Published ｜ Tiger Smell Business Group
author ｜ knocking grid
Sweet Fortune’s troubles and the Chinese stock market ushered in a night of shock-iQiyi was shorted, but it did not come from the exposure of false increase in sales. The shadow brought by it continues to this day.
In the early morning of April 8th, Beijing time, Good Future issued an announcement saying that during the company ’s routine internal audit, the company found that an employee of the new business line “Light Class” business violated the company ’s code of conduct Illegal activities, conspiracy with external suppliers to falsify the sales revenue of light class business by forging contracts and other documents.
After the discovery, the future has called the police, and the employee was detained by the local police. Good Future also stated in the announcement that the revenue from the light-learning business accounted for approximately 3% to 4% of the company’s overall estimated revenue for fiscal year 2020 (as of February 29, 2020). The announcement immediately caused the stock price to collapse, and the stock price fell about 30% in the future, and then the decline narrowed to about 17%.
On the same day, the share price of another education stock, also a US-listed company, also fell by 3%. This round of decline goes back to last Friday-after Ruixing Coffee exposed its financial data on April 2, it was strongly questioned by investors about who to learn from the audited 2019 financial report released on April 3. The financial report shows who to learn from in 2019 to achieve “revenue increased by more than 4 times year-on-year, and net profit increased by more than 10 times”, such data appears “good enough to have no friends” after the Ruixing incident ). Short-selling agency GRIZZLY REPORTS issued a short-selling report at the end of February, arguing with whom to learn that “everything seems unrealistic.”
On the morning of April 8, Chen Xiangdong threw nine screenshots of investors questioning in his network of friends. He said, “Integrity is one of the most precious core values with whom to learn.” In the afternoon, he also rarely held a media communication meeting, and repeatedly expressed at the meeting, learning from whom “all business behaviors and performance data are based on integrity.”
Chen Xiangdong friend circle screenshot
However, on the 8th, U.S. stocks still fell 7.55% before the market, but in the future, they fell 9.53%.
Is the Ruixing effect affecting the stocks in education?
Good future: After Rui Xing, another “counterfeit stock”
Although they are both education stocks, the future is not the same as who they are learning from.
According to the announcement issued by Good Future, this disclosure is an “active announcement”. It is an employee’s illegal behavior discovered after internal audit, and then he chose to take the initiative to make it public. According to the original disclosure plan of Good Future, the fiscal year 2020 annual report will be disclosed next week (Good Future’s financial year starts from March 1 of the previous year and ends on February 28 or 29 of the year). The announcement also mentioned, “Good Future is not aware of this and has zero tolerance for such behavior.” But Good Future did not announce the specific employees involved.
The public disclosure of internal vulnerabilities before disclosure of the annual report is exactly the same as Ruixing ’s last week. However, Ruixing’s total increase in revenue (Q2 ~ Q4 in 2019) reached 2.2 billion yuan, while its total revenue in the first three quarters of 2019 was only 2.9 billion yuan. After such “dehydration”, the actual remaining revenue of Ruixing will become very thin.
The current core business in the future is still its traditional long-term training class. According to the Q2 financial report for fiscal year 2020 disclosed in October last year, its core business is “learning and training small classes and other businesses”, accounting for 76% of total revenue. This item includes learning and thinking of small classes, Reed English, Mobi and other educational programs and services. “Learning and thinking of light lessons” is also included, but no special disclosure is made in the financial report. In addition, Xueersi School’s revenue accounted for 16% of total revenue, and Zhikang’s one-to-one business accounted for 8%.
For a good future, it is the “light class” business that has inflated sales revenue, accounting for about 3% to 4% of the company’s total revenue. According to good future performance estimates in the past year, the revenue of the light class business is about 500 million to 700 million yuan. It can also be seen from the proportion that this is not a core business for a good future. For many people, they may not even have heard of this business.
According to the introduction on its official website, Xueersi Light Class is an online light learning platform under Good Future. It is mainly for elementary school students aged 6 to 12, focusing on the cultivation of academic literacy. Jiang Qinzhen, the head of Xueersi light class business, said in July 2019 that light class is trying to put AI products in the third and fourth lines or even small counties through OTT, IPTV and other channels outside of the App form- In simple terms, it is to reach more home users through channels such as large TV screens.
Xue Ersi Light Course Business Official Website
According to the report of LatePost on the 8th, The counterfeiting incident occurred in the To B sales business of light classes (that is, the sales staff sold the course to the telecom operator, and the telecom operator embedded in the TV and then resold it). Head of sales.
Good future only stated in the announcement that the business experienced a false increase in sales revenue, but did not disclose the specific amount of the virtual increase. The specific circumstances and details of the incident also require further investigation and disclosure in the future.
Who to learn from: Can “integrity” earn trust?
The founder Chen Xiangdong held an “online communication meeting” for two and a half hours on the afternoon of the 8th. He first gave a speech in 80 minutes, responding to some of the content in the short report; he immediately answered questions from the media and said that he would “extremely candidly respond.”
According to its financial report, as of the end of 2019, the operating income of who to learn from has increased by more than 400% for 5 consecutive quarters, and has achieved profit under Non-GAAP for 7 consecutive quarters-this is for mostFor K12 online education companies, it is unimaginable. At present, most companies in the industry are still at a loss, and the cost of acquiring customers is more than 1,000 yuan, while the average cost of acquiring customers is only 500 to 600 yuan. .
On February 25, GRIZZLY REPORTS, a short-selling agency, issued a short-selling report, believing that who it was learned from was suspected of exaggerating financial data, swiping orders in large quantities, and decorating financial reports through affiliated companies. The day after I was short, the response from who I learned was that the report was “subjective and logically confusing, and no evaluation was needed.”
However, after Ruixing disclosed that the financial data fraud occurred, the annual report after the audit with whom he learned the next day became the trigger for a new round of investor doubt.
In the afternoon meeting, Chen Xiangdong mainly responded to the following points:
Through “Baijia Youlian”, “Baijia Yuntu”, “Beijing Youlian” (parent’s home ) Wait for affiliates to deliver profits?
Response: The companies involved are basically companies with whom to learn during business reorganization, and with whom to learn only to help them invest and provide some start-up funds, but did not reap profits from affiliated companies .
By buying a house in Zhengzhou, how can funds be transferred?
Response: The building bought in Zhengzhou will be used as a construction counselor operation center, with a construction area of about 65,800 square meters, an initial price of 333 million yuan, and a calculated unit price of about 5,000 yuan. In the central part of the Zhengzhou Economic Development Zone, such a price (nothing to say).
In addition, in response to the issue of billing, Chen Xiangdong said that whoever he learns from will not be fraudulent, exaggerated and whitewashed.
In the whole communication meeting, Chen Xiangdong repeatedly emphasized the importance of “integrity” in learning values with whom-
On the first day of founding with whom we learned, we determined our core values, and we took “integrity” as one of our core values. Until today, “integrity” is still our most precious One of the core values, I have also done mobilization and training for all partners with whom I have learned for nearly 2 hours on “integrity”.
Chen Xiangdong mentioned that in the early days of who was going to learn to go public in the US, he found that American investors did n’t understand what is meant by “dual teacher” and “live broadcast class”; by September 2019, he would When going to the United States, investors have begun to realize the benefits of the business model of double-class live streaming. Some scholars said to him, “At least in terms of online education, China is far ahead of the world.”
At least one thing is right. US investors are slowly and continuously deepening their understanding of China’s online education model. At such a time point that was raucous due to the Ruixing incident, in the face of a business model and amazing financial data that they still could not fully understand, American investors targeted education stocks as “targets,” Is a normal thing.