A tree was applied for reorganization by its creditor. Is this its chance for rebirth?

Following Cross-Border Link, another cross-border e-commerce giant was requested for reorganization by its creditors.

Today, as one of the four young companies in South China City, Youkeshu’s halo is fading, and it is even facing the risk of delisting due to continuous losses. Recently, it is also faced with the dilemma of not being able to repay a bank loan of 400,000 yuan.

In 2017, a 3.4 billion acquisition plan by Tianze Information allowed Youkeshu to successfully go public through a backdoor listing, becoming one of the few A-share listed companies in the cross-border e-commerce industry. However, after being hit hard by the Amazon account ban in 2021, Youkeshu's development path has been frustrated. Today, the other three of the four young masters, Saiwei, Aoji, and Tongtuo, are in very different situations, but it is obvious from their performance that Youkeshu is getting further and further away from them.

Recently, Youkeshu disclosed an announcement that its creditors had applied for reorganization and pre-reorganization. This may be an opportunity for it to break out of its cocoon and be reborn.

The total loss in 4 years exceeded 400,000 yuan, and the sales of billions of yuan could not pay back 400,000 yuan

It must be hard for sellers to believe that a well-established cross-border e-commerce company with an annual revenue of 5 billion yuan could not repay a bank loan of 400,000 yuan one day. But now the real case of Youkeshu is in front of us, which makes people believe that such a thing is really possible.

Recently, Shenzhen cross-border e-commerce giant Youkeshu announced that a bank loan of 400,000 yuan had become overdue due to its inability to repay.

It is reported that on October 21, 2019, Youkeshu signed a "Working Capital Loan Contract" with the Chengzhong Branch of Jiangsu Zijin Rural Commercial Bank Co., Ltd., and Zijin Bank provided it with a loan of 15 million yuan.

After the loan contract expires, after extension and new loans to repay old ones, Youkeshu should finally repay the remaining loan principal of RMB 8.1 million and interest in installments before August 8, 2025.

Youkeshu said that the current balance of the principal of the above loan is 7.5 million yuan, and part of the principal of 400,000 yuan should be repaid on February 8, 2024. However, due to its inability to repay, this part of the loan became overdue.

The announcement sparked a lot of heated discussions. Many people were shocked by Youkeshu's current situation. At the same time, quite a few people doubted that a billion-level sales could not make a mere 400,000 yuan.

But if you carefully look at its financial report data in recent years, you will find that this is not surprising at all.

On the evening of January 29, Youkeshu released its performance forecast, predicting a net loss of 270 million to 360 million yuan attributable to shareholders of the listed company in 2023.

In fact, not only in 2023, in recent years, Youkeshu's business has been unsatisfactory. As early as before 2023, its net profit had been in the red for three consecutive years. From 2020 to 2022, Youkeshu achieved operating income of 5.027 billion yuan, 1.764 billion yuan and 774 million yuan respectively, and net profit of -871 million yuan, -2.676 billion yuan and -367 million yuan.

In other words, Youkeshu has been losing money for four consecutive years, with the total amount reaching 4.184 billion to 4.274 billion yuan. Although the losses are narrowing, it is still not making money.

In addition, the hundreds of millions of yuan of funds frozen by Amazon have not yet been unfrozen, making cash flow even more scarce.

This series of reasons has led to the tree falling into the embarrassing situation it is in today.

The market value was once only 600 million, and there was a risk of delisting.

In 2019, Youkeshu completed the transfer of ownership, and Tianze Information officially entered the cross-border e-commerce track. Cross-border e-commerce business has also become the company's main source of income and profit.

At that time, Tianze Information's market value was close to 4 billion yuan. Since then, driven by cross-border e-commerce business, its market value has been rising all the way, reaching a peak of 8.293 billion yuan in 2020. This year, Tianze Information's cross-border e-commerce export business achieved operating income of 4.749 billion yuan (accounting for 94.48% of total revenue), a year-on-year increase of 20.16%; net profit of 416 million yuan, a year-on-year increase of 27.95%.

But since then, Tianze Information has been on a downward trend. In October 2022, when Tianze Information changed its name to Youkeshu, its market value was only about 2.5 billion yuan, a full reduction of about 5.7 billion yuan. This is not the end. This year, Youkeshu's market value has fallen to 608 million yuan.

Not only that, Youkeshu may also fail in the capital market.

According to relevant regulations, if Youkeshu 's audited net assets at the end of 2023 are negative, the company's stock trading will be subject to a delisting risk warning announcement at the same time as the 2023 annual report is disclosed, and the stock abbreviation will be prefixed with "ST".

According to preliminary calculations, Youkeshu expects the net assets attributable to shareholders of the listed company to be between -286.5256 million yuan and -196.5256 million yuan at the end of 2023.

Although this is only a preliminary estimate, based on Youkeshu’s financial report data in recent years, the situation is not optimistic.

After being applied for reorganization by creditors, is there going to be a turnaround?

On the evening of February 20, Youkeshu disclosed an announcement that its creditors had applied for reorganization and pre-reorganization. Shenzhen Yuanyang E-Commerce Co., Ltd. (hereinafter referred to as "Shenzhen Yuanyang") recently applied to the Changsha Intermediate People's Court for reorganization on the grounds that Youkeshu could not repay its due debts, was seriously insolvent and obviously lacked repayment ability, but had reorganization value, and at the same time applied to start the pre-reorganization procedure in advance.

Shenzhen Yuanyang has a debt claim of RMB 1.25 million against Youkeshu. According to the Settlement Agreement signed by both parties, Youkeshu should pay the aforementioned debt to Shenzhen Yuanyang before October 30, 2023. However, as of February 19, Youkeshu has not yet paid off the debt to Shenzhen Yuanyang.

Judging from the financial data of the most recent year and period, as of September 30, 2023, Youkeshu's total assets were 686 million yuan and its total liabilities were 748 million yuan, which was insolvent. And according to the above-mentioned 2023 performance forecast, its performance still did not improve.

According to the relevant provisions of the Enterprise Bankruptcy Law of the People's Republic of China, when a debtor cannot repay its due debts and obviously lacks repayment capacity, but has reorganization value, the creditor has the right to request the debtor to reorganize in accordance with the law. The reorganization procedure is different from the bankruptcy liquidation procedure. The reorganization procedure aims to save the debtor, retain the debtor's legal person status and restore sustainable profitability. The debtor will restructure its debts with the creditors under the guidance of the court, and through the readjustment of the debtor's assets and liabilities and the rearrangement of business management, the enterprise will get rid of financial difficulties and return to the track of sustainable development.

Simply put, if a tree successfully enters restructuring, it will have the opportunity to escape its current predicament and be reborn.

Therefore, on the second day after the announcement ( February 21), Youkeshu's stock price hit the daily limit, reversing the previous downward trend, and the stock price closed at 1.88 yuan per share. The market value also rose simultaneously. As of press time, Youkeshu's market value was 1.11 billion yuan.

However, it is worth noting that there is still uncertainty as to whether Youkeshu will enter the pre-reorganization and reorganization procedures.

Currently, Shenzhen Yuanyang has submitted an application for pre-reorganization and reorganization to the court, but there is still uncertainty as to whether the application will be accepted by the court, whether Youkeshu will enter the pre-reorganization and reorganization procedures, and whether the pre-reorganization or reorganization will be successful. In addition, the acceptance of the pre-reorganization application does not mean that Youkeshu has officially entered the reorganization procedure. If Youkeshu's pre-reorganization is successful, the court will review whether to accept the reorganization application in accordance with the law. Therefore, there is also uncertainty as to whether Youkeshu can enter the reorganization procedure.

The future of a tree is uncertain ...

There is a tree

Cross-border e-commerce