Frans "Three Wars" IPO.
Source: France
Recently, Guangzhou France Co., Ltd. (hereinafter referred to as "France") officially submitted a prospectus to the Hong Kong Stock Exchange, intending to list on the main board of the Hong Kong Stock Exchange.
It is worth noting that this is not the first time Frans has hit the IPO. In June 2019 and July 2020, France submitted forms to the Shanghai Stock Exchange and the Shenzhen Stock Exchange respectively. However, limited by objective factors, France's first two IPO plans came to nothing.
Considering that the Hong Kong Stock Exchange is more inclusive, Frans, who has good market influence and income-generating ability, is likely to open the door to IPO this time. With landing in the capital market and opening up financing channels, the story of "Internet of Things + Shared Forklift" told by Frans may also gradually show his imagination.
The pain points of the industry are obvious, and Frans takes advantage of the situation to become the first
In recent years, with the vigorous development of the economy and the continuous growth of the industry and logistics industry, the demand for logistics equipment of related enterprises is accelerating. According to data from the Sealand Securities Research Institute, in 2022, the sales volume of forklifts in China will be 1.048 million units, and the compound annual growth rate from 2011 to 2022 will be 11.6%.
Source: Qianzhan Industry Research Institute
Although the market is booming, it is different from the business model of traditional industries with low terminal costs and coordinated "need-to-purchase". Due to the high cost of logistics equipment and uncontrollable utilization rate, related companies are facing huge cost pressures. Statistics from the KION Group show that the purchase cost of industrial vehicles accounts for 13% of the total life cycle cost. If the company's subsequent use of industrial vehicles is not efficient, then for a long time, the company will bear high costs such as fixed assets and depreciation.
In this regard, France also stated in the prospectus that "the use and management of on-site logistics equipment has inherent challenges such as high purchase costs, high maintenance costs, strong professionalism, and difficult management."
In this context, because it can greatly reduce the cost burden of enterprises, the on-site logistics equipment subscription service industry is developing rapidly. According to data from China Insights Consulting, it is estimated that by 2027, the market size of China's in-site logistics equipment life cycle solutions will reach 34.4 billion yuan, with a compound annual growth rate of 24.6% from 2022 to 2027.
The on-site logistics equipment subscription service is the foothold of Frans. According to the prospectus, from 2020 to 2022, France's revenue from on-site logistics equipment subscription services will be 639 million yuan, 739 million yuan, and 738 million yuan, accounting for 65.2%, 63.0%, and 61.8% of the total revenue, respectively. .
Although France is also building maintenance and repair services and sales of on-site logistics equipment and accessories at the same time, these two businesses have not been able to surpass the on-site logistics equipment subscription service. Taking 2022 as an example, the revenues of France's maintenance and repair services and sales of on-site logistics equipment and accessories will be 141 million yuan and 315 million yuan, respectively, accounting for 11.8% and 26.4% of the total revenue, accounting for 20% of the total revenue. There has been no significant improvement for many years.
In fact, the on-site logistics equipment subscription service business has always been the "story" that Frans focuses on, that is, to purchase equipment through large-scale financing, and then attract customers through a considerable fleet size, and then achieve a closed business loop based on a high retention rate .
According to the prospectus, from 2011 to 2021, France completed 10 financing rounds, and the investors behind it include Zhongding Capital, Dachen Caizhi, Zhongke Merchants and other first-line investors. As of November 2021, when the last round of financing before the IPO is completed, France's valuation will reach 3.13 billion yuan.
Continuous financing allows France to have sufficient resources to purchase a fleet. According to the prospectus, from 2020 to 2022, the number of on-site logistics equipment operated and managed by France will be 31,213, 36,257, and 39,145, respectively, with a compound annual growth rate of 12.0%. The outstanding performance in terms of products and services has also enabled its customer base to continue to expand.
From 2020 to 2022, France has 7,477, 7,929, and 8,170 customers respectively, among which the retention rates of key accounts are 87%, 99%, and 98%, respectively, and the retention rates of net income from key accounts are 98%, 99%, and 98%, respectively. 97%.
Thanks to this, China Insights Consulting data shows that in 2022, France's on-site logistics equipment full life cycle solution revenue will be 900 million yuan, accounting for 7.7%. In terms of revenue, France is China's largest Provider of full life cycle solutions for in-site logistics equipment.
Source: France
Although France's revenue scale is quite impressive, it is worth noting that it is facing the challenge of gradually declining revenue generation efficiency.
The prospectus shows that from 2020 to 2022, France's total revenue will be 981 million yuan, 1.172 billion yuan, and 1.194 billion yuan, respectively, and the net profits attributable to the parent will be 54.21 million yuan, 55.178 million yuan, and 35.401 million yuan. From a vertical comparison, it can be found that the growth rate of Frans' net profit attributable to the mother is not only lower than the revenue, but will also decline in 2022.
This is largely due to lower gross margins at Frans Core. From 2020 to 2022, France's gross profit margins will be 33.7%, 31.9%, and 30.3%, dropping year by year. At the same time, Frans' net profit margins were 5.5%, 4.7%, and 3.0%, respectively, which also showed a downward trend.
Regarding the reason for the decline in net profit, Frans explained that the main reason is that "related service outlets are closed, while fixed costs (such as staff costs, depreciation expenses and other operating related expenses) continue to be incurred during the corresponding period."
It is undeniable that the net profit of France will be under pressure in 2022, which has a certain relationship with the market environment. According to the data from the Sealand Securities Research Institute, in 2022, the sales volume of forklifts in China will decrease by 4.68% year-on-year. performance.
But on the whole, the net profit margin continues to decline, which still reveals the current operating challenges facing Frans. Due to the high operating costs of on-site logistics equipment and the low barriers to entry in the industry, once the utilization rate declines, it may have a certain negative impact on the enterprise. According to the prospectus, from 2020 to 2022, the utilization rates of France's on-site logistics equipment will be 78.9%, 78.5%, and 73.1%, respectively, gradually declining. Therefore, it can be said that the current "economy of scale" that France is betting on is facing the risk of peaking, and it is necessary to find a new way to solve the problem.
Telling new stories, Frans wants to be China's United Leasing
Under the background of profit pressure, Frans chose to land in the capital market. On the one hand, he wanted to expand the scale of basic equipment. profitability.
When seeking to land on the Science and Technology Innovation Board in 2019, France plans to raise 660 million yuan, of which 500 million yuan is planned to be used for the expansion project of on-site logistics equipment based on the Internet of Things, and 160 million yuan is planned to be used for the research and development of the headquarters building and equipment Internet of Things Center construction projects are all related to the Internet of Things.
Source: Frans 2019 prospectus
In the latest prospectus, Frans also stated that the proceeds from the fundraising will be used to enhance the company's service capabilities, expand customer coverage and expand the category of on-site logistics equipment, upgrade the company's supply chain infrastructure, and enhance the company's technical capabilities, etc. . Although there is no specific project disclosure, considering the previous use of funds and the current status of the company, upgrading the Internet of Things will undoubtedly be one of its key efforts to promote cost reduction and efficiency increase.
In fact, as a traditional point-to-point business, as the amount of basic equipment continues to rise, the disadvantages of the original management method of forklift rental are also constantly exposed. Because according to the traditional offline and fragmented management mode, forklifts are likely to have a window period, which will cause waste of resources and increase enterprise costs.
In response to the above difficulties, France has established an "online + offline" all-round service network, which has realized convenient and integrated equipment service management capabilities. The platform has a user-friendly visual interface that allows real-time monitoring of equipment usage in different locations. Improved ongoing operational efficiency.
In addition, the prospectus shows that France's smart asset operation management system can ensure efficient resource allocation and operation management. As of the latest practicable date, France's smart asset operation management system covers more than 95.5% of the equipment fleet. "While we continued to expand our business during the Track Record Period, there was no significant increase in labor costs".
In fact, this "Internet of Things + shared forklift" strategy has already been successfully practiced by the United Leasing Company in the US market.
Source: United Leasing official website
According to official data, United Leasing was established in 1997. It has 1,165 stores and more than 600,000 rental equipment units in 49 states in the United States and 10 provinces in Canada. In 2021, United Leasing's total revenue will be US$9.7 billion, and it has been listed in the Fortune 500 of the United States.
The success of United Leasing is mainly due to its vigorous construction of digital capabilities. For example, in 1999, United Leasing acquired Wynne systems software company. Based on the latter's management system, United Leasing has completed the efficient management of the system and the lease process of operating the branch network. build.
In addition, United Rentals is also equipped with the "Total Control" rental asset management platform and the "United Rentals Mobile" application, which can complete equipment positioning, contract management, and check the delivery progress of goods online.
Thanks to a series of operations, United Leasing has the industry's leading ability to generate revenue. The financial report shows that in 2022, the gross profit rate of United Leasing will be 42.79%, and the net profit rate will be 17.65%, both of which are higher than Frans.
However, based on the current actions on "Internet of Things + Shared Forklifts", Frans still "has more than enough heart but not enough energy" if he wants to become China's United Leasing. The problem is mainly reflected in the lack of capital liquidity.
According to the prospectus, from 2020 to 2022, France's net current liabilities will be approximately 300 million yuan, 149 million yuan, and 267 million yuan, respectively, and the current ratios are all lower than 1. It is reported that this is mainly due to a large amount of investment in fixed assets by France.
Source: France
It can be seen from this that Frans is currently in the stage of converting old and new growth drivers. On the one hand, the model of exchanging scale for growth is facing the challenge of stalling. On the other hand, it wants to carry out Internet of Things and digital construction, but suffers from lack of funds.
The sprint to the IPO of the Hong Kong Stock Exchange is a good opportunity for it to achieve leapfrog development. If it can successfully enter the capital market and open the financing channel, France will obtain sufficient financial resources to support the company's fleet scale construction and upgrade the Internet of Things technology. Therefore, whether it can further demonstrate its competitive strength to the market may depend on this.
Author: Tianyu
Source: Hong Kong Stock Research Institute