Produced | Caiyin News

Article | Jia Ru

Edited | He Bi

Established nearly a decade ago, Beijing 51WORLD Digital Twin Technology Co., Ltd. (hereinafter referred to as "51WORLD") reached a valuation of RMB 4.4 billion after completing its Series F funding round in June this year.

After preparing for an IPO on the Shanghai Stock Exchange's STAR Market in late 2020 and attempting to list on the Beijing Stock Exchange last year, the company formally submitted a prospectus to the Hong Kong Stock Exchange on November 29, 2024, intending to list on the main board and stating that it "does not intend to seek an A-share listing in the near future".

Founded in February 2015, 51WORLD describes itself as "a technology company dedicated to cloning 510 million square kilometers of Earth" and is a "leader in China's digital twin industry".

Since its inception, 51WORLD has received investments from renowned institutions and upstream and downstream partners such as Lightspeed China Partners, Cloud Nine Capital, StarVC, SenseTime, SBI, Moore Threads, Modern Land, and MicroWood Capital, as well as individuals like Liang Botao and Ge Weidong, and local governments of Chongqing and Nanning.

According to its prospectus, 51WORLD focuses on China's digital twin industry, concentrating on three core technology areas: 3D graphics, simulation, and artificial intelligence. It has established three main business lines: 51Aes (Digital Twin Platform), 51Sim (Synthetic Data and Simulation Platform), and 51Earth (Digital Earth Platform).

Among them, 51Aes, established in 2015, aims to enhance design and operational efficiency for enterprise clients, striving for cross-industry digital intelligent transformation. Its three core products include AES (All-Element Scene), WDP (Digital Twin SaaS Platform), and ISE (Infinite Simulation Engine). Industry solutions offered include 51CIM (City Information Modeling Platform), 51WIM (Water Resources Information Modeling Platform), and 51XIM (Industrial and Energy Information Modeling Platform), which are 51WORLD's current primary revenue sources.

Incubated in 2017, 51Sim positions itself as a synthetic data and simulation platform. Its core products include SimOne (Intelligent Driving and Robot Simulation Platform), DataOne (Data Closed Loop and Synthetic Data Platform), and TIM (Traffic Information Modeling Platform). This product helps developers gain deeper insights into the performance of intelligent driving systems in various scenarios, continuously optimizing and improving autonomous driving algorithms to enhance system safety and efficiency. It has already provided commercial services to hundreds of intelligent driving industry clients. From 2021 to 2023, 51Sim's revenue increased at a compound annual growth rate of 70.0%.

According to Frost & Sullivan, 51WORLD is the first company in the digital twin industry to propose and consistently implement an Earth cloning plan, and it is the only company in the industry that can provide a one-stop digital twin solution. Additionally, 51WORLD is the first company in China's digital twin industry to achieve annual revenue exceeding HK$250 million within a year. In 2023, it ranked first in revenue in the digital twin industry and first in funding amounts in China's digital twin market.

In terms of performance, from 2021 to 2023 and the first half of 2024 (hereinafter referred to as the "reporting period"), 51WORLD recorded revenues of RMB 126 million, 170 million, 256 million, and 33 million, respectively, with adjusted net losses of RMB 114 million, 132 million, 68 million, and 60 million, respectively.

From a business perspective, 51Aes is the company's main revenue pillar, contributing nearly 80% of its income. During the reporting period, 51Aes' operating revenues were RMB 111 million, 142 million, 205 million, and 26 million, accounting for 88.3%, 83.3%, 79.8%, and 78.3% of total revenues, respectively. 51Sim's revenues were RMB 14.7 million, 25.9 million, 42.5 million, and 3.8 million, accounting for 11.7%, 15.3%, 16.6%, and 11.5%, respectively. 51Earth's revenues were RMB 0, 2.4 million, 9.3 million, and 3.4 million, accounting for 0%, 1.4%, 3.6%, and 10.2%, respectively.

The primary reason for the losses is the high R&D investment. During the reporting period, 51WORLD's R&D expenditures were RMB 108 million, 134 million, 103 million, and 28.6 million, respectively, accounting for 85.2%, 79%, 40.2%, and 86.1% of total revenues for the respective periods.

51WORLD stated that it plans to incur substantial and potentially increasing R&D expenditures as part of its efforts to design, develop, manufacture, and commercialize new solutions and products, as well as enhance existing ones. "However, we cannot guarantee that our investments will enhance our competitiveness, generate financial returns in the short term, or contribute to our future operating performance within a few years or at all."

Moreover, 51WORLD's sales and administrative expenses remain high. From 2021 to 2023 and the first half of 2024, the company's combined sales expenses, general, and administrative expenses amounted to RMB 107 million, 112 million, 102 million, and 51.4 million, respectively, almost "on par" with R&D expenditures.

Regarding profit margins, 51WORLD's gross profit margin has shown a declining trend year by year, with 65.2%, 65.0%, 54.2%, and 50.0% during the reporting period, respectively.

Specifically, 51Aes and 51Sim, which contribute more significantly to revenue, primarily target enterprise clients, resulting in relatively higher development costs and lower gross profit margins. Therefore, 51WORLD has focused on developing 51Earth, a community-oriented platform for individual users this year, attempting to expand its business from B2B to B2C.

During the reporting period, 51Aes' gross profit margins were 67.8%, 69.2%, 55.7%, and 60.3%, respectively. 51Sim's gross profit margins were 45%, 39.6%, 49.7%, and -9.6%, respectively. 51Earth's gross profit margins were 0%, 88%, 42.8%, and 37.3%, respectively.

Amidst high R&D costs and continuous losses, 51WORLD urgently needs new capital infusions. As of the end of June 2024, 51WORLD held cash and cash equivalents of RMB 272 million and had bank and other loans of RMB 134 million.

For this IPO, 51WORLD intends to use the net proceeds primarily for R&D, enhancing commercialization capabilities, and as working capital and for general corporate purposes.

It is worth noting that according to the listing rules for specialized technology companies under Chapter 18C of the Hong Kong Stock Exchange, the minimum expected market capitalization for a commercialized specialized technology company is HK$6 billion (approximately RMB 5.6 billion); the minimum revenue for the most recent year is HK$250 million; the minimum R&D expenditure ratio is 15%; and the company must obtain a substantial amount of investment from two to five leading seasoned independent investors, with a minimum total investment ratio of 20% at the time of listing (for expected market capitalizations below HK$15 billion).

Although 51WORLD has undergone eight funding rounds, its current valuation is only RMB 4.4 billion, falling short of the minimum expected market capitalization of HK$6 billion.

THE END

The content represents the author's personal views only. Unauthorized reproduction is prohibited.

Images are sourced from the internet, and their copyright ownership has not been verified. They are not used for commercial purposes.

If there is any infringement, please contact the author and us.