Behind the IPO of Tencent’s ＂Yixin＂ in Hong Kong： To be the ＂Ctrip＂ in the automotive field

Zhang Xuan’ an, founder and CEO of Yixin Group. source map

Another Tencent company has opened the IPO road, and Yixin Group will become the fourth listed company invested by Tencent this year.

Yixin Group (hereinafter referred to as "Yixin"), the largest Internet auto retail trading platform in China, has passed the listing hearing on the main board of Hong Kong and submitted its prospectus to the Hong Kong Stock Exchange on October 29th.

According to the prospectus, Yixin has a strong shareholder lineup, including Tencent (00700.HK), JD.COM (Nasdaq: JD), Baidu (Nasdaq：BIDU), Easy Car (NYSE：BITA), Wang Wei, founder of SF (002352), Dongfang Assets, one of the four state-owned assets companies in China, and well-known venture capital IDG. Among them, Tencent directly and indirectly holds about 33% of Yixin’s shares.

Recently, a number of "Tencent concept stocks" have emerged, including Zhongan Online (06060.HK), Reading Group (which will be listed in Hong Kong on November 8) and sogou, which is going to be listed in the United States.

Zhongan Online is the largest online insurance company in China. In September, it made an IPO in Hong Kong, and the issue price was set at the upper limit of the guidance range, raising $1.5 billion. On the day of listing, the highest increase was 18%, and the public subscription amount of retail investors exceeded 400 times.

Yi Xin has not disclosed the listing fundraising plan. On October 30th, Yixin told The Paper that the company could not make any more comments because it was in the silent period of listing, and everything was subject to the prospectus.

Regarding the positioning and planning of Yixin, Zhang Xuan ‘an, the chairman and CEO of the company, said in an interview with The Paper that Yixin’s positioning is an automotive Internet retail trading platform, and the target model is Ctrip.

Zhang Xu ‘an said that he hopes to provide one-stop services covering the whole life cycle, such as new car trading, second-hand car trading, car installment, car rental, car insurance and after-market service, by integrating its car-washing, Yixin car loan and other apps, and websites in taoche.com and daikuan.com, so as to form a closed-loop service, and let consumers rely on Yixin in every aspect of car consumption.

It took only three years from its establishment to listing: "star" shareholders gave support to traffic and risk control resources.

Yi Xin’s establishment to listing can be described as rocket speed. Yi Xin was first born out of a business unit under Easy Car, and then split into independence in August 2014. Zhang Xuan ‘an is the only one in Yixin’s management who is also the president of Easy Car, and all other management and employees are independent. The back-office departments of the company’s business, brand, App and website are also completely independent.

Since then, every financing has been supported by giant companies such as Tencent, JD.COM and Baidu. Among them, Tencent has the strongest momentum. In addition to the large shareholding of Tencent mentioned above, among the four non-executive directors, there are James Gordon Mitchell, chief strategy officer of Tencent, and Jim Lai, head of Tencent Financial Technology Group. JD.COM and Baidu appointed one person respectively.

People close to Yixin told The Paper that Yixin’s rapid development in just a few years could not be separated from the support of several major shareholders such as Tencent in traffic, risk control system and the construction of "one person, one car" account system.

For a long time, cars, as the second highest-priced low-frequency consumer goods after real estate, have made the online car platform’s customer acquisition cost and channel cost high, and the ability to integrate resources such as traffic and capital is extremely high, forcing many companies to bring huge sums of money to enter the market to attract users by advertising or subsidies, and many former "star" companies have fallen on the road of burning money crazily.

When Yixin started, the problems of users were mostly solved by shareholders. Yi Xin, with the idea of opening up the ecology, does not advertise or establish a closed account system, but directly diverts users from Tencent, Baidu and JD.COM.

According to the prospectus, Yixin’s own website and App have accumulated more than 50 million monthly active users, and the demand for car purchases operated by online platforms in a single month has reached 90 billion yuan.

However, acquiring users and activating transactions are only the first level of cooperation between Yixin and shareholders. According to the prospectus, Yixin will do more product-level mining around the current "people+cars" database to realize the transformation from the trading platform level to the traffic realization level. Industry analysts told The Paper that this actually means that Yi Xin wants to cut more into users’ life scenes.

In an interview with The Paper, Zhang Xu ‘an said that Yi Xin will make efforts to interact with tens of millions or even hundreds of millions of account systems such as Tencent JD.COM in the future. For example, Yixin not only has an entrance in QQ wallet, but also aims at personal tailor products of middle and high-end users who pay for QQ for a long time. Whether it is music, e-books, car washing, car use, etc., Yixin users can use one account smoothly without going through other intermediate links.

In addition to deep bundling in the user car scene, at the risk control level, Yixin has built several sets of intelligent models with partners such as shareholders, and analyzed the behavior, search, consumption, location and other data of automobile consumers by establishing the largest "people+cars" database in China, reducing operational risks. According to the prospectus, the 180-day overdue rate of Yixin’s platform is 0.23%, and the 30-day overdue rate is 0.89%, which is at a low level.

The car trading platform model went through: the net profit in the first half of the year was 261 million

The competition of internet car trading platform is becoming increasingly fierce.

In September 2017, Renren announced the completion of a new round of financing of 200 million US dollars. In August, Youxin Group announced that it had obtained $500 million in financing. In June, the used car of melon seeds announced that it had received over $400 million in B round financing, and Chezhibao announced that it had received 500 million yuan in C+ round financing.

However, a series of financing also makes the market worry, can such a crazy money-burning model continue?

As the "first stock of new automobile retail", Yixin’s listing made the market see the operation data from the automobile trading platform model for the first time.

From the business composition, Yixin has two major businesses: trading platform and self-financing According to the prospectus, Yixin’s income in 2014, 2015 and 2016 in the last three years was 47.99 million yuan, 271 million yuan and 1.488 billion yuan, with a compound annual growth rate of 457%; Among them, from the trading platform business launched in 2016 to the first half of 2017, the trading platform business has accounted for 45% of the total new revenue. This also directly promoted Yixin’s income in the first half of 2017 to 1.551 billion yuan, an increase of 240% compared with the same period of last year.

It is worth noting that Yixin has achieved profitability. The company’s adjusted net profit in the last three years was 3.78 million yuan, 65.603 million yuan and 99.665 million yuan respectively; The adjusted net profit for the first half of 2017 was 261 million yuan.

According to the prospectus, the transaction volume in the first three quarters of this year alone has reached 300,000. As of September 30, 2017, the cumulative management fleet exceeded 500,000 vehicles.

An auto e-commerce industry veteran told The Paper that those who do auto finance now want to get involved in the field of auto trading, while those who do auto trading are doing their own auto finance. These two directions have their own advantages and disadvantages, but no matter which way, in the decade when the Internet is flying, players have entered all fields of food, clothing, housing and transportation, but the automobile retail trading sector has not appeared ashore in the market where many players play. The potential of automobile and automobile aftermarket is still huge, and there will continue to be entrants in the future, and capital will flock to it.

Jost Sullivan, a consulting firm, judged that the value chain of China’s automobile industry is "networked", and the Internet platform can expand the opening scope of the automobile retail trading market to consumers, improve the trading efficiency, promote more effective matching of supply and demand and innovate the traditional trading process. They predict that the number of Internet car retail transactions will reach 5.4 million in 2021, and the compound annual growth rate from 2016 to 2021 will be 39.2%.

Just now, all major Internet car trading platforms are fighting for financial strength, traffic advantages, multi-channel layout, risk control capabilities, etc. What is Yixin’s killer weapon?

The above-mentioned people close to Yixin told The Paper that Yixin’s positioning of its development strategy on the platform of Benchmark Ctrip is actually a transition strategy from self-management to openness and self-management. This strategy will absorb more resources in the industrial chain, such as accessing more car services, including charging piles and battery services for new energy vehicles, and build an "Andriod system" for automobile aftermarket services, which will be packaged in every different individual transaction, forming an automobile trading ecosystem.

"Once the big ecology is established, the customer base will continue to flow, generating multiple values, and the scale effect will become increasingly prominent, strengthening profitability." Zhang Xuan’ an said earlier.