On February 18, huitongda network was listed on the main board of the Hong Kong stock exchange. The IPO price was HK $43 / share, and the share price opened slightly higher by 1.28%. The closing price on that day was HK $45.5/share, with a market value of about HK $25.27 billion.
why does it come from the sinking market?
It is understood that huitongda network was established in 2010, founded by Wang Jianguo and served as the chairman. Huitongda network is not Wang Jianguo’s first listed company. Behind him are home appliance chain brand five-star appliance and mother and baby retail brand Kidswant Children Products Co.Ltd(301078) .
From the transaction situation of huitongda network on the first day, especially near the closing, the sudden surge also reflects the optimistic attitude of the capital market towards rural e-commerce.
“Huitongda is a typical rural e-commerce, e-commerce + local network model. It effectively makes up for the other side of jd.com, tmall.com, Taobao, vipshop and pinduoduo, which is dominated by the city.” In the view of Zhang Yi, the traditional e-commerce market can not be developed by the traditional e-commerce market.
Wang Jianguo also said that at the beginning of the establishment of huitongda network, through a large number of visits and research, he found that China’s sinking market is not only a blue ocean market, but also a shallow sea market. The urban Internet and e-commerce model can not be “copied” into it. Therefore, huitongda relies on member retail stores scattered in villages and towns to provide sinking market.
According to the prospectus of huitongda network, as of September 30, 2021, it has 57074 active member retail stores, 13653 active channels or customers and 4268 suppliers, with more than 300 million farmers and consumers.
“The characteristics of the sinking market are relatively scattered, farmers are more sensitive to prices, and the acceptance of unfamiliar goods is mainly recommended by acquaintances. Of course, we should also see that there are many levels of commodity categories in this market, ranging from daily necessities to agricultural means of production. If we can cultivate well, it is worthy of layout.” Zhang Yi told the reporter of Securities Daily.
According to the prospectus, the operating revenue of huitongda network from 2018 to 2020 and the first nine months of 2021 was 29.802 billion yuan, 43.633 billion yuan, 49.629 billion yuan and 46.496 billion yuan respectively, showing an upward trend.
However, from 2018 to 2020, huitongda network lost 276 million yuan, 305 million yuan and 280 million yuan respectively.
From the surface figures, huitongda network is in a state of loss, but the loss is mainly the interest of the previous round a to e financing. Therefore, it is mentioned in its prospectus that these financing will be converted into equity after the completion of IPO, and there is no need to pay interest, subject to the adjusted net profit.
An investor told the reporter of Securities Daily: “huitongda has been exploring multi link and multi-mode healthily, and its value may be greater in the future.”
rural e-commerce has a broad market
With the names of “the first share of rural e-commerce” and “rural Taobao”, huitongda network has attracted capital attention. According to tianyancha data, huitongda had completed 10 rounds of financing before the IPO, with a financing amount of more than 7 billion yuan. SDIC Chuangyi, guodiao fund, Alibaba, Shunwei capital, Huaxia life insurance, Huaxing capital, green capital and Jiangsu coastal fund all took shares to varying degrees.
At the same time, the cornerstone investors of huitongda network also deserve attention. Since the global sale on January 31, the international placement of huitongda network has been oversubscribed, and the total subscription proportion of six keystone investors of Skyworth Group, Shangtang, Jinglin asset management, Suzhou Gold Mantis Construction Decoration Co.Ltd(002081) construction, sandtalk capital and Hailan group has reached 49.76%.
“The rural e-commerce pursued by capital is not only Huitong. Generally speaking, the layout of capital in this field is very extensive. Corresponding to cities, broader towns and rural areas are the markets with relatively weak layout of traditional e-commerce. As an effective substitute, it has also become the reason why the head e-commerce chooses to invest to build a strong retail market barrier.” The above investors told the reporter of Securities Daily.
“However, if we want to generate huge profits, we have to bear and face two challenges to enter this field: fierce market competition and split and small profit market competition costs.” Zhang Yi stressed in the interview. In his opinion, after the listing of huitongda network, for other rural e-commerce brands sinking the market, It doesn’t mean there is no chance: “at present, huitongda’s revenue is tens of billions, but the profit is still negative. It only has a wide coverage. For the sinking market with a population of 600-700 million, it can accommodate four or five or more brands. In theory, this market can find more innovative business opportunities.”
