37 play together auto parts company, behind the industry how the trend

Another game company was closed by a a-share company. However, the company is not a hand tour, but a web game. It is noteworthy that the acquisition of this web game, a A-share company, is also an auto parts company. And before the acquisition, and the Web game scandal-ridden, there is another a a-share company Datang Telecom, and Datang Telecom has issued relevant announcements.

That's interesting. How did this deal arise? Moreover, from this transaction, we can see the trend of industry?

October 9, Shenzhen Stock Exchange listed companies Shun Rong shares (002555) issued a notice to the total value of 1.92 billion yuan to buy domestic web game companies 37 play 60% equity. Among them, 480 million yuan comes from the cash payment, the surplus value comes from the acquirer's listed company share payment.

First come to understand the two companies. 37 play in the domestic web game market, what is the status of the lake?

Data show that 37 play was founded in September 2011, registered capital of 10 million yuan, legal person for Li Weiwei, until the above transaction, Li Weiwei and another co-founder Zeng Kaitian respectively hold 37 play 50% shares.

In other words, 37 play before the sale has not received any VC investment, the whole company is Li Weiwei and had opened two people. This simple equity structure also brings convenience to future acquisitions.

Data show that 2012, 37 play revenue 587 million Yuan, and 2013 1 to July, its cumulative revenue has reached 813 million yuan, corresponding net profit of 69.55 million yuan and 115 million yuan respectively. It can be seen that its growth momentum is very fast.

Among them, 37 play platform Operation Game "Qin Beauty" income accounted for 37 play total revenue 21%, "the Divine Comedy" accounted for 16%, "The Fire God" accounted for 14%, for the first three major income products. These three products are from different developers, for 37 play contribution to the revenue structure is more dispersed, also shows that 37 play in the future development does not rely heavily on a certain developer.

And as of July this year, 37 cumulative registered users 174 million people, monthly pay the number of users 233,700, monthly ARPU (average per user) value of 431.27 yuan, monthly recharge amount of billion.

What is the concept of the above data? Contrast it horizontally. The data reported here, in the first quarter of 2013, 37 play ranked 5th in the domestic market share, the market share of 8.2%, the first four were Tencent, fun Tour, 4399 and 360, the market share of 18.1%, 10.3%, 9.3% and 8.7%.

From this, 37 play with 360 pages of the data is very close to the platform, only a difference of 0.5%, and the third 4399 also only 1.1% of the gap, and the second fun Tour is only 2%. Also further see, the domestic web game market share, Tencent accounted for the big head, the advantage is more obvious, and 2 to 5 of the gap is very small. In other words, 2 to 5 once a merger occurs, will affect the overall pattern. In 2 to 5, the fifth 37 play has become a a-share listed company's holding subsidiary, 360 is already listed in the United States, and 43,991 wanted to separate listing, but the current a-share has been not opened. In other words, the next merger is likely to be the second most interesting tour, before the 360 want to buy fun tour rumors, can release some signals.

Brief introduction finished 37 to play, then Shun Rong shares what is the story?

Data show that shun Rong shares of the predecessor of Wuhu Shun Rong Automotive Parts Co., Ltd., was founded in 1995, in March 2011 in Shenzhen stock market. The registered capital before listing is 134 million yuan. For a main business for the automotive plastic fuel tank development and production and sales of auto parts enterprises, and its main business accounted for the company's total revenue of more than 99%. Its founding team the Wu family owns 56.04% shares of Shun Rong.

What we see here is that the business of Shun Yung shares is irrelevant to the game, even to the Internet. But also can see, Shun Rong shares business unit is very single, the main business revenue accounted for more than 99% of all revenue, this in a a-share seems to be how rare. No real estate revenue, no financial investment revenue, no sideline.

Also noted is that the Wu family owns 56.04% of the shares. You know, if the Wu family has a relatively small stake, then after the merger of the company, it is likely that control is not on its own. In other words, a 56.04% per cent shareholding creates capital conditions for the company's further diversification.

But the company has always been focused on auto parts business, Shun Rong shares why the beginning of "amorous" it?

Earnings showed that in 2012, Shun Rong shares revenue of 309 million yuan, compared with 2011 annual income of 338 million yuan slipped 8.6%. The cumulative income of 2013 from 1 to July was 150 million yuan, and the full-year revenue was likely to be less than last year.

Shun Rong shares also said in the announcement, 2011 onwards, the domestic automotive industry as a whole decline, the independent brand of automobile survival and development is facing the squeeze, the company's main customer procurement and purchase price declines, the main business income decline, the original main industry into the market, customer adjustment optimization stage.

So it can be seen that a a-share companies to focus is indeed more difficult. Most of the company's main business is manufacturing, supporting the country's real economy, while the development of the manufacturing industry on the cash flow depends on a larger, and macroeconomic impact fluctuations. Weak economy, the root of the banks softened, the manufacturing sector hit, the majority of the main business of a A-share is greatly affected, and in order to achieve growth requirements for shareholders to return, only to dabble in or speculate on some of the more hot industries.

And the culture sector has been one of the growth engines since last year. A few of the business of the cultural plate is hot, including film and television, OTT, network video and games. As you can see, stocks like Huayi and Ray have become the leading stocks in the cultural sector, and the share price will rise as soon as there are any hits or blockbusters. In addition, the infusion of assets by cultural companies can also be supported by local Government policy.

Referring to policy support, insert an example. Shun Rong's headquarters in Wuhu, Anhui, and 37 play its wholly-owned subsidiary of Anhui still fun to play in Wuhu. According to local government policies, Anhui is still interested in the 1th and 2nd years from the profit year will be exempted from enterprise income tax, the first 3 to 5th year to halve the levy of enterprise income tax. According to the data, the entire 37 play through financial subsidies and tax relief income accounted for about 10% of its net profit.

And in the cultural plate, film and television play investment and no game from cash flow near. Statistics, the first half of this year, the National Film box office revenue reached 11 billion yuan, and the game income of 33.9 billion yuan, both growth rate of 36%. This also can be seen why the first half of this year's game mergers and acquisitions frequently occurred. Easy to view the data show that the first half of this year's game acquisition a total of 14, involving an amount of up to 9.6 billion yuan.

Of course, in the first half of the 33.9 billion yuan, there are 23.3 billion yuan from the traditional online games, and from the Web game and hand tour income is only 5.34 billion yuan and 2.53 billion yuan respectively. But from the growth rate, the traditional net swims the same period growth rate is 18%, then both the growth rate is 40% and 100% respectively. Therefore, in the first half of the 14 mergers and acquisitions, hand-travel mergers and acquisitions accounted for the vast majority, up to 10.

And it can be foreseen that, because the domestic a-share has been not opened, as well as macro-economic impact on the overseas IPO market cold and VC investment cautious, there will be more and more game companies will be listed companies mergers and acquisitions.

Look at the details of the acquisition.

2012, 37 games revenue 587 million yuan, Shun Rong revenue 309 million yuan. From the revenue point of view, Shun Rong acquisition 37 play, is a "small swallow big" transaction.

The acquisition of "small swallow big" cannot be relied on in cash, most of which depends on equity.

This transaction, the listed company Shun Rong shares of cash payments accounted for only 25% of the total purchase price, the rest of the total purchase price of 75% of the value of the shares paid by the listed company. However, the large number of listed companies ' equity payment may lead to the "backdoor" of the acquirer, so as to make the main body of the listed company change.

Is that "backdoor listing"?

In order to satisfy the transaction in the law does not constitute "borrow shell listing" conditions, after the acquisition triggered, Shun Rong shares the largest shareholder of the Wu family plan to cash 246 million yuan to subscribe to 24 million shares of Non-public offering, so that the Wu family's shareholding ratio reached more than 30%.

According to the relevant regulations of the domestic listed companies, investors can actually control the listed companies ' shares voting rights over 30%, for the ownership of listed companies. Through acquisitions and subscription deals, the share of the Wu family will be reduced from 56.04% to 30.86%.

But note that, in fact, after the acquisition was completed, 37 played two co-founder Li Weiwei and had opened a day will hold the listed companies Shun Rong shares of 22.82% and 20.88%, the total stake of 43.7%. Prior to the acquisition, Li Weiwei and had held 37 games to play 50% equity. In other words, the 37-game management has a total of 43.7% of Rongshun shares in listed companies, which is 30.86% bigger than the Wu family's holdings!

Fortunately, Li Weiwei and his party made some compromises on board seats. After the deal, Shun Yung shares of the board of Directors of 9, excluding 4 independent directors, the Wu family accounted for the board of 3 seats, and Li Weiwei will nominate 2 seats, has not mentioned the seat candidates. It also means that after the acquisition, 37 play will not occupy the majority of the board of Shun Rong shares.

In addition, it is noteworthy that the transaction also involved the "gambling" clause.

37 play commitment Shun Rong shares at the end of 2013 net profit of not less than 220 million yuan. If the transaction takes place within 2013 years, 37 play will be pledged in 2014, 2015 net profit is not less than 300 million yuan and 360 million yuan respectively. And if the deal happened in 2014, then 37 play will be committed in 2014 to 2016 three years of net profit of no less than 300 million yuan, 360 million yuan and 430 million yuan.

As of July 2013, 37 play full year net profit has reached 115 million yuan, and this year's commitment target only 100 million yuan.

But once the commitment is not fulfilled, Li Weiwei and the first days will be paid in shares to compensate, the shortfall in part by cash compensation.

It is noteworthy that this May, Datang Telecom has issued a notice that plans to buy 37 play, but later issued a notice to give up, in late June this year to buy Guangzhou to play.

Datang Telecom acquisition of Guangzhou to play the case, the acquisition price of 1.7 billion yuan, 100% equity acquisition, of which, 35% of the price for cash payments, 65% of the price for shares paid.

Datang Telecom acquisition to play the case also give 37 play to sell pricing made reference. Datang Telecom to play the overall value of 1.7 billion yuan, to play 2012 years of annual revenue of 260 million yuan, net profit of 27 million yuan, and 37 play the same period of revenue for 587 million yuan, is to play 2.26 times times, net profit of 69.55 million yuan, is to play 2.58 times times. If you want to play the valuation is 1.7 billion yuan, according to the same standard, 37 play valuation should be at least 4.4 billion yuan. And Shun Rong to 37 to play the valuation is 3.2 billion yuan. But considering, to play through the release of mobile application Platform PP Assistant in the mobile end of the layout than 37 play ahead, and Shun Rong is 60% of the equity acquisition, gave 37 play a certain independent space, 3.2 billion yuan overall pricing is still within the scope of reference.

Do not choose Datang Telecom, and choose Shun Rong, for 37 play, perhaps there is all sell, or give up the holding power of thinking. After the deal, Shun Wing held 37 play 60% of the controlling power, but also to 37 play two co-founder to leave ample holding space, and the holding space also gives both sides more leeway for the future.

Where's the room?

For 37 play, in addition to have a listed company's "Godfather", broaden the financing channels, the future can also be introduced by the introduction of Third-party investors to the independent listing. The 37-game shareholder structure is very clean and also conducive to future investment operations. In addition, the preceding article also mentions that at present, the domestic web Game 2 to 5 of the market share gap is not obvious, access to a public offering financing channels to facilitate the "breeding war", after all, the A-share has not yet opened, and the U.S. capital market only to the game company about 6-8 times the price-earnings ratio, and once the market share There is still the possibility of an independent listing.

For Shun Rong, it is no easy job to get a more than 3 billion of the value of a company that is much larger than the body. It is also because of this, through the first holding, integrated business investigation Team running-in, and then assess whether overweight, or through the "bet" conditions trigger to harvest more shares, from the price and strategy, are more cost-effective.

For Shun Rong, after all, 37 play There are several also need to prove. First, to move to the end of the pace of transfer, competitors in Guangzhou to play has been through the PP assistant in the mobile end exerting force; second, the future pattern of web games is not good judgment, the current trend is more and more towards the big platform; Three is, and do auto parts, the game industry's core assets is the team, after being acquired, the team can be effective running-in, Middle and high level personnel do not lose.

Finally, compare the recent Hong Kong listing of the roaming. Roaming current market value of HK $8.2 billion, equivalent to RMB 6.5 billion yuan. But unlike 37 play, roaming its business mainly for game development, and 37 play more is agent operations, therefore, 37 play the net profit margin is far less than roaming. 2012, roaming revenue for 777 million yuan, is 37 play 1.3 times times, net profit of 240 million yuan, 37 play 3.4 times times. If the same price-earnings ratio, 37 play market value of 1.9 billion yuan, so it seems, or a a-share valuation high AH.