After failing to bet for two consecutive years, is Shenzhen Dashang going to sell itself?

Looking at the cross-border industry, there are many big sellers that have gone public through backdoor listings, but only a handful of them have succeeded. At the beginning of the year, the billion-level big seller Zhengniao’s bet against the sea came to an end, and it eventually reached a settlement with the listed company with a compensation of 70 million yuan.

Recently, Shenzhen home security is selling Anke Innovation The bet with its parent company Yinzhijie once again turned out to be a dismal failure, and it seems that the company is planning to sell itself if the bet fails.

Shenzhen Dama failed to meet the gambling target for two consecutive years

As a subsidiary of Yinzhijie's holding company, Anke Youxuan (Shenzhen) Technology Co., Ltd. (hereinafter referred to as "Anke Innovation") is a company that mainly deals in security and smart home products. It owns several independent brands including home security brands ANNKE, VACOS and smart home brand EASEHOLD. Its products are sold on e-commerce platforms such as Amazon, eBay, and AliExpress.

Among them, Amazon is Anke Innovation's largest revenue channel. In 2023, Anke Innovation relied on 83 Amazon stores to achieve a revenue of 192 million yuan, and its order volume reached 287,100. Its brand ANNKE performed well on Amazon, and many products ranked among the BSR.

Compared with other holding and shareholding subsidiaries of Yinzhijie, Anke Innovation can be said to be a standout.

In 2023, Yinzhijie's revenue was 1.015 billion yuan and its net loss was 70.1043 million yuan. Specifically speaking of business segments, the revenue and profits of several companies under Yinzhijie engaged in financial information technology, mobile information services, etc. are in a state of decline. Only the e-commerce business, which accounts for 37.02%, is in a state of growth, reaching 376 million yuan, a year-on-year increase of 2.42%, and the net profit remains stable compared with previous years.

Although revenue and profits were both stable, Anke Innovation did not meet the requirements of the bet agreement signed with Yinzhijie in 2022.

As early as 2022, many companies under Yinzhijie had suffered consecutive losses, especially the financial information technology sector, which originally accounted for a relatively large proportion, resulting in the company's performance being strong all the way. Yinzhijie had the idea of ​​bringing Anke Innovation under its control. The reason was that Anke Innovation had stable profits.

At that time, Yinzhijie spent a huge sum of 65 million yuan (13 million yuan per year in the first three years) to buy the remaining 35% of Anke Innovation's shares and signed a second bet agreement with Anke Innovation. The agreement requires Anke Innovation to have an annual net profit of no less than 30 million yuan from 2022 to 2024, or a cumulative net profit of 90 million yuan over three years.

The so-called bet itself involves certain risks, and Yinzhijie has also put forward corresponding requirements. If Anke Innovation suffers losses at maturity and fails to meet the requirements of the agreement, Yinzhijie will deduct the purchase price of Anke Innovation in proportion.

Financial report data shows that Anke Innovation's net profit in 2022 is 28.55 million yuan, and its net profit in 2023 is 28.73 million yuan. It can be said that Anke Innovation has not met the requirement of the bet that the net profit after deducting non-operating expenses must not be less than 30 million yuan for two consecutive years.

Will Anke Innovation be deducted the money paid for its sale if its performance fails to meet the target?

According to another possibility in the agreement, the cumulative net profit in three years exceeds 90 million yuan, excluding the net profit in the previous two years, that is, Anke Innovation's net profit in 2024 must exceed 33 million yuan to complete the performance and achieve the bet with Yinzhijie.

However, for Anke Innovation, whose net profit remains stable, even if the revenue share of Amazon channels increases year by year, the effect is minimal, and most of it is likely to be deducted from the sale price. According to the bet agreement, the last 35% of its shares are paid in installments. Failure to meet the performance target means the failure of the bet, and the final payment is expected to be lost.

This is not the first bet between the two.

The "marriage" between Anke Innovation and Yinzhijie can be traced back to 2014, when Yinzhijie acquired 51% of Anke Innovation through capital increase and acquisition, with a total investment of RMB 10 million and an initial investment of RMB 4 million. At that time, Anke Innovation had just started and its valuation was only about RMB 8 million.

In the same year, Anke Innovation and Yinzhijie signed the first bet agreement, requiring Anke Innovation to fulfill its performance commitments in 2014 and 2015, and Yinzhijie to make additional investments while maintaining its shareholding in Anke Innovation. The agreement ultimately ended with "Anke Innovation completing the bet for two consecutive years", but at that time Anke Innovation was not yet a wholly-owned subsidiary of Yinzhijie.

Subsequently, Yinzhijie continued to increase its stake in Anke Innovation. By acquiring the equity of Anke Innovation held by other companies, it increased its stake in Anke Innovation to 63.67%. With the support of a listed company, Anke Innovation's development in all aspects has naturally reached a higher level. Not only did it successfully obtain financing, but its overall performance was also the best among Yinzhijie's subsidiaries.

Gambling against others is harmful to your health. The mess behind the big sales

When many companies develop to a certain level, they inevitably want to go public through various means. Backdoor listing has become the choice of many cross-border sellers due to its simple process, low risk and low cost. However, looking at the companies that gambled against each other in the cross-border circle, without exception, they all ended up in a mess.

Zhengniao Chuhai and Insai Group made a bet: settled with compensation of 70 million. As a company mainly engaged in home living products, Zhengniao Chuhai's home living, sports and outdoor brands performed well on Amazon, and many brands entered the top 10 of the platform category.

With good performance, Zhengniao signed a five-year bet agreement with Insai Group in 2022. However, Zhengniao was affected by multiple factors such as external conflicts in 2022 and failed to complete the bet agreement. Insai Group required Zhengniao to repurchase all its shares. In the end, Zhengniao was sued by the investor for defaulting on the repurchase of shares. In the end, Zhengniao paid more than 70 million yuan for the repurchase of shares. Payment settlement.

Before Zhengniao went overseas, the 3C brand, which mainly sells headphones, smart speakers and other products, also worked with Gongda Electronics However, Goertek later asked Dama to repurchase its investment shares due to the uncertainty of its performance. When it was not agreed, Goertek applied for property preservation, which ended up with the shares of Dama being frozen.

Going back further, there is also a vivid case of the founder of PriceChain running away. It can be seen that the road of betting on listing is not easy to take. Due to the risks of the agreement itself and the complicated reality, many big sellers often fail to achieve the goals stipulated in the bet. In the end, most of them failed in the capital bet and ended up in a mess. In short, betting is risky and sellers need to be cautious.

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