Jiang Yong, a graduate tutor in accounting, no matter how he calculates, he has lost a lot.
Jiang Yong, born in 1979, joined the entrepreneurial team at the age of 29 and started with a principal of 30,000 yuan to build Hengqi Education into a well-known professional accounting training institution in China.
In 2016, Jiang Yong promoted Hengqi Education to borrow Kaiyuan instruments in disguise for 1.2 billion yuan and renamed it Kaiyuan shares. Subsequently, Jiang Yong accelerated the transformation of Kaiyuan's joint-stock industry into the field of education, and the company was renamed Kaiyuan Education (300338. SZ）。
Wind data shows that on the road of transformation of Kaiyuan Education, large-scale mergers and acquisitions have been implemented, with a total cost of about 1.869 billion yuan (including share payment).
However, landmines planted by high-premium acquisitions finally broke out. In 2019 and 2020, due to the impact of the performance of the M&A target and the impairment of goodwill, the total loss of Kaiyuan Education in the two years was about 1.4 billion yuan.
As of June 4 this year, the market value of Kaiyuan Education was 1.685 billion yuan, and the total market value of Jiang Yong and his co-actors was only 306 million yuan, which was about 600 million yuan less than its shareholding cost.
It is worth mentioning that the Luo Jianwen family, the original actual controller of Kaiyuan Education, has cashed out about 2 billion yuan through the reduction of holdings.
The aftermath of high-premium mergers and acquisitions
In the field of transformation education, Kaiyuan Education has reaped huge losses one after another.
In the first quarter of this year, Kaiyuan Education achieved operating income of 218 million yuan, a year-on-year increase of 56.79%, while the net profit attributable to the shareholders of the listed company (referred to as net profit) and the net profit after deducting non-recurring gains and losses (referred to as non-net profit) were -0.86 billion yuan and -0.87 billion yuan, respectively, a year-on-year decrease of 29.42% and 29.41%.
If it is understandable that there was a loss in the same period last year due to the impact of the epidemic, it is still a bit surprising that there was still a loss in the first quarter of this year.
In fact, throughout 2020, New Century Education survived the hard days of losses.
According to the annual report, in 2020, the company achieved operating income of 850 million yuan, down 42.92% year-on-year, and net profit and non-net profit were -766 million yuan and -764 million yuan, down 20.59% and 26.08% respectively.
This is the largest annual loss since the listing of Kaiyuan Education, and it is also the second year since its backdoor listing.
From a single quarter, in the first, second, third and fourth quarters of last year, the operating income achieved by Kaiyuan Education was 139 million yuan, 231 million yuan, 300 million yuan and 180 million yuan, down 61%, 49.17%, 24.296% and 36.21% year-on-year, and it was not improved by the gradual control of the domestic epidemic and the comprehensive promotion of the resumption of work and production. The corresponding net profit loss was 122 million yuan, 0.41 billion yuan, 0.09 billion yuan and 594 million yuan respectively, with a year-on-year change of -650.34%, -362.61%, -198.31%, 12.88%, and all losses in the four quarters.
Not only did it lose money in 2020, but in 2019, there was no epidemic, and Kaiyuan Education also suffered huge losses. In that year, the company achieved operating income of 1.489 billion yuan, a slight increase of 2.44% year-on-year, net profit, deduction of non-net profit of -635 million yuan, -606 million yuan, down 744% and 707.47% year-on-year.
Two consecutive years of large losses and continued to this year, the main culprit is the landmine planted by mergers and acquisitions.
Kaiyuan Instruments, the predecessor of New Century Education, was listed on the Growth Enterprise Market in July 2012. After the listing, the operation did not improve, and in 2015, the net profit achieved was only 0.04 billion yuan. As a result, industrial transformation is imminent.
In August 2016, New Century Education acquired 100% of the equity of Hengqi Education and 70% of the equity of Zhongda Yingcai (Beijing) Network Education Technology Co., Ltd. (hereinafter referred to as Zhongda Yingcai) through a combination of issuing shares and paying cash, with a total transaction price of 1.382 billion yuan.
The premium rate of this acquisition once caused a sensation in the market. The valuation base date of the above two companies is March 31, 2016, and the appraisal value of the 100% equity of Hengqi Education is 1.209 billion yuan, an increase of 1.144 billion yuan over its net assets, with an appreciation rate of 1770.48%. The appraisal value of 100% equity of CUHK Yingcai was 261 million yuan, an increase of 259 million yuan over its net assets, with an appreciation rate of 11292.53%. In the end, the transaction prices of 100% equity of Hengqi Education and 70% equity of CUHK Yingcai were 1.2 billion yuan and 182 million yuan respectively, which were slightly discounted compared with the appraisal value, but still the premium was amazing, and the goodwill formed was 1.105 billion yuan and 165 million yuan respectively.
Subsequently, the company has successively acquired some or all of the equity of Dodi Technology, Tianhu Education, Zuo Fan Education and other companies, increasing the layout of the education industry. Among them, the appreciation rate of the acquisition of Tianhu Education is also as high as 35 times.
In the above series of acquisitions, New Century Education spent a total of about 1.869 billion yuan (including shares). By the end of 2017, the company's goodwill reached 1.410 billion yuan.
During the performance commitment period, Hengqi Education and CUHK Talents have accurately fulfilled their performance commitments, and in 2019, the two achieved a total net profit of 143 million yuan, which is 0.13 billion yuan less than the promised number of 156 million yuan.
The transaction price of Dodi Technology, which was acquired in June 2017, was 62.4 million yuan, and its loss was 12.57 million yuan in that year, and the loss in 2018 expanded to 65.38 million yuan.
In 2018, due to the impairment of goodwill and the loss of inventory price, the net profit of Kaiyuan Education in the current year was 99 million yuan, down 38.41% year-on-year.
In 2019 and 2020, the total impairment of goodwill alone reached 950 million yuan, and in these two years, the company's total loss amounted to 1.401 billion yuan.
As of now, New Century Education still has 442 million yuan of goodwill on its books.
The market value of 900 million is now only 300 million
Kaiyuan Education has suffered continuous losses, and Jiang Yong's life is not good.
According to public information, Jiang Yong, who was born in Hengyang, Hunan Province, took over the little-known Liuzhou Hengqi in 2008, and in just one year, Liuzhou Hengqi became the largest accounting training institution in the local area, and entered Nanning, Guilin, Hengyang and other cities. In 2011, Hengqi Education Headquarters moved to Guangzhou and began a nationwide market layout. In 2013, Hengqi Education established a head office in Shanghai, and the development momentum was unstoppable.
2016 was a turning point for Hengqi Education. In this year, Kaiyuan Instruments acquired Hengqi Education and ZHONGDA Talents at a high premium, with a price of 1.2 billion yuan and 182 million yuan respectively.
The acquisition was a combination of issuing shares and paying cash, with Jiang Yong holding a 30.992% stake in Hengqi Education and receiving a cash consideration of RMB119 million. Jiang Sheng, one of Jiang Yong's co-actors, or cash consideration of 0.29 billion yuan. Zhongda Talents traded half of the shares and cash payments.
According to this estimate, the cost of Jiang Yong and his co-actors to invest in Kaiyuan Education exceeded 400 million yuan.
In 2017, Jiang Yong participated in the fixed increase of Kaiyuan Education, investing 230 million yuan. In September 2019, Zhao Jun, a concerted actor of Jiang Yong, invested 210 million yuan to receive a 5.11% stake in Kaiyuan Education. Counting these investments, Jiang Yong's shareholding cost is close to 900 million yuan.
So, today, what has Jiang Yong gained?
In recent years, the stock price of Kaiyuan Education in the secondary market has fallen and fallen. As of the afternoon close of trading on June 4 this year, the stock price of Kaiyuan Education was 4.94 yuan per share, with a total market value of 1.685 billion yuan. Jiang Yong and his co-actors hold a total of 18.21% of the company's equity, with a stock market value of about 306 million yuan and a four-year floating loss of about 600 million yuan.
Today's Kaiyuan education, not only the operating performance is ugly, its liquidity is also insufficient. As of the end of the first quarter of this year, the company's book monetary funds were only 0.90 billion yuan, while short-term debt was 196 million yuan. Last year and the first quarter of this year, the company's operating cash flow net outflow was 0.76 billion yuan and 0.57 billion yuan, respectively.
Faced with the problem of insufficient liquidity, as the actual controller, Jiang Yong has long known. On April 14 last year, Kaiyuan Education disclosed a fundraising plan to raise 602 million yuan from Jiang Yong and his co-actors Zhao Jun and Jiang Sheng. But the financing plan has been terminated.
Baidu Encyclopedia data shows that Jiang Yong is currently a guest tutor for graduate students in the School of Accounting of the Central University of Finance and Economics, but he does not know how Jiang Yong, who is good at financial accounting in the face of real embarrassment, will make a beautiful accounting account for Kaiyuan Education?
Corresponding to Jiang Yong's predicament, the Luo Jianwen family, the former actual controller of Kaiyuan Education, was originally in operational difficulties, and after handing over the control of the company to Jiang Yong, it greatly reduced its holdings and cashed out.
In November 2018, Luo Jianwen resigned as chairman of the company, and in March 2019, New Century Education sold traditional assets such as instrument manufacturing to Luo Jianwen for 271 million yuan. In 2015, the market value of this asset was close to 8 billion yuan at its peak.
The reporter of Changjiang Business Daily found that with the completion of the acquisition of assets such as Hengqi Education, the Luo Jianwen family was thinking of exiting and giving way to Jiang Yong. In September 2017, the Luo Jianwen family transferred the equity to introduce strategic investors to the company, with a total transfer price of 731 million yuan.
In 2018 and 2019, Luo Jianwen and his son Luo Xudong intensively reduced their holdings. In March 2017, the Luo Jianwen family held a total of 61.53% of the equity of Kaiyuan Education, and by the end of the first quarter of this year, the Luo Jianwen family's shareholding ratio was less than 5%.
According to incomplete estimates, in recent years, the Luo Jianwen family has cashed out about 2 billion yuan. This amount has significantly exceeded the current market value of New Century Education.
This article originated from the Yangtze River Business Daily