reporter from the Yangtze Business Daily found that after five months of reorganization, on July 1, Zhongying Internet finally launched a reorganization plan to acquire all the equity of Tiantu Advertising for 740 million yuan. However, the premium of more than 10 times, high performance commitments, and the shareholders of the target company are all investment institutions, which has caused the market to have many doubts about this merger and acquisition case.
At the same time, the capital operation of the company's change of ownership and merger is also puzzling.
Zhongying Internet was formerly Jinya Technology, and when it was launched in 2010, it was positioned as the global leader in all-round solutions for IMD technology. However, since 2012, the company has launched a large number of external mergers and acquisitions, and its former main business has long been replaced by gaming e-commerce, and traditional enterprises have transformed into light asset companies.
According to incomplete statistics from the Yangtze Business Daily reporter, the company has successively acquired Yuhan Optoelectronics, MMOGA, Cailiang Technology and other companies, spending 2.985 billion yuan.
However, what continues to acquire high premiums brings Zhongying Internet to "black swan". Yuhan Optoelectronics and MMOGA have not met the standards for three consecutive years. Cailiang Technology, which completed the merger and acquisition in the second half of last year, also passed the crisis. Now that Tiantu Advertising is acquired at a high premium, Zhongying Internet, which has a good reputation of 2.8 billion yuan, has a debt repayment ability far lower than that of its peers.
Last week, in response to the above issues, a reporter from the Yangtze Business Daily sent an interview letter to Zhongying Internet, but as of press time, no specific reply was received. However, some analysts said that Zhongying Internet did not make a strong explanation of why it wanted to acquire Tiantu Advertising, but judging from the high goodwill and the performance of the former merger and acquisition targets, the purpose of the acquisition may be just to buy performance.
premium 10 times acquisition of Tiantu Advertising
Zhongying Internet acquires an advertising company with a premium rate of up to 10 times. On July 2, the restructuring plan launched by Zhongying Internet showed that the company plans to purchase 100% of Tiantu Advertising's equity through issuing shares and paying cash. The target assets are expected to be priced at 740 million yuan, of which the cash consideration is 296 million yuan. At the same time, the company plans to adopt inquiry to raise no more than 10 specific investors to no more than 444 million yuan. Before the acquisition of
, Tiantu Advertising's net profit surged violently. In 2016 and 2017, Tiantu Advertising achieved operating income of RMB 223 million and RMB 222 million, with corresponding net profits of RMB 604,500 and RMB 28.9342 million respectively. Operating income declined slightly, and net profit increased by 45.86 times. The company explained that gross profit margin rose in 2017, and management and sales expenses fell.
is this advertising company, with a net asset of only 64.6081 million yuan, and its estimated value is as high as 742 million yuan, increasing to 677 million yuan, with a value-added rate of 1048.03%. Among the 21 A-share peers, except for Bus Online and Focus Media, the price-to-book ratio reaches 10 times. It can be seen that the price of Tiantu Advertising is not cheap. Under the high premium of
, the counterparty gave a high performance commitment, that is, from 2018 to 2020, Tiantu Advertising's net profit after deducting non-recurring gains and losses will not be less than RMB 57 million, RMB 77 million and RMB 104 million, respectively.
What is interesting is that Tiantu Advertising has a shareholder sudden investment problem. All eight institutions on the counterparty of this transaction were investment institutions, and all of these eight institutions completed their investment in the past year. The plan for restructuring of
shows that the eight institutional shareholders are Ningbo Hushi, Ningbo Hushi, Welkin, Baitang Dasi, Junlian Interactive, Xinyu Junwang, Yushun Sixth Phase and Yuyi Five Phase, and the shareholding ratios in Tiantu Advertising are 26.77%, 13.68%, 13.66%, 23.88%, 10%, 2%, 8.75% and 1.25% respectively. Among them, the controlling shareholders of Ningbo Hushi and Ningbo Hushi are Zheng Bin, and Zheng Bin and the third largest shareholder, Welkin's controlling shareholder Taoli signed a joint actor agreement, which constitutes an affiliated relationship. The executive partners of the fourth, fifth and six major shareholders are all Qianhai Junchuang, and the actual controller is Liu Shuai. The actual controller of the seventh and eighth largest shareholders is Yang Kecong.
search found that the eight major shareholders were established for a short time. The earliest one was Baitang Dasi, which was established in 2015 and acquired shares in September last year. Ningbo Hushi was established on January 23 this year and invested in April. The investment period was from August last year to April this year. Among them, during the restructuring period from February to April this year, five institutions invested. This means that these shareholders completed the sudden investment during the suspension of Zhongying Internet acquisition.
restructuring plan does not disclose the valuation of Shitiantu Advertising of these shareholders. If there is a significant difference from the price of this restructuring, there must be something strange.
Another confusing thing is that among the eight shareholders, Baitang Dasi, the single second largest shareholder with a shareholding ratio of up to 23.88%, did not participate in the performance commitment.
html acquired 3 companies for 23 billion yuan, and 2 of them failed to meet the performance standards
high premium acquisition and extended expansion under high performance commitments. Zhongying Internet was seriously injured.
Zhongying Internet was listed on SME Board on August 31, 2010. Its positioning is a professional manufacturer with the most complete process system and the most diverse applied materials in the field of surface material application technology. After listing, the company's operating performance continued to decline. From 2010 to 2012, its net profit was RMB 66.55 million, RMB 49.41 million and RMB 47.44 million, respectively.
In order to boost performance, the company embarked on the road of external mergers and acquisitions.
In February 2012, Zhongying Internet purchased 100% of Yuhan Optoelectronics' equity for 370 million yuan, a 4-fold premium, which mainly deals in Mingboard and optoelectronics component products. The counterparty promised that Yuhan Optoelectronics' net profit from deducting non-recurring items from 2012 to 2014 will not be less than RMB 40.15 million, RMB 44.97 million and RMB 47.29 million, respectively.
However, the mergers and acquisitions that boosted performance quickly turned into a tragedy of performance. After the consolidation, Yuhan Optoelectronics achieved net profits of RMB 130,000 and RMB 22.18 million in 2013 and 2014 respectively.
Under the drag of Yuhan Optoelectronics' performance, the company's net profit fell for five consecutive times, and it lost 129 million yuan in 2014. In order to stop the loss, in August 2015, the company sold Yuhan Optoelectronics, including the 217 million yuan goodwill recognized at the time of the acquisition.
After selling the loss-making assets, Zhongying Internet launched another merger and acquisition.
announcement shows that in 2015, the company spent 2.184 billion yuan in cash to acquire MMOGA, an e-commerce intermediary platform located in Europe, with a transaction price of 34.63 times the premium to net assets. The counterparty promised that the net profits achieved from 2015 to 2017 will not be less than 27.6 million euros, 39.47 million euros and 56.44 million euros respectively, achieving an annual year-on-year growth of no less than 43% for three consecutive years.
As a result, MMOGA's performance has also broken appointments year after year. From 2015 to 2017, MMOGA achieved net profits of 27.54 million euros, 34.44 million euros and 33.12 million euros, respectively, which was 60,000 euros, 5.03 million euros, and 23.31 million euros, respectively. The performance completion rate in 2017 was only 58.69%.
It is worth noting that after the acquisition, MMOGA's gross profit margin rose sharply. The gross profit margins in 2013 and 2014 were 30.11% and 26.27% respectively, and 85.09% and 82.73% in 2015 and 2016.
gross profit margin has increased significantly, and the promised performance has not been completed. The company explained that due to the restrictive policies introduced by giant international R&D manufacturers, the average annual growth rate of 43% is higher than the actual transaction price and is different from the decreasing growth rate year by year.
Although the performance has not met the standards, Zhongying Internet still insists on mergers and acquisitions. In July last year, the company acquired Cailiang Technology for 475 million yuan in cash, with a premium of 12.64 times.
So far, Zhongying Internet has spent about 3 billion yuan on three mergers and acquisitions.
Goodwill overhangs the top of 4 billion yuan accounts for more than 70% of the total assets
Zhongying Internet, which has repeatedly failed to acquire repeatedly, has seen a significant risk of goodwill impairment.
frequently acquires high premiums, and Zhongying Internet's goodwill has grown rapidly. In 2015, MMOGA was acquired, and goodwill of 2.023 billion yuan was confirmed. At the same time, the net profit of 110 million yuan in the first 10 months of that year reduced the goodwill, and finally determined it to be 1.913 billion yuan. Since then, with the decline in performance failure and the increase in mergers and acquisitions, as of the end of the first quarter of this year, the company's goodwill was 2.129 billion yuan.
This premium acquisition of Tiantu Advertising will also generate 677 million yuan of goodwill, and the total goodwill will reach 2.86 billion yuan, accounting for 71.04% of the total assets of 4.026 billion yuan.
There is no doubt that it is not easy for Tiantu Advertising to successfully achieve its promised performance.
According to performance commitments, Tiantu Advertising's net profit growth rates from 2018 to 2020 need to reach 97%, 35.09% and 35.06% respectively. In 2017, Tiantu Advertising's net profit was 28.9342 million yuan, and it may be difficult to double its net profit this year. After all, the company's net profit in 2016 was only 604,500 yuan, and the surge in 2017 was a miracle. In addition, Tiantu Advertising’s customers are not too stable, and the top five customers have changed a lot.
Once Tiantu Advertising fails to achieve the promised performance, the impairment of goodwill becomes inevitable, which will greatly devour the company's profits.
It is worth noting that when Tiantu Advertising is reorganized, the company has a risk of changing hands. In February this year, controlling shareholder Ran Shengshengrui signed an equity transfer agreement with Weimeng Interactive Entertainment, intending to sell 10% of the equity. Since Ningbo Ruishen and its joint actors Chao Bing and Weimeng Interactive Entertainment will hold a total of 23.16% of the shares, the company's actual controller will be changed to Li Liang. However, as of now, the above equity transfer price has not been paid, and the equity transfer and delivery have not been completed.
In addition, Shi Yajun, a natural person shareholder who holds 13.96% of the shares, plans to reduce his holdings of 10% of the shares.
Zhongying Internet's own financial situation is not good and there is great debt repayment pressure. As of the end of last year, the company's current ratio , quick ratio, and debt-to-asset ratio were 0.58 times, 0.58 times, and 56.44%, respectively. The average value of comparable listed companies in the industry was 3.05 times, 3.02 times, and 32.22%. The company's current ratio and quick ratio rank at the bottom among the industry, and the debt-to-asset ratio was only slightly lower than that of Shanghai Ganglian and Storm Group.
As an asset-light company, Zhongying Internet has obtained a bank credit limit of very small, owns less land, real estate and other collateral, making it more difficult to raise funds through debt financing.
