Produced by |Salt pickers
In just three months, the stock price went from 28HK$85 to 472 Hong Kong dollars, Keep fell "numb".
The most recent round of ** occurred on February 9, when KEEP auditor PricewaterhouseCoopers resigned, and KEEP stock price **27 on the same day5%, in 2024 in just the past two months, Keep's stock price has fallen by more than 70%.
The board of directors of Keep announced that in view of the failure of PricewaterhouseCoopers (PwC in Hong Kong) to reach a mutually acceptable audit schedule with the company on the group's financial results for the financial year 2023, after friendly consultation with the company, PricewaterhouseCoopers agreed to resign as the auditor of the company at the request of the board of directors and appointed RSM as the new auditor.
Source: Announcement of the Board of Directors of Keep.
It is worth noting that PwC also raised concerns with the company's shareholders and creditors due to doubts about certain payments made by Keep.
It is quite surprising that the auditor who had worked with him for less than a year resigned and was replaced by a small local firm in Hong Kong. Keep, which has been listed for less than a year, has not yet solved the profitability problem, and the total amount of doubtful funds raised by PwC this time is as high as 15.2 billion yuan once again planted the seeds of doubt in the hearts of investors and shareholders.
Total 1The use of 5.2 billion yuan is unknown
On 12 July 2023, KEEP was listed on the Main Board of the Hong Kong Stock Exchange, and PwC has been acting as its auditor during the IPO.
In the resignation letter, PwC reminded the company's shareholders and creditors of two precautions. PwC pointed out that shortly before the listing of Keep, two subsidiaries of Keep Singapore and Keep Hong Kong had two expenses that were not clearly used, and the total amount of the two expenses amounted to 15.2 billion yuan.
Among them, KEEP Singapore Subsidiary has entered into a marketing and promotion agreement with a third-party company ("Company A") to appoint Company A as the Company's overseas marketing promoter for 5 years from 1 July 2023.
PwC noted that between June 30 and July 6, 2023, Keep Singapore paid a total of US$12 million (approximately RMB 87 million) to Company A through wire transfers in accordance with the payment schedule in the marketing promotion agreement, but the agreement did not include details such as the scope of services and key angle results.
On 26 September 2023, KEEP Singapore entered into another "Termination Agreement" with Company A to terminate the marketing and promotion agreement, and Company A has returned the US$12 million to KEEP Singapore in installments from October to November 2023.
In addition to this, PwC also questioned certain payments made by Keep's Hong Kong subsidiary.
PwC notes that the Hong Kong subsidiary, Calorie Technology Hong Kong, has entered into certain agreements for financial advisory, capital markets advisory and research services and the subscription of an investment**. Pursuant to these agreements, in July 2023, Keep Hong Kong made certain payments of US$2 million, US$1 million, HK$7.8 million and US$5.15 million (totaling approximately RMB65 million) to various signatories (other transactions).
As at the date of the resignation letter, PwC stated that it was unable to obtain sufficient and appropriate audit evidence to ascertain and support the commercial substance of the above agreements and the services that have been or will be provided by the various parties to the transactions under them.
In response to PwC's question, Keep responded that it had taken a number of actions. This includes maintaining ongoing communication with PwC and providing relevant agreements and other documents or information requested by PwC to assist PwC in conducting audits of marketing promotion transactions and other transactions; enter into a termination agreement to terminate the marketing promotion agreement and all payments made have been refunded as of November 2023; The Audit Committee, with the assistance of an investigation team, has conducted an independent investigation into transactions surrounding marketing agreements, among other things.
However, KEEP did not elaborate on the various questions about the relevant transactions made by Keep Hong Kong.
In fact, it is nothing new for accounting firms to "break up" with listed companies.
An accounting source told Salt Pickers that accounting firms are third parties independent of listed companies, and accountants are under pressure from regulators to issue fair, objective and independent audit opinions. Generally speaking, when a listed company has a disagreement with the accounting firm it hired for some reason, it may be dismissed if the negotiation fails, and it is necessary to find an accounting firm that agrees with the company to cooperate with the company to achieve the purpose of improving the audit opinion.
There is also a situation where the accounting firm chooses to resign voluntarily. The reason for this situation is generally that the listed company has some major hidden problems, and if the firm cannot adhere to the principle of independence and compromise, it will face a high risk of litigation and violate professional ethics, which will be fatal to the reputation and image of the firm. As a result, firms with higher audit risk may choose to resign voluntarily. The above-mentioned financial and accounting person said.
Profitability is still Keep's biggest problem
The loss in four years was nearly 2 billion, and a large number of users were lost
Although the truth has not yet been clearly stated after PricewaterhouseCoopers raised the question of the whereabouts of the expenses, Keep's stock price has been greatly affected, and Keep's stock price fell 28 on the day of the news68% and on a "roller coaster" for the next ten days.
In order to stabilize investor confidence, the board of directors of Keep announced its intention to repurchase shares on February 14. On the same day, Hong Kong stocks rose more than 15% after the opening, * to 3HK$90 shares; On February 15, it rose and fell back to a new low of 3After 450 Hong Kong dollars, it rose 32 on the 16th47%, closed at 5HK$140 shares. On February 19, the stock price was again **7%, closing at 5HK$50 shares.
However, although the Keep buyback has achieved the effect of stopping the decline and recovering the stock price, it cannot solve the fundamental problem. The company is still mired in losses.
According to the Keep prospectus, from 2019 to 2022, the company's adjusted net loss was 36.6 billion yuan, 10.6 billion yuan, 82.7 billion yuan, 66.7 billion yuan, with a total loss of 19 in four years6.6 billion yuan.
Source: Keep prospectus.
According to Keep's 2023 interim report, for the six months ended June 30, 2023, the net loss ratio changed by 8 percent year-on-year compared to 20227 percentage points. In addition, in the first half of 2023, Keep achieved a total revenue of 98.5 billion yuan, down 27%, which is the first year-on-year decline in revenue since the release of Keep's financial statements.
Source: KEEP 2023 Interim Report.
According to the financial report, Keep's operating income mainly depends on the company's own brand products and members' subscription to online paid content.
In the first half of 2023, Keep's private label sports products revenue will be 46.6 billion yuan, down 9 percent year-on-year5%；Membership subscriptions and online paid content revenue44.9 billion yuan, a year-on-year increase of 10%; Advertising revenue 694370,000 yuan, a year-on-year decrease of 214%, which shows that its own brand sports product revenue has begun to show a downward trend.
At the same time, with the "ebb tide" of home fitness popularity, Keep users are also losing significantly. In the first half of 2023, the average monthly active users fell back to 2,95490,000, a year-on-year decrease of 81290,000, a decrease of 208 compared to the end of 202290,000; The average monthly subscriber is about 30170,000, down 1768%, down 771%。
Source: KEEP 2023 Interim Report.
Keep has been listed on the Stock Exchange since July 12, 2023, with an issue price of 28HK$92 shares. Just over a month after its listing, Keep has hit a record of 42HK$4 shares, but since then, Keep's share price has entered a continuous ** trend. As of February 24, the Keep share price was $5HK$19 shares, with a total market capitalization of 27HK$2.8 billion, and the share price high in August 2023 has fallen by 878%。
The investment institutions that have been sent in the snow have lost "numbness".
As early as 2015, Wang Ning, the founder of Keep, expressed Keep's thirst for hematopoietic ability. He said that if Keep can't become a profitable Internet company in 2016, then there is no longer much opportunity.
Now, nearly 9 years have passed, although Keep has successfully landed in the capital market, it still relies on the support of the capital side, not only the road to profitability is difficult, but the stock price is also endless.
By the end of 2021, it has completed nine rounds of financing, with investors including Hillhouse Capital, Tencent Capital and other well-known institutions, with a cumulative financing amount of more than 600 million US dollars, equivalent to more than 4.4 billion yuan.
According to Sina Finance's calculations, a number of star institutions that participated in the investment after the C round, including Goldman Sachs Group, Coatue Management, Tencent Investment, Hillhouse Capital, and SoftBank Vision**, have all lost money. Among them, the top three SoftBank Vision**, Tianjin** and Times Capital have accumulated floating losses of 28.5 billion US dollars, accounting for nearly sixty percent.
Early investors also lost a lot. After combing, in addition to ventech China and bai capital as a whole to achieve a small floating profit, the floating loss scale of Wuyuan Capital and Jiyuan Capital is also at the level of tens of millions of US dollars. In the case of no improvement in the stock price, Wuyuan Capital has taken the lead in leaving the market.
It can be seen that whether it is performance or stock price, Keep has never been able to give investors a profit expectation, if only financing can not find a new profit point, then the listing can not save Keep.
Are keeps facing a "test of life and death"?
As one of the leading online fitness platforms, the dilemma faced by Keep is not an isolated case, but a microcosm of many online fitness platforms.
In recent years, the rise of social platforms such as Douyin, Bilibili, and Xiaohongshu has posed a direct threat to keep.
There are also fitness**, fitness with exercises, and a large number of creators actively produce major social media platforms that have become a new trend of home fitness, and many fitness KOLs use a large number of free dry goods and well-made follow-up ** to attract users.
Although Keep also tries to introduce a large number of high-quality KOL-produced content (i.e., "PUGC", the content model produced by professional users), the effect is not obvious.
According to the Keep prospectus, the number of PUGC courses on the Keep platform has increased from 140 at the end of 2019 to 17,800 at the end of 2022. But even so, compared with social platforms such as Douyin and Bilibili, the number is still far from enough.
However, it is worth noting that although Keep's content output no longer has obvious advantages, "selling medals" has unexpectedly become a revenue highlight.
Initiated by "Goodong", the marathon commemorative medal mode was introduced online, and a variety of "online marathons" were launched with a brainstorm, and Keep kept up with the trend and further developed this model. is such an extremely inconspicuous revenue project, and now it has become an important profit point for Keep, and even the news that "Keep sold medals and earned 500 million yuan" was once circulated on the Internet.
But even so, it has not been able to recover the development status quo of Keep's revenue and stock price. On the other hand, other popular players in this track are now struggling to make ends meet.
The "Love Thin" app has long been ignored; "Goodong", which was established earlier than Keep, has not announced financing news since 2018, and has tried to "bet" on smart hardware such as sports bracelets, but also after players such as Huawei and Xiaomi entered the market, the stamina is obviously insufficient.
The Yue Running Circle, which focuses on the running track, has gradually transformed into a tool product to serve offline running groups, providing services such as event registration and sign-in management and free ** SMS.
The future of online fitness platforms seems uncertain, and new models are needed to change the status quo. With the hot release of this year's Chinese New Year movie "Hot and Hot", the fitness trend has risen again. It remains to be seen whether Keep can seize the opportunity and usher in new vitality.