On December 2, US Eastern Time, OneConnect, a financial technology subsidiary of Ping An Group, updated its F-1 prospectus document submitted to the US Securities and Exchange Commission (SEC), showing that it will use "OCFT" as the stock exchange on December 13. The stock code is listed on the New York Stock Exchange.
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Detailed listing prospectus
OneConnect plans to issue 36 million American Depositary Shares (ADS), with a proposed price range of US$12 to US$14 per share. Morgan Stanley, Goldman Sachs, JP Morgan Chase and Ping An Securities (Hong Kong) will serve as principal The joint lead underwriters of the secondary issue have the right to over-allot no more than 5.4 million ADSs. According to the most optimistic scenario: the issue price is set at the upper limit and an additional 5.4 million ADSs are sold through "over-allotment", and the maximum fundraising amount of OneConnect's IPO will reach US$579.6 million.
OneConnect stated that the funds raised this time will be mainly used in four aspects, one is to enhance the technical capabilities of the platform; the other is to expand overseas business and strategic investment; the third is to improve brand efficiency and use it for sales and marketing; It is for general corporate use. OneConnect was registered and established in December 2015. It is a financial technology service company under Ping An Group. It provides end-to-end solutions such as intelligent marketing, intelligent products, intelligent risk control, and intelligent operations for financial institutions in the banking, insurance, and investment industries. plan. OneConnect completed its Series A financing in early 2018, led by Japan's SBI and SoftBank.
OneConnect was born with the mission of Ping An Group’s digital transformation. Ping An Group’s investment in OneConnect can be said to be all-in-one, investing as many as 100,000 technical manpower and more than 15 billion in funds.
According to the prospectus, OneConnect is positioned as a commercial technology cloud service platform for financial institutions. It currently has 3,700 financial institution customers and is considered to be China's largest commercial technology cloud service for financial institutions TAAS (Technology-as- a-service) platform. The platform provides more than 50 kinds of cloud-native products to meet the diversified needs of customers; it also provides 12 kinds of solutions, which have covered multiple vertical fields of the financial service industry such as banking, insurance, and investment, as well as customer acquisition from marketing, risk The whole process service of management and customer service, and the underlying technical service of the whole system from data management, smart management, to cloud platform.
Since its establishment in December 2015, OneConnect has helped customers complete a total transaction volume of 1.8 trillion; in the first three quarters of 2019, it processed 135,000 anti-fraud reviews, 4.2 million credit risk assessments, and 13,000 motor vehicle insurance claims every day. In addition, OneConnect has started to deploy overseas since 2018, and has subsidiaries in Hong Kong, Singapore and Indonesia. It has built the eTradeConnect blockchain trade linkage platform for the Hong Kong Monetary Authority to meet the service needs of 13 mainstream banks; Formed a joint venture with the SBI Group to provide services to Japanese financial institutions.
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Profit and loss details in the prospectus / Drawing Bplus
However, compared with the rapidly growing business scale, the profitability of OneConnect is not very optimistic.
Not only has it been in a state of loss, but the annual loss has also shown a tendency to expand.
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Backed by peace, unicorns are not "independent"
Regarding the shareholding ratio of OneConnect, before the IPO, SenRong Limited held 49.9% of OneConnect, while Ping An Group held 39.7% through Bo Yu Limited, and SBI and its related beneficial shares held 6.1%; after the IPO , Sen RongLimited, Ping An Group and SBI and their related beneficial shareholding ratios will be 45.1%, 35.9% and 5.5% respectively. Speaking of the relationship between OneConnect and Ping An’s parent company, although OneConnect separated from Ping An Group in 2015, the industry knows that OneConnect is a direct descendant of Ping An that cannot be ignored.
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Ping An Group Advertising / Image Source Network
As of September 30, 2019, OneConnect had accumulated 2,850 domestic patent applications, 542 foreign patent applications, and won 23 international technology awards. The chapter on the relationship between OneConnect and Ping An Group disclosed in the prospectus shows that the two parties have signed a strategic cooperation agreement, which is extended to 10 years after the completion of the IPO, provided that Ping An Group continues to hold or actually holds At least 30% of the shares. Therefore, it is also very obvious from the prospectus that Ping An Group is the most important customer and supplier of OneConnect, and is also a major shareholder.
In the three years since its establishment, OneConnect not only relies on Ping An Group for a large proportion of its revenue, but also directly solves many needs in Ping An Group. The data shows that in 2017, 2018 and the nine months ended September 30, 2019, the revenue obtained from Ping An Group was 235.7 million yuan, 527.6 million yuan and 677.3 million yuan respectively, accounting for the total revenue of the same period. 40.5%, 37.3% and 43.6% of revenue. In 2017, 2018 and the nine months ended September 30, 2019, OneConnect purchased products and services of RMB 358.1 million, RMB 675.8 million and RMB 391.5 million from Ping An Group, respectively, accounting for one Accounting accounted for 23.9%, 27.6% and 15.0% of operating costs and operating expenses in the same period.
It is worth noting that, in addition to Ping An Group, Lufax is another important customer that contributed more than 10% of revenue in the past three fiscal years. Financial OneConnect also stated frankly in the prospectus, "Ping An Group is our strategic partner, most important customer and largest supplier. Any deterioration in our relationship with Ping An Group may have a negative impact on our business performance, have a material adverse effect on our business and growth."
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The "uncrowned king" of the blockchain financial track
For a long time, OneConnect has attached great importance to blockchain technology.
According to Ping An’s 2018 annual report, Ping An has created the world’s largest commercial blockchain platform with more than 44,000 nodes through OneConnect, serving more than 200 banks, 200,000 enterprises and 500 governments and governments at home and abroad. Other commercial establishments provide services.
At the end of March this year, among the first batch of domestic blockchain information service filing companies announced by the State Internet Information Office of China, China Ping An has a total of five major blockchain services on the list. Among them, only one financial company, OneConnect, has Onechain and Tianjin port blockchain cross-border trade platform two blockchain services.
In August of this year, Wang Menghan, head of Ping An Financial OneConnect Blockchain, revealed in his speech that Ping An Financial OneConnect OneConnect Chain FiMAX has been implemented in five major ecosystems:
1. Finance, including reinsurance, supply chain finance, trade financing, SME loans, etc.; 2. Medical care, including electronic medical records, drug traceability, etc.; 3. Automobiles, including super vehicle management offices, etc.; 4. Real estate, including mortgages and other processes ; 5. Smart city, including smart environmental protection, etc.
On the afternoon of November 20th, Lianta Think Tank officially released the "2019 China Blockchain Patent Report" and released the comprehensive strength list of blockchain patents along with the report. In the "2019 China Blockchain Patent Comprehensive Strength List", OneConnect ranked second, second only to Alibaba. In the sub-list "Financial Technology Blockchain Patent Strength List", OneConnect's patent strength ranks first.
Other companies on the list include Ping An Technology, Complex Beauty, Launch Technology, Baidu, Tencent Technology and WeBank. In order to comprehensively display the strength of each company in the field of blockchain patents, the list sets up five dimensions for analysis, namely: the number of patent applications, the number of patent authorizations, the scope of patent protection, the position of patents in the same family, and the application of patents Condition. According to the list analysis, OneConnect and Alibaba can be said to have their own advantages.
Alibaba has performed well in terms of the number of patent applications and the scope of patent layout, while OneConnect is deeply involved in the field of financial technology, and its patent accumulation and industry applications are absolutely leading. In terms of the implementation of patented technology, OneConnect’s strength should not be underestimated: not only the blockchain trade financing network project - eTradeConnect in cooperation with the Hong Kong Monetary Authority, but also the Tianjin port blockchain pilot project in cooperation with the General Administration of Customs.
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Selected as a demonstration case of the financial industry during the "13th Five-Year Plan"
On December 3, at the 4th China New Finance Summit Forum sponsored by Lookout Think Tank and National Finance Weekly, the sponsor announced the selection list of demonstration cases in the financial industry during the 13th Five-Year Plan, and OneConnect was selected as the first batch of demonstration cases case. Also selected are Ant Financial, Ping An One Wallet, CreditEase Pratt & Whitney, Beijing Beidou Guoxing Data, etc.
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"Thirteenth Five-Year Plan" Financial Industry Demonstration Cases / Source Xinhuanet
At the meeting, Qiu Han, co-general manager of OneConnect, said in his speech that in recent years, with the continuous development of financial technology, banks have a need for transformation and upgrading. For regional banks, it is difficult to develop their own financial technology capabilities due to limitations in funds and talents.
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epilogue
Although OneConnect is still in continuous losses, its growth potential is obvious to all. Therefore, although it is not a blue chip, it is undoubtedly a potential stock. Although the financing of US$500 million is not as expected at the beginning, the intangible assets that come with the listing are very attractive. The status of "U.S. listed company" makes OneConnect more attractive in future customer expansion, helping it win the trust of more potential domestic and foreign financial institution customers. The ability to independently expand customers is the key to OneConnect's current turnaround.
However, after listing, OneConnect will face new challenges immediately.
As of now, 12 of the 29 Chinese concept stocks listed in the United States in 2019 have broken on the first day, with a break rate of 41%. Even if it does not break the stock on the first day, the possibility of breaking the stock within one month after the IPO is not low. After the listing of OneConnect, it is worth looking forward to whether the stock price will have a bright performance. The financial technology industry has a strong moat due to its industry characteristics, so early entrants are more likely to occupy more high ground.
At present, although Ant Financial has taken the lead, it has taken a large market share.
But OneConnect's advantage lies in the financial and technical support of the huge Ping An Group behind it, and its deeper understanding of financial business, which makes it easier to win the trust of financial institutions, and the cost of acquiring customers is not high. Especially in the blue ocean of blockchain finance, there is a lot to do.
