Thinking of the creation of IPO is suspended again, why is luo Zhenyu's dream of listing difficult to come true?

Image source @ Visual China

Wen | Radar Finance, author | Zhang Kaijing, editor| Deep Sea

Recently, the IPO review status of Beijing Thinking Creation Information Technology Co., Ltd. (hereinafter referred to as "Thinking Creation"), the main operating entity of Luoji Thinking, has been changed to "Suspended".

Radar Finance noted that since the Beijing Securities Regulatory Bureau disclosed counseling information in October 2019, Thinking Creation has updated its prospectus several times and changed its path from the Science and Technology Innovation Board to the ChiNext Board, but it still hovers outside the door of the IPO. During this period, the paid track of knowledge that the creator of the mind focuses on has undergone earth-shaking changes.

2016 is considered by the outside world to be the first year of knowledge payment, when Products such as Himalaya, Zhihu, Lychee Micro-Lesson, Ten Point Classroom, Douban Time and so on mushroomed, and capital also began to add to this track; but with the passage of time, the popularity of knowledge payment has declined, and trafficking anxiety has become a new label for Luo Ji's thinking. Before the creation of thinking began to prepare for listing, the well-known financial writer Wu Xiaobo had already folded the waters of the capital market.

In the past two years, the form facing Luo Ji's thinking has become more severe. In the context of anti-inward scrolling and lying flat has become the main tone of social media, more and more users are no longer obsessed with solving anxiety through "class", and the monthly life of getting apps has also declined. Even the old show "Friends of Time" has declined in popularity.

Industry insiders believe that the current ways of knowledge dissemination are also becoming diversified, which is also one of the factors that Luo Zhenyu's listing dream is difficult to achieve.

Reduced valuation "bleeding listing"

Radar Finance found that the earliest disclosure of the relevant situation of the listing of Thinking Creation was in October 2019. At that time, the listing counseling information released by the Beijing Securities Regulatory Bureau showed that Thinking Creation chose to be listed on the Science and Technology Innovation Board, and the counseling institution was CICC, and the preparatory work for counseling began in December 2018.

In September 2020, Thinking Creation disclosed the prospectus for the first time, at which time the company has turned to the ChiNext board. According to the prospectus, Thinking Creation intends to publicly issue no more than 10 million shares, accounting for no less than 25% of the post-issuance share capital, and raise 1.037 billion yuan.

According to this calculation, the company's valuation is about 4 billion yuan, compared with the valuation of 7.368 billion yuan after the completion of the D round of financing in September 2017, which has been inverted, which can be called "bloody listing".

It is worth mentioning that Thinking Creation has experienced five rounds of financing before applying for listing, and the current lineup of shareholders behind it is not lacking in well-known institutions such as China Cultural Industry Investment Fund, Sequoia China, Zhengxin Valley Capital, Fengshang Capital, zhen fund and so on.

The "Creator", which holds 5.23% of the shares of Thinking Creation, also has many well-known entrepreneurs such as Lenovo Liu Chuanzhi, New Oriental Yu Minhong, Cheetah Fu Sheng, Good Future Zhang Bangxin, Noah Fortune Wang Jingbo and many other well-known entrepreneurs.

Even so, the listing process of the creation of thinking is still full of twists and turns. In the 18 months since then, the Shenzhen Stock Exchange has conducted three audit inquiries on Thinking Creations, and the latter's prospectus has been submitted to the fourth edition, most recently on March 28, 2022. However, on March 31, the Shenzhen Stock Exchange suspended the review of its issuance and listing due to the expiration of the financial information recorded in the IPO application documents of Thinking Creation.

This is the third time that the Review of Mind Creation has been suspended, and the first two times occurred in 2021 for the same reasons as this one.

According to the prospectus, the main business of Thinking Creation is divided into two parts: online and offline. Online mainly through the App, Luo Jisi WeChat public account to provide courses, listening books and e-books and other products, offline through the Institute of Advanced Studies (formerly known as "Get University"), "Friends of Time" New Year's Eve speeches and other forms to provide general education and skills training services.

However, from the science and technology innovation board to the ChiNext board, there have been many doubts about the innovation ability and business model of thinking creation.

Previously, a representative of the sponsor of a well-known securities company said in an interview with the media that there is a big gap between the overall business model of thinking and creating and the scientific and technological innovation and hard technology industries focused on the science and technology innovation board, which is not in line with the positioning of the science and technology innovation board.

There are also some views that the creation of thinking belongs to the non-rigid need course. Although it advertises to provide customers with "lifelong education", from the perspective of specific teaching content, whether it is the content of offline teaching such as the App or the "Institute of Advanced Studies", it is mainly based on success studies, workplace studies and popular science. These courses can affect people's worldview and outlook on life to a certain extent, but for adults, they can only be icing on the cake, and cannot quickly improve the workplace competitiveness and salary of learners like functional education.

Radar Finance noted that the Shenzhen Stock Exchange also paid close attention to the positioning of thinking creatures in the ChiNext board in the latest inquiry letter. It requires the company to explain the innovation and advantages of the business model, product form compared with the industry, whether the core technology is innovative, and whether it is different from the general technology of the industry.

Traffic bottlenecks are being faced

According to the prospectus and the data predicted by the company in the inquiry letter, in the four reporting periods from 2018 to 2021, the company achieved revenue of 738 million yuan, 622 million yuan, 671 million yuan and 843 million yuan respectively; the company's non-net profit was 32.8095 million yuan, 30.6757 million yuan, 28.1222 million yuan and 48.6473 million yuan respectively in the same period, and both data fluctuated considerably.

Among them, the treatment of cool teenagers is one of the important reasons for the fluctuation of the company's profits.

It is understood that Cool Teen is the main operator of the education brand "Juvenile Get", which is a one-stop education App for 5-15-year-old teenagers, providing three types of services: knowledge payment, training camp and live class.

But Cool Boy's earnings have been poor, and he has been in the red since August 2017. According to the characteristics of the K12 education industry, Thinking Creation in 2019 introduced the famous host Zhang Quanling and others as new investors for Cool Teenagers, and since then it has changed from a holding company of Cool Teenagers to a shareholding company. During the year, Thinking Creation made a profit of 67.4 million yuan from the disposal of cool teenagers' equity.

Since then, online education has ushered in the limelight, and Zhang Quanling and his team have also led Kude Teenagers to complete three rounds of financing in March 2019, October 2019 and October 2020, with a total amount of hundreds of millions of yuan. During this period, the number of users of its fist product "Quanling's Language Class" once achieved a 25-fold increase.

But on the one hand, cool teenagers also have the typical characteristics of online education "burning money", in the first half of 2019-2021, cool teenagers accumulated net losses of more than 370 million yuan; on the other hand, the release of the "double reduction" policy has made them subject to compliance questions. Therefore, Thinking Creation chose to transfer all the remaining equity transfer of the cool teenager in its hands in August 2021.

In addition, government subsidies for the creation of the mind have also declined in recent years. During the reporting period, the amount of government subsidies included in other income of the company was 11.6667 million yuan, 14.2683 million yuan, 12.2962 million yuan and 3.3576 million yuan, respectively.

More critically, from the data of recent years, the app has obviously encountered a traffic bottleneck. In the four reporting periods from 2018 to the first half of 2021, the number of new registered users of the App was 6.8137 million, 3.975 million, 4.5646 million and 1.7203 million, and the number of new paid users was 1.6491 million, 911,000, 826,100 and 333,700, respectively.

According to analysys data, the average monthly active life of the App in 2017 can remain above 2.5 million, and by the second half of 2018, it has fallen below 2 million, and in the past year, it has only been around 1.5 million.

In order to boost the traffic of the App, Luo Zhenyu has personally appeared on variety shows such as "Strange Story". He said on the show: "Many friends told me that you are not suitable for variety shows at all, but I still have to hold on here, and I still have to lick my face and advertise our get apps." ”

In the latest New Year's Eve speech, Luo Zhenyu was also complained by many netizens that "it has changed its taste". It is interspersed with a lot of publicity for teachers in 53 stories, and several stories tailored for advertisers, which seems to the outside world more like an entrepreneur who promotes products than an orator who transmits value points.

How many more people are willing to pay for knowledge?

Radar Finance noted that the main product of thinking creation has shown signs of collapse in recent years.

Taking the "Friend of Time" New Year's Eve speech as an example, from 2017 to 2019, its refund ratio increased year by year, to 2.90%, 4.99%, 14.12%; in 2020, due to the impact of the epidemic, the proportion rose to 43.29%; in 2021, due to the fear of the epidemic, the speech was simply changed to online live broadcast.

Usually, during the speech, Luo Zhenyu will make nouns and concepts for the hot events of the year, explain them from a unique perspective, and then use real-life examples to demonstrate. But in fact, there are views that do not give a deep understanding of the core logic of the thing itself.

For example, in 2019, Luo Zhenyu proposed the "elevator mode" and "climbing mode", and gave examples such as Li Jiaqi and the "Peking University Butcher", but in fact, it is still the clichéd problem that people need creativity and choice ability, and no effective solution to this problem is given.

In addition, the courses in the App have also been accused of insufficient professionalism and practicality of knowledge. Netizens who have long been concerned about the App said that today, the best selling is Xue Zhaofeng's economics class and other courses a few years ago, and the lack of content is self-evident. If it involves related professional fields, the content obtained is superficial and subjective, and many course teachers do not have actual data or professional endorsements, which is used to make it seem chicken.

Luo Zhenyu's own label of "selling anxiety" also seems to be difficult to tear off.

At the end of 2021, before Yu Minhong began his first douyin live broadcast with goods, he had a video connection with Luo Zhenyu, and the theme of the conversation between the two was to discuss the 35-year-old phenomenon of Dachang.

And Luo Zhenyu's sentence left a deep impression on netizens: "If the 35-year-old is still submitting resumes everywhere, it proves that the most important thing before the age of 35 has not been done, that is, the ability to develop his personal network and social network has not yet been completed." The focus of netizens is that although this sentence is not wrong, from the tone to the tone is still the same sense of overlook. So soon after, "this Luo Zhenyu kept creating anxiety" became the most liked comment.

At the same time that Thinking Creator and Luo Zhenyu were pacing in front of the gate of the IPO, the big manufacturers had flocked in and began to lay out the knowledge payment related track. This brings more choices to users' "lifelong learning" channels.

In 2019, Station B opened the internal test of paid courses; in 2020, Station B launched a new level of partition "Knowledge Area", and public data shows that in 2021, 183 million users have learned on Station B, and this contains a lot of free content.

On the other hand, the "2021 Douyin Data Report" released by Douyin mentioned that the total time spent by users listening to open college classes in Douyin this year exceeded 1.45 million hours. At the end of 2021, Douyin also launched a "learning channel", and public data shows that the playback volume of pan-knowledge content on the Douyin platform in 2021 will increase by 74% year-on-year, and the playback of pan-knowledge content will account for 20% of the total playback volume of the platform.

In addition, Sohu's Zhang Chaoyang also began to broadcast physics classes live every week, which is considered to be a key signal for Sohu Video's strategy to promote knowledge live broadcasting.

In this context, if the creator of thinking wants to break through, it is bound to dig out more irreplaceable value of its own. However, from the data disclosed by the company in response to the inquiry letter of the Shenzhen Stock Exchange, from 2018 to 2021, the proportion of its research and development expenses in the total revenue gradually decreased, 12.75%, 17.94%, 16.32% and 13.42% respectively.

At present, there are 3 projects under research by Thinking Creation, with a total budget investment of about 18 million yuan. The Shenzhen Stock Exchange requires clarification that in the case of a small number of R&D projects and a low total budget, is there a situation where R&D expenses are mixed with management expenses and sales expenses, or that R&D personnel are not actually engaged in R&D positions/R&D work?

With internal and external troubles, can Luo Zhenyu wait for the first IPO in his life?