On April 23, Jinlong shares (000712. SZ) announced that the company plans to establish a joint venture with Guangzhou Saifu Jianxin SME Industrial Investment Fund Partnership (Limited Partnership) (hereinafter referred to as "Saifu Jianxin") and Beijing Jiuzhang Yunji Technology Co., Ltd. (hereinafter referred to as "Jiuzhang Yunji") to cooperate in the construction and operation of intelligent computing centers in Guangdong. Among them, the total investment scale of the project will not exceed 1 billion yuan, and two computing power clusters of 125 8-card servers will be built each.
At the same time, the company also issued an announcement that its holding subsidiary Zhongshan Securities' shareholder Xikuang Group intends to transfer a total of 82 million shares (accounting for 4.61% of the registered capital of Zhongshan Securities) to Yanyu Industrial at a transfer price of 3.62 yuan per share, while Jinlong shares, as a major shareholder of Zhongshan Securities, have given up the right of first refusal.
Titanium Media APP noticed that the company abandoned the purchase while cross-border computing power, which may be behind its current attempt to improve profitability. However, in the face of large investment funds, the company's capital is very tight. In addition, because the company has no business experience, no technical reserves, and no professional team, it is doubtful whether its layout of computing power is feasible.
While abandoning purchases, cross-border
Before 2007, Jinlong's main business was real estate development, tap water production and supply, chemical fiber filament production and sales and hotel business. Since then, the company has begun to implement strategic transformation, and its main business has gradually changed to securities business. At present, the company holds Zhongshan Securities and participates in Dongguan Securities.
So as the controlling shareholder of Zhongshan Securities, why did you give up the right of first refusal?
On the one hand, even if the company does not buy it, it will not affect its controlling position in Zhongshan Securities. According to Tianyancha, the company holds 67.78% of Zhongshan Securities, the largest shareholder, and the second largest shareholder, Xikuang Group, holds 9.55%.
On the other hand, Zhongshan Securities performed poorly. From 2020 to 2022, the net profit of Zhongshan Securities will be 251 million yuan, -53 million yuan and -180 million yuan respectively, and the unaudited net profit in 2023 will be -84 million yuan.
If the above shares are purchased, there is a high probability that the company's dismal performance will be worsened. In the first three quarters of 2023, the company achieved operating income of 157 million yuan, a year-on-year decrease of 20.98%, and net profit attributable to the parent company of -262 million yuan, a year-on-year decrease of 14.57%. Looking back on 2021 and 2022, the company's net profit has lost 131 million yuan and 392 million yuan in a row.
More importantly, if the company continues to lose money, it will soon be unable to meet the requirements of "3 years of continuous profit for the controlling shareholder of a comprehensive securities company" in the "Regulations on the Administration of Equity of Securities Companies".
However, the regulatory authorities have stated that after fully considering the current situation of the industry, the controlling shareholders of the existing comprehensive securities companies that fail to meet the conditions of the "Equity Regulations" will be given a five-year transition period, and if the requirements are not met within the time limit, the company will not continue to carry out high-risk businesses such as over-the-counter derivatives and stock option market-making, that is, the comprehensive securities company needs to transform into a professional securities company. It is important to know that the operating profit margin of the above-mentioned high-risk business is higher than that of the company's other businesses.
Jinlong shares are about to lose money for three consecutive years, and the 2023 performance forecast shows that the company's net profit is expected to lose 400 million yuan. At the same time, it has been three years since the five-year transition period mentioned by the regulator, and the next two years are very critical for the company, during which things that affect the company's profitability may be rejected.
In fact, the company has begun to work hard to turn a profit. The company is planning to transfer up to 40% of its equity in Dongguan Securities through a public listing on the Shanghai United Equity Exchange.
Based on the above situation, it is not difficult to understand the company's intention to find profit growth points for cross-border computing power this time. According to the calculation table of the first phase of the investment project, during the five-year operation period, the project company expects the sales revenue to be about 31.24 million yuan and the net profit to be about 3.15 million yuan in the first year, and the average annual sales revenue to be about 35.15 million yuan and the average annual net profit to be about 5.59 million yuan from the second to the fifth year.
Funds are tight, and the source of large sums of money is a mystery
However, in the face of a large investment of nearly 1 billion yuan, the company's capital is very tight. As of the end of September 2023, the company's monetary funds were 4.649 billion yuan, of which customer fund deposits were as high as 3.281 billion yuan, short-term borrowings were 1.512 billion yuan, and short-term financing payable was 603 million yuan. At the same time, the company's total assets are 20.13 billion yuan, total liabilities are 15.451 billion yuan, and the asset-liability ratio is as high as 76.76%.
In fact, the company's "lack of money" has long been traced. In June 2023, the company just threw out the fourth private placement plan in three years, planning to increase no more than 264 million shares to the actual controller Yang Zhimao, and raise about 2.75 billion yuan to repay the company's borrowings and supplement the company's liquidity. However, the company's previous three private placements have all failed, and it is not yet known whether it can succeed this time. The company's pledge of shares before the IPO of Dongguan Securities undoubtedly revealed that the company's financial situation was not optimistic.
It is worth noting that the company did not mention the source of investment funds in the announcement. As can be seen from the foregoing, the company's internal capital is extremely tight, and it is obviously unrealistic to rely on its own funds. From an external point of view, due to the company's high asset-liability ratio and continuous performance losses, it may be difficult to obtain a high evaluation of its credit status from banking institutions. Moreover, the company has tried to raise funds through the issuance of corporate bonds, private placements and other means, but has not made substantial progress for many years.
Perhaps another way is for the company to borrow money from the controlling shareholder. In February this year, in order to repay the company's loans and replenish the flow, the company borrowed from the controlling shareholder Dongguan New Century Science and Education Development Co., Ltd. (hereinafter referred to as "New Century"), with a total loan of no more than 2 billion yuan, and the annual interest rate of this loan is expected to be no more than 10%. It should be noted in advance that the new century is controlled by Yang Zhimao and Zhu Fenglian.
Upon closer examination, it was found that since 2017, the company has repeatedly borrowed large amounts from its controlling shareholders. In July 2017, the company borrowed 1.5 billion yuan from New Century Corporation for a period of one year, and in February 2019, January 2020 and February 2021, it borrowed 1.2 billion yuan, 1.5 billion yuan and 2 billion yuan respectively, with a term of one year.
What is more noteworthy is that although the controlling shareholder frequently lends money to the company, its own financial situation does not seem to be sufficient, and all the shares of the actual controller and his wife are pledged for financing. Relevant data show that Zhu Fenglian pledged a total of 120 million shares of the company, accounting for 13.44% of the company's total share capital; Yang Zhimao pledged a total of 66.3 million shares of the company, accounting for 7.4% of the company's total share capital, and Yang Zhimao controlled New Century pledged nearly 250 million shares of the company, accounting for 27.23% of the company's total share capital, and the cumulative number of pledges accounted for 97.6% of the company's shareholdings.
"Three-no" companies play with computing power, and the feasibility of new business is doubtful
According to the data, the general partner of this partner, Fu Jianxin, is Guangzhou Saifu Heyin Asset Management Co., Ltd., and Jiuzhang Yunji mainly provides artificial intelligence basic software product series and solutions. It should be noted that there is a connection between Saifu Jianxin and Jiuzhang Yunji. It is understood that the two shareholders of Jiuzhang Yunji, Nanjing SAIF Equity Investment Fund (Limited Partnership) and Qingdao SAIF Haohai Venture Capital Center (Limited Partnership) and SAIF Jianxin, may be the general partners of SAIF Fund Department.
According to the agreement, the above-mentioned three phases of the project will be set up as a separate project company for investment and operation, of which the first phase of the project company Jinlong shares, Saifu Jianxin and Jiuzhang Yunji hold 53%, 42.1% and 4.9% respectively, the second and third phase of the project company Jinlong shares hold no less than 53%, and the total shareholding ratio of Saifu Jianxin and Jiuzhang Yunji does not exceed 47%.
From the perspective of the industry in which the above-mentioned companies are located, SAIF Jianxin is a private equity fund, while Jiuzhang Yunji, which is related to the computing power business, is only responsible for the sales of computing power projects. As for the protagonist of this investment, Jinlong shares' main business is securities, and cross-border computing power is no technology, no talent, and no procurement experience.
Some industry insiders told Titanium Media APP that if only the procurement of computing power servers is concerned, it is increasingly difficult for traditional enterprises with no experience and lack of resource advantages to efficiently purchase the required high-performance GPU components and cutting-edge equipment. According to the announcement of Lotus Health, which previously had cross-border computing power, on January 30 this year, only 12 of the 330 computing power equipment it purchased in September last year were delivered, and as of the announcement date, the remaining 318 GPU series servers have not been delivered.
Lotus Health once mentioned in the announcement that the basic conditions for carrying out intelligent computing power leasing business need to have a certain scale of computing power servers and other infrastructure, with a high capital investment threshold. In short, the players who can currently engage in computing power leasing may be the ones who are not short of money. On the other hand, the company's dismal financial situation, not only the performance has been losing money year after year, but also the debt pressure is also very large, can the company tell the story of computing power?
It is worth noting that after the completion of this project, the part of the computing power sales revenue exceeding the estimated sales revenue in the current year will be shared by the project company and Party C (Jiuzhang Yunji) according to the ratio of 30%:70%. (This article was first published on the Titanium Media App, by Zhai Zhichao)