Original title: "Youzan", the first stock of WeChat ecology, a shovel seller at the gold mine
The first stock of WeChat ecology, "Youzan", a gold mine Bian's shovel seller May 17, 2018 07:46:50
This article is from the WeChat public account "Wang Yayuan Hong Kong Stock Circle", author Feng Jike.
On April 18, China Innovation Payment (08083) announced that it has completed the acquisition of 51% equity in Youzan. Since the first mention of the acquisition in July 2016, the 22-month acquisition has finally landed.
China Innovation Payment issued 5.5 billion shares at HK$0.38 per share and paid a total of HK$2.096 billion. Based on this calculation, Youzan’s valuation is HK$4.1 billion. After the completion of the acquisition, Youzan will hold 42.82% of the company's shares and formally become the largest shareholder of China Innovative Payment.
In my opinion, the whole thing is called "Youzan was acquired", which is actually a backdoor listing. Known as the “first share of WeChat ecology”, I believe everyone will be familiar with it. However, as a well-known social e-commerce platform, under the trend of the Hong Kong Stock Exchange to liberalize the listing of new economic stocks, it still needs Low-key listing on the GEM backdoor, do you have an idea?
1. There is huge space in the WeChat e-commerce industry
1. Test the waters of WeChat e-commerce
On January 21, 2011, Tencent (0700.HK) officially launched the WeChat software, and the number of users has grown tremendously . It took about 433 days for WeChat users to go from 0 to 100 million; while the number of users went from 100 million to 200 million, it only took 172 days; today, its monthly active users have exceeded 1 billion.
When WeChat gathered a wealth of traffic, many businessmen began to make small calculations on WeChat, so "WeChat business" quickly emerged.
In addition, Taobao at that time had already developed very large, and the bidding ranking mechanism was already implicit in the traffic. An ordinary small store invests tens of thousands of yuan to bid, and it basically ranks after 100,000+. How can there be any traffic? Even if someone patrons, it is estimated that no one can actually shop in a store after 100,000+. Shopkeepers frequently come up with methods, such as selling hot money at a loss, or even bribing "Ali Xiaoer". It is not a big brand, and the purchase flow is high and the risk is high. For many small brands, it is not a long-term solution after all.
On the contrary, the most obvious feature of WeChat is "decentralization". Each WeChat business exists separately, so when WeChat is a "decentralized" social e-commerce When it rose, many people were eager to try. The wave of WeChat business has swept through, and this should be considered the first test of WeChat's socialized e-commerce, even though this is an unorganized self-publishing behavior.
2. Wechat commerce welcomes people who sell shovels
Wechat commerce is growing In the process, many problems have also arisen, such as the ads in Moments being swiped, lack of effective marketing techniques, and the inability to systematize customer management. These problems have also created pocket shopping (microshop) and pocket communication (with Like) The birth of this kind of "shop-opening tool".
These tools make WeChat no longer a simple and rude circle of friends, but can open a WeChat mall with a mobile phone, and can also do social sharing and more. Good display of goods and communication with customers, etc., the functions are infinitely close to Taobao APP.
Youzan was launched in 2013. At that time, it was cited as a "artifact" by Weishang. At the beginning of its establishment, CEO Bai Ya promised not to charge any fees, and a lot of Crown stores in the second echelon of Taobao are also coming. In just three years, as many as 10 million merchants opened stores through Youzan. According to the calculation of 1 billion Chinese Internet users at that time, on average, one out of every 100 people was a micro-business. In WeChat stores, attentive friends can often see the small characters "Youzan provides technical support". Youzan was the one who gave away the shovel for free at that time.
Later, the hundreds of millions of funds raised were almost burned out, so Youzan announced the cancellation of the free policy, charging each store with an annual service fee of 4,800 yuan. At that time, there were many people giving shovels. Even if you have every reason, as long as you charge a fee, you will lose a lot of merchants.
"In the field of corporate services, the people who burn money are fools. They must return the business to the essence of business and not pretend to prosper." Bai Ya explained.
This bold step allows Youzan to clarify its business model, which is to support the family by selling shovel.
As of the end of 2016, the number of active merchants on the Youzan platform reached 360,000, and the total annual turnover of the platform exceeded RMB 10 billion (approximately 2.5 billion in 2014 and 2015 respectively). 100 million yuan and 4 billion yuan). Some well-known brands are also using Youzan services, such as Uncle Kaiyou, Yangguang Shopping, Liangpin Shop, Pechoin, etc. These data show that the public recognizes Youzan.
3. The outbreak of WeChat applets
Tencent has always wanted to get involved in the e-commerce industry The clues can be seen from its successive equity investments in platforms such as JD.com, Vipshop, Yonghui and Pinduoduo. Since the beginning of 2017, the WeChat Mini Program has been successfully launched. With the help of WeChat social sharing, the Mini Program has many "phenomenal" products.
Such as "Jumping", it became popular in the circle of friends overnight, and two months after it went online, it began to collect advertising money, which was as high as 20 million in three days. McDonald’s , Nike, etc. have participated. Judging from mainstream media descriptions, Nike’s advertising effects are not bad.
Another example is a new-born cake-making family. It launched a small program in May 2017. At one time, it had over 10 million users, and its daily peak of new users reached 100,000. , And gradually formed a million-level small program matrix with cake order+, birthday steward, Xindiandian and Xinxin greeting cards as the mainstay.
It can be seen that with the help of social sharing, the use and consumption of small programs have achieved the effect of fission, and this is the horror of social e-commerce.
According to a report released by QuestMobile, as of March 2018, WeChat Mini Program users have exceeded 400 million, and the penetration rate in WeChat has reached 43.9%. According to the following figure, we It can be seen that small programs have penetrated into all walks of life.
With the rise of WeChat mini-programs, mini-programs have become a "decentralized" e-commerce ecological center. Youzan has long developed mini-programs and used convenient technology to help merchants proceed. Quick docking, no need to develop separately. As CEO Bai Ya said, "You only need to focus on managing your own customers, and you will leave all the other complicated tasks to Youzan."
In the Internet field, the siphon effect is more obvious. , Along with WeChat’s unique operating method: KOL in Moments of Friends, and the birth of small programs, this has formed the ground for the explosive growth of the GMV of Youzan platform and its revenue in recent years.
2. Youzan’s operating status
With customers, you can naturally charge. According to the acquisition announcement, Youzan The income can be divided into (i) transaction fees; (ii) authorization fees; (iii) advanced functions; (iv) membership; (iv) other functions/services.
As of the end of October 2017, Youzan's revenue and gross profit have been greatly improved, with a year-on-year increase of 2 times and 4.3 times respectively, gross profit margin increased from 40% to 70%, and operating losses also In the narrowing, the substantial increase in revenue and gross profit is mainly attributable to the license fee for subscribing to e-commerce applications since May 2016.
In addition, due to the accounting treatment of changes in the fair value of preferred stocks every year, Youzan’s actual operating loss is not as large as expected. The loss before tax in 2016 reached 1.1 billion yuan, but excluding these non-recurring items, the actual loss is only about 160 million yuan.
According to news reports, CEO Bai Ya revealed in an internal email on March 1, 2018: Youzan WeChat Mall achieved breakeven in Q2 of 2017, and Q3With large-scale profitability, direct GMV increased by 86.9% over 2016, and the number of consumers serving indirect services has exceeded 400 million.
Baiya also said that the SaaS business he is doing is basically summarized as: investment in the first 3 years, payback in the 5th year, and profit in the 6th year. Youzan Mall has entered a state of continuous profitability, and the remaining businesses are also expected to achieve continuous profitability by the end of 2018.
The business model has come out, and profits have begun to emerge. How should the valuation be calculated?
CEO Bai Ya mentioned in the email One important point, and the goal of Zan's future is to catch up with Shopify (SHOP.US), which is listed in the United States.
Shopify is a company whose stock price has risen from US$17 to the current level of approximately US$150 within 3 years, an increase of 7.5 times, and the US version with a current market value of 15 billion is praised.
3. The U.S. version has a good reputation-Shopify
Shopify was listed in the U.S. and Canada in 2015. The group’s business follows Youzan is very similar. They are both an online shop system in the SaaS field, which is suitable for e-commerce to establish independent stations. Sellers can use various templates of the system for a certain monthly fee to integrate business flow and capital flow.
Shopify has successfully promoted globally. Its customers include Google, Tesla, GM, Budweiser, Wikipedia and other big names, and of course more medium-sized businesses Build an online store on Shopify.
On March 22, 2018, Shopify announced the expansion of its cooperation with Instagram, adding the "shopping on Instagram" function, allowing businesses to post on Instagram Label the product. We know that Instagram is an interesting and popular photo sharing application, and it is also an excellent place for Shopify's thousands of fashion, jewelry, beauty, furniture and home decoration businesses to effectively expand their customer base.
Currently, Instagram has 500 million daily active users, and its natural integration with Shopify’s sales channels (such as Facebook, BuzzFeed, Pinterest, and eBay) will help brands use mobile Advantages to obtain global consumers.
The business model and environment of Youzan and Shopify are similar in many ways. For example, Shopify grew rapidly in the cracks between Amazon and Paypal's e-commerce giants, with the help of Facebook; while Youzan grew up in the cracks between Alibaba and JD.com's e-commerce giants, with the help of WeChat ecology.
To compare their main business data, as of the end of 2017:
Shopify’s turnover was US$673 million. The compound growth rate of turnover in the past 5 years has reached 95%, and the GMV has reached 26.3 billion US dollars.
As of the end of October 2017 (10 months), Youzan's turnover was only 210 million yuan, and its GMV was about 10 billion yuan.
Shopify is undoubtedly Youzan's goal, and its success also points out the direction for Youzan's development.
Fourth, Shopify and YouzanCompetition situation comparison
Overseas Shopify is fully supported by Instagram, will WeChat also support likes?
As early as October 2014, Tencent and Tiger Fund led the investment in Youzan's competitor Pocket Shopping (WeChat Store). Tencent invested US$145 million, accounting for 10% of the shares. Therefore, many people worry that WeChat will not support Youzan, but according to Tencent's style, I think the probability of not supporting it is small.
First of all, as a Chinese Internet giant, Tencent has always been annoyed that it has not effectively entered the e-commerce field, and the launch of the mini program is actually responsible for entering the e-commerce business. WeChat's traffic + shopping is the core small program, which means that Tencent has really taken a step towards e-commerce.
Tencent’s bow must be aimed at another e-commerce space occupied by the giant Ali, not a small shovel business.
Secondly, after the 3Q war, Tencent has actually become more and more open. For example, NetEase Cloud Class has cooperated with WeChat to launch free classes like "Mini Program Engineer" . Now that Tencent has become more tolerant, it will not make the mistake of choosing one of the two in 3Q.
Finally, Youzan has accumulated hundreds of thousands of active merchants, involving so many merchants, if it is blocked by Tencent, spitting stars will definitely be indispensable.
Therefore, even though Tencent may not support Shopify like Instagram, it will at least allow sellers to compete freely, so that merchants will have better services.
The current competitor with Zan mainly includes Weidian and Yunji. Weidian received Lei Jun’s investment early in the morning. Later, funds such as Tencent and Tiger led the investment of US$350 million. Yunji also announced on April 23 that it had completed a Series B financing of 120 million US dollars, led by CDH Investment, followed by Huaxing New Economic Fund. In 2017, Yunji's transaction volume exceeded 10 billion yuan. It can be described as "under the wind, flying pigs all over the sky."
Whether Youzan can become the best pig, it’s still too early to make a conclusion. It’s just risk and Opportunities coexist forever. Judging from the six years of Youzan's establishment, two years of transformation, good data in all aspects, and strong execution, there is still a lot to win.
Fifth, the GEM backdoor is just a springboard
Since the prospects are bright, why should "decrease" to not be listed separately, And choose to go public on a GEM company backdoor? It also has a mediocre reputation. I think there are roughly two reasons.
Reason 1: At present, Zan does not meet the basic requirements for listing on the main board
Hong Kong Stock Exchange The main board listing conditions are as shown in the figure below, and one of the three conditions must be met. According to data, Youzan two years ago could not meet the requirements, so backdoor listing is the best choice. But why choose GEM instead of motherboard?
Reason 2: Backdoor on the Growth Enterprise Market, in order to operate with a "license"
Youzan chooses to marry with China Innovative Payment, all because of its "payment license". According to media reports, it is becoming more and more difficult to apply for a "payment license". It has a value of at least 700 to 800 million Hong Kong dollars. Youzan can use marriage instead of spending "real money" to buy it. This is for those who are still growing up. Say, three things in one fell swoop: go public, get a license, and spend no money.
According to the management, Youzan currently employs a third-party payment service provider to serve its e-commerce platform. In the future, the company also hopes to use China's innovative payment to replace the existing payment services. Achieve synergy and provide one-stop services, including store opening, business management, as well as payment service support and capital management.
There is a high probability that the GEM is just a springboard for praise, and its ultimate goal is to target the main board.
According to the regulations of the Hong Kong Stock Exchange, the conditions for the transfer of Zhan Zan are the same as the conditions for a new company to apply for listing on the Main Board, that is, one of the above three conditions must be met. Youzan’s revenue in the first 10 months of this year has reached 210 million yuan. Based on its development speed and the synergy effect brought by its payment license, it is believed that it will soon reach the 500 million Hong Kong dollar revenue requirement in the market value/revenue test. Apply Turn the board.
6. Youzan is valued at more than 4.1 billion yuan, it is a unicorn
Return to China's innovative payment There is basically only slag left in this shell, and its business loses money every year. In recent years, it has basically survived by placing. As of the end of 2017, the company’s net assets were approximately HK$1.2 billion, and the current price-to-book ratioIt is 7.9 times. If the goodwill of 700 million Hong Kong dollars is deducted, the real assets are only 500 million Hong Kong dollars.
Incidentally, the auditors of China Innovation Payment have reservations on the 2017 financial statements because of the goodwill impairment test on third-party payment services and The recoverability of the potential investment sincerity paid, and these two things are related to the management's good expectations for the acquisition, and no other suspicious factors are involved.
Since the value of the old business is approaching zero, it can be said that the current market value of China Innovation Payment is 9.8 billion Hong Kong dollars ≈ the value of holding 51% of Youzan. Based on this inference, Youzan’s current valuation has risen to HK$19 billion (9.8 billion ÷ 51%), which is significantly higher than the implied valuation of HK$4.1 billion estimated from the purchase price or a third party’s P / HK$4.7 billion assessed by GMV method.
From the perspective of P/GMV evaluation, Youzan’s GMV needs to reach 28 billion yuan (34.5 billion Hong Kong dollars) to support the current 19 billion Hong Kong dollar valuation, which means that GMV needs to grow relative to 2017 1 times.
In the past 5 years, Youzan’s compound growth rate has reached 95%. In addition, in the post-e-commerce era, it will be a general trend for personalized e-commerce to move away from Taobao Tianmiao’s platform. Youzan GMV still has huge room for development.
However, looking at P/GMV alone, the possibility of actual net profit will be ignored.
According to the data for the first 10 months of 2017, Youzan’s losses are indeed narrowing. If, as the CEO said in an internal email, the main product Youzan Mall has entered a profitable state, Others can also turn from loss to profit at the end of 2018, coupled with the synergy effect brought by third-party payment services, I believe the company will soon realize operating profits.
Therefore, even if praises are injected into China's innovative payment, the market value has doubled, and the increase is relatively rapid, but the current market value is still growing compared with the future development space .
Shovel sellers are most afraid of three things. One is that no one is digging for gold. Shovel Can’t sell, second, the owner of the gold mine won’t let you sell, and third is the competition between selling shovels.
With the rise of WeChat mini-programs and social e-commerce showing fission effects, personalized e-commerce will be the trend of the post-traffic era, and the sales of shovel will not be used Sad. The WeChat ecosystem is also relatively open, and Tencent will not intervene in the business of selling shovels.
Therefore, the biggest uncertainty left in Youzan's future is competition among peers. And this successful backdoor listing will give the company the opportunity to further widen the distance from its competitors.
Excluding the small flaw of borrowing the GEM listing and returning to the fundamentals, in the dividend period of WeChat e-commerce, Youzan is facing the sea of stars. (Edit: Liu Rui)