Original title: also see the high premium of listed companies to take the WeChat public figure, the pit of digital marketing is not afraid of many chicken feathers.
Authors: Shao Hao, Chen Biyu.
Can you look around at the chicken feathers left behind by the surge in digital marketing by a multibillion-dollar media A-share company?
Leo shares disclosed the latest acquisition of Suzhou Mengjia on Sept. 12. The company plans to pay $2.34 billion in cash for a 75% stake in Suzhou Mengjia, a content marketing company that operates Wechat from the media and promises to make a net profit of more than $1.07 billion over the next three years without disclosing past operating data. This is the second A company to invest in billions of dollars this year.
On the one hand is to "No. 1" lavish money, on the other hand is already completed digital marketing acquisitions "sequelae" frequent. According to incomplete statistics by reporters, more than ten A-share companies have acquired digital marketing companies so far in 2014. Nowadays, huge goodwill has become the "sword of Damocles" hanging over these companies, and some companies even go astray.
History does not repeat itself, but it presses the same rhymes. Should the market shift its thinking away from the traditional assumption of sustainability as it cheers for new business models and swallows the bitter consequences again and again? Since the cyclical stocks of the ups and downs of the performance can only be given less than 10 times PE, then almost flash-in-the-pan money will promise to discount the performance, is not it more conducive to protecting minority shareholders?
Frequent mergers and acquisitions in digital marketing are "sequelae"
Meaning to spend 2.34 billion yuan to buy the shares of Suzhou Mengjia Liou, in fact, is the digital marketing field acquisition of the "veteran". Since 2014, the company has acquired a number of digital marketing companies, of which the target companies in the era of minimally invasive, smart advertising have been promised performance is not up to standard - minimally invasive era 2015 to 2017 to achieve a cumulative net profit of 210 million yuan after deduction, less than the three-year commitment to 225.6 million yuan cumulative performance; The annual net profit is not less than 75.4 million yuan, while the actual audited net profit after deduction is only 29.2504 million yuan.
Leo shares are just one of many companies competing for digital marketing. For example, Tianlong Group acquired several Internet marketing companies from 2014 to 2016: Guangzhou Orange Fruit 60% equity in 2014, Beijing Youli minority equity in 2015, Yutang Liancheng 100% equity, Beijing Youli surplus equity in 2016.
Among them, after the acquisition of Guangzhou oranges in 2014, they only fulfilled their performance commitments in that year. The actual results in 2015 and 2016 were 14.3383 million yuan and 3.167 million yuan respectively, far below the promised 17.55 million yuan and 23.69 million yuan. In 2017, the operating profit was directly converted to -1087.75 million, and the company was close to a closed business.
Although Yutang Lianchuang, a $1.3 billion acquisition, has fulfilled its performance commitments, accountants have refused to comment on the discrepancies between the actual and promised earnings of Yutang Lianchuang in 2017, and the exchange has also issued an inquiry. Since then, the company has confirmed the impairment of Yutang Lianchuang Goodwill in the reporting period, adjusted the goodwill, asset impairment losses and related accounting subjects.
Some companies have been tired of goodwill and even "desperate". Since the merger and acquisition expansion began in 2013, Lianjian Optoelectronics has continuously acquired more than 10 advertising companies and media companies, such as Timeshare Media, and transformed into a digital marketing enterprise. However, the acquisition of time sharing media has exposed the problem of inflated performance. According to a survey by the SFC, from 2014 to 2016, time-sharing media increased business revenue by 61.787 million yuan and profit by 6.472 million yuan through fictitious advertising revenue and inter-temporal recognition of advertising revenue. All listed companies and related personnel were punished.
In 2017, Lianjian Optoelectronics made a cautious assessment of the goodwill formed by the previous acquisition, and decided to impair the goodwill of 795 million yuan and 774 million yuan of shares totaling 870 million yuan. The company's actual controllers Liu Hujun and Xiong Jinyu have deliberately ceded their actual control rights because of the risk of equity pledge.
Past high performance promises concealed risks
The rise of the concept of "Internet +" has made digital marketing based on Internet technology rapidly become the darling of capital in the past few years. In just two or three years, more than ten listed companies tried to get a slice of the deal through acquisitions. In acquisitions, most of the target companies are not established for a long time, but with high performance commitments, most of them sell at high prices.
For example, in December 2014, Guangbo launched a 100% equity acquisition of Lingyun Media, with an estimated value of 764 million yuan at a rate of 2097.81%, at a price of 800 million yuan, only one year and one month after the founding of Lingyun Media. Jiayun Technologies (formerly "Mingjia United") acquired three companies from 2014 to 2015, namely Jinyuan Interactive, Yuntian Interactive and Win-Win Interactive. Their valuation value-added rates were 2594.32%, 1434.76% and 934.84%, respectively, resulting in a total of 1.483 billion yuan of goodwill.
In this kind of cross-border acquisition, the premium rate of up to 20 times is not uncommon. For example, ST Longli's acquisition of Fast Cloud Technology and Zhaorong jointly formed 816 million yuan of goodwill, of which Fast Cloud Technology value-added rate exceeded 27 times. Leo shares acquired Shanghai argon krypton, and the value-added rate was estimated to exceed 29 times. Zhongchang, which has the highest premium, bought 100% of Boya Technologies, a digital marketing company, in 2015 for 870 million yuan, with a value-added rate as high as 7834%, causing an uproar in the market.
Looking back on the acquisition process of these digital marketing companies, there is a remarkable characteristic. Most of them come from traditional industries. Because of various reasons, they are on the road of being forced to transform. Small, convenience is incorporated into the system of listed companies.
Zhongchang data, which acquired Boya Technologies, has said that after the completion of the transaction, the company's main business will be expanded from dry bulk cargo transportation and dredging engineering to digital marketing. The business has good development expectations, stable cash flow and strong profitability, strong risk resistance, is the company's current business. Good complement to achieve the steady development of the company's operations. After the completion of the transaction, the company's profitability will be greatly enhanced, and is expected to turn losses into profits, out of the continuous loss situation.
The chairman of a listed company in the transition of digital marketing told reporters that he did not want to miss the wave of Internet development. After a comparison, he found that digital marketing is "the closest to money" and the threshold is low, which is the most suitable choice for the transformation of the company. At that time, he had led the acquisition of several digital marketing companies and was interested in further acquisitions to break up the industry chain upstream and downstream.
Business model "acclimatized"?
Looking back at the ups and downs of digital marketing in A shares, there is a question worth pondering: Is digital marketing a good business? In other words, do they have good sustained strength with strong explosive power? What are the core competitiveness factors behind outstanding performance? Is the company really suitable for the A share market?
"Digital marketing in the final analysis or marketing, for most companies in the industry, their core value lies in people, customer relations rely on people to complete." Senior industry sources told reporters that Internet technology has indeed changed the industry, but can really separate technology and people, technology alone to create value companies are not many.
This explains why digital marketing companies can deliver super performance quickly after they are established, because the team has good resources and can make money wherever it goes. It is revealed that many marketing companies can "sell several times", that is, the team set up a company to sell, leave the company to re-establish a company, and then sell.
For A shares, this excellent ability to make money is attractive, but at the same time there is great uncertainty. Under the existing mechanism, the target company can sell at a good price of more than 20 times the PE value if it promises future performance of three to five years. But as long as the commitment expires, the core team can walk away and start again. The listed companies can hardly stop it. They can only bear the loss of goodwill brought by the sharp decline in the performance of the target company.
This is especially true of WeChat's self media content marketing business, which was acquired by Leo shares in Suzhou. Assuming that it can fulfill the promise performance, how can the core team quit after completion? "Besides, the public number of Wechat is a new thing, can the rapid growth of the first two years continue to the next five or ten years? It's all uncertain. " The senior official said.
The senior person also reminded that there is still a big risk of Weixin public number, that is, how much authenticity. At present, brush volume is still a very big industry, how can listed companies identify these public numbers which is brush volume, which is not brush? This will be a challenge to the quality of information disclosure of listed companies.
"For a long time, people always have expectations for new things, especially in the capital market which is keen on speculation. But when the listed companies take out the real gold and silver acquisition, they should really understand their business model, choose a more appropriate valuation method, after all, 20 times the value of acquisition can only contribute to the profits of assets for 35 years, it is indeed unsafe. The veteran said.
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