Editor's Note: This article comes fromDeep Chain Finance (ID: deepchainvip)Editor's Note: This article comes from
Deep Chain Finance (ID: deepchainvip)
Deep Chain Finance (ID: deepchainvip)
, Author: Yusanichi Nakamoto, reproduced by Odaily with authorization.
Canaan Zhizhi is about to become "the first listed blockchain stock".
According to US stock sources, the listing of Canaan Zhizhi is almost a foregone conclusion.
Just the day before, Canaan Zhizhi officially submitted the prospectus to Nasdaq. Credit Suisse, Citibank, China Renaissance Capital Holdings and CMB International jointly guarantee. Listed on NASDAQ under the stock code CAN, it plans to raise US$400 million, which is a significant reduction from the US$1 billion raised in the previous IPO in Hong Kong.
This company, established in 2013, has already gone through 6 years. As the upcoming "first blockchain stock", what is the composition of Canaan Zhizhi, and why can it be successfully listed?
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In the first half of 2019, the net loss was 331 million, and the development of AI business was slow
Among them, in the first half of the year as of June 30, 2018, Jianan Zhizhi had a net income of 1.9471 billion yuan and a net profit of 217 million yuan.
However, in the first six months ended June 30, 2019, Jianan Zhizhi’s net income was only US$42.1 million (about 288 million yuan), and its net loss reached US$45.8 million (about 331 million yuan).
Canaan Creative’s product revenue is mainly divided into two parts, blockchain products and AI products. Among them, blockchain products are Canaan’s main source of income, and mining machine sales have always been Canaan’s pillar business.
But it can be clearly seen that the revenue of blockchain products was 99.6% in 2017 and 99.7% in 2018, which can be said to be growing slowly.
However, it is worth noting that Jianan Zhizhi’s AI products only made a profit of 500,000 yuan in the first half of 2019. For comparison, the revenue of AI products in the second half of 2018 was 300,000 yuan. Prior to this, Canaan’s AI products had not generated any revenue.
Compared with last year's outstanding performance, Canaan Yunzhi's financial report this year is slightly "dismal". Despite the impact of the general market environment, the financial reports of mining machine companies this year are not satisfactory. But for Jianan Zhizhi, on the one hand, its own AI business has not delivered satisfactory answers, and on the other hand, the newly emerging mining machine company Shenma Mining Machine is closely following.
For Canaan Creative, although the successful listing is indeed a major good news, it still cannot be taken lightly in the future development process.
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Liu Xiangfu is no longer the largest shareholder
According to the prospectus information, there are 11 members in the management of Canaan Yunzhi, the chief financial officer Li Jiaxuan holds 16.2% of the company's shares, the founder Zhang Nangeng holds 16% of the company's shares, and Hengtong Cloud (838316) executive Kong Jianping holds 12.1% of the company's shares , Sun Qifeng holds a 5.8% stake in the company.
According to reports, in April 2015, Kong Jianping invested in Canaan through Shuxin Investment, Sun Qifeng invested in Canaan through Peter Thiel, and Liu Xiangfu, the former major shareholder, held 10.2% of the shares through Urknall Ltd. The 17.6% disclosed in the book has dropped significantly, and it is no longer the largest shareholder of Canaan Zhizhi.
Compared with the over-concentration of Bitmain's shares, Canaan Zhizhi's share allocation appears relatively "balanced".
However, it is worth noting that Liu Xiangfu, who was previously one of the actual controllers of Canaan Zhizhi and held the largest shareholding, also reported that he had left his management position earlier this year. The specific reason was that Liu Xiangfu had differences with the company's overall strategic development. .
Nevertheless, compared to Bitmain's splendid "Gongdou drama", Canaan Yunzhi is much more low-key in the process of handling conflicts.
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“We derive a significant portion of our revenues from our Bitcoin mining machines. If the market for Bitcoin mining machines ceases to exist or diminishes significantly,Facing risks and challenges such as bitcoin ups and downs
According to the prospectus, Jianan Zhizhi listed the price of Bitcoin as the first risk factor.
"Our results of operations have been and are expected to continue to be negatively impacted by sharp Bitcoin price decreases."
Our business and results of operations would be materially harmed. (A large proportion of our profits are obtained from the sale of bitcoin mining machines. If the market for bitcoin mining machines ceases to exist or decreases in the future, our business will be significantly harmed. damage)"
It can also be seen from the changes in profits that the price of Bitcoin holds the fate of major mining machine manufacturers, and the symbiotic attribute is obvious. Due to the need for power consumption, the cost of mining is also affected by the dry and wet seasons of hydropower.
According to previous reports, Jianan Zhizhi's profits in 2015 and 2016 were 1.511 million yuan and 52.544 million yuan, respectively. It can be seen that the price trend of Bitcoin has a great impact on Canaan Zhizhi's business.
In addition, in terms of AI applications, Canaan Zhizhi is worried that it will not be able to succeed in the AI market, which may lead to revenue, growth prospects and financial conditions being affected.
In terms of regulatory policies, Canaan faces regulatory risks related to mining, holding, using and transferring cryptocurrencies.
Changes in the Bitcoin algorithm and mining mechanism, increased mining difficulty, high R&D investment and aggressiveness from competitors will all bring new risks.
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Betting on Edge Computing AI Chips
Since January 2013, Zhang Nangeng, chairman and CEO of Canaan Zhizhi, and his team invented and delivered the first batch of Bitcoin mining machines using ASIC technology, Canaan Zhizhi has always attached great importance to the research and development of chip technology.
Therefore, the accumulation of long-term experience has accumulated considerable advantages for Canaan Creative in terms of technology.
It is precisely because of this that since June 2015, Canaan has completed a total of 7 tape-outs for 28nm, 16nm and 7nm ASICs, and the success rate is 100%. In addition, Jianan Zhizhi also produced a total of 130 million chips in the two and a half years in 2017, 2018 and the six months ending June 30, 2019.
Not only that, Canaan Zhizhi has made great achievements in the research process of ASIC technology.
Canaan believes that ASIC edge AI chips will gain favor in the future and occupy a larger market share. Its market share will soar from 21.3% in 2018 to 40.9% in 2023.
In September 2018, Canaan released the first-generation AI chip K210. As of June 30, 2019, Canaan has delivered more than 26,000 K210 chips and supporting facilities to the market.
However, some people in the industry said that they are not optimistic about the transformation of Canaan Yunzhi.
The ASIC chip used in the mining machine is a customized chip for a specific field. The chip structure is relatively simple, and the computing power and computing efficiency are directly customized according to the needs of specific algorithms. AI chips require massive computing, high flexibility and high efficiency. data interaction efficiency, etc.
In addition, the production of chips is divided into front-end design and back-end design. Jianan Zhizhi is currently limited to the front-end design and research and development of chips, and then finds TSMC for OEM production, and cannot independently complete the mass production of chips.
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Continuous financing, with a valuation of over 20 billion yuan
According to the prospectus, in 2018, Jianan Zhizhi signed several short-term loan agreements with a number of banks, totaling RMB 500 million.
In April 2018, Jianan Zhizhi signed a financing agreement with China Merchants Bank Co., Ltd. Hong Kong Branch and China Merchants International Finance Co., Ltd., with an amount of about 930 million Hong Kong dollars.
After two rounds of financing, in the "2018 Second Quarter Hurun Greater China Unicorn Index", Canaan's valuation reached 20 billion yuan.
As early as one year ago, Canaan Yunzhi received nearly 300 million yuan in financing from Baopu Investment, Jin Jiang Group, and Tunlan Capital. At that time, the valuation was close to 3.3 billion yuan.
Through the large investment in chips, mining machines and other aspects, Canaan Zhizhi still has a good performance in the field of mining machines, although it is still some distance away from Bitmain.
However, Canaan’s market share in bitcoin mining machine shipments is 23.3%, which is still far behind Bitmain’s 64.5% market share.
In terms of chips, in September 2018, Canaan was known as the industry's first commercial edge computing artificial intelligence chip company based on the Risc-V architecture and a self-developed neural network accelerator.
In terms of personnel composition, as of now, Canaan Zhizhi has 286 staff members, of which 127 are technicians responsible for research and development, accounting for 44.4%.
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Why can Canaan be listed in the US?
One week before Canaan Zhizhi announced the prospectus, Bitmain had secretly submitted a listing application to the SEC, and the sponsor was Deutsche Bank. In addition, as early as June this year, Yibang International also reported that it would go public in the United States.
Why did the three giants in the mining machine industry who were defeated by the Hong Kong Stock Exchange gather in the US stock market?
Wall Street has always been the holy land of capital for Internet companies. Compared with listing on A-shares and Hong Kong stocks, listing in the United States has a lower threshold.
Because the United States adopts a registration and filing system, as long as the materials are submitted in accordance with the requirements of the SEC, the application for filing can be listed without any human factors.
Transparent laws, flexible securities regulations, and a loose listing system are the characteristics of the US capital market. Even if companies do not make profits, they can enter the US capital market to raise funds by issuing stocks or bonds.
Second, in June 2017, in order to activate the US IPO market, under the leadership of Jay Clayton, the chairman of the Securities and Exchange Commission appointed by the current President Trump, the policy of secretly filing IPO application documents It is relaxed to all companies preparing to go public.
This also means that all companies preparing to list in the United States can choose to submit IPO application documents in secret.
The advantages of filing an IPO confidentially are:
First, the period for submitting audited financial statements has been changed from the last three years to two years.
Secondly, the limit on the number of shareholders before listing is relaxed from 500 to 2,000, and the number of "unqualified" investors is relaxed to 500, which makes it easier for companies to reform shares before listing.
In addition, after the S-1 form is submitted, the information is only disclosed to the US Securities Regulatory Commission and specific investors, and the public cannot see it until three weeks before the road show. On the premise that the public understands their own financial situation, they can inquire about prices from major investors, and then decide whether to go public after testing the waters.
Finally, free from the constraints of SOX 404b, there is no need to establish an internal control system in accordance with the SOX Act before listing, and it is sufficient to establish an internal control system after listing.
