Geling Shentong will land on the Science and Technology Innovation Board to raise 1.8 billion yuan. Can AI geniuses get out of the huge loss in the future?

Data Intelligence Industry Innovation Service Media

——Focus on digital intelligence and change business

Another AI company under the pressure of huge losses went public.

On March 4, the Shanghai Stock Exchange issued an announcement that Geling Shentong made an initial public offering and listed on the Science and Technology Innovation Board. The price of this issuance is 39.49 yuan per share, the number of issued shares does not exceed 46.24 million shares, and the total share capital after issuance is about 185 million shares. On March 7, Gelingshentong started online subscription, and the total fundraising for this issuance reached 1.826 billion yuan.

It took less than 7 months from the acceptance of the IPO application to the approval of the approval. As an AI company hitting the Science and Technology Innovation Board, Geling Shentong's IPO road seems to be much smoother than other companies.

In recent years, the financial performance of Gelingshentong has not been impressive. According to the prospectus, from 2018 to 2020 and the first half of 2021, Gelingshentong’s operating income was 52 million yuan, 71 million yuan, 243 million yuan and 72 million yuan respectively, and the net cash flow from operating activities in the reporting period Inside are -111 million yuan, -111 million yuan, 35.0882 million yuan and -44.0414 million yuan. Among them, the year-on-year growth rates in 2019 and 2020 were 37.04% and 240.84% respectively; the net profit attributable to the parent company in the same period was -0.7 billion yuan, -414 million yuan, -0.78 billion yuan and -0.57 billion yuan, of which 2019 and 2020 The year-on-year growth rates were -491.58% and 81.17%, respectively.

As for the reasons for the continuous loss of profitability, Gelingshentong explained in the prospectus that the main reason for the company's unprofitable and accumulated unrecovered losses is that the company has invested heavily in research and development in the early stage but the income scale is small, and the implementation of equity incentives has resulted in large share-based payment expenses. Sincerely.

According to the prospectus, from 2018 to 2020 and the first half of 2021, the research and development expenses of Geling Shentong were 72.8502 million yuan, 95.9543 million yuan, 114 million yuan and 55.2347 million yuan respectively, accounting for 128.62% and 118.34 million yuan of revenue. %, 31.70% and 52.05%. In addition to the huge investment in research and development, the continuous increase in research and development expenses of Geling Shentong may be due to the increase in research and development personnel and equity incentives. According to the prospectus, during the reporting period, Geling Shentong’s share payment to R&D personnel was 6.0156 million yuan, 11.6812 million yuan, 37.3498 million yuan and 17.6618 million yuan, accounting for 8.26%, 12.17%, 32.68% and 31.98%.

Huge losses were realized, and Gelingshentong suffered a loss of over 600 million during the reporting period. Although at this moment, Greenshentong has been successfully listed, if it cannot guarantee to achieve profitability within a certain period of time in the future, even if it is successfully listed, it will face the risk of delisting.

Geling Shentong also pointed out in the prospectus that if the company cannot make enough profits to maintain working capital within a certain period of time in the future, it may have negative impacts on the company's cash flow, business expansion, talent attraction, team stability, R&D investment, and strategic investment. , production and operation sustainability and other aspects have adverse effects.

In addition to the insufficient profit data, Geling Shentong also has the problem of rising accounts receivable in the first half of 2021. According to the prospectus, from 2018 to 2020, the book value of accounts receivable of Geling Shentong was 58.632 million yuan, 53.6512 million yuan and 68.2994 million yuan respectively, accounting for 112.83%, 75.34% and 28.14% of operating income , showing a gradual downward trend.

In the first half of 2021, Geling Shentong's accounts receivable reached 90.5016 million yuan, accounting for 125.37% of operating income, which is relatively large. At the same time, the proportion of Geling Shentong's accounts receivable after the due date has also continued to decline, from the highest value of 99.56% to 7.69%.

In addition, the heavy dependence on large customers is also an important problem faced by Gelingshentong. Gelingshentong pointed out in the prospectus that in the field of urban management, its main customers are large integrators, and the revenue of the top five integrators accounted for 84.74%, 60.93%, 40.44% and 60.14%, respectively, with a high degree of customer concentration. In addition, in the field of urban management, due to the late realization of commercialization in the field of urban management, the accumulation of customer resources is weak, and the market expansion is not as expected, or the company's cooperative relationship with major customers is replaced by other suppliers, the company will face the risk of a decline in operating performance .

On the whole, it seems that the key data indicators of Gelingshentong are no longer what they used to be when they became popular overnight with "Sorry, We Only Love You". After the limelight, Gelingshentong has returned to calm.

The meaning behind the strategic placement

Geling Shentong’s issuance adopts targeted allotment to strategic investors, offline inquiry and allotment to qualified investors, and online allotment to those who hold non-restricted A-shares and non-restricted depositary receipts in the Shanghai market. It is carried out in a combination of pricing and issuance by public investors.

The final strategic allotment of this issue is 1,519,371 shares, accounting for 3.29% of the total issue. The total amount of funds raised is 1.826 billion yuan. After deducting the issuance expenses of about 156 million yuan (excluding taxes), the net amount of funds raised is about 1.67 billion yuan.

Judging from the case of Foxconn’s strategic placement, strategic placement can attract the participation of long-term investors. Because of issuance requirements, strategic placements require a certain holding time. In this way, it can be ensured that the investors acquired by the strategic allotment are all investing for the purpose of being optimistic about the long-term development, focusing more on the healthy development of the company in the future, rather than earning short-term profits. The introduction of high-quality strategic investors with high market recognition, good reputation, and related business synergy can be more effectively tied to the long-term interests of the company, boost the better development of the company, and absorb high-quality funds.

Through strategic allotment and other methods, it may also reduce the adverse fluctuations in stock prices caused by speculation in the market and frequent transactions, stabilize the company's stock price, and reduce the short-term impact of raising a large amount of funds on the stock market.

Under multiple considerations, compared with the volatility risks brought about by performance data and other uncertain factors, finding a high-quality partner is the key to continue to take the next step. Ge Lingshentong's choice of strategic placement seems to have explored many of the pros and cons.

Once comparable to the AI four tigers, what is the ability of AI now?

Compared with Starlight Glittering in the early days of its business, Deep Eyes of Green has been a little quieter in recent years. The successful landing on the Sci-Tech Innovation Board brought Geling Shentong back to the public eye, especially its core technological capabilities have also become the focus of public attention.

According to the prospectus, the company's core technical team is composed of 7 people including Dr. Zhao Yong, the founder, chairman and general manager of the company, covering senior talents in various fields such as algorithms, intelligent applications, product design, and hardware development. Academic knowledge and experience in R&D and innovation, as well as a deep understanding and judgment of cutting-edge technologies and development trends in the industry, ensure the continuous R&D and innovation of the company's core technologies.

After years of development, the company has established a highly educated and high-level R&D team. As of the end of the reporting period, the company had 146 R&D personnel, accounting for 55.51% of the total number of employees. Among them, 67 people have a master's degree or above, accounting for 45.89% of the R&D personnel. As of the end of the reporting period, there were 18 invention patents for the main business income.

During the reporting period, the company invested a total of 283 million yuan in research and development, accounting for 77.37% of operating income, and the investment in research and development continued to increase year by year. The company has forward-looking research and exploration in core algorithm technology and application scenario-related technologies. The company's key artificial intelligence technology and research and development in sports health, rail transit operation and maintenance and other fields will further enhance the company's technology accumulation. Provide solid technical support for sustained and rapid development.

However, doubts were also raised about the core technology and commercial landing on the Shanghai Stock Exchange. Compared with other companies in the same industry, the Shanghai Stock Exchange believes that the relevant application scenarios have not been implemented and commercialized in a timely manner when Geling Shentong is relatively close to the general algorithm capabilities of comparable companies in the same industry and has relevant core technologies. This is also a question of the sustainable development and sustainable commercialization ability of Geling Shentong.

Regarding the core technology, Geling Shentong mentioned in the relevant reply to the inquiry letter of the Shanghai Stock Exchange: the company has mastered the core algorithm technology in the field of computer vision, and has formed a deep learning-based model training and data production technology, 3D stereo vision technology, automation Five technical directions: traffic scene perception and event recognition technology, large-scale cross-mirror tracking technology, and robot perception and control technology. The relevant technical indicators selected by the company cover general indicators of AI algorithm technology (such as recall rate, hit rate, accuracy rate, etc.) and AI product performance indicators in specific application scenarios (such as fault detection accuracy, identifiable features of vehicles and traffic events number, etc.), there is no significant difference with the technical indicators selected by comparable companies in the same industry in the same technical category, and can comprehensively measure the advancement of the issuer's core technology.

However, compared with companies in the same industry, Geling Shentong realized commercialization later, mainly because the company's early research and development direction focused on behavior recognition products formed by 3D vision technology, and its landing applications were in the financial and commercial fields.

Geling Shentong is also working hard to find new business breakthroughs, and has carried out forward-looking business layout in new fields such as sports and health, rail transit operation and maintenance, and some products and solutions have entered the stage of customer verification. However, the commercialization progress of new business scenarios is subject to various factors, such as the company’s lagging progress in related technology research and development, insufficient delivery capabilities, weak customer acceptance of products and weak promotion progress, etc., which may cause new products to fail to develop rapidly. Large-scale production may be accepted by the market, or commercialization benefits are not as expected and cannot make up for the initial investment, which will have an adverse impact on the profitability and future development of the enterprise.

Where is the future after the IPO?

In the past, Geling Shentong was a star team that was favored by capital. Its founder Zhao Yong, CEO He Bofei at that time, and CTO Deng Yafeng who joined later, all had a star-like entrepreneurial aura. In the early days, Geling Shentong won the approval of ZhenFund, Ceyuan Fund, Sequoia, etc. It can be said that in the early days of entrepreneurship, Geling’s deep pupils were shining brightly.

However, from entrepreneurship to IPO, Gelingshentong has gone all the way for nearly 9 years. As an early-stage AI company, Geling Shentong can be said to have launched an IPO with a relatively low valuation and fundraising. So after the IPO, where is the future of GreenShentong?

According to the prospectus, in the future, the company will continue to increase investment in technology research and development in the field of artificial intelligence, grasp the development trend of advanced technologies such as the Internet of Things, big data, and robots, deeply integrate artificial intelligence technology with other advanced technologies, and combine social production and life Various application scenarios, to create extensive, efficient, easy-to-use, reliable artificial intelligence products and solutions.

The company's development strategy will focus on the following aspects: First, the company will rely on mature algorithm model production capacity, develop and upgrade the artificial intelligence algorithm platform, improve the cross-platform capability of the algorithm, in order to achieve more efficient technology reuse and reduce research and development costs , improve the efficiency of research and development, and lay the foundation for the industrialization of artificial intelligence by providing cost-effective algorithm products. Second, continue to carry out in-depth integration and innovation of key technologies in multiple fields, cross-border with artificial intelligence technology to form various products, and enrich and improve existing products and solutions. Third, focus on high-value industries. As a strategic basic technology, artificial intelligence technology can be widely used in various industries. Due to the large differences in the demand and actual process of the commercial application of artificial intelligence technology in different industries, the company will focus on industries that have appeared or will soon show commercial application value, go deep into the business scenarios of the industry, and use cost-effective artificial intelligence algorithms and rich innovations The product series builds complete intelligent solutions to effectively promote the efficiency change and growth momentum transformation of the industries served.

Forging ability is important, but in addition to ability, what investors want to see is long-term and stable sustainable development ability and realizable ability. The successful fundraising of 1.8 billion is undoubtedly a good signal for Gelingshentong. But in the future, how to continuously improve the commercialization ability of the core business and how to quickly expand more valuable customers to achieve profitability, perhaps there is still a long way to go.

Text: Sunny / Data Ape