Trainee journalist | Liu Xiaohan
On May 31, Neusoft Group (600718. SH) subsidiaries Neusoft Medical and Neusoft Xikang simultaneously submitted an application for listing on the Hong Kong stock market, which aroused market attention. Not long ago, on September 29, 2020, Neusoft Education (9616. HK) has just been listed and has a market capitalization of about HK$4.5 billion so far.
In 1996, Neusoft Group (600718. SH) listed. As the first listed software company in China, founder Liu Jiren was only 41 years old at the time, the first doctor of computer applications in China, and the market called him the "godfather of software".
After 25 years, it is also the 30th year of the establishment of Neusoft Group, Liu Jiren, Together with Neusoft Education, Neusoft Healthcare and Neusoft Xikang, co-sponsored BY CICC and Goldman Sachs. The troika is driving together, why is Liu Jiren, the "godfather of software", so anxious, and what is the capital bureau?
<h3>Liu Jiren's "East Soft System"</h3>
In 1987, Liu Jiren returned from studying in the United States, and in 1991, Liu Jiren founded Neusoft and landed on the A-share main board five years later. In the early days of Neusoft Group's establishment, Liu Jiren tried to emulate Microsoft and rely on general software to make a fortune, and Neusoft Group's first product was the general software "program automatic generator".
However, due to the rampant sales of pirated software in China, the product's revenue fell rapidly in the second year. Since then, Liu Jiren has decided to turn his direction to the field of industrial software, that is, the IT service industry.
According to the classification of the IT industry by CCID Consultants and other institutions, IT business is generally divided into hardware, software and IT services, IT services include software and hardware support maintenance, system integration, IT consulting, IT education and training, IT outsourcing and network services.
Facts show that this decision provided Neusoft Group with a path to continuous operation at that time. Today, according to Neusoft Group's 2020 annual report, Neusoft's main business includes medical health and social security, intelligent car interconnection, smart city, enterprise Internet of Things and others.
Neusoft Medical and Neusoft Xikang, which are listed in this spin-off, are a branch of Neusoft Group's medical business. Among them, Neusoft Medical is mainly engaged in the manufacture of large-scale high-end medical equipment, while Neusoft Xikang operates cloud hospitals and health management.
In addition to the two IPO subsidiaries, Neusoft Group's medical and healthcare business also includes "smart medical" information construction, smart medical insurance, Ubione smart silver medical, human resources and social security comprehensive solutions, as well as Neusoft Wanghai engaged in medical institution operation management and data services.
<h3>Why choose spin-off listing? </h3>
Despite neusoft's large scale, its financial performance is not so satisfactory. From 2018 to 2020, Neusoft Group's operating income was 7.171 billion yuan, 8.366 billion yuan and 7.622 billion yuan, respectively, and in 2019 and 2020, it increased by 16.66% and -8.89% year-on-year, and the consolidated net profit was in a long-term loss state, with -103 million yuan, -167 million yuan and -0.17 billion yuan, respectively.
In addition, Neusoft Group's operating conditions are also very unstable, from 2018 to 2020, the parent company's revenue increased by 8.40% from 5.037 billion yuan to 5.460 billion yuan, and then decreased by 12.58% to 4.773 billion yuan. At the same time, the net profit attributable to the mother also appeared after a year-on-year decline of 66.36% in 2019, and then rose more than two times in 2020.
Neusoft Group, whose performance is like riding a "roller coaster", began to hope for spin-offs and listings after the 30th anniversary of its listing, looking for new growth points.
As for the reasons for submitting two listing applications at the same time, Liu Jiren can get a glimpse of one or two in an interview with China Securities News - "Neusoft Group's strategic goal is to continuously integrate resources and promote the sustainable development of Neusoft Group's business through a new ecology." ”
The reporter integrated neusoft medical, Neusoft Xikang and Neusoft education data and found that the revenue of the three companies was generally in an upward channel. From 2018 to 2020, Neusoft Medical's revenue was 1.912 billion yuan, 1.906 billion yuan and 2.459 billion yuan, Neusoft Xikang's revenue was 318 million yuan, 400 million yuan and 503 million yuan, and Neusoft Education's revenue was 853 million yuan, 958 million yuan and 1.100 billion yuan, respectively.
In this spin-off and listing, if the stock price is ideal, Neusoft Group can obtain a good capital premium, thereby increasing the market value and enhancing financing capabilities, but it is also necessary to be vigilant against the possibility of reducing the quality and efficiency of the parent company's asset operations.
<h3>Neusoft Medical: Dealer customers are suspected of bribery</h3>
On the evening of May 31, Neusoft Medical submitted a listing application to the Hong Kong Stock Exchange, but in June 2020, Neusoft Medical had impacted the A-share science and technology innovation board, and then voluntarily withdrew due to insufficient information.
It is reported that in 2014, Vich Global, Goldman Sachs, Tonghe and Neusoft Holdings invested a total of 1.133 billion yuan to purchase part of the shares of Neusoft Medical from Msoft Group and increase the capital of Neusoft Medical.
The accompanying VAM agreement shows that if Neusoft Medical is not listed before September 30, 2022, Neusoft Healthcare is required to fulfill the repurchase obligation. Nowadays, Neusoft Medical has changed to a Hong Kong stock, which shows that its listing is urgent.
Neusoft Medical's main business is medical equipment, of which the sales revenue of CT scanners in 2020 accounted for 52.6%, which is the core product of Neusoft Medical. According to the Frost & Sullivan report, Neusoft Medical's CT ownership in the Chinese market accounted for 10.4% of the Chinese market in 2019, ranking first among domestic brands.
According to the prospectus, from 2018 to 2020 (reporting period), Neusoft Medical's revenue was 1.912 billion yuan, 1.908 billion yuan and 2.459 billion yuan, respectively, an increase, but the net profit was almost cut from 168 million yuan in 2018 to 82.044 million yuan and 92.758 million yuan in 2019 and 2020, respectively.
The reporter checked the prospectus and found that Neusoft's costs and expenses did not increase significantly, and the loss was reduced by 65.037 million yuan due to a project called "other income and income".
According to the disclosure, in 2018, Neusoft Medical invested in a company on the basis of intellectual property rights. With the sale of other intangible assets under this item, Neusoft Medical's revenue was 52.5 million yuan, accounting for 31.14% of the net profit of the year, and the net profit exceeded 100 million.
In addition, during the reporting period, the government's subsidies to Neusoft Medical were 80.714 million yuan, 46.705 million yuan and 98.092 million yuan, accounting for 4.2%, 2.4% and 4.0% of the revenue respectively.
In fact, Neusoft Medical's sales do not seem to be smooth. Its main customers in the reporting period include six customers from customer A to customer F, in addition to customer F and customer G, the rest are distributors, it is reported that customer G is also one of the five major suppliers of Neusoft Medical.
In 2018, Neusoft Medical's gross profit margin on sales to the fourth largest customer G was only 18.9%, which was half of the normal gross profit margin of 39.9% in that year; in 2020, the first major customer F, who contributed 13% of revenue, that is, the Ministry of Health of an African country, disappeared from the five major customers.
According to the prospectus, from 2018 to 2020, Neusoft Medical's revenue from the five major customers accounted for 28.2%, 21.9% and 17.6% respectively, accounting for less than 20% and decreasing year by year.
In addition, a distributor customer of Neusoft Medical has recently been caught in a bribery storm. China Procuratorial Network recently published an indictment called "Tong procuratorial second criminal complaint [2021] Z5", showing that in 2017, Wang Moumou, the person in charge of "Neusoft" CT Sichuan Ganzizhou Agent Chengdu ** Technology Co., Ltd., when preparing to purchase "Neusoft" brand CT equipment in a county people's hospital, finally won the bid at a price of 8.97 million yuan by paying bribes of 1.8 million yuan.
<h3>Neusoft Xikang: The low price did not grab the market</h3>
Neusoft Hee-Kang relies on building a network of cloud hospitals that connect policymakers, healthcare organizations, patients, and insurance companies in cities to achieve equitable access to healthcare resources and more effective and efficient delivery of healthcare services.
According to the Frost & Sullivan report, as of the first quarter of 2021, Neusoft Heecom covered 25 urban cloud hospital platforms, according to which it is the largest cloud hospital network, but it is difficult to escape losses.
From 2018 to 2020 (reporting period), Neusoft Xikang's operating income was 318 million yuan, 400 million yuan and 503 million yuan, respectively, showing an increasing trend, and the government subsidies received accounted for 11.95%, 8.00% and 3.18% of the current revenue respectively. Even so, Neusoft Xikang's net profit was -232 million yuan, -218 million yuan and -199 million yuan, respectively, and it still suffered continuous losses.
Neusoft Xikang's main business includes three types: cloud hospital platform services, cloud medical health services, and intelligent medical and health products. It is reported that the cost of the cloud hospital platform includes the development and connection costs of the cloud hospital platform, which are apportioned by different platforms; the cloud medical services include medical personnel welfare expenses and equipment depreciation; while the cloud medical and health services include medical personnel expenses, equipment depreciation and leasing expenses.
According to the prospectus, the gross profit margin of many of Neusoft Xikang's main businesses declined. In 2020, the gross profit margin of cloud hospital platform services fell sharply from 59.3% in 2019 to 38.1%; the gross profit margin of smart medical and health products also fell from 30.8% in 2018 to 18.5% in 2019 and 19.0% in 2020; and the gross profit margin of cloud medical and health services in the reporting period also decreased from 23.9% in 2018 to 20.0% in 2019.
In this regard, Neusoft Xikang explained that the decline in the gross profit margin of the cloud hospital platform is due to the launch of more projects that are still in the early stage of development in 2020; while the decline in the gross profit margin of smart medical products and cloud medical services is due to the low-price competition strategy.
Even so, Neusoft Xikang has not won the favor of major customers. From 2018 to 2020, Neusoft Xikang's five major customers accounted for 14.3%, 21.8% and 16.2% of the total revenue, respectively, and the largest customer contribution revenue accounted for 6.4%, 8.5% and 5.0% respectively.
According to the prospectus, Neusoft Xikang has only one customer with an annual income of more than 5% and is not fixed, all of which stem from the unprofitable sales of smart medical and health products. In 2018, Neusoft Group was also among the top five customers.
In addition, under the low-price strategy, the proportion of neusoft Xikang's marketing expenses has been relatively high in recent years. From 2018 to 2020, Neusoft Xikang's marketing and promotion expenses accounted for 27.85%, 24.20% and 19.23% of the total revenue, respectively, of which employee welfare expenses accounted for 70.0%, 70.7%, 71.5% and 73.6% of the total marketing and promotion expenses, respectively.
![Neusoft Promotes IPO of 3 Companies! The "godfather of software" Liu Jiren's capital territory has expanded again[fig]](data:image/gif;base64,R0lGODlhAQABAIAAAP///wAAACwAAAAAAQABAAACAkQBADs=)