"Ai Four Little Dragons" Ignore Technology To Impact IPO Again: Total Loss Of More Than 13 Billion In Four Years, And Key Financial Data Are Inconsistent

The competition for "Ai first share" is rising again.

After the Hong Kong IPO, "Ai unicorn" ignored the technology to invest in the science and technology innovation board, and again impacted the IPO.

On March 12, according to the official website of Shanghai Stock Exchange, Kuangshi technology's application for initial public offering of depository receipts and listing on the science and technology innovation board has been accepted. The company plans to issue no more than 253 million CDRs this time, and plans to raise 6 billion yuan.

The IPO road of Kuangshi technology can be described as "getting up early and catching up with the late set".

As early as August 2019, Kuangshi launched the first shot of "Ai unicorn" listing and submitted its prospectus to the Hong Kong stock exchange.

From the IPO progress shown on the official website of the Hong Kong stock exchange, the listing of Kuangshi technology in Hong Kong has been stagnant. Since then, Yitu technology and cloud have come from behind in science and technology, and have submitted IPO applications for science and technology innovation board.

Among the "four little dragons" in China, only Shangtang technology has not been officially listed.

Although the listed track has been converted to the market, there are still many problems, such as the huge loss of performance in successive years, the difference of key financial data in the prospectus, and the face recognition technology being questioned by the society, which may become the obstacles for the technology to compete for the first share of the "four little dragons" listed on the stock market.

"It may not be profitable in a certain period in the future"

Ignoring the failure of IPO in Hong Kong, it is generally believed that it was affected by the listing of entities by the US Department of Commerce.

In October 2019, Kuangshi was listed in the entity list by the U.S. Department of Commerce. In this regard, Kuangshi Technology issued an announcement at that time to express strong protest, and stressed that as a leading enterprise of artificial intelligence in China, Kuangshi focuses on providing business intelligence solutions for customers, and abides by all laws and regulations in the region where it provides services, and strictly implements data privacy and security policies.

"Kuang Kuang had passed the hearing of the Hong Kong Stock Exchange at that time. However, due to the sanctions imposed by the United States, the pricing and sales of the company's shares in the Hong Kong capital market would certainly be affected. It may be based on this consideration that Kuang Kuang Kuang abandoned the listing of Hong Kong shares." There are senior investment banks in Beijing said.

After Hong Kong lost the first World War, the management immediately released an optimistic signal of sound operation, intending to stabilize market speculation.

On July 29, 2020, India Qi, the co-founder and CEO of Kuangshi technology, publicly said that from 2019 to 2020, the international environment has changed greatly. Now the company has abundant cash flow, and going public is not the urgent need of Kuangshi.

"Hong Kong's listing needs a suitable time point. After IPO, Kuangshi hopes that the stock price can be stable rather than fluctuate greatly." India said.

In spite of indie's calm state of mind, he is not as optimistic as his description of the operation of science and technology. The extent of loss has been increasing year by year, and the operating cash flow has continued to be negative, indicating that the hematopoietic capacity of AI industry is still weak.

According to the company's prospectus, the net cash flow generated by the company's operating activities in 2017, 2018, 2019 and the first three quarters of 2020 are respectively - 168 million yuan, - 747 million yuan, - 1591 million yuan and - 818 million yuan. The net cash flow from operating activities of the company is negative, and the scale is gradually expanding.

Kuangshi attributed the negative cash flow to higher R & D investment and market development investment, as well as the increase of the company's labor cost. According to the prospectus, with the continuous expansion of the company's business scale in the future, based on the above reasons, the net cash flow generated by the company's operating activities is expected to continue to be negative.

The continuous negative cash flow also shows the current situation of "burning money" by ignoring technology. According to the prospectus, in 2017, 2018, 2019 and the first three quarters of 2020, Kuangshi lost 774 million yuan, 2.8 billion yuan, 6.639 billion yuan and 2.846 billion yuan respectively, with a total loss of more than 13 billion yuan in the past four years. It is worth mentioning that the gross profit rate of Kuangshi's main business has also changed by a large margin. In the past four years, the gross profit rate has been changing in the range of 40% - 60%.

In this regard, Kuangshi explained that due to the large investment scale in R & D and product market development in consumer Internet of things and urban Internet of things, "the company may not be able to make profits in a certain period of time in the future, and the accumulated unrecovered losses will continue to exist, so it is impossible to make profit distribution."

"The company's gross profit margin has changed greatly, which is mainly caused by the different customer structure of different projects in different industries." Electronic analysts of domestic securities companies who have an understanding of Kuangshi technology said.

However, even in the face of such business pressure, Kuangshi's R & D investment is still high. From 2017 to 2019, the company's R & D investment rose from 202 million yuan to 1035 million yuan, and its proportion in total revenue also increased from 66.50% to 82.15%. In the first three quarters of 2020, the company's R & D investment reached 746 million yuan again, even higher than the current revenue of 716 million yuan.

At present, ETO technology and Yuncong technology, which have disclosed their prospectuses, are also in a state of loss in recent years. However, due to the size of the company, the loss degree of the company is more obvious than that of the two enterprises mentioned above.

"At present, the commercial liquidity of domestic AI enterprises is still poor, but the development prospect is still optimistic. The good news is that Kuangshi is less affected by the chip neck. The server used for training and cloud computing in the company's back-end uses American chips, which are not high-tech and easy to buy. And the front-end AI chip can be self-developed, and there are more alternatives. " The electronic analyst said.

"In addition, the impact of the U.S. Department of Commerce's entity list is not direct to companies. As far as I know, the amount of overseas procurement of Kuangshi technology is not very large. However, the technology of computer vision has been relatively open and mature all over the world, and the demand for technology input is small. ". According to the analysis.

The key financial data contradiction between the two editions of the prospectus remains to be solved

In addition to the impact of short-term performance turning losses into profits, Kuangshi technology wants to be listed, or it needs to explain the inconsistency of key financial data between the two versions of the company's prospectuses.

In the prospectus for the listing of Hong Kong shares in 2019, the company's revenue in 2017 and 2018 were 313 million yuan and 1427 million yuan respectively (unit: RMB, the same below). However, in the prospectus for listing on the science and technology innovation board, the company's current revenue has become 304 million yuan and 854 million yuan. In addition, the gross profit of ignoring the disclosure of technology in the Hong Kong stock prospectus in 2018 was RMB 930 million, while the corresponding data in the A-share prospectus directly decreased by 400 million yuan.

The difference between revenue and gross profit in the two editions of the prospectus is due to the income statistics of the main business. Taking the "urban Internet of things solutions" business of Kuangshi technology in 2018 as an example, the company's Hong Kong stock prospectus achieved a revenue of 1.057 billion yuan in 2018, accounting for 74.1% of the total revenue; in the science and technology innovation board prospectus, the business revenue was 543 million yuan in 2018, accounting for 63.56%. This alone, the company's latest disclosure of revenue than the original data by half.

In the "supply chain Internet of things solutions", the business contributed 99.74 million yuan to Kuangshi's revenue in 2018. In the prospectus of the science and technology innovation board, the contribution income decreased to 46.16 million yuan.

In addition to the above-mentioned key financial data, in terms of monetary funds, notes receivable, accounts receivable, inventory and other indicators, Kuangshi's two editions of the prospectuses also have "data fights".

Among them, the notes receivable and receivables of Kuangshi technology in 2018 decreased by 450 million yuan compared with the Hong Kong stock prospectus in the science and technology innovation board prospectus; the inventory in 2018 increased by 89 million yuan compared with the Hong Kong stock prospectus, and the remaining data gap was small.

"The accounting rules of the mainland and Hong Kong are not quite consistent, and there will be differences in accounting treatment. Most of the companies listed in H shares back to a share market have inconsistent data." There are domestic head securities investment banks said.

However, some domestic certified public accountants in charge of listing business told 21st century economic report that although Hong Kong is closer to the accounting standards of Australia and Singapore, the accounting standards of the mainland and Hong Kong are close to international financial reporting standards (IFRSs). "It is normal that there are differences in financial data, but the gap of 500 million yuan is still too large, which may be due to the change of income recognition method.".

Kuangshi also disclosed in the prospectus that the company will implement the accounting standards for Business Enterprises No. 14 - Revenue revised by the Ministry of Finance in 2017 from January 1, 2020.

"After the new income standard comes out, it is not ruled out that the relevant revenue will be affected by the total amount method and the net amount method. However, after the net amount method is generally adopted, the company's gross profit margin should be greatly increased, which is different from the situation of ignoring technology." Said the certified public accountant.

"In the IPO process, as long as there is any inconsistency with the important financial data disclosed in the prospectus, it basically needs to be checked. The key financial data of the two versions of the prospectus are different, which will definitely be inquired by the exchange. " According to the above-mentioned head securities investment bank, at present, the scientific and technological innovation board also requires issuers and intermediary institutions to submit self-examination forms when reporting materials. "The self-examination form should also explain the problem of different financial data, but investors can not see it, and enterprises need to give an explanation.".