2 billion in revenue! Cross-border E-commerce transferred its equity in Paton. Can the former cross-border e-commerce leader be reborn?

On March 23, Cross-border Communication announced that it plans to transfer 100% of the equity of its wholly-owned subsidiary Shenzhen Qianhai Patosun Network Technology Co., Ltd. to Patosun Investment, Yongpa Investment, Xiaomi, Shunwei, Huangpu Chuangrong and other transferees for RMB 2.02 billion. After the completion of this transaction, the company will no longer hold the equity of the target company.

Cross-border Communication said that this transaction was made in accordance with the company's development plan to reasonably adjust the company's business structure, and to further meet the needs of the company's strategic development layout and improve the company's asset utilization rate. This transaction was made because the related party Guangzhou Development Zone Industrial Fund Investment Group Co., Ltd. was optimistic about the development prospects of the cross-border e-commerce industry and Paton's business, so it acquired the corresponding shares at a market-based price through Huangpu Chuangrong, which it controlled.

Is the 2.02 billion transfer of Paton a good or bad thing? Let's first review the current situation of Cross-border Link:

On January 29, 2021, Cross-border Communication released its 2020 performance forecast, achieving a profit of 100 million to 150 million during the reporting period, turning losses into profits year-on-year, and achieving revenue of 16.5 billion to 17.5 billion, a slight year-on-year decrease. However, the company's non-net profit was a loss of 160 million to 210 million, and there was no significant improvement in the operating level.

Therefore, for Cross-Border Link, selling Paton is a helpless move. The company still faces a large liquidity gap and debt repayment pressure at the end of 2020. The 2.02 billion yuan of funds is an opportunity for Cross-Border Link, which is short of cash flow, to make a comeback.

Xiaomi, Shunwei Capital, and Guangzhou State-owned Assets Supervision and Administration Commission all participated in the transaction of Paton's equity, which shows that the capital market is still optimistic about high-quality companies in the cross-border e-commerce industry. At the same time, the transferees also include several companies under the name of Paton's founder and subsidiaries of Cross-border Communication. The equity transfer of Paton this time is more like the founder of Paton, Xiaomi, Guangzhou State-owned Assets Supervision and Administration Commission and other investors to help the parent company Cross-border Communication. As the actual controller of Cross-border Communication, Guangzhou State-owned Assets Supervision and Administration Commission is also doing its best to solve Cross-border Communication's urgent funding needs by purchasing Paton's equity, which can be said to kill two birds with one stone. We can also see that on the evening of March 23, Cross-border Communication issued another announcement: providing a guarantee of 100 million yuan for its subsidiary Paton. Therefore, it can be seen that the two parties still maintain a good relationship and do not rule out the possibility of continuing to cooperate with the help of Cross-border Communication's export platform in the future.

Next, let’s take a look at the general environment faced by Cross-border Communication:

Recently, with the approval of the State Council, the Ministry of Commerce, the National Development and Reform Commission, the Ministry of Finance, the General Administration of Customs, the State Administration of Taxation, the State Administration for Market Regulation and other six departments jointly issued the "Notice on Expanding the Pilot Program of Cross-border E-commerce Retail Imports and Strictly Implementing Regulatory Requirements". The "Notice" clearly states that the scope of the pilot program of cross-border e-commerce retail imports will be expanded to all free trade pilot zones, cross-border e-commerce comprehensive pilot zones, comprehensive bonded zones, import trade promotion innovation demonstration zones, and bonded logistics centers ( Type B) in cities (and regions).

Due to the epidemic, online penetration has further deepened, and global e-commerce retail is also in a period of rapid growth. Before the epidemic, eMarketer predicted that the average annual growth rate of the global retail e-commerce market would be 16.6% from 2020 to 2023. The outbreak of the epidemic will bring about a faster growth of cross-border e-commerce. In particular, the overseas epidemic is showing a trend of continuous escalation. Countries have gradually strengthened anti-epidemic measures, which has had a significant impact on the production of enterprises in the epidemic area, while providing more opportunities for domestic enterprises to go global, accelerating the pace of cross-border e-commerce global sales.

It is foreseeable that 2021 and the next 3-5 years will still be the best era for cross-border e-commerce. The strong support of national policies and the change in consumption patterns of overseas consumers under the influence of the epidemic have provided a good fertile ground for the growth of cross-border e-commerce companies. Shein, Shopee... one after another high-quality cross-border e-commerce companies have emerged and are going global. In such an era, the former leaders of cross-border e-commerce may only lack an opportunity...

After selling Paton, Cross-Border Link still holds two cards, Global Easy Shopping and Youyi E-Commerce, with dual-wheel drive of export and import businesses. With sufficient ammunition in the rear, the frontline soldiers can charge on the battlefield. With the arrival of the 2021 cross-border e-commerce peak season, Cross-Border Link will have an opportunity for a phoenix rebirth.

Paton

Cross-border e-commerce