Three consecutive daily limit-ups in a week, for Tax Friend Shares, which has seen more declines than gains this year, has recently experienced a sudden change in trend.
On June 26th, Tax Friend Shares once again achieved a daily limit-up. By the close of trading, the latest price of the stock was 26.29 yuan per share, with a total market value reaching 10.7 billion yuan. Prior to this, the stock had hit its daily limit-up on the 19th and 25th of June.
Amidst the significant rise, a massive unlocking of restricted shares is also imminent. The company had previously disclosed that 315 million restricted shares, equivalent to 77% of the total share capital, will be unlocked on July 1st. However, the actual controller of the company has promised not to reduce holdings within 12 months.
The main business of Tax Friend Shares is digitalization of finance and taxation. From 2021 to 2023, the company's net profit has declined year after year, with year-on-year decreases of 23.64%, 37.64%, and 42.05% respectively. However, there was an improvement in the first quarter of this year, with both revenue and net profit increasing.
Continuous stock price surge and the upcoming unlocking of 77% restricted shares
In the recent week, Tax Friend Shares have seen a continuous surge. By the close of trading on the 26th, within the last six trading days, the stock has successively accumulated a 20.05% increase; with a net inflow of funds amounting to 83.6127 million yuan.
The recent rise in Tax Friend Shares is related to the previous wave of corporate tax repayments by listed companies. On June 18th, the State Taxation Administration publicly responded to the market's recent attention to tax inspections and supplementary tax payments. The following day, Tax Friend Shares pulled off a daily limit-up. After three days of decline, the stock achieved two consecutive daily limit-ups on the 25th and 26th.
Before the significant increase, the company had already disclosed the upcoming unlocking of a large number of restricted shares. The company announced on the 24th that 315 million restricted shares will be unlocked and listed for circulation on July 1st. Currently, Tax Friend Shares has a total share capital of 407 million shares, and the 315 million restricted shares to be unlocked represent 77% of the total share capital.
The aforementioned unlocked shares are the restricted shares before the company's initial public offering, involving two shareholders, namely the controlling shareholder Ningbo Si Chi Venture Investment Partnership (Limited Partnership) (hereinafter referred to as "Si Chi Investment") and the actual controller Zhang Zhenchao. Currently, Zhang Zhenchao directly holds 22.67% of the shares in the company and controls 54.78% of the equity through Si Chi Investment.
On the same day, Tax Friend Shares also announced that Zhang Zhenchao, based on his confidence in the company's future development prospects and recognition of the company's value, promised not to reduce his directly held company shares through concentrated bidding or block trading within 12 months starting from July 1st. Additionally, any increase in the aforementioned shares due to bonus shares, capital reserve conversion into share capital, rights issues, or other reasons during the aforementioned commitment period will also adhere to the aforementioned no-reduction commitment.Public information indicates that the predecessor of ShuiYou Shares was Zhejiang Xi'an Jiaotong University Longshan Software Co., Ltd., which was jointly established in 1999 by Guyue Longshan, Xi'an Jiaotong University, and Shaoxing Intelligence. Prior to its listing, the company introduced Ant Group's wholly-owned subsidiary Yunxin Venture Investment, Panmao Investment, and Puhua Huiying as shareholders. It then went public on the Shanghai Stock Exchange in 2021.
Over the past year, the company's stock price has shown a trend of fluctuating downward, with a cumulative decline of 16.01%. Last year, both Panmao Investment and Puhua Huiying reduced their holdings.
Wind data shows that, as of now, Panmao Investment has reduced its holdings by 8.9263 million shares, and Puhua Huiying has reduced its holdings by 3.1037 million shares. As of the end of the first quarter, Yunxin Venture Investment holds 4.48% of the shares, Panmao Investment holds 2.25%, and Puhua Huiying holds 0.9%.
Three consecutive years of increasing revenue without increasing profits after listing
Since its listing, ShuiYou Shares has experienced three consecutive years of increasing revenue without increasing profits.
Disclosure data shows that from 2021 to 2022, the company's revenue increased by 4.14% and 5.8% year-on-year, respectively, but its net profit decreased by 23.64% and 37.64% year-on-year, respectively. In 2023, the decline in net profit further widened, with a total operating income of 1.829 billion yuan, a year-on-year increase of 7.71%; net profit was 83.385 million yuan, a year-on-year decrease of 42.05%.
Regarding the decline in net profit last year, ShuiYou Shares explained that, on one hand, the company increased its investment in the research and development of technologies such as artificial intelligence and large language models in the field of finance and taxation, leading to a significant increase in R&D costs. On the other hand, the company serves major digital government project reforms, continuously increasing resource support, but in recent years, user budgets have been continuously tightened, resulting in a significant decline in gross margin.
ShuiYou Shares' business mainly focuses on the digitalization of finance and taxation, serving B-end and G-end customers. The main business income comes from To B SaaS subscriptions and consulting services, as well as To G digital government services.
Among them, G-end business mainly provides digital development services for tax and fee governance to tax authorities, including the State Taxation Administration and various provincial and municipal tax bureaus. It is a core supplier of the national Golden Tax Phase III and Golden Tax Phase IV projects and has participated in the development of projects such as the "Individual Income Tax APP."
However, affected by the tightening of user budgets, the company's G-end digital government business revenue has declined. The annual report shows that last year, the company's To G digital government business revenue was 738 million yuan, a year-on-year decrease of 0.07%; the gross margin was 28.86%, a decrease of 11.3 percentage points.The B-end primarily provides enterprises with digital and intelligent financial and tax cloud SaaS subscription services, with customers including small and medium-sized enterprises (SMEs), financial and tax agency organizations, and human resource service institutions across the country. In the past three years, the company's B-end business revenue has maintained continuous growth, with the gross margin of To B SaaS subscriptions and consulting advisory services increasing to 73.86% last year. However, the company experienced a contraction in the scale of its SME customer base last year, with a decrease of 4.3% in active users and 3.3% in paying users.
In the first quarter of this year, the company achieved a total operating income of 363 million yuan, a year-on-year increase of 9.66%; net profit was 32.7753 million yuan, a year-on-year increase of 2.4%.
Cash financial management once "stepped on a mine" with Minmetals Trust
Cash-rich Shuiyou Shares has long been keen on financial management and "stepped on a mine" with Minmetals Trust last year.
According to the announcement, as of the end of the first quarter of this year, the company's balance of trading financial assets was 276 million yuan, a decrease of 15.6% compared to the end of 2023.
In April of this year, Shuiyou Shares disclosed plans to purchase financial products with high safety, good liquidity, and meeting the capital preservation requirements with no more than 170 million yuan. At the same time, it also plans to entrust financial management, intending to purchase financial products from banks, securities firms, trusts, and other financial institutions with good liquidity, high safety, and controllable risks, with no more than 1 billion yuan.
However, previously, Shuiyou Shares suffered a loss of 524,200 yuan in investment principal due to "stepping on a mine" with Minmetals Trust. According to the announcement, the controlling subsidiary of Shuiyou Shares, Yiqiying, invested 100 million yuan in July 2021 to subscribe to the "Minmetals Trust - Xinze Investment Collective Fund Trust Plan No. 38". As of July 5, 2023, there was still 47.32 million yuan of trust product investment principal that had not been recovered.
Subsequently, due to the failure of the aforementioned trust product to be realized within the expected period stipulated in the trust document, Minmetals Trust disposed of the assets by transferring all investment targets held by this trust product. Because the asset disposal consideration for the trust was lower than the principal of the trust product, it led to a loss of 524,200 yuan in the company's investment principal.
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