Gangwan Business Observer, Shi Zifu 

Jushuitan, a well-known service provider in the domestic e-commerce SaaS ERP field, has launched its second bid to the Hong Kong Stock Exchange. On March 21, Jushuitan Group Co., Ltd. (hereinafter referred to as Jushuitan) submitted an application to the Hong Kong Stock Exchange, with China International Capital Corporation and J.P. Morgan as the joint sponsors. Jushuitan's first IPO took place in June 2023. According to Tianyancha, Jushuitan's domestic operating entity is Shanghai Jushuitan Network Technology Co., Ltd. 

01

Losses of 1.251 billion in three years

Jushuitan provides users with one-stop SaaS products and services. Among them, Jushuitan ERP is the company's core SaaS product, serving and satisfying merchants' key needs in processing e-commerce orders on e-commerce platforms. The main functions provided by Jushuitan ERP include order, warehousing, procurement, and distribution management systems. In addition to e-commerce SaaS ERP products, Jushuitan also generates a small portion of its revenue from other e-commerce operation SaaS products. From 2021 to 2023 (hereinafter referred to as the reporting period), Jushuitan achieved revenues of 433 million yuan, 523 million yuan, and 697 million yuan, respectively. Among them, the company's e-commerce SaaS ERP generated revenues of 374 million yuan, 457 million yuan, and 600 million yuan, accounting for 86.2%, 87.4%, and 86.1% of total revenues, respectively; other e-commerce operation SaaS products generated revenues of 24.5 million yuan, 40.8 million yuan, and 69.6 million yuan, accounting for 5.7%, 7.8%, and 10.0% of total revenues, respectively. In terms of key operating indicators, during the reporting period, Jushuitan's total SaaS customer base was 33,100, 45,700, and 62,200, respectively, with total SaaS product turnover of 716 million yuan, 741 million yuan, and 1.048 billion yuan, respectively. The SaaS revenue conversion rates were 26%, 27%, and 29%, respectively, and the average monthly SaaS revenue per customer was 1,000 yuan, 900 yuan, and 900 yuan, respectively.

However, Gangwan Business Observer noticed that in terms of net customer revenue retention rate, Jushuitan showed a trend of first decreasing and then increasing, reaching 122%, 105%, and 114% during the period, respectively. Although there was a rebound in 2023, the net customer revenue retention rate has not yet recovered to the 2021 level. Moreover, Jushuitan, which has submitted two applications, has still failed to escape the predicament of losses. During the reporting period, Jushuitan's annual losses were 254 million yuan, 507 million yuan, and 490 million yuan, respectively, with adjusted net losses of 137 million yuan, 379 million yuan, and 206 million yuan, respectively; net loss rates were -58.7%, -96.9%, and -70.3%, respectively, and adjusted net loss rates were -31.6%, -72.5%, and -29.5%, respectively. Over three years, Jushuitan has suffered losses of 1.251 billion yuan. 

02

Asset-liability ratio continues to soar to 310.07%

Regarding the reasons for the operating losses, Jushuitan also explained in the prospectus. "It is mainly attributed to a large amount of financial costs, mainly including interest expenses on financial liabilities to investors. In 2021 and 2023, with the company's business growth, the company's sales costs, sales and marketing expenses, general and administrative expenses, and research and development expenses continued to increase, leading to an increase in operating losses, net losses, and adjusted net losses (measured under non-IFRS) during the same period." 

Specifically, during the reporting period, Jushuitan's sales costs were 214 million yuan, 250 million yuan, and 263 million yuan, respectively; sales and marketing expenses were 235 million yuan, 314 million yuan, and 344 million yuan, respectively; general and administrative expenses were 68.414 million yuan, 98.079 million yuan, and 131 million yuan, respectively; and research and development expenses were 192 million yuan, 234 million yuan, and 234 million yuan, respectively. At the same time, due to accumulated losses, Jushuitan's liabilities are also continuously expanding. At the end of each reporting period, Jushuitan's total current liabilities were 661 million yuan, 1.013 billion yuan, and 1.291 billion yuan, respectively; net liabilities were 1.033 billion yuan, 1.513 billion yuan, and 3.673 billion yuan, respectively; net current assets were 134 million yuan, -227 million yuan, and -142 million yuan, respectively; and asset-liability ratios were 170.24%, 203.74%, and 310.07%, respectively.

Jushuitan stated that the increase in net liabilities is mainly due to the recognition of financial liabilities to investors (referring to the paid-in capital with preferences held by certain investors) and the issuance of convertible redeemable preferred shares (which will be terminated after the listing). The company expects that upon completion of the listing, the net asset value will become positive, and subsequently, the financial liabilities to investors, as well as convertible redeemable preferred shares and warrants, will be transferred from liabilities to equity. At the same time, regarding the negative net current assets recorded at the end of 2022 and 2023, Jushuitan also stated that it expects the net current liabilities situation to improve as the company expects increased profitability to further improve operating cash flow.

It should be emphasized that at the end of each reporting period, Jushuitan's total current assets were 795 million yuan, 786 million yuan, and 1.149 billion yuan, respectively. Taking 2023 as an example, the company recorded current assets of 1.149 billion yuan, while total current liabilities reached 1.291 billion yuan, indicating that current assets could not cover current liabilities, resulting in "insolvency." As of January 31, 2024, Jushuitan's total current assets were 897 million yuan, total current liabilities were 1.057 billion yuan, and net liabilities were -160 million yuan. Calculations show that the current ratio is 0.84, less than 1, indicating relatively weak solvency. However, there is some optimistic news. At the end of each reporting period, Jushuitan's net cash generated from operating activities was -23.805 million yuan, 78.711 million yuan, and 210 million yuan, respectively, and year-end cash and cash equivalents were 535 million yuan, 427 million yuan, and 897 million yuan, respectively, showing a recovery trend. 

03

Smaller scale compared to peers, consumer complaints should be taken seriously

The e-commerce SaaS market segment where Jushuitan operates is relatively fragmented. According to the prospectus, based on relevant revenue in 2023, Jushuitan is the third-largest e-commerce SaaS provider in China, accounting for 5.7% of the market share. In addition to Jushuitan, well-known e-commerce SaaS providers include Weimob (02013.HK), China Youzan (08083.HK), Guangyun Technology (688365.SH), and Yueshang, among others. From the perspective of revenue scale, according to publicly disclosed information from various companies, in 2023, Weimob achieved revenue of 2.228 billion yuan, Youzan achieved revenue of 1.45 billion yuan, and Guangyun Technology achieved revenue of 477 million yuan. Jushuitan's revenue in 2023 was slightly higher than that of Guangyun Technology but still lags behind peers such as Weimob and Youzan.

Also in that year, the gross profit margins of Weimob, Youzan, and Jushuitan were 66.1%, 69.2%, and 62.3%, respectively, with Jushuitan's gross profit margin slightly lower than Weimob and Youzan by more than 4 percentage points. Apart from its financial performance, Jushuitan's C-end user performance is also worthy of attention. According to the Heimao Complaint Platform, as of April 17, there were a total of 133 complaints with the search keyword "Jushuitan," with 11 complaints in the past 30 days. Consumer complaints include malicious delay in payment, difficulty in refunds, unfair terms, fraud against customers, etc., with issues such as difficulty in refunds being repeatedly mentioned. On platforms like Zhihu, issues such as "false advertising, refusal to refund, order delays" regarding Jushuitan have also been mentioned multiple times. 

With sustained losses, listing to "replenish blood" is undoubtedly imminent. Apart from performance considerations, it is also crucial for Jushuitan, which is making its second bid to the Hong Kong Stock Exchange, to address user "pain points." (Produced by Gangwan Finance)