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JD Digital and Ant Prospectus PK: Liu Qiangdong’s net worth may increase by 100 billion Ma Yun sells “half of the country”



Following Ant, another e-commerce giant’s “money bag” also moved towards IPO. On the evening of September 11, the Shanghai Stock Exchange Science and Technology Innovation Board disclosed the JD Digital Technology prospectus. The announcement shows that JD Digits intends to issue no more than 538 million shares this time, and the total amount of funds raised is 20.367 billion yuan. It will account for no less than 10% of the total equity after the issuance. If the over-allotment option (commonly known as the green shoe mechanism) is used, the maximum is not more than 15% of the issued quantity.

JD Digital and Ant Prospectus PK: Liu Qiangdong's net worth may increase by 100 billion Ma Yun sells "half of the country" 1

Although both companies started from finance and gradually transformed into technology, JD Digital’s business scope is broader, almost packaging all businesses in the JD system except retail and logistics, even including smart city, digital marketing and other businesses . The ants are more focused.

Although the business scope is different, the competition between the e-commerce giants and their “deputies” can still be seen through the comparison of a few series of numbers.

Who can make more money?

As two companies with their own financial attributes, “earning ability” is always an inevitable comparison dimension.

The prospectus disclosed that from 2017 to the end of 2019, JD Digital’s overall operating income was 9.070 billion yuan, 13.616 billion yuan, and 18.203 billion yuan, with a compound annual growth rate of 41.6%. In the first half of 2020, JD Digital’s revenue continued to grow, reaching 10.327 billion yuan, exceeding the entire year’s revenue in 2017.

In contrast, Ant’s “plate” is bigger. In the first half of 2020, its revenue is 6.6 times that of JD Digital, reaching 72.5 billion yuan, and the compound annual growth rate is not losing to JD.com. According to the ant prospectus, from 2017 to 2019, Ant Group achieved revenues of approximately 65.96 yuan, 85.722 billion yuan, and 120.618 billion yuan, breaking through the 100 billion mark, with an average annual compound growth rate of nearly 36%.

JD Digital and Ant Prospectus PK: Liu Qiangdong's net worth may increase by 100 billion Ma Yun sells "half of the country" 2

Of course, just looking at revenue does not reflect the earning power of the two, and profit indicators are equally important.

In terms of net profit, JD Digital has been in a relatively volatile situation. During the reporting period, net profits were -3.82 billion yuan, 130 million yuan, 790 million yuan and 670 million yuan, respectively. In the first half of this year, they were still losing blood. Equity incentives are the main reason for the volatility. During the two periods of loss, JD Digital’s expenditures for equity incentives reached 4.381 billion yuan and 1.063 billion yuan, exceeding the loss of the year.

However, in terms of gross profit indicators, JD Digital has been increasing year by year. From 2017 to June 2020, JD Digital’s gross profit margin was 54.69%, 64.38%, 65.77% and 67.08%, respectively.

On the other hand, although Ant’s net profit has remained positive throughout the year, and has risen from 8.205 billion in 2017 to 18.07 billion in 2019 and 21.923 billion in the first half of 2020, the gross profit rate has been in the past two years. However, it has declined, from 63.72% in 2017 to 49.83% in 2019, a cumulative drop of nearly 14%. For comparison, in the just-concluded semi-annual report on the Science and Technology Innovation Board, the average gross profit margin was 50.81%.

JD Digital and Ant Prospectus PK: Liu Qiangdong's net worth may increase by 100 billion Ma Yun sells "half of the country" 3

In the prospectus, Ant attributed the decline in 2017 to the increase in transaction costs caused by the increase in transaction fees paid to financial institutions that year. In 2019, it was due to the continuous expansion of business scale and the need to expand the service cost after ecological partners. However, the gross profit margin of Ant Group rebounded in the first half of this year, reaching 58.58%, which is due to the growth of digital financial technology platform services (including micro-loan business represented by Huabei and Boraibe, and wealth management business of Ant Fortune and Yu’ebao. And insurance business represented by Hao Medical Insurance and Hu Hu Bao).

In addition to revenue and profit indicators, the company’s revenue structure not only reflects the company’s “what makes money”, but also reflects the health of the company’s future growth.

JD Digital has clearly divided its business according to customer attributes, namely to B (for merchants and enterprises), to F (for financial institutions), to G (for governments) and others.

In the three and a half years of the reporting period, JD Digital’s revenue has undergone structural adjustments: the proportion of financial institutions’ business has increased year by year, from 17.05% in 2017 to 41.48% in the first half of 2020. ; At the same time, the business for merchants and enterprises fell sharply from over 80% in 2017 to 52.37%. However, these two businesses have always been the largest source of JD Digital’s revenue, accounting for more than 90% of the total.

In addition, JD Digital’s to G business is also worthy of attention. Although its contribution to revenue is small, only 5.57%, its revenue compound growth in the past three years has reached 239.05%, which is a rapid growth.

For Ant, its revenue structure is also changing. Ant divides its business into three major segments, namely, digital payment and digital financial technology platforms (including micro-loan business represented by Huabei and Yibei, wealth management business of Ant Wealth and Yu’e Bao, and Hao Medical Insurance and Huhe Bao Representative insurance business.) and innovative business and technological infrastructure.

Among them, the revenue of digital financial technology services similar to JD Digital’s to F business accounted for “half of the revenue”. In 2019, its revenue was 67.784 billion yuan, accounting for 56.2% of the company’s total revenue. In the first half of 2020, this figure climbed to 63.4%. The proportion of data payment and merchant services dropped from more than half in 2017 to about 1/3 in the first half of 2020.

As the “money bag” of Ali and JD.com, the business relationship between the two parties and their respective parent companies is also worthy of attention.

According to the information disclosed by JD Digital, from 2017 to the first half of 2020, the proportion of revenue from transactions with related parties “JD Group” and “JD Allianz” has increased year by year, reaching 29.93 of total revenue respectively. %, 29.25%, 31.41% and 33.2%. In other words, nearly 1/3 of JD Digital’s business comes from JD.

For Ant, in the first half of this year, related transactions with Alibaba and Internet Commercial Bank accounted for 15.14% of total revenue. In the previous 2017-2019 years, the amount of recurring related transactions was equivalent to 14.59 of the issuer’s consolidated operating income for the current period. %, 16.54%, 15.85%, always maintained at the level of about 15%.

Who “makes rich” is stronger?

Almost simultaneously with the IPO news of Ant Group and JD.com, people have speculated on the wealth and freedom of the founders and stock-holding employees. The charm of “distributing wealth and gathering together” should not be underestimated.

Chen Shengqiang, the CEO of JD Digits, once put out the rhetoric that “as long as we do a good job, at least 20 billionaires and 300 millionaires can be created”. Now, this promise has reached the moment of fulfillment.

Among the top ten shareholders before the issuance, the only natural persons were Liu Qiangdong and Chen Shengqiang. Liu Qiangdong’s direct shareholding in JD Digital is almost the same as Ma Yun’s 8.8% shareholding in Ant, accounting for approximately 8.86% of the total share capital before the issuance. However, Liu Qiangdong also indirectly controlled 41.49% of the total share capital of JD Digits before the issuance through Linghang Fangyuan, Suqian Aggregation, and Boda Heneng, accounting for 50.35% of the total share capital before the issuance, more than half. According to the 200 billion yuan valuation generally given in the market, Liu Qiangdong’s net worth will increase by about 100.7 billion yuan. Chen Shengqiang’s personal shareholding ratio is 4.23%, and his realizable wealth after listing has reached 8.46 billion yuan.

In addition, JD Digital also has a special voting rights mechanism. The ratio of the number of votes per share for holders of Class A and Class B shares is 10:1. Liu Qiangdong directly and indirectly controls Class A and Class B of the company The shares have a total of 74.77% of the voting rights of JD.com before this issuance, and the power is more concentrated, in line with Liu Qiangdong’s strong style in the past.

Among the many shareholders, the most noticeable is the Suqian Aggregation, the largest holding company of JD Digital, which was established in June this year by JD Group in order to convert its share of corporate profits into company equity. According to its disclosed shareholding structure, Liu Qiangdong, Li Yayun, and Zhang Wei hold 45%, 30% and 25% of the shares respectively. Li is the CCO (Chief Compliance Officer) of JD.com. He rarely goes outside and is quite low-key. Zhang is Liu Qiangdong’s personal assistant and was once dubbed “JD.com’s most powerful female assistant.” The biggest commonality between the two is that they serve as supervisors and legal persons for many of JD’s subsidiaries.

Suqian Dongtai, the third largest shareholder with a shareholding ratio of 7.8%, is the employee shareholding platform of JD Digital. Among them, Huaan Asset Management’s shareholding ratio in Suqian Dongtai is 70.11%, which is a single asset management plan of JD Digital’s employee shareholding. The remaining 29.88% is held by Shuhong Chuangyuan and used for future employee equity incentive plans and the costs and expenses incurred by the implementation of incentives.

However, it should be noted that on August 20 this year, Suqian Dongtai pledged 188,756,375 shares of the issuer due to financing needs, accounting for about 82.5% of the total shareholding ratio.

In contrast, Jack Ma personally holds 2.677 billion shares of Ant, and said that his shareholding after listing does not exceed 8.8%, which is equivalent to Liu Qiangdong’s shareholding.

However, Jack Ma is obviously more “generous” in terms of equity incentives. As the employee shareholding platform of Ant Group, Hangzhou Junhan and Hangzhou Junao currently hold 29.86% and 20.65% of the shares respectively, holding a total of 50.52% of the shares, and are the controlling shareholders of Ant Group. After the issuance, Hangzhou Junhan and Hangzhou Junao will hold no less than 40% of the total shares.

According to previous media calculations, at a valuation of US$200 billion, after listing, Ant Group and Ali executives will give birth to at least 58 billionaires, with a maximum net worth of 140 billion yuan and a minimum net worth of 666 million yuan; among them, 37 people will be more than 5 billion. , 22 people over 10 billion, 9 people over 20 billion, 4 people over 50 billion, including Ant Group executive chairman Jing Xiandong, CEO Hu Xiaoming, non-executive director Jiang Fang, etc.

In contrast, JD Digital’s ability to create wealth is relatively “weak”. Except for Liu Qiangdong, the natural person with the second largest indirect shareholding ratio is Li Yayun. By holding 30% of Suqian Gathering and 0.005% equity incentives, Li Yayun’s total shareholding ratio reached 11.045%, and his net worth exceeded 20 billion. Similarly, “the most powerful female assistant” Zhang Yao holds a 25% stake in Suqian Gathering and a 0.006% equity incentive, holding a total of 9.206% of the shares, and his net worth exceeds 18.4 billion yuan, but I am not sure about Li Yayun and Zhang. Whether the 雱 is for holding.

In addition to distributing the stock to executives and employees, on the eve of the realization of his huge wealth, Jack Ma also announced that he would donate 611 million shares of Ant shares he held, and entrusted Hangzhou Yunbo to donate to his designated charity organization in the future, which is equivalent to donating Ant 2% of the shares of the group after listing. In addition, the National Social Security Fund has the largest share among the external shareholders of Ant Group, which entered the market with RMB 7.8 billion that year. After several rounds of equity dilution, the shareholding ratio was 2.93%, but the investment income has doubled. According to current estimates, the pension equivalent to 1.3 billion social security contributors has risen by RMB 25 per person.

Who is the most “underwriting”?

While all using “science and technology” to advertise themselves, the real money invested in technology and the actual results achieved can be used as the core element to measure its scientific and technological composition.

From 2017 to 2019 and the first half of 2020, JD Digital’s research and development expenses were 1.078 billion yuan, 1.743 billion yuan, 2.567 billion yuan and 1.619 billion yuan, accounting for 11.88%, 12.80%, and 14.10% of operating income, respectively. And 15.67%, more than 80% of the listed companies on the Science and Technology Innovation Board, also reached the top 5% level in the entire A-share market.

R&D investment chart

In terms of the allocation of scientific research personnel, as of the end of the reporting period, the number of R&D personnel in JD Digital was 4172, accounting for 41.77% of the total number of employees.

On the other hand, the proportion of Ant Group’s R&D investment in operating revenue from 2017 to 2019 has also increased year by year, at 7.32%, 8.05%, and 8.79%, which is about half of JD Digital’s figure. The scale of revenue is larger, and the overall amount of scientific research investment is also more, reaching 4.789 billion, 6.903 billion, and 10.605 billion, which have been maintained at about four times that of JD Digital.

At the same time, among the more than 16,000 employees of Ant, more than 60% are technicians, surpassing top technology companies such as Google and Amazon. Even in Ant’s board of directors, one third of them are from a technical background, namely Hu Xiaoming (CEO of Ant Group), Cheng Li (CTO of Alibaba) and Xingjun Ni (CTO of Ant Group).

According to media statistics, in 2019, the R&D expenditure for 133 new shares on the Sci-tech Innovation Board totaled 21.2 billion yuan. This means that the scientific research investment of a single company of Ant has reached half of all listed companies on the Science and Technology Innovation Board, and JD Digital has reached more than 16 times the average scientific research investment level.

Huge investment in scientific research has also brought impressive results.

For example, in the financial sector, as of the end of June 2020, JD Digital’s big data risk control system for financial institutions has accumulated more than 1,000 models of various types, more than 100,000 risk strategies, and an average of 470 million daily decisions. The prospectus also disclosed some of the major scientific research projects being participated in, including taking the lead in undertaking the national key research and development plan sponsored by the Ministry of Science and Technology, and the National Natural Science Foundation of China international cooperation projects sponsored by the National Natural Science Foundation of China.

The accumulation of ants in technology is even more “hardcore”. In terms of technical patents, Ant already has 26,000 patents, 26 self-developed core technologies, and 18 world-class awards. In terms of databases, Ant’s self-researched database OceanBase has the world’s first performance test, and in the accumulation of blockchain technology related to finance, the number of blockchain patent applications of AntChain has also been ranked first in the world, and it has started commercial化.

At the same time, the use of funds after financing also reflects the future direction of the company.

It is worth noting that 72% of JD Digital’s fundraising purposes will be directly used for technology-related projects, including digital solutions upgrade construction projects for financial institutions, digital solutions upgrade construction projects for merchants and enterprises, and emerging industries Digital solution upgrade construction project, open platform upgrade construction project, digital technology center expansion project, etc. However, it is estimated that the largest amount of investment used to supplement working capital, accounting for about 28% of the net raised funds.

In contrast, the largest proportion of ant’s fundraising, that is, 40%, will be invested in innovative technology, and the remaining financing will be used to help digital managers upgrade, strengthen international cooperation, and supplement liquidity.

As the core assets of Ali and JD.com, Ant Group and JD.com are listed in succession. They were once strategically placed as e-commerce giants, and they were placed with high hopes for “pockets”. “. After leaving the legendary “rich-making story”, the future of digital technology will also be more interesting.