Text | Lu Xiaoming, Xin Nan
On the evening of September 26, Bitmain disclosed on the Hong Kong Stock Exchange, officially launched the listing plan in Hong Kong., officially launched the listing plan in Hong Kong.
Bitmain's status in the industry and its low-key style have always made it controversial. After the news of the planned IPO came to light, rumors about Bitmain’s listing crisis continued to flow out. Just on September 20, there were rumors in the market that Bitmain would suspend the IPO and carry out reorganization. With the submission of the prospectus this time, the rumors of the suspension of the IPO were self-defeating. Prior to this, Bitmain conducted B and B+ rounds of financing respectively this year, with a total financing of more than 700 million US dollars, with valuations exceeding 12 billion US dollars and 14 billion US dollars respectively. Its capital once reported that "Tencent and Softbank invested", but they all denied it later, and the specific capital can be answered in this prospectus.
From the prospectus, Odaily has unearthed ten points worthy of attention. The more prominent finding is that the sharp drop in cryptocurrencies this year has indeed had a lot of impact on Bitmain’s operating conditions.
In addition, the three major domestic mining machine manufacturers have submitted prospectuses so far, which seems to be revealing a signal to the market: mining machine manufacturers must go public. Among them, the valuation of Bitmain is astonishing. Even at a valuation of US$12 billion, its price-earnings ratio has surpassed Nvidia. Odaily has previously written an article to analyze the relevant background and situation ("IPO is imminent, how does Bitmain sustain a valuation of US$12 billion?》）。
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1. Gross profit margin has declined year by year, from 52% to 36.2%
The prospectus disclosed that Bitmain’s net profit increased from US$83 million in the first half of 2017 to US$743 million in the first half of 2018, a year-on-year increase of 794.8%. In the first half of the year, Bitmain’s net profit was US$743 million, an increase of nearly eight times year-on-year; adjusted EBITDA was US$1.123 billion.
Bitmain’s net profit in the first half of the year exceeded 700 million US dollars, but if you pay attention to Bitmain’s gross profit rate, you will find that it has dropped significantly, from the initial 52% to 36% this year. In addition, among all parts of the business, the gross profit margin of mining pool operations is the highest and relatively stable; however, the gross profit margin of mining machine sales and self-operated mining has declined in the past two and a half years.
The prospectus also stated that the gross profit margin in the first half of the year dropped sharply.secondary title。
2. How many mining machines have you sold? How much did the price drop?
In the field of mining machines, Bitmain has a global market share of 74.5%. It is not difficult to see from the prospectus that mining machine sales are Bitmain’s largest source of income, accounting for 94.3% of mining machine sales in the first half of 2018.
However, with the decline in the market value of cryptocurrencies, the currency market has entered a cold winter, and the enthusiasm for mining has declined. Bitmain also had to follow the market trend and lower the price of mining machines. According to the prospectus, in the first half of this year, Bitmain sold 1.87 million BTC/BCH mining machines, and its average selling price has dropped from $1,160 last year to $1,012. The price of other cryptocurrency mining machines is even more serious, falling from more than 1,400 US dollars to less than 1,000 US dollars.
Bitmain’s four major businesses are inseparable from the mining industry. Self-operated mining is Bitmain’s second largest business, but it can be seen from the prospectus that the proportion of revenue from this business has been decreasing in recent years.
Mining is one of the businesses that Bitmain has been controversial before. It is always said that Bitmain has mastered more than half of the BTC computing power through self-operation or investment in AntPool, BTC.COM and ViaBTC. Bitmain CEO Wu Jihan has also been called a generation of mining bully by the outside world.
"The Spring and Autumn Era of Mining Industry: Bit Powerful Ranks, Singapore Fights Ruthlessly""The Spring and Autumn Era of Mining Industry: Bit Powerful Ranks, Singapore Fights Ruthlessly"。
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3. In the first half of the year, the impairment loss of cryptocurrency exceeded US$100 million
The prospectus revealed that in the first half of 2018 alone, Bitmain lost $102 million due to cryptocurrency impairment.
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And according toCailian SocietyAccording to statistics, the decline of BCH in 2018 also reached 87.09%.
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4. The proportion of self-operated mining revenue and profit decreased
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5. Cryptocurrency assets account for 28% of total assets
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6. Cryptocurrency revenue cannot be included in operating cash flow
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7. Cash flow in the first half of the year mainly comes from financing and opening balance
Even based on the above point, Bitmain’s cash from investment minus cash from operations in the first half of this year is a negative number, which has been positive for the previous three years. The reason why there is still positive cash flow this year is mainly due to the cash obtained from financing activities of US$250 million, as well as the large amount of cash and cash equivalents at the beginning of the year.
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8. What are other financial assets?
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9. Raised more than US$700 million this year
According to the prospectus, Bitmain raised funds three times in total, concentrated in the second half of last year and this year. This year alone, the financing amount exceeds 700 million US dollars.
In August 2017, Bitmain completed A-round financing of US$50 million, with an estimated valuation of US$1.1 billion. The main investors were Sequoia China, New Horizon Capital, Sinovation Ventures, Beijing Cathay Ventures, IDG Investment, and Beijing IC Industry International Fund .
The B round of financing was completed in July 2018, with a financing of 290 million US dollars and a valuation of approximately 12.4-12.7 billion US dollars. Sequoia China invested 180 million US dollars. Other investors include TAIJIA GROUP, American hedge fund Coatue, and EDB, an investment agency under the Singapore Economic Development Board Investments, etc.
Completed the B+ round of financing in August 2018, with a total financing of 440 million US dollars and a valuation of 14.2-14.9 billion US dollars. The investors include Crimson Partners, China Technology Industry Investment Management Co., Ltd., CIC Zhongcai, Palace Investments and Pavilion Capital Fund under Temasek, etc. .
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10. Shareholders
The top 1 and 2 major shareholders are still Ketuan Zhan and Jihan Wu, holding 36% and 20% respectively, and the third place is the employee share reward pool. Since then, other founding members, the fourth largest shareholder Zhao Zhaofeng holds 6.26% of the shares, the fifth largest shareholder Ge Yuesheng, the senior investment director of Bitmain, holds 4.18%, the sixth largest shareholder Hu Yishuo holds 4.18%, and the seventh largest shareholder Song Wenbao Holding 0.72%.
I am Lu Xiaoming, editor of Odaily. I am exploring the real blockchain. Please add lohiuming for breaking news and communication. Please note your name, unit, position and reason.
I am Lu Xiaoming, editor of Odaily. I am exploring the real blockchain. Please add lohiuming for breaking news and communication. Please note your name, unit, position and reason.
The liberal arts student said that there are many financial reports that he can't understand, and all the great gods are welcome to give you advice.
