Mining machinery "sell at a loss" international trading day fell 4.4%, mining machinery shares where the hope?

Original title: "Mining machinery" sold at a loss "international trading day dropped 4.4%, mining machinery shares where the hope?

By Xuejiao Huang, Odaily Planet

At 9:30 PM on June 26, Eben international listed on The Nasdaq stock Market and became the second miner after Jia-Nan.

Under the ticker symbol EBON, the company sold 19.26 million common shares at a price of $5.23 per share, raising about $100.75 million and a total market capitalization of $685 million. & have spent

Eppon fell in early trading, touching as low as $3.81, before closing 4.4% lower at $5. On the same day went public in the United States, up as much as 150%& NBSP; Another Chinese concept of sound network (API) contrast tragic.

Unlike at the end of last year, when the industry's "mining machine first stock" Jia Nan went public, ebang's listing did not arouse much public opinion, for this p/E ratio is NBSP; -14.6 miner shares, many views have been clearly expressed to see decline.

Among the top miners, Yibang has obvious weaknesses: the performance of miners is at the bottom, the sales mode of big customers is risky, and the sales network needs to be expanded. Compared with Jia Nan Yun zhi, Yibang international also has a significant gap in the operation capacity of selling inventory and closing money.

Mired in controversy and class-action lawsuits, it has lost 78% of its market value since listing. < / p > < p > Jia Nan also let "mining shares" this track itself is questioned. How to get investors to pay for the "supercomputing story" is a big problem when margins are negative, bitcoin production has halved and prices have barely budged.

However, Odaily planet found that there are still a lot of analysis bias, misreading data and lack of understanding of the mining machine industry in the current media dissemination of eppon listing related content. & have spent

Eppon International, for example, has a certain percentage of leverage, but it remains within normal limits, and the client lawsuits that some investors fear will not affect its fundamentals.

Therefore, in this paper, we will make a comprehensive interpretation of "mining machine second share" from data information, business development and industry prospect.

Two miner stocks, which is worth buying?

As "the second stock of mining machine", people inevitably compare it with "the first stock of mining machine" Jia Nan Yun zhi.

Eppon International was founded in 2010. At the early stage, it was engaged in research and development of communication network access equipment. By the end of 2016, the first bitcoin mining machine was released at the beginning of the bitcoin bull market, about four years after Jiannan.

On the issue of going public, the two companies are almost in step. Some interesting things can be seen in the horizontal comparison between companies seeking listings in Hong Kong and now both listed on Nasdaq and reporting their latest results as miners.

(1) Market value & NBSP;

The relationship between the two is often described by the phrase "a hundred million states = half a thousand dollars."

Canaan Inc. went public on nasdaq on Nov. 20, 2019 at $9 a share -- its price known as American depositary shares -- after several dives, leading to a significant drop of more than 78% since its offering price.

In terms of total assets, the total liabilities and shareholders' equity of EppON International & NBSP; $82 million, about 59% of The company's total assets; Jia Nan's IPO market value reached $1.4 billion, twice that of Eppon. & have spent

After the first day's close, Ebon's market value was $655 million. Due to the continuous decline of Jianan's market value, Ebon's market value is 220 times that of Jianan.

If you really want to bet on the mining track, compared to buy Eppon International, Jia Nan's current market value of $300 million is a "low value".

(2) Business composition & NBSP;

For both miners, the share of machinery sales and related revenues is quite high.

According to the prospectus, over the past two years, sales of mining machines have accounted for more than 99 percent of Jia Nan's total revenue, while the share of Sales of mining machines and accessories has dropped sharply, from 96.3 percent in 2018. That's down to 82.4% in 2019. At the same time, mining machine operation and maintenance income accounted for a significant increase from 2.6%& NBSP; Non-mining business (sales of telecommunications equipment) also saw its share of revenue rise slightly, from 1.2%, to 14.5%. Rose to 3.1%.

Due to the low share of mining machine sales, eppon International is said to be less dependent on bitcoin mining, which is actually not true.

According to the prospectus, in 2019, Eppon International earned $109 million from the sale of its mining machinery, with the revenue of its mining machinery management and operation business totaling $1,570. Ten thousand us dollars, which together account for 96.9% of EppON International's total revenue. Although they are in different links of mining industry chain, they are deeply affected by the rise and fall of mining industry.

Especially from last year to this year, is the replacement of the old and new mining machine moment, a large computing power mining machine can top 4 small computing power mining machine, used to manage the mining machine has a significant surplus. Therefore, yibang international expansion of mining machinery operation and maintenance service line may not have a great room for growth, nor can it build a moat of business.

Therefore, it is only a superficial statement that Eppon International's business is more diversified than Jia Nan's.

(3) Business performance

As can be seen from the figure below, eppon's sales revenue declined significantly in 2019, and its performance in 2018 was only half that of Jia Nan.

The most striking results for the two companies are gross margin, net profit and year-over-year figures, all of which are negative, meaning that the two companies declare a loss for every miner they sell.

However, it is not the same. In 2018, Eppon International had a negative net profit and a low gross profit. Compared with Jia Nan Zhi in the same period, it can be seen that Eppon International has a high sales cost and operating cost.

This year, things began to reverse. In the case of revenue decline, yibang international sales costs, operating expenses are also reduced. Jia Nan's income fell by 47%; Operating costs fell by only 11.77%, operating expenses increased by 43.57%, and the net interest rate reached a staggering NBSP; -72.7%. Therefore, Jia Nan yun was also criticized for its possible improper cost control and poor management.

Ebang said in its prospectus that its net loss had widened three-and-a-half times this year because of a sharp reduction in tax rebates from local governments.

A look at its prospectus shows that in 2019, Ebon earned a VAT rebate of less than $10,000, while in 2018 the rebate amounted to $27.36 million, close to the amount of a loss. But the enterprise pays tax is the normal behavior, the tax preference is the short-term dividend, cannot be long-term, hundred billion international should make the countermeasure early.

(4) Operation capacity

Other indicators that test a company's operational capability include inventory turnover, accounts receivable turnover, and total asset turnover.

Through comparing the data of jianan and eppon international, it can be seen that jianan's stock is sold quickly, balance payment is recovered quickly, and its capital utilization rate is high, which reflects its higher position in the industrial chain and more efficient operation.

Ebon International financial report, source: Oriental Wealth Network

Jia Nan yun financial report, source: Oriental fortune & NBSP;

Potential risk analysis, who is true and who is false?

After the listing, Jia Nan yun zhi first quarter performance "changed face", plus the "financial fraud" lawsuit storm, Jia Nan shares have fallen to 21% of the offering price. Big Brother Jia Nan yun zhi's poor performance has investors worried that Eppon International could do worse. Indeed, mining machinery shares in the future performance from all aspects are not optimistic.

(1) The most uncompetitive mining machine

As shown in the figure above, the ipbit mining machine owned by Ebbn has the lowest computing power (highest 44Th/s) and the highest energy consumption ratio (57W/J, the lower the better), which is in an obvious disadvantage among the head miners. Its market share of 5.76% is only half that of Jia Nan. & have spent

Historically, the performance of pterbates has also lagged behind that of head miners for most of the time.

Five mining machine brand mining power consumption (J/T) change

Source: Mining official website, produced by BitMEX Research, data as of June 2020

(2) To B  Sales model

All the time, yibang international sales model is oriented to enterprise customers. According to its prospectus, Ebang's mines are all sold directly, without any distributors, agents or distributors.

Interestingly enough, the top three accounts accounted for 34% of Eppon International between 2018 and 2019. The top 10 customers contributed 57% of the revenue.

The model facing large customers has the advantages of low sales cost, but low profit and high dependence. Once customers lose, they will suffer heavy losses.

(3) Leverage operation

In its prospectus, which was updated on June 17th, Eppon Raised the maximum amount raised from $100m to more than $144m, which was interpreted as "eppon international is in urgent need of short-term financing" and cited in other media as citing its larger borrowings (3,200&Nbsp; outstanding loans are counted; Ten thousand dollars) for proof.

But that is not necessarily the case.

Let's start by looking at the ratio of international debt.

According to the prospectus, as of December 31, 2019, Ebang's total debt stood at 57.04 million yuan, down 30% from 2018. At the same time, the asset-liability ratio reached 69.05%, an increase from 2018, and was 30.12% higher than Jia-Nan Yun & NBSP; That's pretty high.

But there is no doubt that mining machinery production is a heavy investment, long - term business, debt management is inevitable.

According to the prospectus, as of December 31, 2019, Eppon International had us $62.45 million in inventory and accounts receivable, which exceeded its total liabilities, with a cash cycle of between 50 and 130 shares. The day, also known as the 6000& NBSP; The probability of $10,000 has turned into cash flow.

Looking at Jia Nan before the listing, the new loan in 2018 was 276 million US dollars, and the asset-liability ratio reached 82.8%. After the listing, the debt-to-asset ratio decreased by 3/4 at the end of 2019.

(4) Litigation is not a serious problem

The listing comes amid a number of pending lawsuits. Many analysts believe that the decisions of these lawsuits will bring uncertainty to its share price.

But the dispute does not mean Eben is at a disadvantage.

Many of the disputes are lawsuits brought by Eppon's customers over the quality and delivery of its products.

Let's look at a lawsuit that has been closed. On September 3, 2018, a customer filed a civil lawsuit with the Hangzhou Intermediate People's Court, accusing Ebang International of (1) delayed delivery of some products in an order worth us $1.9 million in December 2017; (2) The product fails to achieve the advertised performance and other problems, and claim 770& NBSP to Eppon; Ten thousand dollars in losses.

On November 5, 2019, the Hangzhou Intermediate People's Court rejected most of the plaintiffs' claims, ordering Zhejiang Ebang to pay the plaintiffs a total of $26,000 in penalties and logistics costs. The plaintiff's second suit was also dismissed. & have spent

This just shows that mining machine manufacturers have a greater say in the industry because of concentration and monopoly, and because mining machine products have no industry standards and cannot be followed, so it is difficult for users to protect their rights. Odaily has reported tens of millions of "problematic mining machines" in mainland China, and miners have not received explicit legal support so far.

Therefore, most of the order disputes are not enough to affect the fundamentals of Eppon.

(5) Mining machinery is a sunset industry?

Bitcoin mining is also hitting a ceiling at a time when the blocks are shrinking and the currency has been trading sideways for a long time but participants are constantly betting on it.

According to Frost& Amp; Sullivan reported that the global market size of Bitcoin mining machines increased from 1.1 billion yuan in 2014 to 21.4 billion yuan in 2018, with a compound annual growth rate of 110%. In the next five years (2023), the market size of the Bitcoin mining machine market is expected to reach 31.7 billion yuan, with a compound annual growth rate of 8.2%.

From a growth rate of 100% to a gross profit of less than 5% and a negative net profit, a "mining" manufacturer is no longer as legendary as it used to be. The rise of the industry still needs to be seen in terms of currency and price, but the fear is that a long sideways and bear market will make investors lose patience.

Yibang development roadmap and concept stocks

2010 & have spent In January, zhejiang million bond communication technology co., LTD. Was set up, mainly engaged in the communication network access equipment production and development, in 2014 started to develop BPU offering, in 2015 in "zhejiang billion state" new three board, year-end 2016, issued the first COINS ore wing E9 bits + in the market, smooth on currency circle of hundred million bond bull market express new three board, withdrew in early 2018, he joined the Hong Kong market after the restructuring, but filing but failed twice.

2020 & have spent On April 24, 2008, Ebang international listed in the United States prospectus disclosed, and updated on June 19.

The Daily Planet Odaily has made A comprehensive statistics of the mining companies on the A stock market. Among them, Yinjiang Stock (SZ300030), China Railway Stock (SH603300) and Zhongying Internet (SZ002464) are related to Yibang.

Since June, Yinjiang Shares and China Railway Shares have enjoyed a good rise, up as much as 20% and 25% respectively, but this is mainly due to the positive impact of the main business. & have spent

The market and time will give the final result. The time window for Bitlandmass, another mining giant that has been seeking a listing for the same number of times, is not too long.

Text link:https://www.odaily.com

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