Big data industry innovation service media
——Focus on data·Changing business
Master Lu, a Hong Kong-listed company, stunned the capital market with his epic cutting of leeks——
On September 11, Master Lu, with a market capitalization of HK$200 million and cash on hand of HK$500 million, suddenly announced that the board of directors would vote on a special dividend proposal and planned to pay dividends. As soon as the news came out, the stock price rose, rising by as much as 70% within six trading days.
The cool operation came. On September 20, Master Lu’s major shareholder Chengsheng Co., Ltd. took advantage of the sharp rise in stock prices to reduce its holdings by more than 34 million shares and cash out HK$35 million. On that day, Master Lu’s stock price plummeted 50%.
An even more outrageous operation came. On the 21st, Master Lu announced that due to changes in stock prices, the board meeting originally scheduled for that day was cancelled, and the special dividend proposal was shelved...
Within ten days, a special dividend was first announced, attracting a large number of investors to buy. After the stock price rose sharply, the major shareholders insisted wildly, and after the stock price fell sharply, the dividend was cancelled. Investors said that cutting leeks in one go is something even a movie screenwriter would not dare to do!
Tian Ye is the CEO and Zhou Hongyi is the actual controller.
Master Lu, formerly known as Z Weapon, was launched on the market in 2008. It is a popular benchmarking software in the PC era. The founder is Lu Jin, who is known in the industry as the number one optimization person in China. In 2010, on the eve of the famous 3Q war, 360 invested in Master Lu, holding nearly 40% of the shares.
In 2011, Lu Jin left Master Lu. In 2014, Zhou Hongyi appointed Tian Ye as CEO of Master Lu. In 2016, Lu Jin chose to completely sell Master Lu to 360 and create Lion's Roar, which was later merged into Xunyou Technology.
With the support of 360, Master Lu successfully weathered the crisis of transition from the PC era to the mobile era and was listed on the Hong Kong Stock Exchange in 2019.
The prospectus points out that Tianye, Master Holdings, Chengsheng Co., Ltd., 360 Technology, 360, Qixin Zhicheng, and Zhou Hongyi are regarded as a group of controlling shareholders. The specific shareholding method is that Zhou Hongyi holds Chengsheng Co., Ltd. through 360, and Chengsheng Co., Ltd. holds the equity of Master Lu.
After the reduction, Chengsheng Co., Ltd.’s shareholding in Master Lu dropped from 30.76% to 17.99%.
Master Lu has been listed for four years, and its market value has dropped by 90%
In the PC era, Master Lu is the killer application. When it was launched in October 2019, Master Lu had 125 million monthly active users. Sullivan's data shows that Master Lu's market share in the PC market in 2018 was as high as 98.8%.
In terms of operation methods, Master Lu is deeply tied to 360 series software. Part of the revenue comes from online advertising, and the other part comes from games and e-commerce. The prospectus shows that from 2016 to 2018, Master Lu achieved revenue of 70 million yuan, 120 million yuan, and 320 million yuan respectively, and the corresponding net profits were 30 million yuan, 60 million yuan, and 80 million yuan respectively.
The issue price of Master Lu is HK$2.7. On the first day of listing, Master Lu’s stock surged 218% to HK$8.6, corresponding to a market value of HK$2.2 billion. However, the good times did not last long. After listing, Master Lu quickly experienced a sharp decline, falling below HK$2 in April 2020, and its market value evaporated by HK$2 billion.
As the price fell, Master Lu CTO He Shiwei reduced his holdings eight times in a row and cashed out HK$3.3 million, which made matters worse and accelerated the stock price's decline. In 2022, Master Lu achieved revenue of 360 million yuan and net profit of 60 million yuan, but the stock price has been sluggish for a long time, hovering around HK$1. After cutting leeks and reducing its holdings, Master Lu’s share price once fell to HK$0.9, corresponding to a market value of less than HK$300 million.
Successful transformation to eliminate advertising, with 500 million in cash on hand
In the first half of 2023, Master Lu achieved revenue of 290 million yuan, a year-on-year increase of 61.5%; net profit was 30 million yuan, a year-on-year increase of 21.2%. As of the end of June, Master Lu had 500 million yuan in cash and cash equivalents, twice its market value, and its asset-liability ratio was only 13.2%.
Master Lu’s business success is attributed to the transformation away from advertising. After Tian Ye became CEO, Master Lu transformed into electronic product sales and realized traffic monetization through e-commerce. In addition to e-commerce, Master Lu has also launched a game publishing business and won the top IP "Kung Fu Panda" from Universal Pictures.
After years of continuous transformation, Master Lu, which relied 100% on advertising in the early years, will only have advertising revenue accounting for about 35% of total revenue in mid-2023. Not only that, Master Lu, who used to rely on 360 investment to make a living, places hundreds of millions of ads on the 360 platform every year, becoming an important advertiser of 360.
Tian Tian claimed to be Zhou Hongyi's disciple, and Zhou Hongyi also fully trusted Tian Tian. Master Lu’s listing documents disclosed that 360 entrusted all of Master Lu’s voting rights to Ye Ye.
With four listed companies in hand, the Red Leader Capital Bureau
Zhou Hongyi, the leader in red, is not only a serial entrepreneur, but also has been active in the venture capital circle and has won a series of IPOs. In December 2022, after the Huafang Group, consisting of Huajiao Live and Liujianfang, went public, Zhou Hongyi's listed companies increased to four.
Zhou Hongyi’s first IPO was Qihoo 360, which was listed on Nasdaq in 2011. In 2016, Qihoo 360 was delisted and listed on the A-share market two years later and was renamed 360 Group, becoming the first large-scale Internet company to return to the A-share market. company.
In June 2018, 360 Group spun off its subsidiary 360 Financial Group, which was listed on Nasdaq in December of the same year. In August 2020, 360 Finance changed its name to 360 Digits. In November 2022, 360 Digital went to Hong Kong for a secondary listing, and in February 2023, it was renamed Qifu Technology.
In addition to the four listed companies 360, Qifu Technology, Master Lu, and Huafang Group, Zhou Hongyi is also an important shareholder of Nezha Automobile. Relevant announcements released at the end of 2022 show that 360 holds 10.72% of Nezha Automobile’s shares. In 2022, Nezha Automobile achieved revenue of 13.33 billion yuan and a net loss of 6.92 billion yuan, with a cumulative loss of 11.14 billion yuan in three years.
Text: Bugle-X / Data Ape
