Li Ping | Author Stone Finance | produce
On April 6, according to the news on the official website of the China Securities Regulatory Commission, Yuncong Technology Group Co., Ltd. (hereinafter referred to as Yuncong Technology) was approved for IPO on the Science and Technology Innovation Board. Following SenseTime's successful listing in Hong Kong, Yuncong Technology is expected to become the second company in the "AI Four Tigers" to land on the capital market.
According to public information, Yuncong Technology was founded in 2015 and is an artificial intelligence enterprise that provides efficient human-machine collaborative operating systems and industry solutions, and is committed to promoting the industrialization process of artificial intelligence and the intelligent transformation and upgrading of various industries. In the industry, Yuncong Technology, Together with SenseTime, Yitu Technology and Megvii Technology, is known as the "FOUR LITTLE DRAGONS OF AI", and is also the latest company to be established among the four companies.
Judging from the data disclosed in the prospectus, the operating conditions of cloud technology are not optimistic. During the period of 2019-2021, the cumulative loss of Cloud from Technology reached 2.084 billion yuan, with an average annual loss of nearly 700 million yuan. As of the end of 2021, the company still has a huge unmade loss, and the cumulative undistributed profit of the consolidated caliber is -2.216 billion yuan. In addition, in the "AI Four Little Dragons", the cloud has the lowest gross profit margin from technology, and the overall trend is in a downward trend.
In the face of regulators' doubts about its sustained profitability, Cloud From Technology has given a forecast for achieving a turnaround in 2025. However, under the increasingly fierce industry competition, the gross profit margin of the cloud from technology continues to weaken, the risk of bad debts in accounts receivable is prominent, and the "commitment" to achieve profitability in 2025 has some credibility?
1
With a loss of 2.085 billion yuan in three years, it is difficult to break the curse of AI profitability
In recent years, thanks to breakthroughs in computing power, big data and algorithms, artificial intelligence technology has made breakthroughs. Among them, computer vision, speech recognition and natural language processing are regarded as the three major application areas of artificial intelligence.
The so-called computer vision refers to the ability of computers to imitate human visual systems and enable computers to extract, process, understand and analyze images and image sequences. With the increasing optimization of deep learning algorithms based on neural networks, computer vision has become a relatively mature and commercially advanced technology field in the artificial intelligence industry. According to Jost & Sullivan data, in 2020, computer vision accounted for 56.6% of the Chinese intelligent software market, which is much higher than other segments.
On the other hand, the rapid rise of Internet giants such as Alibaba and JD.com has also accumulated a large amount of user data for computer vision companies. For computer vision companies, data and technology are indispensable. Therefore, with massive data resources, China's computer vision technology is currently in a leading position in the world.
In the field of computer vision, SenseTime, Megvii, Yuncong Technology and YITU Technology took the lead in the circle and were named "AI Four Little Dragons". According to IDC data, in 2020, the above four companies will have a market share of more than 40% in the field of computer vision applications.
Among them, Yuncong Technology was established in 2015, and its founder Zhou Xi was an expert introduced by the "Hundred Talents Plan" of the Chinese Academy of Sciences, and served as the director of the Intelligent Multimedia Technology Research Center of the Chongqing Green and Intelligent Technology Research Institute of the Chinese Academy of Sciences, the deputy director of the Institute of Electronic Information Technology, and formed the face recognition research team of the Chinese Academy of Sciences.
According to the data, in the six years from the establishment of the company to the official launch of the IPO of the Science and Technology Innovation Board, Yun has raised more than 3 billion yuan from science and technology, and many state-owned and government funds such as China Guoxin, Guangzhou Industrial Investment Fund and Bohai Industrial Investment Fund are its shareholders. The founder's background in the Chinese Academy of Sciences and the investment of a number of state-owned capital have given Yuncong technology the name of "AI national team".
However, the "national team" label has not brought much help to the cloud from the performance of technology business. According to the latest prospectus, from 2019 to 2021, the main business income of Cloud from Technology was 780.4773 million yuan, 751.1467 million yuan and 1070.4255 million yuan, and the net profit attributable to the owners of the parent company was -639.6014 million yuan, -812.9333 million yuan and -632.1284 million yuan, respectively. The amount of loss during the three-year period was as high as 2.085 billion yuan.
As of the end of 2021, Yuncong Technology still has huge unmade losses, and the cumulative undistributed profit of the consolidated caliber is -2.216 billion yuan.
In fact, with the rapid development of the industry, the competition in the artificial intelligence industry has also intensified. As far as cloud technology is concerned, on the one hand, it competes with artificial intelligence start-ups such as SenseTime, Megvii Technology, and Yitu Technology, and on the other hand, it also faces fierce competition in the field of security applications from visual equipment manufacturers such as Hikvision and Dahua.
In addition to the competitive pressure of the industry, the continuous huge investment in research and development is also an important reason why the cloud has fallen into a deep loss from the main business of technology. From 2018 to 2021, yuncong's scientific and technological research and development expenses were 454.1538 million yuan, 578.0733 million yuan and 534.1665 million yuan, accounting for 56.25%, 76.59% and 49.67% of the operating income of each period, respectively.
As a typical talent-intensive industry, talent reserves have a profound impact on the quality of algorithms, and R&D investment has become an important expense for AI companies. At the same time, the competition for talents between companies has also continuously improved the salary level of employees, which has further aggravated the labor costs of enterprises. In the past three years, the cloud has accounted for more than 50% of the total revenue from technology research and development expenses, and the research and development expense rate far exceeds the company's gross profit margin.
In the case of intensified competition in the industry and excessive internal R&D, SenseTime, Megvii And Itu Technology, which are also the "Four Little Dragons", have also been in a state of loss. According to the data, from 2018 to 2020, the net loss of SenseTime was 3.433 billion yuan, 4.968 billion yuan and 12.158 billion yuan, and the net loss of Megvii Technology was 2.8 billion yuan, 6.639 billion yuan and 3.327 billion yuan, respectively; from 2018 to June 2020, the net loss of Yitu Technology was 1.161 billion yuan, 3.642 billion yuan and 1.299 billion yuan, respectively.
Obviously, how to break the curse of profitability and achieve sustainable profitability of enterprises has become the biggest "algorithm" challenge for AI companies such as cloud technology.
2
The gross profit margin of the receivables is low, and it can turn a loss into a profit after three years?
The continuous huge losses have made it increasingly difficult for artificial intelligence startups to raise funds in the primary market, and landing in the secondary market has become the only choice for corporate financing to "continue to live".
In August 2019, Megvii Technology took the lead in submitting listing materials to the Hong Kong Stock Exchange, pulling up the curtain of AI companies collectively impacting the IPO. Since then, YITU Technology and Yuncong Technology have applied for the IPO of the Science and Technology Innovation Board in November 2020 and December 2020 respectively.
However, due to the common problems such as poor hematopoietic capacity and continuous losses, the listing journey of the above three companies has not been smooth. Among them, Megvii Technology did not make progress after submitting its listing application to the Hong Kong Stock Exchange, and finally turned to the A-share Science and Technology Innovation Board; Yitu Technology terminated the IPO process of the Science and Technology Innovation Board in June 2021, and only Yun from Technology experienced three inquiries before and after the Shanghai Stock Exchange to obtain approval for listing. It is worth mentioning that in the face of the Shanghai Stock Exchange's doubts about its sustained profitability, Yuncong Technology has said that according to the current orders in hand and the cautious forecast of future business, it is expected that the company's revenue scale will achieve stable growth in the next 5 years (2021-2025), and 2025 will become the company's turnaround node.
Despite the many halos of "unicorns" and "high technology" overhead, the poor operating performance of AI companies has really surprised investors in the secondary market. Especially after Yitu Technology terminated the IPO process of the science and technology innovation board, the IPO prospects of AI startups were once cloudy.
It is this profitable "promise" of cloud technology that makes it the first company in the "AI Four Little Dragons", and the AI track finally passes through the darkest moment. Following Cloud From Technology, Megvii Technology's IPO on the Science and Technology Innovation Board was also approved in September 2021 and is currently in the state of submission for registration. In addition, SenseTime has successfully listed in Hong Kong on December 30, 2021.
As of now, only Yuncong technology in the "FOUR LITTLE DRAGONs of AI" has clearly made a prediction of the company's profit node, but whether it can truly turn a loss into a profit in 2025 has been widely questioned.
First of all, from the perspective of gross profit margin, the profitability of the cloud from science and technology is not prominent, and the gross profit margin level ranks first in the "AI Four Little Tigers".
The prospectus shows that from 2019 to 2021, the gross profit margin of the main business of cloud technology was 38.89%, 43.21% and 36.76% respectively, and the overall trend was in a downward trend. From 2019 to 2020, the gross profit margins of comparable listed companies including Megvii Technology were 59.99% and 59.94%, respectively, and the profitability of Cloud Technology was far less than the industry average.
From the perspective of the industrial chain, the artificial intelligence industry chain can be divided into three levels: the basic layer, the technical layer and the application layer. Relatively speaking, the basic layer business such as chips and cloud computing platforms also has a high gross profit margin; the downstream application layer is an extension of the artificial intelligence industry, integrating one or more types of artificial intelligence basic application technologies, and forming software and hardware products or solutions for specific application scenarios, the industry competition is relatively fierce, and the gross profit margin is low.
From the perspective of revenue composition, the main products and services of cloud technology can be divided into two parts: human-machine collaborative operating system and artificial intelligence solutions. Among them, the human-machine collaborative operating system belongs to the field of artificial intelligence platform from the industry attribute, and the gross profit margin remains above 70%, while the artificial intelligence solution belongs to the application layer, and the gross profit margin is only maintained at about 30%. In 2021, the cloud accounted for 87.28% of the revenue from technology artificial intelligence solutions, and the proportion of the application layer business with low gross profit margin was too high, resulting in its overall gross profit margin of only about 40%.
In contrast, the gross profit margin of YITU Technology, which takes artificial intelligence chip technology and algorithm technology as the core, exceeds 63%, and the gross profit margin of SenseTime, which locates AI factories, is close to 70%. Therefore, although they are all artificial intelligence enterprises, the business positioning of the "AI Four Little Dragons" is different, which determines that there are significant differences in profitability between companies.
In addition, the downstream customers of the cloud from science and technology are mainly large government and enterprise customers such as banks, public security, airports, etc., and the customer payment cycle is long, which also leads to the company's accounts receivable amount continuing to be at a high level.
At the end of each reporting period, the balance of accounts receivable from Cloud From Technology was 308.3334 million yuan, 523.4902 million yuan and 420.1920 million yuan, accounting for 38.19%, 69.36% and 39.07% of the operating income of the current period, respectively. As of the end of 2021, the amount of cloud bad debt provision from technology has reached 67.1548 million yuan.
The continuous rise in accounts receivable not only brought heavy bad debt pressure to Yuncong Technology, but also made the company's operating cash flow continue to deteriorate. During the Reporting Period, the net cash flow generated by Cloud from technology operating activities was -505.8717 million yuan, -461.8878 million yuan and -546.7975 million yuan, respectively, and the net outflow of operating cash flow exceeded 1.5 billion yuan in the three years.
The continuous outflow of operating cash flow has exposed the cloud from technology to liquidity risk. As of 2021, the company's monetary funds are only 852 million yuan remaining. According to the company's average annual loss of 700 million yuan, the cloud from the technology of this monetary funds can not support too long.
In this IPO, Yun raised 3.75 billion yuan from the technology plan, of which 813 million yuan will be used for the human-machine collaborative operating system upgrade project, 831 million yuan will be used for the light boat system ecological construction project, 1.412 billion yuan will be used for the artificial intelligence solution integrated service ecological project, and the remaining 693 million yuan will be used to supplement the working capital.
It should be said that regardless of whether the company can turn a profit in 2025, cloud will get a temporary respite from at least IPO financing from technology, which may be one of the reasons why it dares to take the lead in making "profit" forecasts. But the listing is not on the shore, for the cloud from technology that is only close to ringing the bell, only by completely unlocking the curse of loss can we truly tell the story of capital.
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