On April 12, Jingzhou Huihe Equity Investment Partnership (Limited Partnership) reached an agreement with Hejing Technology on the transfer of shares. After the completion of this equity change, the controlling shareholder and actual controller of Jing technology remain unchanged, and Jingzhou Huihe has become the second largest shareholder of the company.
Yesterday, Jing Technology resumed trading, affected by the overall weakness of the broader market, closed at 12.86 yuan / share, a slight decline of 1.76%. Why did Hejing Technology introduce new strategic investments? As the only educational asset wisdom tree of Hejing Technology, what kind of impact will this behavior have on it? In order to explore the impact of this stake on the educational assets of Hejing Technology, especially the long-term value of wisdom tree, Blue Whale Education interviewed Li Donghua, CIO of Wisdom Tree.
Officially joined the national team
The shares of Wisdom Tree's controlling shareholder and Jing Technology have been suspended since the opening of the market on March 30 due to the introduction of partners that are in line with the development strategy of listed companies, which has a significant impact on the company. After the completion of the equity change, the strategic investor Jingzhou Huihe was introduced to hold 12% of the shares.
Importantly, the shareholders of Jingzhou Huihe Equity Investment Partnership (Limited Partnership) are Shenzhen China Merchants M&A Equity Investment Fund Partnership and Shenzhen China Merchants Huihe Equity Investment Fund Management Co., Ltd. Among them, shenzhen state-adjusted china merchants mergers and acquisitions equity investment fund partnership enterprises do not have clear shareholder information; The shareholder of Shenzhen China Merchants Huihe Equity Investment Fund Management Co., Ltd. is China Merchants Capital Management Co., Ltd.
In other words, the transferee behind this share transfer is China Merchants Capital. This move may make Hejing Technology a "bridgehead" for the state-owned preschool education industry.
After the introduction of strategic investment, the focus is on applying part of the funds to the wisdom tree. Why the government can look at the wisdom tree is closely related to its achievements in recent years.
Wisdom Tree is currently the largest preschool education interactive platform in China, its own development and mergers and acquisitions in the same industry, such as the merger and acquisition of "Zhiqu Interconnection" and "Saturn Education", so that its users reached 28 million, the monthly active users reached 8 million, and the number of kindergartens served reached 120,000. The cooperation between Wisdom Tree and China Unicom's "Interactive Baby" also indicates that it will provide a management platform for the government. The huge database is very beneficial to the government to regulate the management of preschool education.
The injection of state-owned assets into the preschool education industry is also in line with Premier Li Keqiang's statement at the two sessions this year that "it is necessary to increase the supply of preschool education resources through multiple channels, use the Internet and other information means to strengthen the supervision of the whole process of childcare, and must reassure parents".
Government policy is skewed towards pre-school education
Preschool education is the beginning of lifelong learning, a critical stage in life development, and the input-output ratio is optimal when the child is 0-6 years old, so this field is worth more family and social investment.
The reality, however, is that pre-school education remains a weak link at all levels and in all types of education. Compared with K12 and the university level, the government's investment in pre-school education is limited. The "red, yellow and blue" incident and the Ctrip parent-child park child abuse incident are actually a reflection of the entire industry. Insufficient number of teaching staff, low quality, large mobility, insufficient supervision, etc. are all shortcomings of preschool education.
2017 was a turning point, a year in which China's preschool education achieved leapfrog development. The government has focused on pre-school education.
As can be seen from the chart, the national policy for preschool education in 2017 is very intensive, which shows the government's concern and expectations for children, and also shows the importance of preschool education. The combination of preschool education and the Internet is a new trend in future development, coupled with policy support, the expected development space of the preschool education market is very large. The Wisdom Tree seized this historical opportunity and got the first ticket for the early childhood industry to enter the intelligent era.
Reasons for non-profitability
The preschool education market is huge. There are nearly 113 million preschool children aged 0-6 in China, of which about 45 million are young children aged 3-6; In terms of education, Chinese parents are very willing to invest in their children; Coupled with the tilt of national policies on the preschool education industry, this market has great prospects.
Although the development prospects of the preschool education market are promising, why has the wisdom tree not yet made a profit? According to Wisdom Tree CIO Li Donghua, there are two main reasons:
First, the current situation of the industry. At present, although the preschool education industry is huge, the main characteristics of participating institutions are many, miscellaneous and small, and this decentralized feature leads to its inability to form a scale, which in turn causes it to fail to produce good business models and products. In addition, the business model of the preschool education industry has always been very traditional, and it is still in the early stages of the Internet.
The second reason is that the wisdom tree has just begun to do business exploration. In many respects, it is not yet mature and needs to be improved.
But Li Donghua said that in 2018, the wisdom tree will definitely be profitable. Like most Internet companies, the main monetization model of Wisdom Tree is advertising, and advertising revenue is expected to increase significantly in 2018. Confidence mainly comes from two aspects, one is customer positioning, and the other is the team.
The user positioning of the wisdom tree is accurate, and the main user group is parents. Users have a strong consumer demand, and the wisdom tree has its multi-dimensional data, so the advertising revenue is bound to be very substantial. Last year, the wisdom tree mainly used the traditional advertising model, and this year will add Internet attributes, such as addresses, to target ads to users. The UP value of the wisdom tree is expected to be greatly improved; In addition, many technical talents have chosen to join the Wisdom Tree to build Internet advertising teams, such as the technical teams of Baidu and NetDragon.
In addition, the wisdom tree has basically stopped subsidizing channel providers, because with the diversification of products, the self-hematopoietic ability of channel providers has been continuously enhanced. For example, milk, wisdom tree and Mengniu reached an agreement, the supplier at a very low price directly to the kindergarten, not only to ensure food safety, but also to allow the channel providers to benefit from it.
"Profitability in the future wisdom tree is inevitable." Li Donghua said. According to previous statistics, the single revenue of advertising can already cover all the costs of the wisdom tree, and the rest is profit.
Wisdom Tree Strategic Planning
Wisdom Tree's development in 2018 focuses on the market, and hopes to basically complete the unification of the national market this year, especially in key cities and developed areas, and then build itself into a "small Tencent" in the 3-6-year-old preschool education market through excellent products and services; The core of development is products and technologies, and wisdom tree will build a smart kindergarten system around the four major product lines of safety, health, teaching and mutual entertainment. Wisdom Tree will also be committed to providing big data for the national standardized management of the preschool education industry and improving the overall level of the preschool education market.
China Merchants capital injected into the preschool education industry, whether the wisdom tree is only one step, whether there is a greater layout in this market in the future, but also need the majority of preschool education workers to pay close attention.