[Youxin Cloud], which has debts of US$2.2 million, applies for an US$8 million Nasdaq IPO listing

Source: Beast Finance Author: Beast Finance

Beast Finance

Beast Finance has learned that Guangzhou Youxin Technology Ltd (referred to as Youxin Cloud), a one-stop business online PaaS cloud service provider headquartered in Guangzhou, has recently submitted a prospectus to the U.S. Securities and Exchange Commission (SEC), applying to Nasdaq IPO listing, stock code (YAAS), Youxin Cloud plans to issue 2 million Class A ordinary shares at a recommended price of US$4 per share through this Nasdaq IPO listing, and raise US$8 million in funds .

Company Introduction

Youxin Cloud, a one-stop business online PaaS cloud service provider, is committed to helping enterprises achieve digital transformation with big data, cloud computing and other technologies. Through one entrance and one system, it can adapt to all organizations, customize all business processes, and combine the company's own "business online" and "refined operations" to achieve the company's profit-oriented sales growth goals.

Youxinyun mainly acquires customers through direct sales and marketing. The company's main customer groups are consumer goods, cosmetics and food and beverage industries.

In the most recent fiscal year, a total of 25 customers used its professional services system and a total of 183 customers used its payment channel services.

Youxinyun's management is led by founder and CEO Mr. Lin Shaozhang, who has been with the company since its inception and prior to that he served as chief technology officer of Beijing Wuqiong Information Technology Ltd.

As of March 31, 2023, Youxin Cloud has received US$12.2 million in investment from investors such as Jinshajiang Venture Capital and Kaitai Capital.

Industry Overview

According to the 2022 market research report of Daxue Consulting, a professional market research consulting company from Europe, China's CRM software market is still in its infancy.

Many Chinese companies don't rely on software to build customer relationships. The adoption of customer relationship management systems is mainly concentrated in the country's southeastern coastal areas, with Hong Kong leading the way.

Most Chinese companies are looking for a CRM system called "SCRM", where the "S" stands for "Social", so they strongly prefer CRM systems that are integrated with major Chinese social platforms.

The picture below shows the development of CRM software in China


Beast Finance

Youxin Cloud’s main competitors in this industry include:

(1) ClickPaas

(2) Mingdaoyun

(3) China Youzan (08083)

(4) UFIDA (600588)

(5) Xuanwu Cloud (02392)

(6) Salesforce (CRM)

(7) Tencent Qidian

(8) Fenxiangxiaoke

(9) Sales Yi (Neocrm)


Financial situation of

Field Service 365 According to the IPO prospectus, Mengshou Finance compiled Youxinyun’s financial performance as follows:

(1) Total revenue: Youxin Cloud’s total revenue in 2021, 2022 and as of March 31, 2023 are: US$1,106,860, US$1,277,066, and US$407,037 respectively.

(2) Gross profit (loss): Youxin Cloud’s gross profits in 2021, 2022 and as of March 31, 2023 are respectively: US$649,517, US$695,727, and US$238,769.

(3) Gross profit margin: Youxin Cloud’s gross profit margin in 2021, 2022 and as of March 31, 2023 are: 58.68%, 54.48%, and 58.66% respectively.

(4) Operating profit (loss): Youxin Cloud’s operating profits in 2021, 2022 and as of March 31, 2023 are: US$4,245,519, US$6,772,400, and US$1,714,244 respectively.

(5) Comprehensive income (loss): Youxin Cloud’s comprehensive income in 2021, 2022 and as of March 31, 2023 are respectively: US$4,239,548, US$5,561,138, and US$1,989,613.

(6) Operating cash flow: Youxin Cloud’s operating cash flow in 2021, 2022 and as of March 31, 2023 are respectively: US$4,607,453, US$5,273,756, and US$1,554,219.

As of March 31, 2023, Youxin Cloud had $912,483 in cash and $2.2 million in total liabilities.

Youxin Cloud's free cash flow was negative ($4.4 million) in the 12 months ended March 31, 2023.

IPO details

According to the IPO prospectus, Beast Finance summarizes Youxin Cloud’s IPO situation as follows:

(1) Youxin Cloud plans to issue 2 million Class A ordinary shares through this Nasdaq IPO listing at a recommended price of US$4 per share. , and raised $8 million in funding.

(2) No existing shareholders have expressed interest in purchasing Youxin Cloud shares at the IPO price.

(3) Youxin Cloud will issue 2 million Class A ordinary shares and has registered that 1.75 million shares will be sold by shareholders.

(4) If these 1.75 million shares are sold by shareholders at a concentrated time, it will have a huge negative impact on Youxinyun’s stock price.

(5) Class A shareholders will have one vote per share, and Class B shareholders will have ten voting rights per share.

(6) According to Nasdaq rules, Youxin Cloud will become a "controlled company" and the founder and CEO will have the majority of the voting rights.

(7) If Youxinyun can successfully list on the Nasdaq IPO, excluding the impact of the underwriter's over-allotment option, the company's market value at the time of IPO will reach US$126 million.

(8) Youxinyun’s current ratio of outstanding shares to outstanding shares (excluding over-allotments by underwriters) is approximately 6.02%%, and figures below 10% are generally considered “low float” stocks, so Youxinyun It will be a "low float" stock, but its share price may be affected by significant price movements.

(9) Regarding unresolved legal proceedings, management stated that as of September 30, 2022, it was not aware of any legal proceedings against the company.

(10) Youxinyun’s financial situation shows that the company’s revenue is declining, its gross profit and variable gross profit margin are also declining, and its operating losses are serious.

(11) In the 12 months ended March 31, 2023, Youxin Cloud’s free cash flow was negative (US$4.4 million).

(12) Selling expenses as a percentage of total revenue have also changed as revenue has declined; its sales efficiency multiple was negative (1.1x) during the most recent reporting period.
Youxin Cloud currently plans to pay no dividends and retain any future earnings for reinvestment to meet the company's growth and working capital needs.

(13) Youxinyun is bound by the laws of the Cayman Islands and China to pay dividends under specific conditions. Such companies have historically delivered poor returns to investors, with limited communication between the company and investors, and poor post-IPO performance is common.

(14) There is a huge market opportunity for providing CRM software and related services in China, but there are many competitors, and most Chinese companies do not rely on such software to build customer relationships.

(15) As a company about to be listed, the business risks faced by Youxin Cloud include small scale, weak capital, and lack of record of creating growth.

(16) The 111x EV/revenue multiple that management is seeking is a ridiculous valuation for a company that can't grow on a small basis.

The intermediary agency

Mengshou Finance learned from the IPO prospectus of Youxin Cloud that the book runner of Youxin Cloud’s Nasdaq IPO listing is Univest Securities.

MengShou Finance is committed to letting every unwilling young person learn to invest in Hong Kong and US stocks and experience the fun and excitement of being a shareholder of the world's number one company in the world's most mature and compliant market. Let every young person gain freedom through Hong Kong and US stock investment with dignity and equality.

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Origin blog.csdn.net/weixin_60999797/article/details/133356428