On April 19, Weimob Group (02013.HK), a leading digital marketing company in China, said that it plans to issue $85 million in convertible bonds and raise about $40 million through the placement of 277 million new shares, with a total of $125 million.
According to the announcement, the funds raised will be mainly used to repurchase the remaining $201 million in convertible bonds due in 2026. On the day of the announcement, Weimob had received a commitment from qualified bondholders to sell the remaining convertible bonds with a total principal amount of approximately US$183 million to the company through the transaction manager.
It is reported that strategic investors and many institutional investors actively participated. It is worth mentioning that Tencent also participated in the transaction as a strategic shareholder. At present, investors participating in the transaction have completed the subscription.
Weimob Group said that the fundraising and buyback will have a significant positive impact on the company's future business development. Sufficient funds for long-term development through the placement and issuance of convertible bonds will inject momentum into the development of Weimob Group's core business, which is expected to further enhance Weimob's technical capabilities and comprehensive market competitiveness, and optimize its capital structure.
However, after this news was announced, on April 19, Weimob Group's (02013.HK) share price gapped, hitting HK$1.1 at one point in the intraday, refreshing a record low, and finally closing down 17.65% at HK$1.12.
According to the data, since its establishment in 2013, Weimob Group has been committed to creating decentralized digital transformation SaaS products and full-link growth services for merchants to help merchants grow sustainably.
As one of Tencent's leading service providers, Weimob Group ushered in a golden period of its development at the beginning of its establishment, relying on the big tree of WeChat ecology.
However, in recent years, with the successive launch of mini programs, official accounts, video accounts, small stores, and live streaming, the WeChat e-commerce ecosystem has become increasingly complete and prosperous, leaving more and more space for third-party SaaS providers such as Weimob to play.
In such an environment, Weimob Group struggled to save itself, adopted the strategy of "mass customization", and achieved omni-channel integration around the marketing sector. So far, the results are gradually emerging.
According to the financial report, in 2023, the company will achieve revenue of 2.228 billion yuan, a year-on-year increase of 21.1%. Among them, 60.6% came from subscription solutions (i.e., traditional SaaS products), with revenue reaching 1.349 billion yuan, a year-on-year increase of 4.5%.
During the reporting period, Weimob's smart retail revenue was about 613 million yuan, a year-on-year increase of 19.5% and a year-on-year organic increase of 32.2%, accounting for 45.5% of the subscription solution revenue. This is mainly due to the successful transformation of Weimob into large customers.
While the SaaS business is developing steadily, Weimob's marketing business (merchant solutions) is growing at a rapid pace. During the period, the revenue was 878 million yuan, a year-on-year increase of 60.5%, accounting for 39.41%.
In 2023, the gross advertising revenue of Weimob will be about 14.466 billion yuan, a year-on-year increase of 44.5%, and the advertising growth rate of Kuaishou and Xiaohongshu channels will reach 164% and 259% respectively.
It is worth mentioning that although Weimob's revenue has increased, it is still difficult to hide the fact that "it is difficult to make profits". In 2023, the group will continue to lose 758 million yuan.
In fact, in the past few years, Weimob Group has been in a state of bleeding. From 2020 to 2022, Weimob's losses will be 1.157 billion yuan, 783 million yuan, and 1.829 billion yuan respectively.
The reason for this is that high sales expenses are the main reason for the company's loss. In 2023, after deducting the cost of sales, Weimob's gross profit will be 1.484 billion yuan, but the sales expenses alone will exceed 1.551 billion. This shows that the products and services provided by Weimob Group do not have high barriers to competition, and it is still in the rough mode of "throwing money for growth".
In summary, although Weimob Group's two major businesses have shown certain operational resilience and marginal improvement, it has not yet broken the curse of "loss". How to turn losses into profits as soon as possible is a difficult problem that Weimob Group needs to solve urgently.
Without the support of performance, investors also choose to "vote with their feet".
Author: Bottle