Regulatory policies tightened beyond expectations, and Ant Group's net profit plummeted, officially clearing 36Kr shares

Wen | Shi Sitong

Editor| Tian Yanlin

On March 12, ant group's investment entity API provided filing documents to the U.S. Securities and Exchange Commission (SEC) showed that ant group had sold all of its 15.1% stake in 36Kr and completely withdrawn from its shareholder sequence.

Specifically, on March 10, Qianren LP (the buyer) entered into a share purchase agreement with API (Hong Kong) Investment Limited (the seller) whereby the buyer purchased 6,070,880 ADS (American Depositary Shares) representing 151,772,000 Class A common shares representing the issuer.

According to public information, Ant Group invested in 36Kr in 2015 to support 36Kr to build a platform for entrepreneurs to communicate. On November 8, 2019, 36Kr was listed on the NASDAQ, with a market capitalization of $490 million. As of March 12 this year, the market value of 36Kr has shrunk to $24.67 million.

Since the announcement of the rectification plan in 2021, Ant Group has not only reduced the scale of yu'e bao and shut down mutual treasure in the financial business, but also frequently reduced its holdings and exited in the capital market. The withdrawal of the layout of 36Kr is the second contraction of Ant Group in its capital map this year. In January this year, Ant Group reduced its holdings in ZhongAn Insurance, and its shareholding ratio dropped from 13.54% to 10.37%.

On February 24, Alibaba Group released its quarterly financial results for the october-December 2021 period. According to the data, from July to September 2021, Alibaba's investment income from Ant Group was 5.811 billion yuan. After deducting the investment income of the two overseas companies, the actual operating income of Ant Group in the third quarter of last year fell by more than 40% month-on-month.

Nearly a year and a half of rectification has challenged ant group's revenue capacity. On March 2, Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, publicly stated: "Ant rectification is still continuing, resolutely curbing the disorderly expansion of capital in the financial sector." This means that the rectification of the domestic financial technology giant is not over.

01 The capital map shrinks again and again

In 2020, when Ant just applied for listing, it was revealed that as of August 31 of that year, the group had made a total of 197 investments, covering 23 fields such as travel, catering, education, finance and insurance, enterprise services, artificial intelligence, real estate and home furnishing, etc., with a cumulative cost of nearly 300 billion yuan, and the global investment layout spanned 12 countries such as the United Kingdom, the United States, India, and Singapore, and the huge investment territory amazed the outside world.

On November 3 of that year, Ant Group announced that the listing plan was suspended, and in December, under the joint supervision of the four departments, a special team was established to formulate a rectification plan. Since then, Ant Group has entered a contraction stage, covering its payment, credit information, gold consumption and other businesses, in addition to actively reducing the scale of balance treasure, shutting down mutual treasure, but also reducing its holdings in the capital market.

In April 2021, Ant Group reduced its stake in Indian takeaway company Zomato; in October of the same year, it sold all of its shares in Caixin Media, and also withdrew its investment in Mango Super Media in advance.

Analysts pointed out that since the second half of 2020, after experiencing a series of normative actions such as the suspension of IPO events and the tightening of relevant policies and the tightening of Supervision of Internet financial business, Internet financial technology giants led by Ant Group have made business adjustments, followed the regulatory orientation, actively contracted the investment map, and released a signal focusing on the main business.

For the current rectification of Ant Group, Guo Shuqing said that the overall progress is relatively smooth. "The financial business carried out by these platforms, because there is a certain degree of innovation, was not included in our supervision in the past, and now it is gradually being incorporated into the supervision, there is a process. In the process of rectification, we will encounter difficulties of one kind or another, including the identification or identification of these products by enterprises and management departments, such as data, personal information, personal privacy protection issues, corporate information, trade secret protection problems, involving many aspects, very complex, but in general, we feel full confidence to do a good job in rectification. ”

02 After deducting investment income, ant profits fell sharply

Although Ant Group's capital territory continues to shrink, this does not mean that the risk of its high leverage will soon be lifted, and the company's performance growth has recently stalled.

According to Alibaba's fiscal third quarter of fiscal 2022, from October to December 2021, Alibaba's revenue was 242.58 billion yuan, an increase of 10% year-on-year. In the quarter, Alibaba's net profit attributable to the mother was 20.429 billion yuan, down 74% year-on-year. From July to September 2021, Alibaba recorded an investment income of 5.811 billion yuan for Ant Group, an increase of 21% year-on-year.

Alibaba said in its earnings report that the increase in investment income from Ant Group was mainly due to an increase in net income from investments held by Ant. However, some market participants believe that due to the implementation of domestic accounting standards by Ant Group and the use of US-GAAP by Alibaba, the net profit derived from the investment income does not fully reflect the real quarterly operating results of Ant Group.

Because Ant Group holds 14% and 13% stakes in Zomato and Bukalapak respectively, and the two companies have completed their listings in 2021, Ant Group's cumulative income as an early investor has multiplied. If the investment income of Zomato and Bukalapak, two overseas companies, is deducted, the actual operating income of Ant Group in the third quarter of last year fell by more than 40% month-on-month.