The Xiaomi ecological chain company Huami Technology is going to "backdoor listing" in A shares.
On the evening of January 5, A-share listed company Yitong Technology (300211.SZ) announced that its controlling shareholder Wang Zhenhong intends to transfer 90,772,524 shares of the company (29.99% of the company's total share capital) to Anhui Shunyuan Xinke Management Consulting partnership (limited partnership) (hereinafter referred to as "Anhui Shunyuan").
According to the announcement, the transfer price per share of Wang Zhenhong's share transfer of nearly 30% of Yitong Technology is about 10.57 yuan, and the total transfer price is about 960 million yuan. After the completion of the transfer, the controlling shareholder of Yitong Technology will be changed to Anhui Shunyuan, and its actual controller will also be changed to Huang Wang, the actual controller of Huami Technology.
It is understood that Huami Technology is one of Xiaomi's ecological chain enterprises. Earlier, regarding the market’s concern about the relationship with Xiaomi Group, Huang Wang responded positively, saying, “Maybe the Xiaomi bracelet is too successful, making everyone mistakenly believe that the cooperation between the two parties in wearables is exclusive and exclusive.”
In October 2020, Huami Technology also announced that its strategic cooperation agreement with Xiaomi Corporation (HK:01810) will be extended for another three years. Previously in October 2017, Huami Technology signed a three-year business cooperation agreement and strategic cooperation agreement with Xiaomi, which expires in October 2020.
Huang Wang takes control of A-share company
It is understood that Huami Technology is also a company listed in the United States. Regarding the equity investment in Yitong Technology, Huami Technology mentioned in its public announcement that Huami Technology and Jiangsu Yitong hope to work together to take advantage of Yitong Technology’s opportunity to enter China’s domestic capital market and expand the medical market in China for a long time. Health ecosystem.
According to data, Anhui Shunyuan was established on September 27, 2020 and has not yet started actual operations. It is understood that Anhui Shunyuan’s executive affairs partner is Anhui Huami Intelligent Technology Co., Ltd. (hereinafter referred to as "Huami Intelligent"), the controlling shareholder behind it is Huami Technology, and the actual controller is Huang Wang.
Yitong Technology stated in the announcement that Anhui Shunyuan’s acquisition of Yitong Technology’s shares is aimed at relying on Yitong Technology’s listing platform and with the help of New York Stock Exchange-listed Huami Technology (NYSE:HMI) in the health ecological industry. The advantages in the field will enhance the sustained profitability and operating capabilities of listed companies.
After the announcement of relevant news, Huami Technology closed up 4.55% to 13.33 US dollars per share on January 5 in US stocks, with a total market value of 826 million US dollars. On January 6, Yitong Technology’s stock price opened at a daily limit of 7.9 yuan, harvesting its first daily limit in 2020, a one-day surge of 20.06%, and a total market value of 2.391 billion yuan.
Regarding the changes of Yitong Technology, the Shenzhen Stock Exchange sent a letter of concern to it, requesting it to supplement the disclosure of Anhui Shunyuan’s business integration arrangements, and the specific content and development plan of improving the profitability of listed companies with the help of Huami Technology. Has a clear, specific and achievable transaction arrangement established for enhancing profitability?
At the same time, whether Anhui Shunyuan has accepted the original shareholder's (Wang Zhenhong) commitment or made an alternative undertaking, after the completion of the equity transfer, whether the shares held by Anhui Shunyuan are subject to a sale restriction arrangement, and whether the relevant sale restriction arrangement is conducive to maintaining control of your company, Whether the long-term stability of the equity structure and daily operations is conducive to safeguarding the rights and interests of listed companies.
According to the announcement, the transfer agreement stipulates that the transferor shall make a performance commitment on the performance of the listed company’s original business segment. If the performance commitment is not fulfilled, both parties to the transaction shall negotiate the listed company’s performance within 30 days after the listed company’s audited financial report for that year is publicly disclosed. make up.
In this regard, the Shenzhen Stock Exchange required Eton Technology to clarify the subject of the compensation obligation and the compensation object of the above-mentioned performance compensation commitments, and whether the above-mentioned performance commitments involve the obligations of listed companies, and ask lawyers for their opinions. According to the announcement, Yitong Technology needs to submit and disclose before January 11.
Yitong Technology's revenue is declining year by year
It is understood that the transferor (Wang Zhenhong) promised that the revenue of its original broadcasting and television business segment in 2021 will not be less than the revenue of the listed company in 2020, and the revenue in 2022 will not be less than half of 2020, and the accounts receivable The fund turnover rate is not less than 106.51%.
Yitong Technology’s previous financial report data showed that its operating income from January to September 2020 was 60,982,900 yuan, a year-on-year decrease of 18.55%. The communications equipment industry has disclosed that the average operating income growth rate of individual stocks in the three quarterly reports is -3.72%, and the performance of Yitong Technology is far below average.
Beduo Finance understands that in recent years, Yitong Technology's revenue has been declining year by year. In 2017, 2018, and 2019, its revenue was 169 million yuan, 128 million yuan, and 98.9087 million yuan, respectively, with a year-on-year decline of 22.89%, 24.50%, and 22.69%.
According to public information, Huami Technology was established in 2015 and is mainly engaged in the research and development of smart wearable devices. Its products include Xiaomi bracelets, Xiaomi body fat scales, and Amazfit watches. On February 8, 2018, Huami Technology was listed on the New York Stock Exchange with an issue price of US$11.
As of March 31, 2020, Huami Technology founder and CEO Huang Wang holds 34.5% of the company’s shares and is its largest shareholder; Xiaomi Group holds 14.5% of its shares and is its second largest shareholder; Wells Fargo (Wells Fargo & Company) 10%, and Shunwei Capital holds 6.7%.
Huami Technology's revenue growth slows
On November 23, 2020, Huami Technology announced its financial report for the third quarter of 2020. According to the financial report, its revenue for the third quarter of 2020 was 2.235.1 billion yuan, a year-on-year increase of 20%; net profit was 81.1 million yuan, a year-on-year decrease of 60% from 203.3 million yuan in the same period in 2019.
Beduo Finance found that the sharp decline in revenue year-on-year was related to the rising cost of Huami Technology. According to the financial report, its research and development expenses for the third quarter of 2020 were 172.9 million yuan, a year-on-year increase of 38.8%; marketing and sales expenses were 115.6 million yuan, a year-on-year increase of 104.2%.
In addition to increased R&D investment and high marketing costs, Huami Technology's gross profit margin is low. The data shows that Huami Technology's gross profit margin was 27.2% in the first quarter of 2019, which continued to decline to 20.6% in the third quarter of 2020, and was 25.2% in the same period in 2019.
Huami Technology stated that gross profit margin and gross profit are affected by product structure and may change during the product life cycle. In the third quarter of 2020, the total shipments of Xiaomi and its own brand products were the same as the same period in 2019, but the decline in gross profit margin was mainly due to the year-on-year decline in the profit margin of Xiaomi products.
It is worth mentioning that Huami Technology's revenue growth rate is also slowing down. According to previous data, from the third quarter of 2019 to the second quarter of 2020, Huami Technology's revenue growth rate was 73.31%, 72.42%, 36.13%, and 9.5%, respectively. Among them, the year-on-year growth rate of revenue in the second quarter of 2020 dropped to single digits.
In the third quarter of 2020, Huami Technology's revenue growth rate picked up slightly year-on-year, with a year-on-year increase of about 20% and a month-on-month increase of 96.6%. However, related data also shows that from the perspective of the sales cycle of the smart wearable device industry, due to holidays and other factors in the third and fourth quarters, the quarterly sales revenue is generally higher than that in the first and second quarters.
Huang Wang, founder, chairman and CEO of Huami Technology, said that shipments and revenue in the third quarter increased by 16% and 20% respectively, mainly due to the newly released Mi Band 5 and the excellent new products of the own brand Amazfit watches and headphones Performance, as well as the continued expansion of global sales and economic recovery in multiple regions.
For the fourth quarter of 2020, Huami Technology expects net revenue to reach 1.95 billion yuan to 2.15 billion yuan, compared with 2.11 billion yuan in the same period in 2019. This also means that Huami Technology’s revenue may officially enter a negative growth stage in the fourth quarter of 2020.