Recently, Jushuitan Group Co., Ltd. (hereinafter referred to as "Jushuitan") disclosed a prospectus to be listed on the Hong Kong Stock Exchange.
Titanium media APP noticed that Jushuitan has experienced 7 rounds of financing, with a total of 614 million yuan, but the total operating profit of Jushuitan in the past three years is about -734 million yuan, that is to say, within three years, the company will "burn out" all the above-mentioned financing funds. The main factors that led to Jushuitan's loss were the company's high period expenses, and the company's period expenses remained high despite the dismissal of 400 employees.
400 employees were laid off, and costs remained high during the period
Jushuitan is an e-commerce SaaS ERP provider, which can cover a number of management functions including procurement, orders, inventory, distribution and finance, etc., and can help e-commerce merchants solve the problems and challenges they face such as cross-platform store management, massive orders and SKUs, digitalization and data analysis, and industrial chain collaboration.
From 2021 to 2023 (hereinafter referred to as the "reporting period"), Jushuitan achieved operating income of 433.422 million yuan, 523.078 million yuan and 697.191 million yuan respectively, and gross profit margins of 50.5%, 52.3% and 62.3% respectively, which shows that the company continues to grow in both revenue and gross profit margin.
What is unexpected is that in such a background, Jushuitan still can't get rid of losses. During the reporting period, the operating profit of Jushuitan was -124.598 million yuan, -369.695 million yuan and -239.412 million yuan respectively, totaling about -733.705 million yuan.
Titanium Media APP noticed that the main factors leading to the above phenomenon are the high costs during the period. During the reporting period, the period expenses of Jushuitan are as follows:
It can be seen that the expenses of Jushuitan continued to increase during the period, especially the sales expenses, marketing expenses, and R&D expenses have always been higher. At the same time, combined with the revenue and income, during the reporting period, the sales expenses and marketing expenses of Jushuitan accounted for 54.3%, 60.1% and 49.3% of the current operating income respectively, and the R&D expenses accounted for 44.3%, 44.8% and 33.6% of the current operating income respectively, accounting for 98.6%, 104.9% and 82.9% of the current operating income respectively.
In particular, as of the end of 2021, the end of 2022, and the end of 2023, the number of employees in Jushuitan is 2,764, 3,215, and 2,829 respectively, that is, Jushuitan has laid off nearly 400 employees in 2023, and the company's expenses during the period have not declined. So, in the face of such high period expenses, how should Jushuitan make a profit in the future?
The money from the 7 rounds of financing was all spent in the three years of operation
Jushuitan was established in 2014, and in the 10 years of development, the company has carried out 7 rounds of financing, the details are as follows:
It can be seen that in August 2020, after the completion of the C round of financing, the company's valuation was as high as 6 billion yuan.
It should be noted that it is doubtful whether Jushuitan will be able to maintain this valuation. It is reported that in the field of China's e-commerce SaaS providers, in addition to Jushuitan, there are also Weimob (02013.HK), China Youzan (08083. HK), Guangyun Technology (688365. SH), the financial data of the above three companies are as follows:
Unit: 100 million yuan, note: The above Guangyun Technology's revenue in 2023 is the revenue from January to September 2023
It can be seen that the revenue realized by Jushuitan is not in the forefront of the above three companies.
According to the Choice financial terminal, as of April 22, the total market value of China Youzan was HK $2.308 billion, the total market value of Weimob Group was HK $3.186 billion, and the total market value of Guangyun Technology was 2.742 billion yuan. In the face of such a situation, can Jushuitan still maintain a valuation of 6 billion yuan?
In fact, the issue of valuation may not be the main issue that Jushuitan considers, and the lack of funds is the most serious topic at the moment. It is reported that in the above 7 rounds of financing, Jushuitan raised a total of 614 million yuan.
In addition, the total operating profit of Jushuitan in the past three years is about -733.705 million yuan, that is to say, within three years, Jushuitan has "burned" all the 614 million yuan from the above 7 rounds of financing, and "burned" more than 100 million yuan.
In addition, as of the end of the reporting period, the assets of Jushuitan are as follows:
In other words, Jushuitan is a company that mainly operates with light assets, and the proportion of the company's current assets to total assets in 2023 has reached 65.92%, and at the same time, since 2022, the company's current assets have been far lower than the current liabilities, which shows that the debt pressure is large, and because the non-current liabilities in 2023 are as high as 4.125 billion yuan, Jushuitan has been in a state of insolvency.
It should be noted that there are 3.128 billion yuan of convertible redeemable preferred shares in Jushuitan's non-current liabilities in 2023, and if the impact of this part of the assets is excluded, Jushuitan's net assets in 2023 will be -54.542 million yuan, which is still insolvent.
An industry insider told Titanium Media APP that convertible redeemable preferred shares allow investors to convert preferred shares into common shares under certain conditions, or redeem shares when certain conditions are met. This type of stock is usually converted into common stock when the company goes public, providing a way for investors to participate in the potential gains as the company grows. At the same time, if the company fails to achieve the expected target or cannot be listed within a certain period of time, the company needs to redeem these preferred shares at the agreed price, providing investors with a guaranteed return.
According to this statement, if Jushuitan is successfully listed, the convertible redeemable preferred shares will immediately become the company's assets, thus getting rid of insolvency.
In particular, the convertible redeemable preferred shares of Jushuitan are mainly generated in the company's above-mentioned 7 rounds of financing, and the details are as follows:
Among them, shareholders who hold preferred shares of Jushuitan in Series B and Series C have repurchase plans with the Company, and if Jushuitan fails to complete the listing on or before August 13, 2025 (i.e., the fifth year of the termination date of Series C financing), the Company will be required to repurchase it. In other words, if the listing of Jushuitan is unsuccessful, the above-mentioned convertible redeemable preferred shares may become the "straw" that crushes Jushuitan. (This article was first published in Titanium Media APP, author|Deng Haotian)