Winning the new financial era

Chapter 433 Everyone Wants to Take a Ride
"What a perfect combination of finance and technology!"

Looking at the data reports listed on the large electronic screen on the stage, Robert of Goldman Sachs praised.

"That's right!"

Evans of Morgan Stanley nodded, "More than 8 million registered users worldwide, is this number several times higher than PayPal?"

"PayPal only announced in February this year that the number of registered users worldwide has exceeded 2 million, and now there are at most a quarter of Mobao Pay's users."

Wang Zheng from Bank of America Merrill Lynch answered with a smile, saying that such an amazing company as Ruixiang has emerged in China, leaving PayPal behind. As a Chinese, he also feels extremely excited and proud.

The Credit Suisse counterparts sitting next to them poured cold water on them, "You may not look at PayPal users, but they are all distributed in developed countries in Europe and America, and the annual revenue and profits generated are not in Southeast Asia, South Asia, or even Africa. These backward areas are comparable.

贝宝16年营收是108亿美元，净利润是14亿美元；今年预测营收是130亿美元，净利润18亿美元。

In addition, the market value has also approached the [-] billion US dollar mark!
In conversion, a user is worth four or five hundred dollars.

Do you think the two can be compared? "

Several people shook their heads, PayPal is indeed not suitable to be used as a benchmarking reference for Ruixiang.

According to this valuation method, Ruixiang’s 8 million users are multiplied by 4000 or [-] US dollars, and the valuation is [-] billion US dollars.

This size is already on the same level as Ahri and Penguin.

It is not to say that Ruixiang cannot achieve this valuation. The key is to come up with some convincing financial data.

For example, revenue of US$500 billion and net profit of US$80 billion.

"Tell me about Ruixiang's financial report!"

Mansur first smiled at Zhang Yida, then glanced at the surrounding investors, "I believe everyone is impatient."

"it is good!"

Zhang Yida pressed the PPT controller in his hand, and the PPT page on the electronic large screen changed, and a set of histograms appeared.

"Revenue in 14 was 65.2452 billion yuan and net profit was 7.447 million yuan;

In 15, the revenue was 155.14 billion yuan, and the net profit was 3.77 million yuan;

In 16, the revenue was 321.08 billion yuan, and the net profit was 2.55 million yuan;

In the first half of 17, the revenue was 269.06 billion yuan, and the net profit was 0.69 million yuan. "

Zhang Yida smiled to the investors in the audience: "This is the financial report of Ruixiang Group for the last three and a half fiscal years. Do you have any questions? If not, then..."

"Wait a minute!"

Chen Weimin, the investment representative of Khazanah Malaysia, interrupted suddenly, and immediately attracted everyone's attention.

Chen Weimin also realized that she had lost her composure, and explained with a smile: "I don't mean anything else, I just think this level of profitability is a bit strange."

Why does it feel strange?He saw that Ruixiang's net profit was getting lower and lower, which was completely opposite to a normal company.

Other companies are losing money in the early stage, and their profits continue to expand in the later stage.

The sharp trend is good, and the profit level is not as good as the year after year.

With Chen Weimin's reminder, other investors have also noticed this problem and turned their attention to Zhang Yida.

Zhang Yida wasn't nervous at all, and said with a smile, "So it's the question, don't worry, I'll give you a satisfactory answer."

"Let's move on!"

Zhang Yida turned the page of the PPT and introduced the detailed business income for each year.

A group of investors stopped speculating wildly and began to focus on the stage.

By the time Zhang Yida has broken down the main business and expenditures for the three years of 14, 15, and 16, many investors have already figured out the "mystery" of the financial report.

Most of it is spent on mobile payment market subsidies and investment in research and development of cutting-edge technologies.

"In the first half of 17, the advertising revenue of the six major financial supermarkets was 42.08 billion yuan, and the net profit was 27.75 billion yuan;

Mobile payment business revenue was 107 billion yuan and net profit was 12.84 billion yuan;

Consumer finance business, including the two major products of Yongbei and Daibei, with a revenue of 78.2 billion yuan and a net profit of 50.83 billion yuan;

Wealth management business, including banking, securities, funds, insurance, etc., has a revenue of 12.66 billion yuan and a net profit of 9.44 million yuan;

Digital technology and enterprise services, including Ruixiangyun, Mung Bean Credit, Tiance Technology, etc., had a revenue of 24.87 billion yuan and a net profit of -101.38 billion yuan.

Other business revenue was 4.25 million yuan, and net profit was 1.21 million yuan. "

After listening to Zhang Yida's introduction of the various revenue structures and profits of various businesses in the first half of 17, all investors understood.

The loss of over 100 billion yuan in digital technology and enterprise services is very conspicuous, which means that the cost of R&D investment far exceeds the income brought back by technology applications.

The mobile payment business is profitable, but the profit margin is very low, in the early ten or so.

The reason for this situation, Zhang Yida also explained: Although the marketing subsidies for mobile payment have weakened recently, they will last for a long time.

Consumer finance is Ruixiang's cash cow. It obtains funds from banks or bond markets at a capital cost of less than 6%, and resells them to users at an average annual interest rate of 18%, with a gross profit margin of nearly 70%.

Investors whispered to each other, exchanging their views on the financial report.

Zhang Yida didn't interrupt, just watched them quietly on the stage.

If Ruixiang wants to make a substantial profit, it can do so at any time, and its annual net profit will not be less than RMB 200 billion.

But doing so would undoubtedly be slow suicide.

First cut off the burning of money in the field of cutting-edge technology, and secondly reduce marketing subsidies.

There are not many marketing subsidies at present. Ruixiang, Tenpay, and Leech Financial Services have reached a tacit agreement, and it is important to make money first.

After the mobile payment war that lasted for two or three years, no one has benefited, and at the same time, no one has won.

So in this case, the three mainstream payments have all begun to change their strategies, after all, they have to be just right.

Last year, Leech Financial was the first to announce fees for cash withdrawals and credit card payments.Then the penguins followed suit.

Zhang Yida hesitated for a while, but chose to follow up.

If Ruixiang uses this as a gimmick and announces that there is no charge, it can indeed attract some users.

But it won't be long. Penguin and Leech Financial Services are expected to announce that "fees will be abolished" and continue to be free.

In this way, the industry has entered a vicious circle.

This vicious circle is not good for Ruixiang, because no one has a big business.

Moreover, Ruixiang is now gradually turning its main focus overseas, which requires a large investment.At this time, the profitability of the domestic business is crucial.

As for investors, they have also been constantly putting pressure on Ruixiang: make profits early and IPO as soon as possible.

"Let's take a look at this table next!"

Zhang Yida's speech attracted investors' attention to the stage.

Turning over a page of the PPT, Zhang Yida pointed to a pair of histograms and introduced:
“锐向在2014年度科研投入是4亿美元，2015年度8亿美元，2016年度是16亿美元，2017年度上半年已经投入了16亿美元，全年预计是32亿美元左右。”

Many investors in the audience covered their foreheads, they were frantic!

In three and a half years, 44 billion U.S. dollars has been invested in the field of cutting-edge technology, which is 288 billion yuan when converted into RMB.

This should have been the net profit of Ruixiang Group, but now it has been filled into the bottomless pit of scientific research.

But no one questioned it. After all, the money spent is all in exchange for Ruixiang's technical moat.

In this age of ever-changing technology, being a miser is no good.

Zhang Yida has also learned about Leech Financial's annual R&D investment, and Ruixiang has basically caught up with the other side.

Leech Financial Services Group was established in 14, but its predecessor Alipay went online in 03.

After 10 years of development than Ruixiang, Leech Financial's various technical reserves and talent reserves are not comparable to the former.

In order to close the gap, or even even out the gap, Zhang Yida had no choice but to burn money.

Through Ari's financial report, and the agreement that Leech Financial needs to share 37.5% of the net profit with Ari.

可以逆向推测出蚂蟥金服的净利润，15-17年上半年，分别是42亿、28亿、73亿。

Regarding these figures, Zhang Yida believes that they are also "very knowledgeable".

Similar to Ruixiang, this should be the remaining figure after a large investment in research and development.

The real profit may be three or four times this figure.

"A round of financing is 5000 million US dollars, B round of financing is 5 million US dollars, C round of financing is 20 billion U.S. dollars, and D round of financing is 25 billion U.S. dollars. Where did the financing go?"

Some investors were curious about this question, so they asked Zhang Yida.

"Let me explain first that the C round of financing is only US$15 billion in cash, and the other US$5 million is the resources given by Penguin."

Zhang Yida explained with a smile, and then continued: "Part of these financing funds were used as R&D funds for early scientific research, and after Ruixiang generated positive cash flow, it was replaced with the company's reserve cash;
Another part has invested in a series of ecological enterprises such as Grab and GoJek, and built overseas local e-wallets.

The construction and expansion of Ruixiang Cloud Computing Center also rely on financing, and tens of billions of RMB have been invested so far.

The last part, Ruixiang Industrial Investment Fund, the third phase of the fund, Ruixiang as the GP, invested a total of 7 million US dollars.

In addition, we acquired Station B and Chizi City, launched a cultural revival fund as an LP, bought Ruixiang Building, and built the second headquarters in Rongcheng..."

Many investors present frowned, using equity financing funds to invest, what kind of show operation is this?
Zhang Yida saw their confusion and didn't explain too much.

Switch the PPT to the next page, and begin to introduce Ruixiang's Phase III industrial investment fund.

"In Kuaishou's B+ round, Ruixiang Industrial Fund invested 3000 million US dollars in the first phase and obtained 5% of the equity. After dilution, it currently holds 3.83% of Kuaishou's equity, worth 3.83 million US dollars, and the investment income is 3.53 million US dollars.

Ruixiang holds one-third of the shares of the first-phase industrial investment fund, and as a GP, it can share a return of 1.6473 million US dollars.

In Bitmain's A round, Ruixiang Industrial Fund invested 500 million US dollars in the first phase, and obtained 15% of the equity.

Last month, Bitmain just completed a US$5000 million Series B investment led by Blackshirt Capital, entering the ranks of unicorns with a valuation of US$10 billion.

Ruixiang's equity has been diluted, and there is still 14.25%, worth 1.425 million US dollars, and the return on investment exceeds 28.5 times.

......"

Zhang Yida introduced the 27 projects invested by Ruixiang Industrial Investment Phase I Fund one by one.

Including the time of investment, shareholding ratio, current valuation of the project, market position, return on investment, etc.

The investors in the audience have been dumbfounded, what does this mean?
Just an industrial investment fund needs to be valued at tens of billions of dollars?
Mansur's heart moved, and he asked Zhang Yida with a smile: "Um...my friend, when will the fourth phase of Ruixiang Industrial Investment Fund start to raise funds?"

Zhang Yida coughed, "This question...let's discuss it in detail later! Of course, I welcome all friends!"

Mansour also realized that now is really not a good time to discuss this issue, the time and occasion are wrong, so he smiled apologetically at the investors around him.

Not only Mansour, but also other investment representatives were moved.

What kind of technology company is this?It is simply an investment company disguised as technology.

They also wanted to ask about Zhang Yida Phase IV Fund, but the occasion was not right.

Each of them made up their minds to have a private chat with Zhang Yida to see if they could get a ride.

(End of this chapter)