Economic Observer: At a time when online merchants are still struggling to make profits, one number is particularly eye-catching. Recently, the US research company S&P Global Market Intelligence investigated the compensation of top managers of listed companies in the Asia-Pacific

Economic Observer Network Reporter Zhou Ju At a time when many auto e-commerce companies are still struggling to make profits, one number is particularly eye-catching. Recently, the US research company S&P Global Market Intelligence (SPGlobal Market Intelligence) conducted an investigation on the compensation of top managers of listed companies in the Asia-Pacific region. The survey results show that Zhang Xu'an, CEO of of Yixin Group, ranked second among the highest paid in Asia in 2017, with an annual salary of US$113 million (total including shares and allowances), which is approximately 779 million yuan.

As a reference, Zhang Xuan's salary is nearly 2.5 times that of Evergrande Group CEO Xia Haijun (third place), and 6 times that of Lenovo Group CEO Yang Yuanqing (ninth place).

Yixin Group was established in 2014. It is an independent automobile trading platform from Bitauto.com, and later received joint investment from Tencent, JD.com, Baidu, and Bitauto. At present, Yixin Group's business is divided into two parts. One is the trading platform business (mainly Taoche.com), which mainly includes facilitating consumer car purchase transactions and facilitating auto financing partners to provide loans to consumers; It operates a financing business that mainly provides consumers with automobile financing solutions through financial leasing and operating leasing.

In November last year, Yixin Group was listed on the Hong Kong Stock Exchange with a huge loss. The listing prospectus showed that in 2015, 2016 and the first half of 2017, Yixin Group’s net losses were 28.2 million yuan, 1.4 billion yuan and 6.1 billion yuan respectively. . As of the first half of 2017, Yixin Group had a cumulative loss of 7.6 billion yuan. Only half a year later, Yixin Group turned a loss into a profit. The financial report shows that in 2017, Yixin Group's operating income totaled 3.906 billion yuan, a year-on-year increase of 162%. Adjusted net profit was 464 million yuan, a year-on-year increase of 366%. Adjusted operating margin was 13% and adjusted net margin was 12%.

Unlike most e-commerce companies that focus on transaction business, Yixin Group’s most profitable business segment is financial leasing. Data show that Yixin Group's self-operated financing business income reached 2.942 billion yuan in 2017, accounting for 75%, an increase of 131% compared with last year. The operating income of the trading platform business was 963 million yuan, accounting for only 25%. In the self-operated financing business segment, the operating income of financial leasing business was 2.653 billion yuan, accounting for 68% of the total revenue.

Yixin Group, which has achieved profitability, is quite generous in terms of employee benefits. The financial report shows that Yixin Group’s employee salary and benefits (including equity incentives) totaled 1.62 billion yuan in 2017, a year-on-year increase of 436%. As of the end of 2017, there were 4,743 full-time employees, and the per capita salary and benefits exceeded 340,000 yuan.

However, Yixin Group’s profitability has declined since entering 2018. In the first half of 2018, Yixin Group's revenue was 2.564 billion yuan, a year-on-year increase of 65%, and its adjusted net profit was 123 million yuan, a year-on-year decrease of 53%. Yixin Group gave the main reason for the decrease in profits: the adoption of International Financial Reporting Standard No. 9 "Financial Instruments" from January 1, 2018, resulting in an increase in the provision for credit losses on finance lease receivables. Its performance in the third quarter of this year was still lower than expected. The explanation given by Yixin Group was that the market transactions in 2018 were sluggish since the group's business was launched.

This downturn is even more obvious in the stock price. After listing last year, Yixin Group only reached its highest share price of HK$10.18 on the first day of listing, and its market value once reached HK$63.9 billion. In the following days, it began to enter a downward channel. It closed at 7.12 yuan on the fourth day after listing, falling below the HK$7.7 mark. The issue price has been falling since then. Yesterday, Yixin Group's share price closed at HK$1.83. This price has dropped 77.1% from the highest point since its listing. The latest total market value is HK$11.785 billion.

The former e-commerce "unicorn" has lost momentum sharply, and may face more severe tests in the future. On the one hand, Yixin Group’s trading and financial businesses are linked to the overall performance of the automobile market, and the Ministry of Industry and Information Technology stated that China’s automobile market will continue to maintain low or even zero growth in the next 2-3 years. On the other hand, Yixin Group's business model determines that it is a process of continuous "burning money". There have been reports that Yixin Group's capital chain has broken several times before, and the market downturn may increase its financial pressure. In addition, due to service process and other issues, Yixin Group has been accused of "black car loans" by consumers many times.Under multiple pressures, Yixin Group did not have an easy time in 2018, and whether its CEO's high salary can be maintained in 2018 deserves attention.