Since the beginning of this year, the epidemic has been both a crisis and an opportunity. Whether it is foreign or domestic, the epidemic is obviously a big test, and companies that have solidified or left behind have completely shot down and accelerated the transformation of the global digital economy. Under this general trend, many SaaS companies in the US stock market FANG, Salesforce, Shopify and other industries have recorded the best single-quarter performance in the company’s history. At the same time, a new round of mergers and acquisitions has been set off, leading various industries. Chase after victory. And this wave of mergers and acquisitions in the United States has also spread to China.
On November 6, Weimob (2013.HK) issued an announcement to acquire 51% of Shanghai Haiding Information Engineering Co., Ltd. through a wholly-owned subsidiary Weimob Development through capital increase and share transfer. After the announcement of
, Weimob's share price rose in response, and it soared by 7% on November 9.
Source: Futu
Source: Internet
Obviously, the capital market is very optimistic about this transaction.
So, what kind of company is Haiding that made Weimob's share price soar? In the short, medium and long term, how much impact will this acquisition have?
1. Hidden champion
The protagonist of this transaction, Haiding Company, whose full name is Shanghai Haiding Information Engineering Co., Ltd., was founded in 1997. Its core business is to provide commercial enterprises with POS, ERP, membership, supply chain and other businesses Management informatization program. Ding Yuzhang, the founder of
, is a professor at East China University of Science and Technology. He once presided over the completion of the National Science and Technology Commission's 863 prototype system for commercial automation information management. He is a typical academic talent.
Source: Public information
was established for more than 20 years, Haiding has focused on the field of business information. According to the acquisition announcement, whether it is the company's R&D investment, overall customer unit price, or top ten customer unit price, Haiding's operating data is completely comparable to any enterprise-level software company in the existing market. .
Source: Company announcement
On the one hand, the familiar Hema, Bubble Mart, MINISO, etc. are all its customers. On the other hand, according to the 2019 China Top 100 Convenience Stores list operated by the China Chain Store Association, more than 30% of the companies are Haiding’s customers. More than 40% of the enterprises in the 2019 TOP100 list of commercial real estate released by the Opinion Index Research Institute chose Haiding, of which the coverage of Top50 commercial real estate customers was 58%.
It is no exaggeration to say that Haiding is undoubtedly the hidden champion in the field of commercial retail information. Every time ordinary consumers visit the supermarket three times, one transaction goes through Haiding's system. For the acquisition of , Weimob paid 510 million yuan in exchange for a 51% stake in Haiding. After the completion of the transaction, Haiding will become a subsidiary of Weimob Group and be included in the listed company system.
So, what can Weimob and Haiding get from this transaction?
2. 1+1>2
It is true that in the more than 20 years since its establishment, Haiding has worked hard and relied on its own strong R&D investment to obtain a good market share, but the company’s founder is academic and does not have much capital considerations, so Before the entry of Weimob, Haiding's control has been controlled by Wanda Financial, a subsidiary of Wanda Group.
According to the acquisition announcement, Haiding’s original shareholders include Bingsheng, which is controlled by Wanda, and Shanghai Jiubai (State-owned Department Store), which is actually controlled by the State-owned Assets Supervision and Administration Commission of Shanghai Jing’an District. Ding, to achieve coverage of convenience stores, supermarkets, so as to master more user consumption data entry.
However, four years have passed, and the management of professional managers has not been able to fully release the advantages and value of Haiding. Therefore, under the cooperation of multiple parties, Haiding and Weimeng successfully married.
For Haiding, Weimob not only has the first-echelon product competitiveness in front-end fields such as CRM, but also has mature and highly competitive channel promotion capabilities, which can make up for its shortcomings. For the six months ended June 2020, Weimob’s precision marketing servicesThe number of advertisers in the service increased by 33.5% to 26084. Weimeng has rich experience in front-end mini-programs, membership management, and front-end and back-end connection. The digital wave of
has come, and more and more shopping centers and convenience stores have natural marketing needs. The cooperation, whether it is re-developing new solutions or directly selling Weimob products, will enable Haiding to penetrate the front-end marketing field smoothly.
For Weimob, Haiding's years of deep cultivation in its own field will also provide it with deep technical capabilities and broad customer resources in the back-end fields such as ERP and SCM, and empower new product development.
At the same time, Haiding's technology in the supply chain, ERP, logistics and other fields can be connected with the member + applet system of Weimeng to achieve front-end integration.
Source: Network
Overall, Weimob’s acquisition of Haiding is a win-win transaction. Haiding makes up for the shortcomings of Weimob in chain convenience stores, supermarkets, shopping centers, etc. At the same time, Haiding is in the middle and backstage, which can complement the front-end capabilities of Weimob.
3. What is the impact
In this transaction, Weimob paid 510 million cash to acquire 51% of Haiding, corresponding to Haiding’s valuation of 1 billion yuan. In 2019, Haiding's operating income was 246 million yuan, and corresponds to about 4 times the PS. After the acquisition of
, Haiding will be merged into the Weimob system. For Weimob, the significant increase in revenue is the first benefit.
In the first half of this year, Weimob’s SaaS revenue was about 305 million. Although most of Haiding’s products are privatized deployments, referring to cloud transformation companies such as UFIDA, Kingdee, and Shiji, the future Probability will bring a greater increase in Weimob's SaaS business.
Source: public data compilation
In addition, Haiding’s customers are very high-quality and extremely sticky. Some of the top customers have cooperated for more than 10 years. In other words, Haiding's customer lifetime value (LTV) is extremely high. At the same time, Haiding has formed a brand effect in its own field. Whether it is from the sensory perception or the business data disclosed in the acquisition announcement, Haiding’s marketing investment (CAC) at the customer acquisition level is much lower than that of Weimob. Product area.
Secondly, Haiding will start a new growth curve through the empowerment of Weimob. China's entire shopping centers and retail formats account for a very large proportion of retail sales. There are currently 8,000-10,000 shopping centers, and each shopping center has a demand for value-added services. If Weimob can cut in from the middle and back-office and front-end marketing, and realize it from the GMV part of the supermarket, this part of the market has a very large space.
Therefore, whether it is viewed statically or dynamically, holding Haiding will greatly improve the company's business operation quality.
In other words, not only can increase performance, but also increase valuation.
4. Finally,
According to the Harvard Business Review report / survey shows that , in each B2B purchase, a total of 6.8 people participated in the purchase process. It is this multi-person participation decision-making model that makes the enterprise-level service market extremely high customer stickiness. Historically, mergers and acquisitions have always been an effective way for SaaS companies in various industries in the U.S. stock market to expand market share or revenue.
Take Salesforce as an example. In just 18 months from the 2019 to 2020 fiscal year, Z21z24 billion US dollars mergers and acquisitions were used to continuously consolidate its product ecology.
Source: the company's official website
. From the acquisition of Yazuo at the beginning of the year to promote smart catering, to the acquisition of Haiding to expand smart retail, we have gradually seen the shadow of Salesforce in Weimob.
Looking forward to the future, under the dual trend of digital wave and private domain traffic, as long as the company maintains its existing strategic determination and execution, the company's stock price is obviously a high probability event.
