Leaking all the air vents perfectly, how Jumei Youpin shattered a good hand


Editor’s note: This article is from WeChat public account “Alpha Works” (ID: alpworks), author Sun Jiabao, 36 氪 released with permission.Following the failure of the first privatization in 2016, CEO Chen Ou once again threw out a privatization plan for Jumei Youpin (NYSE: JMEI).As one of the earliest companies to enter the beauty makeup e-commerce and online celebrity marketing, Jumei Youpin not only did not take the ride of the current Internet celebrity economy, but was also joked by investors and netizens as “eating ugly” and “giant no product”.Let me show you how Jumei Youpin shattered a good hand.The core business has been hit hard. The senior investors in China will definitely know how good Jumei Youpin was. In the past, if you came to talk about beauty e-commerce plus online red live broadcast, what vibrato, Ruhan (NASDAQ: RUHN), Saturday (SZ:002291), these were little brothers a few years ago.Founded less than three years ago, Jumei Youpin achieved sales of over 6 billion yuan in 2013 and a market share of 22.1%. It is China’s first e-commerce company that has been profitable for seven consecutive quarters before going public.On May 16, 2014, Jumeiyoupin was listed on the NASDAQ as the “China Beauty E-commerce First Share” with an issue price of US $ 22.At its peak, the stock price reached $ 37.99 and the market value reached $ 5.5 billion.However, the ensuing turmoil of fakes caused Jumei Youpin, the enthusiastic one, to fall to the altar.Jumei Youpin has been self-operated + third-party platform business since its establishment.The third-party platform business draws a certain percentage of commission profits from the turnover.In July 2014, Jumei Hengye, a third-party merchant of Jumei Youpin, was concentrated in selling fakes.Kunpeng Hengye sold fake clothing and watches through e-commerce platforms by falsifying documents such as brand authorizations and customs declarations.At that time, e-commerce companies including Jumei Youpin, Jingdong Mall, and No. 1 Store were all pulled into the water.But this incident has the most serious impact on Jumei Youpin.Several US law firms have announced that they will initiate class actions on behalf of investors in Jumei Youpin.An old employee of Jumei Youpin once said, “At that time, Jumei Youpin was just listed, and the founder was so high-profile, any emotional venting and questioning would be infinitely magnified.” After that, Chen Ou directly cut off luxury on third-party platforms.Product business, all third-party platform beauty business turned into self-employed.That is to say, do not do third-party platform business, only do self-employed.For Jumei Youpin, where more than half of its turnover comes from third-party platform business, this not only means a decline in revenue, but also affects the number of users.In this way, the stock price of Jumei Youpin started to fall continuously.Six months after its listing, the market value of Jumei Youpin has fallen from a peak of US $ 5.5 billion to approximately US $ 1.9 billion, a shrinkage of more than 60%.After investing in non-core businesses, Street Power became the top pillar and cut off the third-party platform business. Jumei Youpin has repeatedly changed its strategy.The transition to cross-border e-commerce began in the third quarter of 2014.Beginning in 2015, Jumeiyoupin opened another extremely fast duty-free shop with another 1 billion yuan, and eliminated consumers ’doubts on counterfeit goods through“ global direct mining and platform self-operation ”.This business has grown rapidly, and traffic and revenue have increased.The financial report for the second quarter of 2015 showed that its net revenue was US $ 308.1 million, an increase of 100% year-on-year; of which net profit attributable to the company’s ordinary shareholders was US $ 17.1 million, an increase of 11% year-on-year.However, this still cannot restore the confidence of the capital market in Jumei Youpin. After a brief rebound, the stock price continued to fall.Chen Ou also did not continue to die on e-commerce, but began to make frequent cross-border investments in search of new growth points.In July 2015, Jumei Youpin invested USD 250 million in a vertical baby tree (HK: 01761) in the vertical mother-child community, holding 11.6% of the shares.This investment did not bring a generous return to Chen Ou.In 2018, Chen Ou sold 4% of the baby tree to Alibaba for $ 86.5 million, and still holds 3.33% of the shares.In May 2017, Jumei Youpin announced the acquisition of the shared charging brand “Street Power”. As of March 31, 2019, Jumei Youpin held an 82.07% equity interest in Jidian.Facts have proved that when Jumeiyoupin’s e-commerce business has been declining for years, the revenue of the shared power bank has increased significantly from 73.73 million yuan in 2017 to 879 million yuan in 2018, accounting for 22% of the total revenue.Become a new pillar of Jumei Youpin.In recent years, most people who have bet on the United States are optimistic about the asset of Street Power. If there is no Street Power, most investors would have run early.The first privatization failed. The co-founder left in February 2016. The share price of Jumei Youpin fell to $ 6, and the market value shrank by 73%.Chen Ou proposed to privatize Jumei Youpin for $ 7.Regarding the specific reasons for the privatization, CEO Chen Ou stated in an open letter that Jumei Youpin is seriously undervalued in the US stock market. Privatization means that the company enters the entrepreneurial process again.At the time, this was strongly resisted by Jumei shareholders.The $ 7 privatization price is less than one-third of the issue price, which seriously hurts the interests of shareholders.After that, the stock price of Jumei Youpin went down all the way, even under 3 dollars, which also made Jumei Youpin’s privatization offer lose its practical significance.Chen Ou was once dubbed by investors as “Three Chens”.The privatization has not yet been completed. On July 26, 2017, Jumei Youpin co-founder Dai Yusen announced his departure and joined Zhenge Fund as a partner.After Dai Yusen’s departure, the privatization of Jumei Youpin has still not been completed.Jumei Youpin also lost its credibility in the capital market.On August 30, 2017, Peter Halesworth, the managing partner of Jumei Youpin stock holder Heng Ren Partners LLC, issued an open letter saying that under the background of the booming e-commerce in China, Jumei Youpin announced that it was privately held.After a series of errors, the stock price fell 45.2%.At the same time, the book cash announced by Jumei Youpin at the end of 2016 was US $ 331 million (equivalent to 87% of the market value of Jumei Youpin, more than double the amount of book cash in 2014, and three times the cash held before the IPO), But Jumeiyoupin has never paid a dividend to shareholders.In November 2017, Chen Ou withdrew the privatization offer.Later, Jumei Youpin has repeatedly tried to raise the stock price by means of repurchase, etc., but none of them could make a substantial turn in the stock price.The goal of low-price privatization is street electricity?The only thing that can make Jumei Youpin’s stock price move is joint stock.On January 1, 2020, Jumei Youpin announced that it would adjust the ratio between ADS (American Depositary Shares) and Class A ordinary shares from the original 1 ADS representing 1 class A ordinary shares to 1 ADS representative.10 Class A ordinary shares will be effective on January 10.Two days after it came into effect, that is, January 12, Jumei Youpin announced that it would be privatized again.Proposed privatization at a price of $ 20 per ADS.Once the transaction is completed, it will be delisted from the NYSE and Jumei Youpin will become a private company.On the surface, the purchase price of Jumei Youpin was higher than the previous one. In fact, Chen Ou’s price of $ 20 per ADS was equivalent to $ 2 per share before the joint venture, not only lower than the last private$ 7, far less than the $ 22 IPO price in 2014.The reason for the privatization given by Chen Ou this time is the same as the last time, that is, the current small-cap stocks have relatively poor liquidity, and shareholders have repeatedly proposed privatization proposals.In fact, discerning investors have long questioned that the original intention of Chen Ou’s privatization was not a matter of liquidity. It was more likely that he saw the assets of Street Electric and wanted to privatize at a low price before listing.Investors are right to question this.One of the clues is that Jumei Youpin has not announced financial results since the second half of 2018.The 2019 financial report has been pushed back and forth until now.There are two consequences of not making an earnings report: First, institutional investors are no longer optimistic about the company, sell off, and the stock price is lower.Secondly, individual investors could not see the data of Street Power, shook their investment stance, sold, and the stock price fell.Reaching the same goal, failing to report earnings will lower stock prices.Why is lower share price the most desirable situation for Chen Ou?Because this means that he can directly privatize the high-quality asset of Street Electric at a low price, and then return to the Hong Kong Stock Exchange or the science and technology board to go public again.Previous data has proven that Street Power is a high-growth quality asset.In the first half of 2018’s financial report, we can see that Street Electric had nearly 1 billion yuan in revenue in 2018.According to Ai Media Consulting, 2019 should not be bad either.The scale of China’s shared power bank users is expected to exceed 300 million in 2019. In the first half of 2019, the share of China’s shared power bank users was ranked first in the industry with 40.5%, and the proportion of small power, monsters and calls was 23.6.%, 20.9%, and 11.7%.Assuming that each person spends 15 yuan per year, this means that Street Electric’s revenue in 2019 doubled year-on-year.Whether the second privatization can be successful According to the latest data disclosed by Jumei Youpin, Chen Ou and its related parties hold a total of 42.9% of Jumei Youpin and own 88.3% of the company’s voting rights.Compared to the 2016 privatization, the voting rights of the buyer group did not seem to have improved.In the last privatization, the buyer consortium of Jumei Youpin included Chen Ou, Dai Yusen, and Sequoia Capital, which collectively accounted for more than 90% of the voting rights.Therefore, it is currently unclear whether the privatization will be successful this time.And companies that are listed on US stocks after a Cayman or Bermuda-registered company must comply with several rules when privatizing: first, voting rules for the privatization of Cayman or Bermuda-registered companies.If a listed company is to be privatized through an agreement arrangement, in addition to the approval of 75% or more equity, and no more than 10% or more equity objection, it also needs to pass a mechanism commonly known as “several heads” to obtain a majority of attendance.The number of shareholders agrees.Secondly, the US Securities and Exchange Commission has two main conditions for the delisting of privatization: one is initiated by a controlling shareholder, and the other is that the purchase of tradable shares must be carried out in cash.Based on the current market value of US $ 200 million of Jumei Youpin, Chen Ou needs to pay approximately US $ 118 million.In the offer letter, Chen Ou stated that the privatization will be financed by a combination of borrowing and equity financing, and the loans will be provided by third-party institutions.Whether Jumei Youpin can meet the above conditions is another unknown.Moreover, it is likely to face class actions by minority shareholders.After all, in the US capital market, due to the low purchase price of privatization, deliberate plagiarism and arbitrage have triggered widespread class action among shareholders.As for Jumei Youpin, no matter if you are not doing business, or if you are not in a good time, who would have thought that the first share of beauty e-commerce in that year will end with privatized street electricity..

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