The equity of the original actual controller is about to be auctioned off.
Author | Zhang Kaijing
Editor 丨 Cai Zhen
Source | Mustang Finance
"I am a slag slag Hui (Zhang Jiahui), and if I am a brother, he will come to cut me." This advertising slogan is still talked about today, but the page game behind it has gradually faded out of the player's vision. And the developer of this game, Kaiying Network (002517. SZ), also to the historical node of the change of actual controller.
On August 3, Kaiying Network announced that about 250 million shares held by controlling shareholder Wang Yue will be publicly auctioned on the Ali auction platform from 10:00 on September 6 to 10:00 on September 7. If you count another equity auction, Wang Yue's current judicial auction of shares will total 440 million shares. If the shares are auctioned successfully, Wang Yue's shareholding will only be 1925 shares, and he will completely lose control of the company.
Wind data shows that as of August 4, Kaiying Network's stock price closed at 5.9 yuan, a slight increase of 0.17% in a single day. According to the current market value of the company of 12.7 billion yuan, the value of the 440 million shares to be auctioned in Wang Yue's hands is about 2.598 billion yuan.
Hurun, once the "youngest richest man in China from scratch", is now about to lose some of his most important assets. In contrast, Kaiying Network, which was involved in more than 8 billion yuan of litigation disputes because Ofe Wang Yue and others manipulated the securities market, has gradually picked up its performance.
Will this be the endgame for both sides?
Wang Yue is now "clearing" passive reduction
Will you say goodbye to public companies once and for all?
In fact, as early as July 6, Kaiying Network announced that Wang Yue's shares were ordered to be auctioned, which may lead to a change in the control of the company.
According to the Enforcement Ruling issued by the Shanghai Financial Court to Wang Yue, he was ordered to judicially auction part of the shares of the company held by him in the dispute over the repurchase of pledged securities of China Industrial Securities Asset Management Co., Ltd., Everbright Xinglong Trust, CITIC Construction Investment Securities and Shanghai Haitong Securities Asset Management Co., Ltd. for failing to perform relevant obligations. The shares auctioned together accounted for 11.72% of the total share capital of Kaiying Network.
However, this is not all that needs to be auctioned. According to the announcement released by Kaiying Network earlier, Wang Yue was also ruled to judicially auction kaiying network shares in the pledge securities repurchase dispute case between Industrial Securities and Guotai Junan Securities for failing to perform relevant obligations. The parts auctioned together account for 8.74% of the total share capital of the listed company.
Based on this calculation, Wang Yue currently has a total of about 440 million shares that have been ruled judicially auctioned, accounting for 20.46% of the company's total share capital. As of May 31, Wang Yue's shareholding in Kaiying Network was 20.46%.
This means that if all the above auctions are successful, the number of Wang Yue's shares in Kaiying Network will plummet to 1925 shares, almost achieving passive liquidation.
It is worth mentioning that in the latest announcement, Kaiying Network disclosed the specific judicial auction time of about 250 million shares, from 10:00 on September 6 to 10:00 on September 7.
According to Ali's auction, the shares have been frozen by the Shanghai Financial Court and will be auctioned in 5 groups, of which the group with the fewest shares contains 25.4484 million shares with a starting price of 149 million yuan; the group with the largest number of shares contains 62.5 million shares with a starting price of 365 million yuan. The current starting price is only a display price, and the specific price will be calculated based on the average closing price of the 20 trading days before the auction date.
Source: Ali Auctions
In addition, on August 13, Wang Yue's 64.8 million shares of Kaiying Network will also be publicly auctioned on the Ali auction platform. Combined with the announcement, the equity is the part of the above-mentioned Wang Yue who was applied for judicial auction in the dispute case with Guotai Junan.
The most immediate reason for the auction of large shares was to pay off high debts.
According to industrial and commercial information, Wang Yue is currently involved in 163 pieces of risk information, including 6 records of becoming an executor, with a cumulative amount of 1.213 billion yuan; he also carries 14 consumption restriction orders and the rights he holds have been frozen 14 times by the Shanghai Municipal Financial Court, the Wuhan Intermediate People's Court, and the Shanghai Pudong New Area People's Court; And in 3 final cases, 326 million yuan was not fulfilled.
Although Kaiying Network said that the change of control of the company will not have a significant impact on daily production and operation, Wang Yue's "succession" candidate has attracted a lot of attention from the market.
Judging from the situation of the 2021 annual report, the second largest shareholder of Kaiying Network under Wang Yue is the company's chairman Jin Feng, with a shareholding ratio of 9.79%, and the third largest shareholder is Jin Feng's fellow villager Jin Danliang, with a shareholding ratio of 3.91%.
Mustang Finance noted that in the 2019 annual report, Jin Feng is not yet among the top ten shareholders of Kaiying Network, but in the past two years, it has successfully bid for 21.24 million shares of Kaiying Network held by Wang Yue at the Highest Price of 4.9 yuan per share at the Ali Auction, gradually increasing its shareholding ratio to the current 10.77% through a series of increases in holdings, including spending more than 100 million yuan in May this year.
The auction of large amounts of equity led to insider trading
Jin Feng's increase in holdings and Wang Yue's reductions are related to the securities market manipulation case that occurred in the East Window incident in 2019.
Wang Yue is a well-known figure in the newspaper of the university of Anderson University, who showed the characteristics of an Internet entrepreneur as early as his college years, but the identity that really made his reputation rise and his wealth value jumped, was also the founder of the game company Kaiying Network.
Backed by Tencent's open platform, Kaiying Network's games such as "Fishing Tycoon", "Legend of Shushan", and "National Miracle MU" have gained significant traffic advantages, and successfully attracted the attention of capital for the company, and Kaiying Network was finally able to complete the listing of backdoor Taiya shares in 2015. At that time, its valuation was as high as 6.3 billion yuan, which once refreshed the M&A valuation record of the mobile game industry.
In March 2016, with a net worth of 6.6 billion yuan, Wang Yue, together with Didi founder Cheng Wei, Youzu founder Lynch, and Good Future founder Zhang Bangxin, entered the list of self-made billionaires in the Hurun Global Rich List of "Post-80s", of which Wang Yue and Cheng Weitong became the two youngest people in China to be selected for the list at the age of 32.
But many years later, Wang Yue's foreshadowing of imprisonment was also buried.
At the time of listing, Kaiying Network signed a VAM agreement, promising that the net profit from 2015 to 2017 would not be less than 460 million yuan, 570 million yuan and 700 million yuan respectively, while the company's net profit in 2013 and 2014 was only 33.9207 million yuan and 62.5412 million yuan, which was still quite far from the VAM requirements.
In order to add color to the performance, Kaiying Network began a large-scale merger and acquisition, and "Legend of blue moon" was also included in the company at this time.
Source: The official website of Legend of blue moon
In June 2016, Shanghai Kaiying, a wholly-owned subsidiary of Kaiying Network, acquired a 20% stake in Zhejiang Shenghe Network Technology Co., Ltd. ("Zhejiang Shenghe"), which is known for developing the Legend of blue moon game for 200 million yuan. Jin Feng is the majority shareholder of Zhejiang Shenghe and was promoted to president and CEO in 2018.
It is worth noting that as of May 31, 2016, Zhejiang Shenghe's net assets were only 49.0417 million yuan, but Kaiying Network and its subsidiary Shanghai Kaiying acquired 71% of the equity of Zhejiang Shenghe for a total price of about 2.6 billion yuan in more than a year.
According to reports, "Legend of the Blue Moon" broke through 60 million in the testing stage, and the flow in October alone exceeded 200 million, and the annual flow in 2016 exceeded 1 billion.
On the surface, this is the reason why Kaiying Network will not hesitate to spend a lot of money to win Zhejiang Shenghe, but later investigations showed that this merger and acquisition case is only one of the good news released by Wang Yue for "market value management". In July 2017, within five months after Kaiying Network released the news of the follow-up acquisition of 51% of zhejiang Shenghe's equity, the company's stock price rose by nearly 60%.
The operation of signing a performance VAM agreement and a stock purchase commitment at the time of the acquisition of Zhejiang Shenghe also appeared in the subsequent acquisition of Zhejiang Jiuling Network Technology Co., Ltd. (hereinafter referred to as "Zhejiang Jiuling") by Kaiying Network.
In 2018, Kaiying Network acquired a 70% stake in Zhejiang Jiuling for 1.064 billion yuan, which is also closely related to legendary IP. In April of that year, LegendARY IP signed the "Authorization Certificate" authorizing Zhejiang Jiuling to publish and operate the HTML5 mobile game "Dragon City Battle Song" developed by zhejiang Jiuling.
Unlike Zhejiang Shenghe, the acquisition of Zhejiang Jiuling not only failed to boost kaiying network's stock price, but also brought huge pressure on the company to pay compensation for litigation. At the end of 2018, Legend IP initiated arbitration on the grounds that "Zhejiang Jiuling did not pay the minimum deposit, monthly share and one-time reward in accordance with the agreement". As of the end of December 2019, the claim amount of LegendARY IP has reached 7.662 billion yuan.
In 2019, Wang Yue's capital game came to an end, and he was criminally detained on suspicion of manipulating the securities market, and was sentenced to 5 years and 6 months in prison the following year and fined 10 million yuan.
According to the Shanghai Securities News, the core of the Kaiying Network series of cases is a capital operation led by Wang Yue to manipulate the market, raise stock prices, and sit on stocks through means such as publishing false information and foreign investment by listed companies. Jin Feng is the actual controller of Zhejiang Shenghe and Zhejiang Jiuling, and is also the closest partner of Wang Yue Capital.
However, at the same time that Wang Yue was imprisoned, Jin Feng had been released on guarantee pending further investigation at the end of 2019 and received a "decision not to prosecute" issued by the Shanghai Municipal People's Procuratorate in 2020.
Also in 2020, JinFeng began to continuously increase its stake in Kaiying Network through centralized bidding and block trading, and its shareholding ratio increased from 0.23% in the first quarter of 2020 to 10.77% at present. Jin Feng was also promoted to the chairman of Kaiying Network in 2019 and has been in office ever since.
Performance showed signs of recovery
Can Kaiying Network make a comeback?
The continuous capital operation of Wang Yue and others once hollowed out the Kaiying network. In 2019, the company's net profit was -1.839 billion yuan, down 640.31% year-on-year.
Source: Kaiying Network official website
The company's huge loss dilemma is related to the legendary IP dispute case involving Zhejiang Jiuling, which involved more than 8 billion yuan. In 2020, after Kaiying Network "sold" Zhejiang Jiuling 1 yuan to Zhou Yu, the company's performance improved.
In 2020, Kaiying Network achieved a net profit of 243 million yuan, a year-on-year turnaround; in 2021, the company's revenue increased by 53.92% year-on-year, and net profit increased by 248.12% year-on-year; The company's latest 2022 interim performance forecast shows that in the first half of this year, it is expected to achieve a net profit attributable to the mother of 470 million yuan - 650 million yuan, an increase of 69.63% - 134.6% year-on-year.
However, from the perspective of revenue composition, the current Kaiying network and the beginning of the listing have been sentenced to two people.
In 2016, mobile online games and web games accounted for 43.22% and 39.60% of the revenue brought by Kaiying Network, respectively, while 9.87% of the company's revenue came from game distribution, and 7.31% of revenue came from the distribution of other application products; By 2021, the proportion of revenue generated by mobile games for the company has increased to 94.63%, and only 5.37% of the revenue comes from web games, and there is no other source of revenue.
This means that Kaiying Network has almost completely become a mobile game company.
In addition, Kaiying Network has also "rubbed" the recent hot meta-universe concept, and its subsidiary Shanghai Kaiying Investment Lexiang Technology Co., Ltd. is a VR hardware manufacturer, and its brand is Dapeng VR, a top 50 VR company in China.
However, even if the performance picks up, Kaiying Network is still far from its peak, and the company's stock price is still hovering at a low level, falling by more than 70% from the historical high.
At a time when the pattern of the game industry is accelerating and high-quality content is becoming more and more of a core competitiveness, the research and development expenses of Kaiying Network are not prominent in the industry.
Taking 2021 as an example, the R&D expenses of "big factories" such as Perfect World and Century Huatong are all about 2 billion yuan, while the R&D investment of Glacier Network, Giant Network and Palm Fun Technology accounts for more than 30% of revenue. In contrast, Kaiying Network's R&D expenses of 339 million yuan and less than 15% of the R&D ratio make the company have a certain risk of "falling behind".
Who will "take over" Wang Yue's shares? Under the leadership of Jin Feng, can the stock price of Kaiying Network return to the peak? Let's talk in the comments section!