The trap of acquisition

Absrtact: Xiamen 35 Interconnection Technology Co., Ltd. (hereinafter referred to as the 35 interconnection, 300051.SZ) sparked a spike in share prices as a result of the acquisition of CICC Online, but the company itself, which has a P/e ratio of more than 660 times times, is inversely proportional to its share price. The question of related transaction expands

Xiamen 35 Interconnection Technology Co., Ltd. (hereinafter referred to as "35 interconnection", 300051.SZ) sparked a spike in share prices as a result of the acquisition of CICC Online, but the company itself, which has a P/e ratio of more than 660 times times, is inversely proportional to its share price. The question of affiliated transactions casts a shadow over its expansion.

The share price of 35 has risen 44.18% since May 6. However, the 35 interconnection that is transforming to the mobile end is in an awkward position, both in the traditional business and the new business, which has been placed high hopes, has not brought growth to the company. A person close to 35 connected to the first financial daily said that the mobile terminal business cost the company a lot of financial and material resources, if sales are not good, do not rule out the production of mobile terminals will temporarily stop.

The trap of acquisition

The total assets of less than 600 million of the 35 interconnection after the listing through the expansion of acquisitions, and the acquisition of most of the company's poor performance.

2010, 35 Internet acquisition of Beijing billion China Mail Information Technology Co., Ltd. (hereinafter referred to as "billion in the Mail") 70% equity, in 2012, the acquisition of billion in 27% of the postal rights, as at the end of last year, the total acquisition of billion in the 97% stake in the mail. Although the same enterprise mailbox market, but the business model and customer groups are different, 35 interconnection mainly to take the SaaS model for the outsourcing of customer sales, billion in the mail is to provide software version of the product for the construction of customer sales.

Billion in 2012 net profit year-on-year decline of more than 95%, only 1.0227 million yuan, did not meet the expected return on acquisition. 35 interconnection in earnings reported that the main reason is the slowdown in domestic economic growth, industry customer demand decline, new product investment, maturity is low, has not been effectively converted into sales revenue.

February 2011, 35 Interconnection also acquired the Central Asia Interconnection 60% Equity, Central Asia Interconnection last year, the net profit attributable to 35 interconnection is only 3.4001 million yuan, did not meet the original commitment of 27 million yuan target. 35 The interpretation of interconnection is because with the Central Asian interconnection of the original shareholders on the Central Asian interconnection has not completed the 2011 annual commitment to profit compensation issues have not reached a consensus, resulting in day-to-day management team management work has been affected, thus affecting the company's performance growth. At the same time, the Central Asian interconnection major customer management and business cooperation model has changed greatly affected the growth of the original business.

The most recent market concern, or 35 interconnection May 4, said the 35 interconnection and its wholly-owned subsidiary of Tianjin 35 Communications will be 210 million yuan in the price of gold online 100% equity acquisition.

Because 35 interconnection to the gold online this year's performance has the high expectation, pledged the gold online 2013 net profit is 25 million yuan, will be 2012 years 3.7 times times. This allows 35 of interconnected shares to pull five trading board.

However, a careful study of the quality of CICC online is not good. Net profit only 6.7472 million yuan last year, compared with 17.2409 million yuan a year ago a big drop of 60.87%, its industry in recent years is facing fierce competition, the overall performance is in a downward trend. For example, the eastern wealth of the Internet financial Information services company fell 64.72% in the first quarter of last year after a fall of net profit of 161.49%, net profit loss of 14.8506 million yuan; China Financial Online, Net profit losses in 2011 and 2012 were also $19.3 million trillion and 11.9 million dollars respectively.

Many analysts believe that as CICC's online performance declines and the IPO is hopeless, the main reason for the takeover may be to curve the market, and some media believe that given the intricate relationship between the 35 interconnection and CICC's online controllers and executives, the acquisition is not intended simply to expand the business, or even to be questioned as a related transaction.

A person who declined to be named said to reporters: "The company whether endogenous development or extension expansion, there are problems, concepts and performance is also very virtual, it is difficult to maintain its two-tier market hype." ”

Poor business transformation

35 The main business of interconnection for software Operation services and terminal products sales, for all types of enterprises to provide enterprise mailboxes, web site construction, network domain name, OA, CRM and Pushmail, Pushoa and other mobile office software products and services.

In recent years, the company has been investing heavily in mobile terminal operations, including the launch of 35phone and 35pad. At the same time, 35 interconnection is also in the 35 mall operating system research and development, 35 mall mainly based on the business model sales network products and hardware products.

Although it is transforming into a new business, neither the old business nor the new business is on the right track. From last year's situation, in addition to the network domain name revenue and web site construction revenue slightly increased, enterprise mailbox revenue fell 5.75%, mobile end product revenue fell 15.44%, software product sales fell 29.46%, mobile e-commerce revenue fell 3.27%;

35 The overall performance of the Internet in recent years is also falling annually, from 2010 to 2012, its net profit is 35 million yuan, 25 million yuan, 3 million yuan respectively. In the first quarter of this year, the company achieved operating income of about 60.54 million yuan, down 10.7% from the same period last year, the net profit attributable to the parent company is about-3.21 million yuan, the year-on-year decline of 2024.7%.

Several agency analysts told reporters that the company because of poor performance, these two years have no one to do research.

"35 interconnection to the mobile interconnection direction to the layout is right, but too late, the timing is not appropriate." Zhang, the chief executive of the agency, told reporters that most of the company's business was still in the old business, which was a decade ago, and it has declined.

"Such as mailbox, now most enterprises are using Tencent's mailbox, domain name peak also passed, it is difficult to increase significantly, e-commerce, but not to sell how much money." These businesses account for about 70% of the company's share. "Zhang said that the new business is not reliable, now do mobile phones, pad is even more difficult, has been sold to the price of cabbage, even Huawei companies are thinking about how the mobile phone transformation, if 35 are still counting on these mobile terminal products, the prospect is difficult to predict.

Reporter enquiries found that the 35phone of several models currently quoted in the 1500 yuan ~2300 yuan, although the specific sales of 35 interconnection did not disclose, but in the mobile phone market, a number of sales staff to reporters, 35phone and 35pad sales are not good, some non-flagship models can talk about 1000 yuan.

In fact, in order to invest in mobile terminal products, the 35 interconnection set up two communications subsidiaries in Xiamen and Tianjin in 2011, and invested more than 100 million yuan in the construction of terminal projects. But this year, a quarterly display, 35 of the interconnection of Xiamen 35 communication has invested 10.2 million yuan, so far the loss of more than 30 million yuan, the total investment in Tianjin, 100 million yuan commitment, has been invested 50 million yuan, has not realized operating income.

35 of the Internet reported in the report, 35.79% of Xiamen's 35 communications in 2012, a huge loss. The main reason is a large investment in product development, due to market changes, the company launched a mobile terminal products failed to achieve the expected sales.

2012 earnings showed that the mobile terminal products sold only to 9.78 million Yuan, 2011 and 2012 Two years of total sales revenue is only 21.34 million yuan.

It is said that Xiamen 35 communications for performance reasons, but also carried out a large area of layoffs. However, 35 interconnected Dong Yang Xiaoliang said that the company is in the restructuring phase, inconvenient to comment.

The plan for this year's new project, 35 interconnected, said will be based on the company's existing boss Smoothen system, complete from the PC to the mobile device end-to-end cross-platform extension, and the existing enterprise mailbox upgrade, automatically identify and protect against the mailbox server network attacks, spam filtering, sensitive message classification protection and other virtualization information protection.