Recently, Beijing Youbao Online Technology Co., Ltd. (hereinafter referred to as "Youbao") submitted listing application materials on the Hong Kong Stock Exchange, preparing to be listed on the main board of the Hong Kong Stock Exchange. Previously, the company was listed on the New Third Board under the abbreviation of "Youbao Online" in February 2016, and then delisted in 2019.
During the listing period of the NEEQ, Youbao also signed a listing guidance agreement with China Securities, preparing to be listed on the A-share market (Shenzhen Stock Exchange GEM). On February 25, 2021, Youbao signed the "Termination of Counseling Agreement" with China Securities Investment Securities, and unanimously agreed to terminate this GEM IPO counseling.
Received investment from Ant Group, covering a wide range of points
According to Bedo Finance, Ubo was established in 2011 and is a professional platform service provider for smart retail terminals, claiming that it is an important strategic partner of the Alibaba economy. At present, Youbao owns smart retail products including Youbao Smart Containers, Youbao Smart Vending Machines, Youbao Cafe, Yousing KTV, etc.
It is worth mentioning that UBO has received huge investments from Ant Group and Primavera Capital. In August 2019, Ubao announced the completion of financing of RMB 1.6 billion, led by Ant Financial Services (i.e. Ant Group) and followed by Primavera Capital. Among them, Ant Financial invested RMB 1.2 billion in Ubao in the form of capital increase.
Before this sprint listing, Ant Group held a 16.68% stake in UBO, making it the company’s largest institutional investor. At the same time, Primavera Capital holds 5.56% of the shares, and CICC holds 3.96% of the shares; Wang Bin, chairman of the board of directors, executive director and chief executive officer of Youbao, holds 17.90% of the shares, and Chen Kunrong, executive director and president of the company, holds 4.09% of the shares. The two are unanimous The action person holds a total of 21.99% of the shares.
Youbao stated in the prospectus that it is the largest unmanned retail operator in China. According to Frost & Sullivan, UBo has the largest network of vending machines in the country. As of December 31, 2021, the company's point-of-sale (point-of-sale) network consisted of more than 102,700 vending machine Youbao points and subsidiary points.
According to the prospectus, Ubao’s point network accounts for 55% of the top 40 airports in terms of passenger traffic in China, 22% of all college campuses, and 34% of the top 80 shopping malls in the country. As of December 31, 2021, a total of 320 million identifiable transaction users have shopped on the Youbao platform, completing more than 4.6 billion transactions.
According to Frost & Sullivan, the penetration of China's unmanned retail market is extremely low. In 2021, compared with 21.9 units in the United States, 20.0 units in Japan, and 6.1 units in Europe, the average number of vending machines in China per 1,000 population is only 0.7, and there is a big gap.
As of December 31, 2021, China's vending machines only cover 7.6% of the country's potential places that can be placed, and the penetration rate is expected to increase to 19.5% by 2026. The size of China's vending machine retail market is expected to grow from RMB 27.1 billion in 2021 to RMB 79.9 billion in 2026, at a CAGR of 24.0%.
The annual revenue has fallen sharply, and it has recorded losses for two consecutive years
According to the prospectus, the revenue of Youbao in 2019, 2020 and 2021 will be 2.727 billion yuan, 1.902 billion yuan and 2.676 billion yuan respectively, and the gross profit will be 1.329 billion yuan, 559 million yuan and 1.101 billion yuan respectively. profit) were 39.649 million yuan, -1.184 billion yuan and -188 million yuan, respectively.
Affected by the COVID-19 epidemic, UBo’s revenue has dropped significantly in 2020, down 30.3% from 2019, and turned from profit to loss. In 2021, Youbao’s revenue will increase by 40.7% year-on-year to 2.676 billion yuan, but it is still lower than that in 2019, and the scale of losses has narrowed.
Under the measurement of non-Hong Kong financial reporting standards, the adjusted net profit of Youbo in 2019, 2020 and 2021 will be 39.649 million yuan, -815 million yuan and -170 million yuan respectively, and the adjusted EBITDA will be 319 million yuan and -170 million yuan respectively. 476 million yuan and 66.60 million yuan.
Overall, UBO’s gross profit margins are 48.7%, 29.4%, and 41.1%, respectively. Among them, it will decline due to the new crown pneumonia epidemic in 2020, and there will be a significant recovery in 2021. Due to factors such as rising costs, UBO has recorded losses for two consecutive years in 2020 and 2021, with corresponding loss rates of 62.3% and 7.0% respectively.
Under the measurement of non-Hong Kong financial reporting standards, UBo will return to profitability in 2021. Beido Finance found that in 2019, 2020 and 2021, UBO’s adjusted net profit will be 1.5%, -42.8% and -6.4% respectively, and the adjusted EBITDA profit margin will be 11.7%, -25.0% and 2.5% respectively.
Significant recovery in retail business, lower R&D investment
In terms of revenue, UBo’s revenue mainly comes from smart retail business, supply chain operation service, digital value-added service and others. Among them, the smart retail business refers to the retailing of goods from vending machines at Youbao points, accounting for 56.5%, 70.3% and 71.6% of the revenue respectively, and the proportions have increased, and both exceed 50%.
Youbao stated in the prospectus that in the three months ended March 31, 2022 (the first quarter), the total transaction volume of its smart retail business increased by 26.1% compared with the same period in 2021. For the month ended April 30, 2022, despite a rebound in the COVID-19 pandemic, the gross merchandise volume of its smart retail business still grew by 6.2% compared to the same period in 2021.
UBo said the company's performance largely depends on its ability to find suitable strategic locations for existing and new sites. In 2019, 2020 and 2021, UBO’s point-of-sale operating and development expenses will be 575 million yuan, 553 million yuan and 586 million yuan respectively, accounting for 56.1%, 51.0% and 54.4% of the sales and marketing expenses in the same period.
In 2019, 2020 and 2021, UBO’s sales and marketing expenses will be 1.024 billion yuan, 1.084 billion yuan and 1.077 billion yuan respectively, accounting for 37.5%, 57.0% and 40.3% of the total revenue in each period. During the same period, the general and administrative expenses of UBO were 156 million yuan, 511 million yuan and 123 million yuan respectively, accounting for 5.7%, 26.9% and 4.6% respectively.
According to Beido Finance, contrary to the increase in points, sales and marketing expenses, UBO's R&D investment has continued to decline. According to the prospectus, the sales and marketing expenses of Youbao in 2019, 2020 and 2021 are 57.301 million yuan, 41.484 million yuan and 36.761 million yuan respectively, accounting for 2.1%, 2.2% and 1.4% of the total revenue respectively.
According to the prospectus, the number of points of Youbao as of December 31, 2019 is about 47,700 units, and as of December 31, 2021, it is 102,700 units, with a compound annual growth rate of 29.1%. As of December 31, 2021, UBO has more than 4,400 locations across the country.
According to another introduction, UBO plans to open a total of about 150,000 new points within three years after listing, and will open about 40,000, 50,000, and 60,000 new points in 2023, 2024, and 2025, respectively. Among them, it is planned to place smart containers at more than 80% of the new points.
Youbao said it estimates that the cost of setting up a new point equipped with smart containers will be about RMB 7,000 to 9,000, while the cost of setting up a new point equipped with other types of machines will be between RMB 18,000 and RMB 26,000.