Viewpoint May 8 Co., Ltd. once again “plans to reduce” the shares of I love my family. Since taking a stake in I Love My Home in 2018, May 8 Co., Ltd. has been testing it almost every two years and hesitated to withdraw, but it seems that it can’t let it go.
On January 6, Wo Ai Wojia Holding Group Co., Ltd. issued a pre-disclosure announcement on the plan to reduce shares held by shareholders holding more than 5% of the shares.
The content of the announcement shows that in the next 6 months, May 8th Co., Ltd. intends to reduce the total number of shares of My Love My Family through centralized bidding, block trading or a combination of the two methods, and the total number of shares in I Love My Family shall not exceed 77,495,978 shares, and the reduction ratio shall not exceed 3.29% of the total share capital.
As of the announcement date, May 8th Co., Ltd. held 195 million shares of My Love, accounting for 8.28% of the total share capital of My Love. If the implementation of the reduction plan is completed, after Wuba Co., Ltd. reduces its holdings of 3.29% of the shares in Wo Ai Wojia according to the plan, the shareholding ratio of Wuba Co., Ltd. will be less than 5%, but it still holds 4.99% of the shares. Shares.
Two proposed reductions
Dating back to earlier times, in May 2018, I love my home successfully listed and took the top spot in the “first share of real estate agency”.
In June of that year, 58 Group united with real estate service companies such as I Love My Home, Centaline Real Estate, 21st Century Real Estate China, Vanke Real Estate Park Lin, Maitian Real Estate, Zhonghuan Internet, New Environment, Longhu Guanyu and other real estate service companies to launch the industry-wide real estate pledge conference.
Soon afterwards, I love my family announced that the company’s shareholders, Beijing Hezhao Jiusheng Investment Co., Ltd., Kunming Handing Century Enterprise Management Co., Ltd., and Tibet Shengju Investment Co., Ltd., will hold 150 million shares of the company under unrestricted circulation. The shares were transferred to Wuba Co., Ltd. at a transfer price of RMB 7.12 per share, and the total transfer price was RMB 1.068 billion.
After the completion of the transfer, the number of shares held by May 8th Co., Ltd. changed from unheld to 150 million shares, accounting for 8.28% of the total share capital, becoming the second largest shareholder of I Love My Family.
For this equity investment, 58 Group stated that it mainly values the real estate brokerage service team, industry vision and performance, as well as the value of brands such as I Love My Home and Xiang Yu.
Yao Jinbo said, “In the future, the two parties will use the real estate information platform and the brokerage company’s business coordination mechanism to learn from each other’s strengths in information quality, SaaS services, etc., and integrate organically, to jointly promote the construction of a long-term mechanism of real housing in the entire industry.”
The original intention of cooperation is always good, but this situation has changed after I love my family’s 2020 semi-annual performance forecast.
In July 2020, I love my family announced that it is expected that the net profit attributable to shareholders of listed companies in the first half of the year will drop by 88.19% -92.12% from the same period last year. Soon afterwards, I love my family announced for the first time that May 8th Co., Ltd. intends to reduce its holdings of 77.496 million shares to 4.99%.
Later, due to various reasons, as of February 27, 2021, when the time limit expired, Wuba Co., Ltd. did not reduce its shareholding, and its shareholding status remained unchanged. Until recently, I love my family once again announced the May 8th Co., Ltd. pre-reduction plan.
The time limit for the share reduction plan is not implemented, which is more likely to be good news for investors, but it cannot be ruled out that stock holders have other considerations. However, in general, the repeated “planning to reduce holdings” by major shareholders will inevitably affect the company’s stock price.
I love my family said that May 8 Co., Ltd. is not a controlling shareholder or actual controller of the company. In view of its asset integration, it plans to reduce its holdings of some of the company’s shares. The implementation of this share reduction plan will not lead to changes in the company’s control rights, and will not have an impact on the company’s governance structure and future continuous operations.
Difficulties in holding down
Whether this reduction will be further implemented in the future, there are many factors that need to be considered.
First, is the reduced holdings of funds that have been realized are attractive to May 8th Co., Ltd.? As of the close of the market on the 7th, I love my home closed at 3.26 yuan/share, which was cut in half compared to 7.12 yuan/share when it was invested. Compared with the total transfer price of 1.068 billion yuan at the time of the share purchase, even if all the shares held at this time are cleared out, only 489 million yuan will be returned.
Exiting the market at this time or waiting for the stock price to recover, this choice is not easy to do.
Second, how do I love the future development potential of my family? In fact, only from the performance of operating data, I love my family’s operating situation in 2021 is not ideal. Although the mid-year data is remarkable compared to 2020, it still faces some challenges in the third quarter.
According to the 2021 semi-annual report released earlier, I love my family achieved revenue of 6.129 billion yuan, an increase of 55.86% over the same period last year.
The report shows that three items of data have increased significantly. One is to achieve operating profit of 537 million yuan, an increase of 639.21% over the same period last year; the second is to achieve a net profit attributable to owners of the parent company of 379 million yuan, an increase of 840.20% over the same period last year; and the third is attribution. The net profit from shareholders of listed companies after deducting non-recurring gains and losses was 358 million yuan, an increase of 750.70% over the same period last year.
Hundreds of times growth is more convincing than other words, but the dazzling results were cold in the third quarter. Relevant data show that the total transaction volume of the second-hand housing market across the country fell by nearly half year-on-year in the third quarter.
Reflected in the data of the third quarter report, in the third quarter, I love my family achieved operating income of approximately 2.817 billion yuan, a year-on-year decrease of 0.06%; realized net profit attributable to shareholders of listed companies of approximately 96.95 million yuan, a year-on-year decrease of 52.4%; attributable to listing The net profit of shareholders of the company after deducting non-recurring gains and losses was RMB 95,212,200, a year-on-year decrease of 53.88%.
In addition, I love my family is also facing the issue of executive resignation. According to incomplete statistics, five executives have left since August this year, including the company’s vice president and CIO (chief information officer) Liu Dongying, vice president Lu Jun, chairman of the board of supervisors Zhang Peng, supervisor Liu Hui, and director Wenbin. Dating back to earlier times, in 2018, a total of 6 executives left.
Third, whether the business coordination between the two parties will continue to advance. As mentioned in the previous article, Yao Jinbo expressed his intention to cooperate in the business coordination mechanism and promoting the construction of real housing in the whole industry at the beginning of his shareholding. What is the next step?
In the past, the members of the “Anti-Shell Alliance” went their separate ways, and Yao Jinbo’s Anjuke listing did not go smoothly.
In March 2021, foreign media reported that Anjuke plans to conduct an IPO in Hong Kong within this year. The following month, Anjuke submitted a prospectus to the Hong Kong Stock Exchange. In October, according to the Hong Kong Stock Exchange, the IPO prospectus submitted by Anjuke had been “invalidated”. There is currently no second submission.
In the prospectus, in 2020, Anjuke Group has integrated Anjuke, 58 Real Estate, Aifang and Qiaofang, and its positioning has transformed from an online marketing service provider to a leading open real estate information transaction service platform.
After the lapse of the IPO, Anjuke has obviously lost the most effective financing channel at this stage.
According to the announcement on the evening of the 6th, the reason for this shareholder reduction was the need for group asset integration. After the completion of this reduction, 58.com, a group of May 8th Co., Ltd., will no longer be the second largest shareholder of I Love My Family.
