China's fiscal and tax market is gradually transforming to intelligent fiscal and tax management, following the process of digitalization to help enterprises reduce costs and improve efficiency. According to public data, the total scale of China's financial and tax digitalization market is expected to exceed 70 billion yuan in 2025.
On the track of innovation, there is no shortage of growth companies. Zhitong Financial APP learned that according to the disclosure of the Hong Kong Stock Exchange on February 9, Baiwang shares *** referred to as Baiwang Cloud) submitted a listing application to the main board of the Hong Kong Stock Exchange, with Haitong International as its sole sponsor. It is reported that the company submitted a listing application to the Hong Kong Stock Exchange on June 28, 2023.
In the past four years, the cumulative loss has exceeded 1.2 billion
According to the prospectus, Baiwang Cloud is an enterprise digital solution provider in China, focusing on providing SaaS financial and tax digitalization and data-driven intelligent solutions through the company's Baiwang Cloud platform. The Company deals with a variety of transaction documents, including but not limited to invoices, receipts, bills and other accounting documents. As of September 30, 2023, the Company has processed approximately 12.7 billion transaction vouchers, corresponding to a total transaction value of approximately 5691 trillion yuan (unit: RMB, the same below).
For the nine months ended September 30, 2020 to 2023 (hereinafter referred to as the reporting period), Baiwangyun's revenue was approximately 29.1 billion yuan, 45.4 billion yuan, 5$2.6 billion and $46.8 billion yuan. The losses for the same period were about 38.9 billion yuan, 44.8 billion yuan, 1$5.6 billion and $21.3 billion yuan, with a cumulative loss of more than 1.2 billion yuan in the past four years.
Broken down into the business structure, Baiwang Cloud's business is mainly divided into three parts: cloud-based solutions, on-premise financial and tax digital solutions, and others. During the reporting period, the revenue of the cloud-based solution business was 18.7 billion yuan, 33.5 billion yuan, 4$2.2 billion and $39.7 billion yuan, accounting for 643% to 848%；The revenue of the on-premise financial and tax digital solution business increased from 968610,000 yuan, 1100,000 yuan 934910,000 yuan, 689100,000 yuan, the revenue trend is up and then down. It can be seen that the development focus of Baiwang Cloud has shifted to the cloud solution business.
According to the Zhitong Finance APP, the competitive barriers to the cloud-based solution business are not high. Specifically, when enterprises carry out related invoices, transactions and other activities through the company's financial and tax digital services, a large amount of data is left for Baiwang Cloud. The platform processes the transaction nature, transaction amount, frequency and other key transaction information reflected in a large number of transaction vouchers, so that financial service providers can understand the business performance and operating conditions of enterprises, identify eligible enterprises with financing needs, and improve the risk management of financial service providers. At the same time, Baiwang Cloud also assists small and micro enterprises with financing needs to find suitable financing products.
Therefore, the digitalization of finance and taxation-related transactions and the transaction-related big data analysis for small and micro enterprises financing are highly competitive, characterized by rapid technological changes, changing customer preferences, and the continuous introduction of new solutions and services.
As a result, Baiwang Cloud faces competition in all aspects of its business, and the Company expects that competition will continue to intensify in the future, including from existing competitors and new market entrants who may be more mature and enjoy greater resources or other strategic advantages.
The prospectus also pointed out that with the expansion of the company, it may continue to record net losses and net cash used in operating activities, and there is no guarantee that it will not incur net current liabilities in the future. If the Company records a net outflow of operating cash in the future, working capital may be constrained, which may adversely affect the financial position. The Company's net current debt position may expose the Company to the risk of liquidity shortages, in which case the Company's ability to raise funds, obtain bank loans, and declare and pay dividends will be materially and adversely affected.
The dividends of the rapid development of finance and taxation are still there
The fiscal and taxation industry is naturally sensitive to policy winds. For example, the establishment of a new generation of digital finance and taxation platforms such as Baiwang Cloud has a lot to do with the fact that the State Administration of Taxation launched the "Internet + Tax" Action Plan in 2015 and began to build an electronic tax bureau with "online and offline integration, front and back office integration".
In 2021, the policy window period for the fiscal and taxation industry will be opened again. The national unified electronic invoice service platform and the pilot of "digital invoices" have once again ushered in development opportunities for the digital industry of finance and taxation. In the same year, the capital began to vigorously bet on the digital track of finance and taxation, Baiwangyun has received two financing of more than 500 million yuan, and Huisuan has obtained a D round of financing of 80 million US dollars.
Policies provide an outlet for the development of the industry, and the endogenous digital needs of enterprises have also brought a huge market. Under the combined effect of the internal and external environment, the fiscal and taxation track ushered in rapid growth.
According to the Frost & Sullivan report, the size of China's digital finance and tax-related transactions in terms of revenue increased from 3.7 billion yuan in 2018 to 5.9 billion yuan in 2022, with a compound annual growth rate of 124%；It is expected to reach $19.3 billion in 2027, growing at a CAGR of 267%。
The dividends of rapid growth are still there, but can Baiwangyun successfully meet the high growth?
Focusing on itself, Baiwangyun can hardly hide the current situation of cash flow roller coaster.
According to the prospectus, from 2020 to 2022, the net cash used in operating activities and the net cash used in investment activities were negative. During the reporting period, the company's cash and cash equivalents increased from 27.3 billion yuan, an increase to 50.5 billion yuan. At the end of 2022, it dropped sharply to 2$3.7 billion, compared to $2.7 billion as of the end of September 20231.1 billion yuan.
With continuous losses and a rollercoaster of cash flow, it's no wonder that Baiwangyun urgently needs to land in the capital market.
According to public information, the company entered into a counseling agreement with China Securities Construction Investment** on January 7, 2021 in preparation for the A-share listing. In view of the overall A-share approval process, the listing counseling was suspended in September 2021. After the A-share collapse, Baiwangyun turned to the Hong Kong stock market, and this IPO is another application after its submission lapsed on June 28, 2023.
Whether or not it can successfully get the Hong Kong stock pass this time is the first hurdle that Baiwangyun needs to pass. Once listed, how to prove their hematopoietic ability has become the biggest test it faces.