Another loser! Tongtuo gambled 900 million yuan and the difference was 100 million yuan, and the big sales bet was a mess

Recently, as listed companies have released their 2020 annual reports, the performance commitments of major sellers have also surfaced. Some are happy and some are sad.

However, as the industry and the outside world pay more attention to the fulfillment of performance commitments by cross-border e-commerce giants and listed companies, some listed companies that failed in the bet have begun to step forward, explain the realization of their performance commitments, and issued letters of apology.

Tongtuo lost the bet, and its parent company sent a letter of apology

Yesterday, Huading Co., Ltd., the parent company of Damaitongtuo, issued an "Apology Letter Regarding the Implementation of the 2019 Performance Commitments of the Target Company by Yiwu Huading Nylon Co., Ltd. in Issuing Shares and Paying Cash to Purchase Assets and Raising Matching Funds ".

The apology letter shows that the independent financial advisor and sponsor deeply regret that Tongtuo Technology, the target company of the listed company's asset reorganization, failed to achieve its performance commitment for 2019, and solemnly apologizes to all investors!

It is reported that on April 17, 2017, Huading Co., Ltd. and Tongtuo's original shareholders Liao Xinhui, Zou Chunyuan and Tongwei Investment signed the "Performance Compensation Agreement for Issuing Shares and Paying Cash to Purchase Assets". According to the agreement, the performance commitment period of this transaction is 2017, 2018 and 2019. The net profit attributable to the parent company's shareholders after deducting non-recurring gains and losses during the performance commitment period of Tongtuo Technology shall not be less than RMB 200 million, RMB 280 million and RMB 392 million respectively .

The performance commitments achieved by Tongtuo Technology in 2019 are as follows:

As can be seen from the above figure, in 2019, Tongtuo's net profit attributable to the parent company's owners after deducting non-recurring gains and losses was RMB 287,051,878.34, while the promised profit was RMB 392,000,000, with a difference of -RMB 104,948,121.66.

In fact, not only in 2019, but also in 2018, Tongtuo failed to fulfill its performance commitments for that year.

A report from Huading Holdings Group showed that in 2018, Tongtuo's net profit attributable to the parent company after deducting non-operating items was 221.1423 million yuan, while the promised profit was 280 million yuan, with a difference of -58.8577 million yuan.

In the past three years, Tongtuo completed its performance commitments only in 2017.

A report from Huading Holdings Group showed that in 2017, Tongtuo's net profit attributable to the parent company after deducting non-recurring items was 202.1676 million yuan, while the promised profit was 200 million yuan, exceeding the target by 2.1676 million yuan.

During the three-year commitment period, Tongtuo was required to achieve a total net profit of 872 million yuan. At the end of the three-year period, Tongtuo had only achieved 710 million yuan, with a difference of 162 million yuan.

There is no doubt that Tongtuo lost in this gamble of nearly 900 million yuan.

The long road of cross-border sales

Tongtuo lost the bet, but what about the other sellers in the bet? Winning and losing are still common in the military. The following is a review of the bets of Zebao, Youkeshu, and Jiazhilian. Their "love and hate" with their parent companies spanned several years.

Zebao: Successfully completed performance betting

In mid-April this year , Xinghui Co., Ltd. (after Xinghui Precision changed its name) stated that Zebao Technology achieved a net profit attributable to the parent company's ordinary shareholders of RMB 246.9912 million after tax in 2020, which was RMB 56.9912 million higher than the promised amount, completing 130% of the promised net profit in 2020. In addition, Zebao completed the performance commitments for 2018 and 2019, so the three-year performance bet was a success.

There is a tree: Not completed, but the completion rate is 97%,

Youkeshu also bet on the performance of 2018-2020. At the end of April, Tianze Information stated that Youkeshu had not completed its performance commitments for 2020, and it had not completed its performance commitments for 2019. From 2018 to 2020, Youkeshu’s cumulative net profit attributable to parent company shareholders after deducting non-recurring gains and losses was 973.7379 million yuan, which was 26.2621 million yuan less than the total amount of 100,000.00 million yuan promised in the "Profit Forecast Compensation Agreement", and the completion rate was 97.37%.

The following is Youkeshu’s cumulative performance commitments and actual achievements from 2018 to 2020:

Price Chain: Not completed, 1 billion yuan in compensation required

The largest case in cross-border e-commerce, the huge compensation case of 1 billion fell on Jiazhilian. Jiazhilian started the "love-hate" entanglement with its parent company Xunxing Co., Ltd. since 2017.

In June last year , Xunxing Co., Ltd. announced the performance of Jiazhilian: the net profit attributable to the parent company's shareholders in 2017, 2018, and 2019 was no less than RMB 100 million, RMB 160 million, and RMB 250 million, respectively, and the cumulative promised net profit was RMB 510 million. However, Jiazhilian has not fulfilled its performance commitments for three consecutive years.

Jiazhilian achieved a cumulative net profit of -41.1243 million yuan from 2017 to 2019, failing to fulfill the performance commitment of achieving a cumulative net profit of 510 million yuan in three years, which has triggered the relevant agreement on performance compensation.

According to the performance compensation principles agreed upon in the Profit Compensation Agreement, Gan Qingcao, Zhu Ling and Common Dream need to pay the performance commitment compensation amount and the impairment test compensation amount to Xunxing Co., Ltd. in cash, totaling RMB 1 billion.

The current fate of Gan Qingcao, the founder of Jiazhilian, is already known to the industry. He was forced to pay 1 billion yuan in compensation and is stranded overseas. Jiazhilian has become a wholly-owned subsidiary of Xunxing Co., Ltd.

In addition to the big sales mentioned above, Yibai Network and Huakai Creative also have a bet agreement. Although the performance commitment process has not yet ended, Yibai Network's net profit performance in 2019 and 2020 was very dazzling, and it also exceeded the performance commitment of the bet in the past two years.

Why do cross-border e-commerce companies like to gamble?

The dynamics of big sellers have always been the weather vane of the industry. Outsiders feel sad and sour when watching the ups and downs of the big sellers' bets. If the bet is won, everyone is happy and the company is successfully listed. If the bet is lost, the company is gone.

Industry insiders also have their own views on "betting" and "performance commitments", and look at the bet from the perspective of operating model, founder style, and company size.

Previously, Jiazhilian suffered heavy losses due to gambling, and many people felt very sorry that the company they had worked so hard to build was handed over to someone else.

One seller said: " Companies should not sign gambling agreements. It is better to lose the company they have worked so hard to build. They should have some sense when signing agreements . It is good enough to promise to make back the investors' costs and add a little high interest. "

Why do they want to go public through gambling? One seller analyzed: " In fact, some cross-border e-commerce companies are asset-heavy. When they grow big, they are seriously short of money. The money they earn turns into unsalable inventory. The more inventory they have, the more serious the shortage of money. Going public is to get more investment. "

In addition to the reason of lack of money, some sellers added: “First, the bosses of cross-border e-commerce are all people born in the 80s and 90s. They are starting a business for the first time. In addition, the industry is developing rapidly and they see great prospects. However, they have no experience in connecting with capital and lack of money, so gambling is their choice.

Second, there is insufficient understanding of capital and limited access to the top capital circles, so a bet is needed to ensure the rights and interests of capital.

Third, the company's core competitiveness is not enough. It can be said that most of them are in the mode of buying and selling goods. They have no core business model and are likely to be replaced. To put it bluntly, they are just catching up with the industry's trend. The possibility of being selected by capital is small, so gambling is everywhere. If a company has a lot of advantages and strong brand value, why do they need to gamble? "

Although many big sellers want to win-win and get more capital turnover, some sellers are very cautious about "betting" and take into account the company's operating model. An employee of a billion-level company said: "The company is relatively conservative and emphasizes profit. It will not bet simply for scale or GMV , which is consistent with the boss's work style. " Another seller added a point of view that betting is actually more suitable for high-quality big sellers, such as Zebao.

In conclusion:

From the above situation, it is not difficult to see that the performance commitment between Tongtuo and Huading shares was finalized when the 2019 annual report was released, but it is still brought up now. It is not difficult to see that the industry has recently paid attention to the gambling situation between cross-border e-commerce sellers and listed companies. Or it is a concern about the capital influx into the cross-border e-commerce industry.

In fact, as the cross-border e-commerce industry has experienced explosive growth since 2020, capital has paid more attention to this area. The recent large amount of capital rushing to acquire Amazon stores also proves this point.

But trading with capital is a dangerous game. A seller once joked: "You want capital's money, but capital wants your life." From the lessons of some failed bets, we know that this is not a joke.

However, we also know that the bigger the cross-border e-commerce business is, the more investment is required. Cross-border e-commerce is also a rapidly changing industry. It is not an exaggeration to describe it as changing with each passing day. When the bottleneck comes, if there is no financial support, it is easy to be eliminated by the market. Although there are some who slowly persevere, reinvest the profits obtained, and gradually expand the scale, they are only a minority after all.

Unlike technology companies, trading companies are backed by strong technical strength. If trading companies want to obtain capital investment, they have to pay a certain price, either for part of the control of the company or for signing a gambling agreement.

In this case, the sellers are controlled by capital.

In this two-year situation, how do we view the performance betting among big sellers?

A former Jiazhilian manager said: " It is absolutely necessary for a company to invest in its development stage. This is especially true for e-commerce, which speeds up the process of getting orders because of the convenience of user orders. While getting orders quickly, it also requires merchants to speed up the response of the supply chain. This puts higher demands on capital demand. "

"In general, we need to have a certain level of forecasting and control capabilities for financial early warning, inventory turnover and order forecasting. Now everyone has a deep understanding of the word "fast", but implicit in fast are the other two words "stable" and "accurate". Don't take too much money, just enough. Don't make plans and promises beyond your ability. Being able to resist the temptation of funds, use funds steadily, control inventory in an orderly manner, foresee risks in advance and have countermeasures when they occur are all things that need to be made and considered in advance. "