Original title: GEM IPO | Ouyeel Yunshang has not submitted for registration for a year and a half, with a gross profit margin of less than 2% and a net profit that has fallen for two consecutive years
Source: Times Investment Research
Author: Lei Ying
Edited by Sun Huaqiu
Has the A-share spin-off cooled down?
With the failure of the listing of the spin-off subsidiary Baowu Carbon Technology Co., Ltd., the market has turned its attention to Ouyeel Yunshang Co., Ltd. (hereinafter referred to as "Ouyeel Yunshang"), another subsidiary of China Baowu Iron and Steel Group Co., Ltd. (hereinafter referred to as "China Baowu"), which intends to apply for an IPO on the Growth Enterprise Market and successfully passed the meeting on November 4, 2022, but so far, it has not submitted for registration.
According to the prospectus (the previous draft, the same below), as a third-party industrial interconnection platform for the steel industry, during the reporting period (2019-2022 first half of 2022), the comprehensive gross profit margin of Ouyeel Yunshang did not exceed 2%, and the net profit declined year-on-year from 2022 to 2023.
On June 5 and 19, on the risk of declining performance, low gross profit margin and other related issues, Times Business School sent letters and calls to the office of the board of directors of Ouyeel Yunshang to inquire, but as of press time, the company has not replied.
China Baowu builds a steel e-commerce platform
According to the prospectus, as of October 21, 2022, China Baowu held a total of 61.38% of the shares of Ouyeel Yunshang through direct and indirect means, and was the controlling shareholder of the company. The State-owned Assets Supervision and Administration Commission of the State Council holds 90% of the equity of China Baowu and is the actual controller of Ouyeel Yunshang.
In 2015, the controlling shareholder China Baowu integrated the original high-quality resources of bulk commodity e-commerce and established a third-party industrial Internet platform Ouyeel Yunshang with a new business model.
By integrating the resources of all parties in the steel industry chain, Ouyeel Yunshang uses information technology such as the Internet to integrate service resources such as trading, warehousing, transportation, wharf, and processing, and provides one-stop comprehensive services for partners in the steel industry chain such as steel mills, end users, trade service providers, warehousing service providers, carriers, and processing centers.
During the reporting period, the main business of Ouyeel Yunshang included Internet services, Internet transactions, logistics services, other transactions and services, among which the revenue from Internet trading business accounted for more than 80% of the operating income.
According to the prospectus, the company's Internet trading business mainly includes: online transactions (platform-based unified purchase and distribution) of steel products directly purchased from steel mills and sold to downstream users through the platform, online transactions of industrial supplies for non-production raw materials (MRO platform transactions), and online transactions (cross-border e-commerce transactions) that seek sources of goods and sell them across borders according to user needs.
The main source of revenue of Ouyeel Cloud Business is the unified purchase and distribution business under Internet transactions. In each period of the reporting period, the proportion of revenue from Ouyeel Yunshang's unified purchase and distribution business to operating income was 77.68%, 80.74%, 81.33% and 69.28% respectively.
Gross margin less than 2%
It should be noted that as a third-party industrial interconnection platform, the gross profit margin of Ouyeel Cloud Business is not high.
According to the prospectus and the reply documents to the first round of inquiry letters, from 2019 to the first half of 2023, the gross profit margin of Ouyeel Yunshang was only 1.68%, 1.26%, 0.99%, 1.17%, and 1.21% respectively, less than 2%, and the overall trend was declining.
The lowest gross profit margin is only 0.99%, and the sustained profitability of Ouyeel Cloud Business is naturally worrying.
According to the prospectus, Ouyeel Yunshang selected Guolian shares (603613. SH), Shanghai Ganglian (300226. SZ) as a comparable listed company in the same industry. Among them, Shanghai Ganglian is not only similar to Ouyeel Yunshang in terms of business model, but also the main categories of transactions are steel products, so it is more comparable.
According to the prospectus, from 2019 to the first half of 2022, the gross profit margins of Ouyeel Yunshang were 1.68%, 1.26%, 0.99%, and 1.02%, respectively, while the average gross profit margins of comparable listed companies in the same industry were 3.52%, 2.73%, 2.60%, and 2.31%, of which the gross profit margins of Shanghai Ganglian were 0.74%, 2.00%, 1.94%, and 1.60% respectively.
It is not difficult to find that during the reporting period, the gross profit margin of Ouyeel Yunshang was lower than the average of its peers. Compared with Shanghai Ganglian, which has a similar business and the same business category, the company's gross profit margin will continue to be lower than that of Shanghai Ganglian in the first half of 2020-2022.
It should be noted that some of Ouyeel Yunshang's businesses have greater advantages than Shanghai Ganglian.
According to the reply documents to the first round of inquiry letters, Ouyeel Yunshang's unified purchase and distribution business model has certain similarities with Shanghai Ganglian's "help you buy" business. In 2019, the revenue scale of Shanghai Ganglian's "help you pick" business was 24.587 billion yuan, while the revenue scale of Ouyeel Yunshang's unified purchase and distribution business was 43.487 billion yuan in the same period.
Similarly, Ouyeel Yunshang's spot trading business is similar to Shanghai Ganglian's consignment trading business. From 2018 to 2019, the unit prices of Ouyeel Yunshang's spot trading business were 6.05 yuan/ton and 5.72 yuan/ton, respectively, while the unit prices of Shanghai Ganglian's consignment business were 5.51 yuan/ton and 5.18 yuan/ton, respectively. It can be seen that the unit price of Ouyeel Cloud Business is relatively high.
In addition, Shanghai Ganglian provides customers with free matching trading services, while Ouyeel Yunshang's matching trading services are fee-based businesses and have a large profit scale. In each period of the reporting period, the gross profit of Ouyeel Yunshang business matching business income was 6.9398 million yuan, 8.0357 million yuan, 12.7714 million yuan and 7.1081 million yuan respectively.
In the case of obvious advantages in multiple businesses, why is Ouyeel Yunshang still lower than Shanghai Ganglian's gross profit margin?
Ouyeel Yunshang said in the prospectus that because the Internet trading business is an emerging Internet business, the industry has not yet formed a mature business model, each market participant has formed a differentiated business model with its own characteristics, and the internal business structure of each market participant is relatively complex, therefore, there are certain differences in the gross profit margin level between comparable listed companies in the same industry.
Net profit fell for the second year in a row
In addition to the abnormally low gross profit margin, the performance growth of Ouyeel Cloud Business is also doubtful.
According to the prospectus, from 2019 to the first half of 2022, Ouyeel Yunshang's operating income was 55.984 billion yuan, 74.772 billion yuan, 126.669 billion yuan, and 56.608 billion yuan respectively, and the net profit was 67.1496 million yuan, 298 million yuan, 486 million yuan, and 227 million yuan respectively, and the net profit deducted from the non-attributable parent company was -101 million yuan, 207 million yuan, 178 million yuan, and 87.5278 million yuan respectively.
It can be seen that during the reporting period, although the company's operating income grew steadily, the net profit deducted from the non-attributable parent was not stable, and the non-recurring profit and loss had a greater impact on the net profit of the current period. From the perspective of deducting non-attributable net profits, the company's net profit loss after deducting non-attributable to the parent exceeded 100 million yuan in 2019, and although it turned losses into profits in 2020, the net profit deducted from non-attributable to the parent company in 2021 declined year-on-year.
According to the reply documents to the second round of inquiry letters, in 2022, Ouyeel Yunshang will achieve operating income of 112.827 billion yuan, a year-on-year decrease of 10.93%; The net profit was 453 million yuan, a year-on-year decrease of 6.78%.
As of now, the company has not released financial data for 2023.
However, Baosteel (600019. SH), as a shareholder holding 5.17% of the shares of Ouyeel Yunshang, listed Ouyeel Yunshang as an important associate in the annual reports of previous years, and disclosed the main financial data of Ouyeel Yunshang in the annual reports.
According to Baosteel's 2023 annual report, in 2023, Ouyeel Yunshang will achieve operating income of 117.193 billion yuan, a year-on-year increase of 3.87%; The net profit was 400 million yuan, a year-on-year decrease of 11.79%.
It is not difficult to find that from 2022 to 2023, Ouyeel Yunshang's net profit will decline year-on-year for two consecutive years, and the net profit margin in the same period will only be 0.4% and 0.34% respectively.
In addition, the announcement of the results of the review meeting showed that due to the low level of gross profit margin, the business needs a large amount of external financial support, and the 10%~20% deposit and price decline early warning mechanism prepaid by downstream customers did not fully cover the risk of steel price fluctuations, the GEM Listing Committee required Ouyeel Yunshang to explain its response measures and effectiveness to the sharp fluctuations in steel prices, as well as the business risks caused by downstream customers if they default and abandon orders.
After the meeting, Ouyeel Yunshang did not disclose the reply documents related to the deliberations of the Listing Committee.
(2330 words)
Disclaimer: This report is intended for use by Times Business School clients only. The Company does not consider the recipient to be a client by virtue of receipt of this report. This report has been prepared on the basis of publicly available information that the Company believes to be reliable, but the Company does not guarantee the accuracy or completeness of such information. The opinions, assessments and forecasts contained in this report reflect the views and judgments expressed as of the date of publication. The Company does not guarantee that the information contained in this report will be kept up to date. The information contained in this report may be modified without notice, and investors should pay attention to the corresponding updates or modifications. The Company strives to be objective and fair in the content of the report, but the views, conclusions and recommendations contained in this report are for informational purposes only and do not constitute an offer or solicitation to buy or sell the securities described. Such views and recommendations do not take into account the specific investment objectives, financial situation and specific needs of individual investors and do not constitute private investment advice to clients at any time. Investors should fully consider their own specific circumstances and fully understand and use the contents of this report, and should not regard this report as the sole factor in making investment decisions. Neither the Company nor the author shall be liable for any consequences arising from the reliance on or use of this report. To the best of their knowledge, the Company and the author have no legally prohibited interest in the securities or investment targets referred to in this report. To the extent permitted by law, the Company and its affiliates may hold positions and trade in securities issued by the companies mentioned in the report, and may provide or seek to provide investment banking, financial advisory or financial products and other related services. The copyright of this report is only owned by the Company. Without the written permission of the company, no institution or individual shall infringe the company's copyright in any form such as reprinting, copying, publishing, quoting or redistributing it to others. If the quotation and publication are carried out with the consent of the Company, they shall be used within the permitted scope, and the source shall be indicated as "Times Business School", and this report shall not be quoted, abridged or modified in any way contrary to the original intention. The Company reserves the right to pursue such liabilities. All trademarks, service marks and marks used in this report are trademarks, service marks and marks of the Company.