On the evening of July 8, the Science and Technology Innovation Board ushered in the first case of withdrawal.
The website of the Shanghai Stock Exchange shows that the review status of Beijing Papaya Mobile Technology Co., Ltd. is "terminated", which is the first enterprise to terminate on the Science and Technology Innovation Board. There were 101 days between accepting the application and ending the review.
In detail, the Shanghai Stock Exchange has reviewed the application for withdrawal of issuance and listing filed by Beijing Papaya Mobile Technology Co., Ltd. (hereinafter referred to as Papaya Mobile or the issuer) and its sponsors. Relevant rules stipulate that he now agrees to his application and decides to terminate the issuance and listing review of his science and technology innovation board in accordance with the law.
The Shanghai Stock Exchange accepted applications for the issuance and listing of Papaya Mobile on the Science and Technology Innovation Board on March 29, 2019. On June 28, after two rounds of review inquiries and responses, the review center of the Shanghai Stock Exchange convened an review meeting to form an review report on the company’s issuance and listing application, which was proposed to be submitted to the Listing Committee for deliberation, and a letter was sent to request the issuer and sponsor to submit a prospectus to the meeting draft. On July 4, the company and the sponsor submitted an application for withdrawal of the issuance and listing.
Two rounds of audit inquiries focus on these issues
In the preliminary audit, the audit center of the Shanghai Stock Exchange successively launched, The first and second rounds of inquiries were issued on June 4, and the first and second rounds of inquiries submitted by Papaya Mobile and its intermediary agencies were received on May 22 and June 19, 2019. The two rounds of review and inquiries focused on the following issues:
First, the issuer’s core technology advancement and the issuer’s production and operation mainly relying on core technology. Papaya Mobile currently owns 1 US patent and no domestic patents. During the reporting period, R&D investment accounted for 4.94%, 1.20% and 0.71%, respectively, and the comprehensive gross profit margin of each period was 20.31%, 6.24% and 4.38%, respectively. The SSE enquiry requires the issuer to state what kind of core technologies it has, whether these technologies are common basic technologies for business in the industry, and the role of related technologies in providing customers with overseas marketing services; the issuer is required to combine the reporting period Trends in gross profit margin changes, R&D investment, and technology of comparable companies in the same industryLevels, etc. further disclose whether the company’s core technology is advanced and whether it can be effectively transformed into operating results.
The second is the issuer’s business essence and business model. Papaya Mobile’s prospectus positions it as a company that relies on self-developed technologies for big data processing and analysis, and mainly uses global big data resources and big data processing and analysis technologies to provide overseas marketing services. The Shanghai Stock Exchange pays attention to the accuracy of the issuer’s industry positioning and classification, and requires the issuer to combine the industry classification catalogs and guidelines issued by relevant departments, the content of the company’s specific business activities, the source and acquisition of big data, the application scenarios of the technology, and the issuer’s Factors such as the relationship between the company’s business and big data, the similarity between its main business and comparable companies, fully explain and disclose whether the company’s industry positioning is accurate.
The third is whether the issuer fully discloses the risk factors that may have a significant impact on its ability to continue operations. In 2018, woodGua Mobile’s purchases from Facebook accounted for 91.99% of the annual purchases, and related revenues were mainly realized through Facebook channels, while its purchases accounted for a low proportion of Facebook’s Asia revenue and total advertising revenues. The relevant contractual terms for its business sustainability There are also adverse effects. The company has not fully disclosed the adverse effects of the above circumstances on the company's ability to continue operations in a prominent position in the prospectus of the application draft.
Fourth is the adequacy, consistency and comprehensibility of relevant important information disclosure. The main business of Papaya Mobile previously disclosed on the NEEQ includes game business. The gross profit of game business in 2016 still exceeded 30%, but it was not clearly disclosed in the prospectus application draft, and stated that the company’s main business did not occur during the reporting period Significant changes; in the inquiry response, it was disclosed that the issuer’s purchases from Facebook in 2018 accounted for Facebook Asia21% of revenue is inconsistent with the results calculated based on Facebook publicly disclosed data on the Nasdaq exchange. The contents of the review inquiries and responses of the issuer and intermediary agencies are an integral part of the issuance and listing application documents and have been publicly disclosed in accordance with the prescribed procedures.
It is worth noting that once the application documents for issuance and listing are accepted and the content of the reply to the review inquiry is disclosed, it will be legally binding on the issuer and related institutions. The information disclosure documents should be true, accurate and complete. Liability is not reduced due to termination of the audit. If the issuer’s information disclosure and the practice of intermediary institutions have violated regulations before the termination of the review, the Shanghai Stock Exchange will deal with it in accordance with relevant regulations.
Withdrawal of an application for issuance and listing is the independent judgment and normal behavior of the applying enterprise, and the Shanghai Stock Exchange respects it. At present, the first batch of listed companies on the Science and Technology Innovation Board has already emerged.The basic requirements, review standards, and prescribed procedures for establishing a science innovation board and piloting the registration system are advanced in an orderly manner. During the issuance and listing review, the Shanghai Stock Exchange will make full use of the functions of the public inquiry review to make an review and judgment on whether the issuer meets the issuance conditions, listing conditions, and information disclosure requirements, and form review opinions. We will continue to adhere to information disclosure as the center, grasp the positioning of the science and technology innovation board, focus on the issuer's science and innovation attributes, technological advancement, use of advanced technology to carry out production and operation, major operations and technical risks and other major issues, and urge the issuer to fully disclose Relevant information so that market entities can effectively judge the issuer’s scientific and technological innovation attributes and investment value.
Once listed on the New OTC Market
Papaya Mobile was listed on the OTC Market in May 2016. In December of the same year, it withdrew from the OTC Market due to "adjustment of the company's business and development strategy."
In just 8 months of listing, the woodenGua Mobile only disclosed a 2016 semi-annual report. In the first half of 2016, the company achieved operating income of 233 million yuan, a year-on-year increase of 53%; net profit was 7.15 million yuan, a year-on-year increase of 238%.
According to the public transfer specification at the time, Papaya Mobile was established in 2008 and is committed to building a global mobile Internet platform. Papaya Mobile focuses on the precise and programmatic placement of mobile Internet advertising. Based on big data technology, it provides advertisers with advertising strategies and technical solutions covering major Internet media resources around the world through its own Internet advertising platform. The main business includes mobile digital marketing and mobile game development and operation in the global market.
The main business disclosed by Mobile at that time included game business. The gross profit of the game business in 2016 still exceeded 30%, but it was not clearly disclosed in the prospectus application draft.The company's main business has not undergone major changes.
In the response to the inquiry, it was disclosed that the issuer’s purchase from Facebook in 2018 accounted for 21% of Facebook’s Asian revenue, which was inconsistent with the results calculated based on Facebook’s public disclosure of data on the Nasdaq exchange.
The proposed fundraising of 1.176 billion yuan
The prospectus of Papaya Mobile shows that in the two years after its delisting, its operating income and profit scale have increased significantly. From 2016 to 2018, the operating income of Papaya Mobile was 565 million yuan, 2.279 billion yuan, and 4.328 billion yuan; the net profit attributable to the company's shareholders was 34.34 million yuan, 61.76 million yuan, and 83.447 million yuan, respectively, with rapid growth.
In terms of the sci-tech innovation board listing standards, Papaya Mobile was valued at 1.2 billion yuan when it introduced external investors in December 2016.In June 2017 and January 2018, Papaya Mobile was valued at 1.3 billion yuan at the time of the share transfer. In addition, the company’s net profit in the last two years exceeded 50 million yuan. Therefore, Papaya Mobile chose the "Shanghai Stock Exchange Science and Technology Innovation Board" "Standard One" in the Stock Listing Rules applies for listing on the Science and Technology Innovation Board.
During the NEEQ listing period, Papaya Mobile did not have any financing or share transfers and other equity changes. In this application to be listed on the Science and Technology Innovation Board, Papaya Mobile plans to issue no more than 22.58 million shares, and the planned amount of funds raised is 1.176 billion yuan. The raised funds are mainly used for big data intelligent platform upgrade projects, R&D center construction projects, supplementary liquidity, etc. .
3 listed companies were listed as comparable companies with similar businesses
In recent years, Papaya Mobile The overseas marketing business engaged in is growing rapidly. The main model is that overseas marketing service providers connect relevant overseas market media traffic resources to provide services for domestic companies that have overseas marketing needs.
The prospectus shows , Papaya Mobile mainly serves enterprises in the e-commerce, tool applications, interactive entertainment and other industries. In 2018, Papaya Mobile’s revenue from the three major industries of e-commerce, tool applications, and interactive entertainment totaled 3.786 billion yuan, accounting for 87% of its revenue The company claims that "the strong overseas demand from customers such as Baidu, Qihoo 360, and Toutiao has laid a good industry foundation for the company’s rapid development."
Currently, the domestic market is engaged in overseas marketing.There are a lot of business enterprises. Papaya Mobile listed three listed companies with similar businesses in the prospectus including Huayang Lianzhong, Jiayun Technology, and Blue Focus.
Take Blue Pointer as an example. In the first half of 2018, the total revenue of Blue Pointer’s overseas business reached 5.27 billion yuan, an increase of 217% over the same period last year, ranking first in China, and its overseas advertising has also become blue Cursor is currently the most important source of income. The recently announced 2018 performance report shows that the blue cursor achieved a total operating income of 23.26 billion yuan in 2018, a year-on-year increase of 53%. The major reason for the large increase in revenue is the large increase in the mobile Internet business and overseas advertising business.
Last year’s R&D investment accounted for only 0.71% of operating income
Compared with the fast-growing operating income, Papaya Mobile’s net profit growth rate was “moderate” a lot, from 2016 to 2018 Its net profitThe combined growth rate is 56%. The company's comprehensive gross profit margin is also declining. In 2018, the comprehensive gross profit margin was only 4.38%, and the net profit margin was only 1.9%.
Higher operating income also directly affects the proportion of Papaya Mobile’s R&D investment. In the application standards of the Science and Technology Innovation Board, the proportion of R&D investment in operating income is a very important indicator.
In 2016, 2017, and 2018, the research and development expenses of Papaya Mobile were 27.9 million yuan, 27.31 million yuan and 30.52 million yuan respectively. However, due to greater revenue growth, the proportion of Papaya Mobile’s R&D investment in operating revenue fell from 4.94% in 2016 to 1.2% in 2017, and only 0.71% in 2018.
However, Papaya Mobile stated that the company is a technology-oriented company. More than 50% of its employees are R&D technicians, about 40% each year.Of expenditures went to research and development.
(Xu Yan made important contributions to this manuscript)