Two years after listing, the market warned, how can Huaxia Boya survive?

Picture source: Oriental IC

In nine years, Huaxia Boya was finally listed in the United States on May 8, 2020. However, in just two years, Huaxia Boya received Nasdaq's low stock price delisting warning.

Watching its fundamentals, revenue decline, net profit profits and money; multiple projects shut down, cash in their hands is urgent ...

After more than ten years since its establishment, Huaxia Boya is here?

Two years, from the first day of breaking to delisting warning

On July 19, Huaxia Boya announced that it received a warning letter from Nasdaq, reminding its stock price to not meet the minimum purchase price requirements for Nasdaq's continued listing.

According to the requirements of Nasdaq's listing rules, listed securities need to maintain a minimum buying price of $ 1/share. If it fails to meet the minimum purchase price requirements for 30 consecutive working days, it is deemed to be unsatisfactory.

According to the announcement information, Huaxia Boya's closing price from June 1st to July 14th is below $ 1, which has not met the above requirements.

The announcement pointed out that Huaxia Boya has 180 days to re -strive for compliance. If it fails to re -compliance before January 11, 2023, it may face delisting.

Regarding the delisting crisis, Huaxia Boya said that it will continue to monitor the stock price and may consider other feasible solutions under appropriate circumstances, including but not limited to the reflection of the existing shares that have been issued to re -meet in order to re -meet regulation.

On the day of the news, Huaxia Boya's stock price was falling. On the day of the announcement, Huaxia Boya received a receipt of US $ 0.6050/share and closed down 3.81%. On May 25th, when the Ministry of Fed's meeting was released, the three major US stock indexes rose together, and most of the popular Chinese stocks rose on the 25th, but Huaxia Boya fell 38.8%against the market.

Back to the early days of Huaxia Boya's listing, it was no longer optimistic about capital.

Huaxia Boya's issuance price was $ 6/share, and it broke through the first day of listing. It closed at 4.90 US dollars per share, which fell 18.33%from the issuance price.

Capital feedback is so cold, perhaps because Huaxia Boya itself is "too small", and the future development prospects may be "looking at it at a glance".

Huaxia Boya's main five -piece businesses are: textbooks and textbooks for Chinese and foreign cooperative schools, developing and providing Chinese and foreign cooperative courses, overseas learning consulting services, technical consulting services for smart campus solutions, and pre -job training.

The first annual report on listing shows that Huaxia Boya's revenue was only US $ 5.256 million, or about RMB 37.137 million. Even in such a small base, Huaxia Boya's annual growth rate is only 9.29%. The net profit during the year was only $ 438,000, a year -on -year decrease of 48.04%.

Since the development of these five main businesses, it has shrunk further, and the risks of each business seem to have begun to appear in batches.

The business is down, there are only 27 employees left

In 2021, the development of Huaxia Boya's business seemed to have a dilemma.

According to financial report data, in 2021, Huaxia Boya realized revenue of US $ 3.9095 million, a year -on -year decrease of 22.2%. In fiscal in 2021, Huaxia Boya changed from profit to losses. The net loss throughout the year was 1.25 million US dollars, a decrease of 203.4%from the net profit of US $ 1.21 million in fiscal 2020.

Among the two businesses contributed to revenue, a total of 26.761 million yuan in revenue of Chinese and foreign cooperative schools was 2.676 million yuan, a year -on -year decrease of 3.5%, accounting for 68.5%of the revenue; smart campus solutions and technical consulting services business revenue was 1.0594 million yuan. 46.9%year -on -year; 27.1%of revenue.

There are four projects under Huaxia Boya's Chinese -foreign cooperative school business. As one of the main sources of income, the academic English curriculum project established by Fuzhou Melbourne Institute of Technology was established in September 2011. A total of two projects have also been established as the main source of income. Among them, the academic English project of the Fujian and Taiwan universities will be discontinued in July 2022. The international general education curriculum project is still ongoing. In addition, the related cooperation projects set up by Fujian Preschool Academy have stopped in July 2019.

Regarding the development of this business year, Huaxia Boya said that the decline in related business income was mainly due to the decrease in the number of students. As of December 31, 2021, a total of 2,488 students in related business were reduced by nearly 10%compared with the 2731 people in the same period of 2020, which led to a decrease of US $ 2540,000. Perhaps to save the income. During the year, Huaxia Boya increased the tuition fees of the above -mentioned course projects, from an average of $ 1015 per student in 2020 to $ 1076/year. Come loss.

For nearly half of the income of smart campus solutions and technical consulting services, Huaxia Boya said that in 2021, it reached a cooperation with the partners in 18 projects, but the scale and scope of these projects were small, and their direction was directed to its direction. The service fee received by customers has been reduced. At the same time, the related cooperation signed with the State Grid Corporation in 2020 was not renewed in 2021, which also led to the overall decline in relevant business income.

For the rest of the business, the overseas learning consulting service business has shrunk by 72.1%year -on -year revenue, and the annual revenue is 36,200 yuan, accounting for only 0.9%of the total revenue. According to the financial report, due to the influence of new crown pneumonia, since 2020, Huaxia Boya has stopped the relevant one -to -one model study abroad consulting service, leaving only the school's study abroad consulting service in cooperation with the school to continue operation. The relevant development business of textbooks and textbooks was fully shut down in 2021, and the relevant income was not entered throughout the year. In this regard, Huaxia Boya said that the proportion of this business was very low, and the fiscal year in 2021, 2019 and 2019 accounted for 0%, 1.0%, and 0.3%of the total revenue, which were mainly affected by the number of enrollment of Chinese and foreign cooperative schools.

However, things seem to be so simple. In the risk reminder, Huaxia Boya stated that according to the publishing relevant laws and regulations, although the textbooks and textbooks provided and developed are only provided to the students of Chinese and foreign cooperative schools in the name of Chinese and foreign cooperative schools. The government approval and permission required for the publishing and sales of textbooks and textbooks has not yet been applied for. It added, "Although it is a curriculum provider, it has been printed and distributed our own textbooks in a small scale without obtaining any publishing and distribution permits, but as of the annual report, it has not been fined or other forms of supervision. , Administrative penalties or sanctions. "

Pre -job training is the only business with positive growth. In 2021, a total of 137,800 yuan was recorded, an increase of 80.3%year -on -year. However, this business accounts for only 3.5%. The growth of positive direction is really inadequate and insufficient.

Due to the decline in revenue, Huaxia Boya has strengthened expenditure control, but the results after the throttling are sighing.

In fiscal 2021, its revenue cost decreased from US $ 2.16 million in fiscal 2020 to $ 1.15 million, and the reason was that the average scale and scope of the 18 technical consulting service projects in 2021 compared with the project in 2020, it was compared with the project. There is a reduction.

At the same time, its sales expenses decreased by 31.8%to $ 150,000 from $ 220,000 in fiscal 2020. The main reason for the decrease in sales expenditure is due to the reduction of business streamlined to a smaller office space, depreciation decreases $ 18,200, rent expenditure is reduced by US $ 160,000, and wages and employee benefits are reduced by 14,900 US dollars.

This may also directly lead to a reduction in all employees. As of December 31, 2021, there were only 27 employees in Huaxia Boya, and before 2020 and 2019, the number of full -time employees was 41 and 98, respectively. Among the only 27 people in this, only 2 people and 10 senior executives and 10 people have only 6 technical supporters. It is difficult to imagine that this is the volume of a listed company.

Risk accumulation, frequent mergers and acquisitions staged "snake swallowing"?

From the perspective of the annual report, in addition to the decline in performance, there are many hidden risks.

Regarding the most important Chinese -foreign cooperative school business, Huaxia Boya said that fiscal year 2019, 2019, and 20121, their revenue in related businesses account for 47.3%, 55.2%, and 68.5%of the total income, and most of this business is mostly of this business. The income comes from Fuzhou Melbourne Institute of Technology and Minjiang University. In 2017-2018, it carried out five Chinese-foreign cooperative school-run projects with 4 universities, of which two of them were terminated because they evaluated "unprofitable". At present, this business income is highly concentrated in the above two major partners.

In addition, the students will pay 15,000-28,000 yuan of tuition fees to the Chinese and foreign school-running projects organized with relevant colleges every year, and according to the cooperation contract, Huaxia Boya has the right to collect 12.5%-50%of the student tuition fees. However, whether the tuition fee can be obtained depends on whether the cooperative institutions are satisfied with their teaching results. If there is a dissatisfaction, relevant colleges can extend the tuition fees or delay the payment of this tuition fee, which may also affect its income.

In addition, the enrollment of related projects also mainly depends on the reputation of Chinese and foreign colleges. If the reputation of the cooperative institutions is damaged, it will no longer be supported by students and parents, and it will also affect Huaxia Boya's income and operation.

In terms of smart campus solutions and technical consulting services, Huaxia Boya admits that although the gross profit margin of the project's business line was 41.9%in the 2021 fiscal year, the gross profit margin in 2019 and 2019 was 29.4%and 29.7%, respectively, and it has been low. In other business lines. This is due to the nature of the business itself, that is, the cost of software customization and hardware facilities is high, and the full set of solutions is high. Huaxia Boya admits that it cannot guarantee that the business's future profit margin can increase, nor can it guarantee that the business income or total income can continue to invest in the business operation.

In addition, the study abroad consultation business is affected by the epidemic, visa policy, destination country and regional immigration policy, international students' intention to study abroad, and the proportion of cooperative institutions and graduation rates. The pre -job training business also relies more on the performance of the employees and the recognition of the employer.

In other words, the five main businesses of Huaxia Boya have the risk of all business, and there is a huge uncertainty from many aspects of its continuous growth and development in the future.

But even so, Huaxia Boya is still seeking acquisitions.

In February this year, Huaxia Boya announced that it had signed a share acquisition agreement with the shareholders of Wanwang Investment Co., Ltd., agreed to acquire 100%equity of Wanwang investment for $ 60 million. It is reported that Wanwang Investment and Operation and Operation of an independent college and a undergraduate secondary college, the number of students in the school is more than 4,200. According to the agreement at the time, the consideration of $ 60 million in transactions will be paid in installments. On the day of the news, Huaxia Boya has paid the part of the acquisition payment when the delivery is transferred to Wanwang Investment shareholder Huang Xiaosi Huang, Chairman of Huaxia Boya and the company's CEO execution The other joint accounts held by Guan Linyi will complete all after the audit of Wanwang's fiscal year in 2021. The company is expected to be officially delivered before May 2022.

Lin Yiyi will also serve as the only director of Wanwang and its related company Hong Kong Wanzhong Education Investment Management Co., Ltd..

It is worth noting that as of the date of the announcement, the total market value of Huaxia Boya was about 15.3 million US dollars, and the total transaction volume reached US $ 60 million, which is far exceeding the company's total market value.

At the same time, according to the 2021 annual financial report, as of the end of the reporting period, the cash and cash equivalents held in their hands were US $ 32,678,400, or it was not enough to pay the acquisition fee. Essence

On July 14 this year, Huaxia Boya has completed the acquisition of Beijing Oriental Intelligence. According to previous announcements, Huaxia Boya acquired 100%of Oriental Intelligent's equity with 7 million ordinary shares.

The announcement shows that Dongfang Zhiye originally belonged to Beijing Yunban Technology Co., Ltd. and was a comprehensive service provider of higher vocational education. Huaxia Boya said that the acquisition will enable the company to develop a curriculum system with trusted teachers' resources, expand services to internship recommendations, etc., and ultimately enables the company to enter the next stage of growth in the vocational education industry.

Cash is urgent, and it must be acquired as a shareholding. Huaxia Boya seems to be desperate. And the business risk is frequent and the performance has declined significantly. Now that the delisting warning is over, can Huaxia Boya still turn over?

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