The current situation of frequent negative news and continuous losses has made the capital market lose confidence and patience in SenseTime, and the future of SenseTime is full of uncertainty.
The starterYoung Finance
youngcaijing
AuthorXiaoyu.
Image sourceInternet.
The performance continued to suffer huge losses
On December 16, it was reported that SenseTime (HK: 00020) released an obituary, and Tang Xiaoou, the founder of SenseTime, an artificial intelligence scientist, director of Pujiang Laboratory, director of Shanghai Artificial Intelligence Laboratory, and professor of Hong Kong Chinese University, died at 23:45 on December 15, 2023, at the age of 55.
Capital markets were sensitive to the news. On the morning of December 18, Hong Kong stocks opened, and SenseTime's share price fell 1429%。As of December 18th, SenseTime's share price was 111% to 112 Hong Kong dollars shares, SenseTime's latest market capitalization is 374HK$900 million. Compared with the previous trading day (December 15), the market value of SenseTime decreased by about 46HK$800 million.
Since its listing, SenseTime's share price has experienced wild fluctuations. From the highest point of 9 per share in the early days of the listingHK$7, down to the current HK$149 Hong Kong dollars, in just about a year and a half, the stock price fell by nearly ninety percent. This undoubtedly reflects investors' concerns about the future development of SenseTime. One of the key factors behind this is that SenseTime's revenue performance has been consistently unsatisfactory.
Since its establishment, SenseTime has still not achieved profitability, and from 2018 to 2022, SenseTime's net profit attributable to its parent company was a loss, with a net loss of 342.8 billion yuan, 496.3 billion yuan, 1215.8 billion yuan, 171400 million yuan, 604.5 billion yuan. From 2018 to 2021, SenseTime's losses showed an upward trend, and in 2022, under the strategy of reducing costs and increasing efficiency, the losses will shrink.
According to the financial report, in the first half of 2023, SenseTime Group's operating income will be 14300 million yuan, a year-on-year increase of 13%；Gross margin was 453%, but SenseTime still did not achieve profitability, and the net loss narrowed by 20% to 31$0.4 billion, and the adjusted net loss narrowed by 67% to 23900 million yuan.
According to the financial report, SenseTime's main revenue** includes smart business, smart life, smart city and smart car, accounting for total revenue of the group8% and 59%。Among them, smart business and smart city are the two main incomes of SenseTime**, which are essentially making money through security.
SenseTime's R&D investment has been at a high level, and from 2018 to 2022, SenseTime's R&D expenditure was 84.9 billion yuan, 191.6 billion yuan, 245.4 billion yuan, 361.4 billion yuan, 401.4 billion yuan, accounting for the proportion of operating income respectively38%。
In the first half of 2023, SenseTime's R&D expenditure decreased by 12 percent year-on-year4% to 17$8.3 billion, mainly due to a decrease in employee welfare expensesAnd as SenseTime switched from using third-party cabinet services to using its own AIDC, server operation and cloud service fees were reduced. However, in the first half of this year, the proportion of R&D expenses in operating income was still as high as 12442%, which means that the company's R&D investment has far exceeded the operating income in the same period.
The high R&D investment did not bring a corresponding increase in operating income and net profit to SenseTime. SenseTime has said that the industry in which the company operates is affected by rapid technological change, and technological innovation is also developing rapidly, and a lot of resources need to be invested in research and development. Due to the inherent uncertainty of R&D activities, the Company's R&D expenditures may not yield corresponding benefits.
Accounts receivable face the risk of bad debts and tight cash flow
From the perspective of the company's operation, SenseTime is facing bad debts of accounts receivable and tight cash flow.
As of the end of June this year, SenseTime's total accounts receivable reached 77$2.6 billion. Among them, the aging of accounts receivable is mainly 1-2 years and 2-3 years, and the amount is 289.4 billion yuan, 202.2 billion yuan. During the reporting period, the provision for impairment of accounts receivable was 291.9 billion yuan, compared to 25.5 billion yuan in the same period last year7.9 billion yuan.
In its financial report, SenseTime bluntly stated that "the aging of the company's total receivables has deteriorated", and believes that the reason is that "some customers (especially smart city customers) are facing temporary budget constraints and an unclear macroeconomic environment". SenseTime's high provision for bad debts is also one of the factors contributing to its continued losses.
Continued losses have put SenseTime under greater liquidity pressure. From 2020 to 2022, SenseTime's cash flow from operating activities had a net outflow of 122.9 billion yuan, 248.5 billion yuan, 308.4 billion yuan, the amount continued to expand, and in the first half of 2023, the net outflow of cash flow from operating activities was 180.5 billion yuan, basically the same as the same period last year.
In the case of continuous negative operating cash flow, financing has continuously transfused SenseTime's cash flow, but the amount of financing is decreasing year by year. From 2020 to the first half of 2023, SenseTime's cash flow from financing activities was 1318.6 billion yuan, 937.8 billion yuan, 332.9 billion yuan, 41.3 billion yuan. Net cash flow from financing activities began to show a significant downward trend in 2022, with the first half of 2023 compared to 117.7 billion yuan, a decrease of 6491%。
As of the end of June this year, SenseTime's cash and cash equivalents decreased by 100.7 billion yuan, cash and cash equivalents at the end of the period balance of 715.3 billion yuan. If the financing is stopped, the continuous loss will cause SenseTime's cash flow to decrease rapidly, and SenseTime will face the risk of breaking the capital chain.
Shorted by Grizzly Bear, SenseTime was accused of inflating revenue
The poor stock price performance has made SenseTime targeted by short-selling institutions Grizzly Bear.
On November 28, Grizzly Bear, a U.S. short-selling agency, issued a report on SenseTime Group, claiming that SenseTime Technology "artificially (non)intelligently exaggerated revenue" through related party transactions and other means7%。
The short-selling report released by Grizzly Bear mainly focuses on topics such as inflated income and cashing out of major shareholders.
Grizzly Bear reported that SenseTime inflated its revenue by deliberately concealing related parties and financial manipulation of related party transactions. Grizzly Bear believes that SenseTime's method of falsifying revenue is recycling**, and cites two lawsuits.
One case is a dispute over a sales contract between Beijing SenseTime Technology Development and Jiangsu Jingyida Technology. According to the first-instance civil ruling of the case, on November 17, 2019, SenseTime placed 1024The payment of 50,000 yuan was remitted to Xinzel Company, Jingyida Company, and the next day, Jingyida Company remitted the money to Shanghai Yihua E-commerce*** Yandu District People's Court of Yancheng City, Jiangsu Province, and characterized the transaction between SenseTime, Jingyida Company and Shanghai Yihua E-commerce as a cycle**.
The other case was a dispute over a sales contract between Su Caitong and Sichuan Changhong Jiahua Information Products Co., Ltd., in which Sichuan Changhong Jiahua Information Products Co., Ltd. was a customer of SenseTime. In the civil judgment of the first instance of the case, the process of the case was divided into five steps, and through multi-step operations, a closed cycle of Xinzeer Company's purchase of 3.1 million yuan from Changhong Jiahua was finally formed, and the goods had been received but the payment had not been paid.
In addition, the Grizzly Bear report also said that Tang Xiaoou, the controlling shareholder of SenseTime, Alibaba and Japan's SoftBank Group, have continued to ** SenseTime's shares in the past few months, among them, Ali ** all SenseTime shares, while SoftBank ** in July ** 14.9 million shares of SenseTime Technology**, after still holding 33700,000,000,000 shares, representing 12 of the total number of shares outstanding99%。
In the face of Grizzly Bear's short-selling allegations, SenseTime responded on November 28 and December 5 respectively.
In its response, SenseTime pointed out that Grizzly's report was a patchwork of outdated information and misunderstandings, including a large number of unfounded speculations and misleading conclusions and interpretations, and lacked a deep understanding of SenseTime's business.
In response to the suspicion of concealing related parties and shareholders' eagerness to cash out, SenseTime said that it has never entered into any discloseable transactions with the companies listed in the report that "did not disclose the related parties of the company";There is also no basis for speculation about the shares of Tang Xiaoou**, the executive director and controlling shareholder of SenseTime.
In the announcement issued by SenseTime at the end of November 2022, Tang Xiaoou, Wang Xiaogang, Xu Bing and others stated that during the two-year period starting from December 30, 2022, they would not ** any shares of SenseTime held or beneficially owned by him or any entity controlled by him on November 30, 2022. With this statement, the company's senior management showed confidence in the future performance of SenseTime.
However, Tang Xiaoou's death has made the future of SenseTime full of uncertainty, and SenseTime still faces great challenges in the future.