Last year's huge loss was 2.64 trillion! SoftBank Vision Fund "lost" and Son Zhengyi: The world has entered chaotic mode, and the future will be more cautious

Dot blue letter attention, do not get lost~

On May 12, SoftBank Group announced its annual report for fiscal 2021 (April 1, 2021 to March 31, 2022).

According to the financial report, SoftBank Group's net loss in fiscal 2021 was about 1.7 trillion yen (about $13.12 billion, 89.9 billion yuan), the largest annual loss in the company's four-decade history. Among them, The Vision Fund, which is responsible for the investment business of SoftBank Group, lost 2.64 trillion yen (about $26.2 billion, 139.7 billion yuan), which also set a record loss. In the previous fiscal year, SoftBank also achieved a net profit of nearly 5 trillion yen (about $39 billion).

At the close of the day, shares of SoftBank's companies listed on the Tokyo Stock Exchange fell 8%.

A huge loss of 1.7 trillion yen a year

On May 12, SoftBank Group announced its annual report for fiscal 2021 (April 1, 2021 to March 31, 2022). According to the financial report, SoftBank Group's net loss in fiscal 2021 was about 1.7 trillion yen (about $13.12 billion, 89.9 billion yuan), the largest annual loss in the company's four-decade history.

SoftBank Group blamed the huge loss on falling stock prices of its listed portfolio companies. Since last year, a number of Internet companies owned by SoftBank Group have seen sharp stock prices fall. In the first quarter of this year alone, the share price of South Korean e-commerce coupang fell by more than 70% compared with its listing price; didi Chuxing's stock price fell by more than 80% in the past six months; and Alibaba's stock price fell by more than 50%. In addition, Southeast Asian travel giant Grab fell 80 percent and U.S. food delivery company DoorDash fell 48 percent.

According to the financial report, the top three losses of the vision fund phase I came from Didi, Wework and Grab.

The top three losses of the second phase of the Vision Fund came from WeWork, JD Logistics and Dingdong Grocery Shopping.

In terms of investment, SoftBank Group made a total of 5.2 trillion yen (about $46.2 billion) in fiscal 2021. Among them, the amount of investment in each quarter was 20.9 billion US dollars, 12.8 billion US dollars, 10.4 billion US dollars and 2.5 billion US dollars, showing a gradual decreasing trend, and only 2.5 billion US dollars were invested in the fourth quarter.

As of March 31, SoftBank Group's portfolio included 475 portfolio companies. Among them, vision fund phase I holds 82 portfolios and 22 listed companies worldwide, and Vision Fund PHASE II holds 250 portfolios worldwide, including 14 listed companies. It is worth noting that the number of portfolios of the First Phase Fund has not changed compared to June 2021, while the Second Phase has increased by 159 portfolios. Although the number of investments is increasing, Sun Zhengyi's attitude is still cautious considering that the amount of investment is declining.

Last year, the number of companies listed by the Vision Fund reached 27, a new high. Since its inception, the Vision Fund has paid $47.3 billion in dividends. In the first phase of the Vision Fund, which has the largest dividend, SoftBank Group received a dividend of $7.6 billion, and other external investors received a dividend of $31.1 billion.

Son: The world is in chaos mode

After the release of the annual report, SoftBank Group Chairman Masayoshi Son said that because of the new crown epidemic and the Conflict between Russia and Ukraine, the world began to enter "chaos mode". The cumulative number of COVID-19 infections exceeded 500 million, oil prices rose 38%, natural gas prices rose 117%, wheat prices rose 44%, the consumer price index rose 12%, the Fed entered a rate hike cycle, the dollar began to appreciate, and the Nasdaq index, which is dominated by technology stocks, fell 27%. All of this has made him more cautious and will adopt a more defensive strategy in the future.

In addition, Son also talked about three concerns about SoftBank, including the declining market value of the shares it holds, high debt and tight cash. Son Zhengyi believes that the market's worries are more worried. SoftBank's net assets now hold are 18.5 trillion yen (about $151 billion), just 800 billion yen (about $6 billion) less than at the end of the previous quarter. Among them, the value of holdings is 9.2 trillion yen (about $75 billion), of which the largest proportion of listed companies is still Alibaba, accounting for 22%. It was followed by ARM, at 12 percent, SoftBank, at 10 percent, and T-Mobile and Deutsche Telekom, which combined at 4 percent. The Vision Fund accounts for 49% of the company's net assets.

SoftBank Group's current debt-to-net asset ratio is 20.4 percent, and it has remained at 25 percent for the past three years, a long way from the 35 percent red line. At present, SoftBank Group holds 2.9 trillion yen (about $23 billion) in cash and will repurchase up to 1 trillion yen of shares by November 8, 2022. At present, the amount of repurchases has reached 430 billion yen, and the average repurchase price is 5197 yen per share.

At the press conference, Son repeatedly mentioned the word "Defence". He said it was time for SoftBank to take defensive measures, not radical ones, and that "in this chaotic world, the approach we should take is defense."

At the same time, he talked about SoftBank's layout in various regions around the world, emphasizing that the fund does not rely on a specific region and investment is more balanced. However, from the perspective of its investment income, due to the strong supervision of China's Internet and the global epidemic and other factors, its investment income in China has turned from profit to loss. In August last year, Son publicly stated that 23 percent of the Vision Fund's investments were in China.

At today's press conference, he said that SoftBank's new investment in China will be more cautious and will also conduct stricter due diligence, but caution does not mean "zero investment".

Looking ahead, SoftBank's biggest opportunity comes from ARM's rapid growth. The number of chips based on the ARM architecture has reached 29 billion, and the market share in the four markets of mobile phones, LOT, automotive and cloud is 95%, 63%, 24% and 5%, respectively. ARM's net profit was $2.665 billion, up 34.6% from the previous year. Son also mentioned that ARM is preparing for an IPO.

Editor: Wan Jianyi

a

Copyright Notice

All original content of securities times platforms shall not be reproduced by any unit or individual without written authorization. Our company reserves the right to pursue the legal responsibility of relevant actors.

Reprint and cooperation can contact the Securities Times Assistant, WeChat ID: SecuritiesTimes

END