Reporter Wang Jinchen
Recently, the China Securities Regulatory Commission approved the overseas listing application of Shenzhen Tiantu Investment Management Co., Ltd. (hereinafter referred to as "Tiantu Investment"). Tiantu Investment has taken a step forward in the road to listing in Hong Kong and is expected to become the first local venture capital institution listed in the "New Third Board + H shares ".
As a "old"-level enterprise in the investment industry, Tiantu Investment focuses on consumer goods investment. It has become famous in the industry for betting on weeks of black ha and Naixue's tea . It has the title of "consumption track sniper" and "consumption catcher".
However, Tiantu Investment's operating performance is difficult to be ideal. In 2021, Tiantu Investment's revenue and net profit both declined, especially the decline in net profit reached 30%. In 2022, the trend of both revenue and net profit decline has not stopped. In the first half of the year, Tiantu Investment's revenue and net profit decreased by 18% and 24% year-on-year compared with respectively.
Affected by the downward economic climate in the consumer sector, Tiantu Investment's investment income in 2021 decreased by 55.92%, which in turn "draged" the performance to decline.
revenue and net profit have declined, and liquidity is worrying
Tiantu Investment is a leading private equity investment institution focusing on China's consumer field. Its predecessor, Tiantu Entrepreneurship, was founded by the actual controller Wang Yonghua in April 2002. In November 2015, Tiantu Investment listed on on the New Third Board of .
On October 14, Tiantu Investment issued an announcement stating that the company has been approved by the China Securities Regulatory Commission to issue no more than 199 million overseas listed foreign shares, with a face value of RMB 1 per share. If progress goes well, Tiantu Investment will be a precedent for venture capital institutions to list on the New Third Board and Hong Kong stocks at the same time.
As a "old"-level investment company, from 2019 to 2021, Tiantu Investment's number of investment projects in China's consumer industry was second only to Tencent Investment and Sequoia Capital , ranking first among all private equity companies focusing on the consumer field, and was named "consumer products investment expert" in the industry.
As of the end of 2021, Tiantu Investment has invested in a total of 205 portfolio companies, including 169 companies in the consumer field including food and beverage, clothing, health care, etc. Among the existing 178 portfolio companies, 148 are in the consumer industry.
Specifically, the celebrity cases of Tiantu Investment include Zhou Heiya, China Feihe , Naixue's Tea, Xiaohongshu, Cha Yan Yuese , All Things Rebirth and Baiguoyuan , etc. At present, China Feihe, Naixue’s Tea, Zhou Hei Ya and All Things New Life are all on the market.
However, the high concentration in the consumption field also brings certain risks to Tiantu investment.
third-party rating agency YY rating points out that Tiantu Investment's consumption track has a high concentration, and the industry will rotate in the future, the prosperity of the consumer track may change, and the current economic downturn and impact from the epidemic, most consumer companies' operations have been impacted. Tiantu Investment's asset quality may be affected, and its profit growth may be unsustainable.
Tiantu Investment has also realized the changes in the consumer track. Company CEO Feng Weidong said in August this year, "The current moment when the craze fades may be the best time."
However, from the perspective of performance, Tiantu Investment cannot stay out of it.
financial report shows that in 2021, Tiantu Investment's operating income and net profit both declined, achieving operating income of 2.026 billion yuan, a decrease of 18.63% from 2.489 billion yuan in the same period last year; and achieved net profit of 728 million yuan, a decrease of 29.77% from 1.036 billion yuan in the same period last year.
Regarding the double-digit decline in operating income, Tiantu Investment explained that the main reason is that due to the impact of the epidemic in 2021, the company's non-asset management business operating income decreased.
Entering 2022, Tiantu Investment has not reversed the downward trend of operating income and net profit. As of the end of the first half of the year, Tiantu Investment's operating income was 959 million yuan, a year-on-year decrease of 17.87%; net profit was 394 million yuan, a year-on-year decrease of 24.10%. At the same time, the gross profit margin dropped sharply from 28.87% to 9.75%.
In addition to the difficult performance to be optimistic, Tiantu Investment's liquidity is also worrying.
prospectus shows that in 2019 and 2021, the net cash outflow from Tiantu Investment's operating and investment activities was RMB 1.018 billion and RMB 1.102 billion, respectively.This is mainly attributed to the fact that most funds are still in the investment period, and the investment cash outflow exceeds the cash inflow of realized income. During the same period, Tiantu Investment's net current liabilities were RMB 784 million and RMB 506 million respectively.
But by 2022, Tiantu Investment's liquidity is still under great pressure. As of the end of the first half of the year, the company's revenue from operating and investment activities cash flow was -224 million yuan. As of the end of April, the net current liabilities were 1.18 billion yuan.
Investment income is "shrinkable" and it is difficult for LP to exit
In addition to the obvious financing demand, what are the reasons behind Tiantu Investment’s intention to go public?
Looking at the entire environment, the current equity investment and financing market is facing difficulties in raising funds.
Qingke Research Center data shows that the venture capital market raised more than 2.2 trillion yuan in 2021, and the total amount of fundraising broke the historical record. However, in the first half of this year, the entire venture capital market raised only 772.455 billion yuan, a year-on-year decrease of 10.3%.
In addition, the venture capital industry is seriously inverted and the " Matthew effect " is obvious. Faced with limited high-quality investment opportunities, competition has pushed up the investment costs of venture capital institutions, and therefore more funds are needed. With Tiantu Investment's current profit and cash flow situation, listing financing is a good way.
Tiantu Investment also admitted in its prospectus that through listing on the Hong Kong Stock Exchange, it "to use the overseas financing platform to enhance our competitive advantages, raise funds for business development, promote our international strategy, and further expand our capital structure."
-day chart investment shows that fluctuations in global market conditions, including the Chinese market conditions and challenges facing the Chinese consumer industry, have negatively affected the stock price performance of its listed invested companies.
Take the celebrity case Naixue’s Tea as an example. Tiantu Investment has participated in the investment three times in total, with an amount of 381 million yuan. In 2021, Naixue's Tea was listed on the Hong Kong stock market at a valuation of HK$19.8 per share and HK$34 billion. At that time, Tiantu Investment held 's shareholding in was 13.04%. According to calculations, the market value of Naixue's equity held by Tiantu Investment at the time of issuance is approximately HK$4 billion.
However, after Naixue's Tea's stock price fell all the way after its listing. As of the closing on November 16, 2022, it had fallen to HK$5.61 per share, with a total market value of more than half of the time of issuance. The market value of the equity held by Tiantu Investment was also greatly reduced.
Some industry insiders analyzed that in the face of the dilemma of "buying at the high point and retreating at the low point" in the consumer field, many investment institutions will face huge pressure to exit in the next few years. However, due to the poor liquidity of the New Third Board, it is a big problem for the investors behind Tiantu Investment to exit.
If Tiantu Investment successfully logs onto Hong Kong stocks, creates an opportunity for "LP to convert shares" and then exits and cashes out smoothly from the investment projects, and only then can LP obtain actual returns.
In 2020, Tiantu Investment achieved investment income of 2.096 billion yuan, a year-on-year increase of 966.93% from 196 million yuan in 2019; however, it fell by 55.92% to 924 million yuan in 2021. In the first half of 2022, although investment income of 641 million yuan increased compared with the same period last year, it is far from the historical high.
Investment income As a large part of the source of income and profit , it is concerning what the investment income of Tiantu Investment will be in the next step and whether the Hong Kong stock listing will be smooth.
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