. A shock absorber rod is the stem in the shock absorber providing support of a vehicle’s suspension system.
- Engine Valves and Tappets
The engine valves and tappets are manufactured by Jinan Worldwide Auto Accessories Co., Ltd. (Jinan Worldwide) Engine valves and tappets are used in internal combustion engines to control and facilitate the engine’s air intake and exhaust functions. The engine valves and tappets are critical to optimizing the engine’s power output and fuel consumption. Jinan Worldwide produces five series of engine valves and tappets in term of applications with over 200 models.
Sales Revenue by Product Segments
In 2009, the sales revenue from alternator products was $74.2 million, sales revenue from starter products was $68.9 million, sales revenue from rod and shaft products was $21.2 million, and the sales revenue from engine valves and tappets was $46.6 million. Among the four principal products, rods and shafts production enjoyed the fastest growth rate and the highest gross margin, reaching approximately 25-30%.
The company manufacture and sell both alternators and starters using largely the same facilities, personnel and other resources in Jinzhou Halla. Rods and shafts are mainly manufactured by subsidiary Jinzhou Wanyou. Valves and tappets are manufactured by our newly acquired subsidiary Jinan Worldwide.
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Human Resources
Management Team
- Qingjie Zhao, CEO & President:
Mr. Zhao is a senior engineer of professor level, and a postgraduates tutor of LUT, He is also a committee member of the Liaoning Provincial People’s Political Consultative Congress and representative of the Jinzhou Municipal People’s Congress. Mr. Zhao had served in universities, research institutions and enterprises as lecturer, head of shock absorber research centre, general manager and chairman respectively. He has over 20 years experience as senior management and 29 years experience in automotive industry.
- Qingdong Zeng, CSO:
Mr. Zeng will oversee the Company’s daily operations of accounting, research and development, legal affairs and human resource and assist the Chief Executive Officer in the development and implementation of the Company’s overall strategies. Mr. Zeng has over 16 years experience in enterprise management and over 25 years experience in the automotive industry.
- Meirong Yuan, CFO:
Mr. Meirong Yuan become a director of Jinzhou Halla Electrical Equipment Co., Ltd since January 2002, graduated from Lanzhou Business School, a certified public accountant.
- Yuncong Ma, COO:
Mr. Yuncong Ma has been appointed director and general manager of the Jinzhou Halla Electrical Equipment Co., Ltd since October 1997, senior engineer, graduated from the Harbin Institute of Technology.[3]
Employee
WATG employed 3,766 full-time employees as of December 31, 2009. Under the Chinese Law, the company have to have contracts with all of the officers, managers and employees. WATG are required to contribute state pension scheme organized by Chinese municipal and provincial governments at the rates of 30.6% to 45.0% of the employee's salaries and wages.The company also have to purchase various types of social insurance for employees required by Chinese Law.Under is a table sets for number of full-time employees by function:
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Competition
The automobile parts market in China is very competitive. The company compete based upon the price and quality of their products, product availability and customer service. There are approximately 10 major competitors in this market trying to sell the same products that to the same group of target customers.
Primary competitors Located in China
Shanghai Valeo Automotive Electrical Systems Co. Ltd.,
Hubei Shendian Auto Motor Co., Ltd.
Zhongqi Changdian Co., Ltd.
Parimary International competitors
VALEO (France),
BOSCH (German),
RAMY (U.S.),
Mitsubishi Motor (Japan)
Denso (Japan).
These competitors may have better financial resources, larger staff, and more established market recognition in both international markets andd domestic Chinesehan WATG have.
SWOT Analysis
Strengths
- The company's ability to generate cash from operating activities is one of their fundamental financial strengths.
- The company now operate four research and development centers, each performing different research and development activities.These centers focusing on the enhancement of current products, and the development and testing of new alternator, starter and electric motor products. and also focusing on the development and testing of new engine valve and tappet products to achieve success.
Weaknesses
- The Company has been chanlleged by the geographic distance between business operations, the compatibility of the technologies and operations being integrated and the disparate corporate cultures.
- The Company has difficulty in designing products that are compatible with product standards in foreign countries.
- Hard to Opening the overseas markets,due to the import and export regulations, difficulty in accounts receivable collection and also difficulty in engaging and retaining distributors and agents who are knowledgeable about, and can function effectively in, overseas markets.
Opportunities
- There is a opportunities for the company to expand their market share in the international market. As international automotive manufacturers implement cost saving plans, low cost manufacturing regions such as China has a great opportunities. WATG has high quality, low cost products, also this will be attractive to international automakers and engine manufacturers.
- In the other hand, WATG's subsidiary Jinzhou Wanyou is specialized in the manufacturing of rods and shafts. With more and more oversea automakers ceasing to manufacture rods and shafts themselves due to cost concerns, the company will anticipate more sales opportunities for rods and shafts in the oversea market.
- WATG also plan to utilize their existing export sales network and resources to sell engine valves and tappets manufactured by recently acquired subsidiary Jinan Worldwide, and in the furture it will increase the company's export sales.
Threats
- Goverment Taxes
Porter's 5 Forces
Risk Factors
References
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