Masterwork Group (Tianjin Evergreen Technology Group Co., Ltd.) 2019 results

MW – one of the anchor investors in Heidelberg


Masterwork, one of the leading Chinese manufacturers of packaging converting equipment, is well known in India, notably, since it demonstrated two die-cutters running at the Printpack India exhibition in the Delhi NCR in February 2019 at the Heidelberg India stand. Sold and serviced globally by Heidelberg, it has entered the Indian market with several sales to leading packaging converters. Masterwork also became a significant investor in Heidelberg in the first quarter of 2019, wherein obtained 8.46% in Heidelberg shares for € 60 million, which amounted to around 9.2% of the existing share capital.

Masterwork is a part of the Tianjin Evergreen Technology Group Co, Ltd, which is quoted on the Shanghai stock exchange. From what we have gleaned from industry reports is that it has been a Shenzhen-based supplier of cigarette cartons as well as die-cutting and hot-foil stamping equipment. The tobacco carton printing company is also known as Shenzhen Liqun Printing Co., Ltd. The company’s preliminary audit report in the public domain, states that this company failed to win a major tender for the production of tobacco cartons and has thus claimed impairment costs and turned the company overall from a profit-making one to a loss-making company.

We first heard and saw Masterwork when it displayed its die-cutters in one of the converting halls several drupas ago in Dusseldorf. In subsequent drupas, especially drupa 2016, MK was shown as a major Heidelberg supplier of converting equipment with whom Heidelberg had shared various technologies and intellectual property. In the 2020 drupa, we expected a stronger level of joint branding with one of the two large stakeholders in Heidelberg (Ferdinand Reuesch AG has a similar shareholding and is also known as an anchor shareholder in Heidelberger Druckmaschinen.)

Ms Li Li, who is listed as the Chairman and General Manager of Masterwork Machinery China, Forex Trading Broker and President of Masterwork USA on Masterwork’s US website, is a member of the Heidelberg board of directors. We believe that the data that we have collected on the publicly listed company from the Shanghai Stock Exchange and then translated with the help of Google Translate and other Chinese experts represents the working of both the converting equipment manufacturing and the tobacco carton-making division.

As readers who delve more deeply into these matters will know or discover, Masterwork or MK is in the process of shifting its operations from Shenzhen to Tianjin. As far as we can make out from the MK financial figures, these are preliminary accounting figures for 2019 and not yet fully audited by an accounting firm, and so may differ from the finally announced numbers. We have extrapolated the numbers from the Chinese Yuan to Euros at the currency exchange rates on 31 March 2020. We have reliable information that the company had 1900 employees in 2019.

The publicly available documents refer to the preliminary audit of 23 January 2020 and the balance sheet of 28 February 2020, in which the 2019 numbers or results are much worse for Masterwork than for 2018. MW’s 2018 revenue of euro 168.05 million increased slightly to Euro 169.19 million while its net profit to shareholders, which was Euro 10.71 million in 2018, turned into a Euro 89.47 loss in 2019. Dividing the 2019 total operating income by 1900 employees for our viability estimate gives a ratio of Euro .089 million per employee.
Several reasons for the recent negative results are stated including the loss of an important tender for cigarette packaging. Other stated reasons given are reconstruction and employee compensation caused by relocation and the relocation itself of Shenzhen Liqun (Masterwork) to Tianjin.

The positive information given in the preliminary audit concerns the investment in Heidelberg, which is stated as in-depth cooperation with international industry giants that have further enhanced the brand’s overseas reputation. The report also says, “Regarding the company’s international development process, the expected growth goal of expanding foreign sales has been achieved.”

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