The main question on the subject is: How do you think of the Jingdong Financial Restructuring Initiative announced by Jingdong's 2016 third quarter financial report? Many people have not answered this question for many days, so let me try it.
Types of divestitures and Jingdong's situation
Obviously, JD Finance's asset reorganization is a kind of asset divestiture.
Asset divestitures are generally divided into three types according to the method of divestiture: direct sales, spin-offs, and corporate separations.
(1) Direct sale
Specifically, direct sales are generally for the purpose of alleviating corporate financial difficulties, seeking efficient operations, or "beautifying" accounting statements.
1) There are many examples to alleviate financial difficulties. For example, Motorola sells its mobile phone business to Google, Nokia sells its mobile phone business to Microsoft, etc. The essence is to save the business. Now Motorola Mobile still exists, and Nokia has only temporarily stopped making mobile phones in recent years That's it, the company is still there, and there is a chance to make a comeback.
2) Demand for efficient operations refers to reducing internal losses of enterprises, eliminating inefficient operations from enterprises, etc .;
For example, earlier, the spin-off of Lenovo into Shenzhou Digital and Lenovo Computer meant that the operation was efficient, and the two businesses had overlapping parts, internal friction, etc., so Liu Chuanzhi split them (of course, this is not the main motivation, personally think The main motivation was Liu Chuanzhi in order to balance Yang Yuanqing and Guo Wei.
Subsequently, Lenovo acquired IBM's PC business, which is IBM's need to improve operating efficiency.
3) To beautify the statement, to put it plainly, is to divest the loss-making business, and the company may turn losses into profits or reduce the amount of losses.
There are many examples. Direct analysis of JD. In the news announcement, there are reasons for the split:
JD Finance is in a state of continuous loss, with a net loss of 677 million yuan in the first three quarters of 2015, which has repeatedly weighed on JD Group's net profit.
If the reorganization can be successfully completed, JD Finance's financial data will no longer be included in the JD Group's consolidated financial statements.
JD.com's data is very good this time, which is part of the reason.
(II) Spin-off and listing
Spin-off and listing have many motivations. Here, for a detailed interpretation:
1) Financial reasons
Facilitate financing and valuation, especially if the parent company cannot make money.
Obviously, JD.com, a US-listed company, has yet to earn any money and cannot provide sufficient funds for JD.com's financial development. Therefore, JD.com has separately raised a Series A financing. After the spin-off, JD Finance's subsequent financing and listing IPO will have great financing effects.
2) Reasons for value release
Different types of business have different valuation models. For comprehensive groups, valuations are generally low.
JD's e-commerce business belongs to the self-operated retail category; JD Finance belongs to the Internet financial business. After the spin-off, the valuation will be higher.
Similarly, Sohu splits Changyou, Sina splits out Sina Weibo, etc .;
The only difference is that the reason given by JD Finance is a financial regulatory reason, which requires domestic listing, which involves the distribution of shareholders' interests, and even evolved into the Alipay event that year, which violated the trust responsibility.
3) Reasons for business management
Two issues are involved, one is corporate strategy, and the other is corporate management.
The corporate strategy may involve internationalization of the country. For example, Tongrentang spun off Tongrentang Technology and listed in Hong Kong to facilitate internationalization.
There are many aspects of enterprise management. First of all, for many executives, after the spin-off, there is a lot of autonomy to answer, which is also conducive to the capture of talents. For example, Sohu split out Sogou, inspiring Wang Xiaochuan's effect;
JD Finance's incentives for senior management are self-evident.
Second, avoiding regulatory risks is also an important issue. For regulators, it's not easy to deal with a behemoth like Alipay.
The supervisory body, who is in charge, is not so clear at present;
Deposit funds, how to supervise, the current supervision is a bit too formal;
Regulatory laws are too weak.
Obviously, it is too high a policy risk to directly allow foreign capital to actually hold shares.
JD Finance faces the same regulatory risk issues, and dismantling helps reduce risk.
(3) Company separation
Basically, the company is split into two companies, and the shares are distributed to corresponding shareholders.
For example, in order to avoid tax, Yahoo proposed to split Yahoo into an actual Yahoo company and a company with a large number of Asian assets, and then split the shares to shareholders.
Let's take a look at JD official information:
As a result, JD Group will receive cash consideration based on market fair value from the investors participating in the transaction, and after JD Finance achieves accumulated pre-tax profit in the future, it will receive 40% of JD Financial's pre-tax profit;
In addition, if China's relevant regulatory regulations permit, JD Group has the right to convert its rights in JD Finance to a 40% equity interest in JD Finance.
Obviously, the designs of JD.com and JD.com have imitated the designs of Alipay (now Ant Financial, their ratio is 33.3%) and Alibaba Group.
There is a certain large shareholder's motivation for hollowing out behavior, that is, the large shareholder will use its controlling position to transfer the cash resources and profits of the listed company to the large shareholder and its subsidiaries, harming the interests of small and medium shareholders.
Back to this time, the JD financial reorganization agreement is a reorganization of the spin-off type. Beautifying statements, facilitating financing, value release, motivating executives, and avoiding regulatory risks are all obvious factors. In addition, there is also a motive for some major shareholders to hollow out.
How is it different from Alipay
There is still a certain difference between JD Finance and Alipay. The most fundamental difference is the difference between wealth effects and control.
(I) Wealth effect
Let's take a look at Jack Ma's shareholding ratio in Ali Group and Ant Financial.
At the time of listing, the data disclosed by the proportion of Ali holdings was 8.9%;
The approximate shareholding ratio of Ant Financial is given by Bloomberg as 37.9% (some say 33%. There are also about 7.8%), but it is estimated that there is a change, it is not sure; (but personally, the shareholding ratio should be impossible As low as 7.8%, which is not in line with conventional logic.)
At the beginning stage, around 2000, I could n’t get enough money, and I ’ve been trying hard to sell a lot of equity for financing. Due to the lack of money and panic in 2005, I gave up 40% of the shares to Yahoo, and received $ 1 billion and Yahoo China was directly acquired by Yahoo (the public all know "acquisition of Yahoo China", that is just the credit of public relations).
It has always been subject to capital restrictions and influences. Although it is said that it is developing well, in the end, it is too small to share with the brothers who fight the world together. Therefore, Alipay's split has obvious wealth effects.
JD Finance is different. Tencent's largest shareholder is Tencent, but Tencent and JD have always been happy. Liu Qiangdong's own shareholding ratio is also relatively high. The shareholding ratio before listing was as high as 23.7%, even today it is 16.2%.
To put it plainly, the wealth effect of splitting Alipay has enough energy to directly affect Ma Yun's behavior; it is not very obvious with Liu Qiangdong.
(B) the issue of control
Everyone also knows that Ali's partner system actually has less equity, but in order to control the company, there is no way to take it. After all, the long-term management of the senior management represented by the founder is conducive to the company's healthy development. Short-term shareholders or institutions are likely to do things that harm the interests of the company.
But splitting Alipay, it's different.
Ant Financial's shareholders, currently Jack Ma and its management, are in absolute control. Even if they are listed, they are also major shareholders.
It's awful, no one can drive away Ali's management directly. Because Ali, who lacks ant's financial services, has no fighting power. Without Alipay, it also hurts shareholders' own interests.
The separation of Alipay basically completely solved the problem of control. It makes sense that the partnership system is generally difficult to pass after the company matures, but because Ma Yun holds the sacred sword of Ant Financial, the basic major shareholders are helpless.
Back to JD.com, JD.com didn't take shape. It has set up AB stocks and B class super voting rights, which effectively protected Liu Qiangdong's control of the company. Although currently holding 16.8% of shares, Liu Qiangdong's voting rights are as high as 80.9%.
Since the early start-up environments of the two companies are different, Jack Ma's Alipay split has some issues of wealth effects and control of power; compared to JD.com, there is no such problem.
Capital market response
Let's look at the stock price chart and see what the market thinks of it.
The capital market responded well. Of course, we must also see that this time JD.com's financial report is good. In the third fiscal quarter, GMV increased 47%, and net profit increased 10 times.
Of course, what is the impact of specific financial reports on the estimated impact and the split, I think I ca n’t answer this question (limited capacity);
But it is certain that the capital market is basically affirmative of JD Finance's reorganization this time. It has released corporate value, increased JD financial development space, and is conducive to JD's value maximization.
to sum up:
This time, JD.com's financial motivations mainly include beautifying statements, facilitating financing, value release, motivating executives, and avoiding regulatory risks. There are also negative factors such as the motivation of certain major shareholders to hollow out behavior.
Compared with the Alipay split, this time it is relatively clean. Jack Ma split Alipay because of the wealth effect and the motive for control, and some violate the contract spirit.
The capital market is basically positive about this reorganization.
Original link: http://ps3-ita.com/internet/64.html
Author: Autumn source Shunji Source: Titanium Media