Behind The IPO Of Aihui In The United States: "Mr. Key" JD Capital And Business Two-Way Blessing

On May 29, Beijing time, AI recycling International Co., Ltd. submitted an IPO prospectus to the US Securities and Exchange Commission (SEC) for listing on the New York Stock Exchange under the stock code "rere".

Last year, the company upgraded its brand name to "at renew.". At that time, Chen Xuefeng, the founder and CEO of AI recycling group, said that with the continuous expansion of the group's business, the "Ai recycling" brand could not fully represent the company's business and spiritual core.

In fact, since its establishment in 2011, AI recycling has developed from a single product start-up company to an end-to-end platform company after nearly 10 years of development since its establishment in 2011. Its businesses include Aihui, paijitang, paipaipai and ahs device, representing C2B, B2B, B2C and overseas businesses respectively.

Although the business boundary is constantly expanding, the upgraded all things new group still focuses on the second-hand 3C trading business. However, its services have covered the whole process from recovery, detection, rating, pricing to resale, and has opened the value closed loop of "C2B + B2B + B2C", serving businesses and consumers at the same time.

According to the report of CIC, a market research company, in terms of the number of trading equipment, the market share of all things new group in the second-hand 3C trading and service field will be about 8.7% in 2020, higher than the 4.4% market share jointly owned by the next five Chinese companies.

With the disclosure of the IPO prospectus, China's largest second-hand consumer electronics trading platform has also uncovered the mystery, allowing the outside world to see what kind of business the second-hand 3C trading is.

"Second hand transaction" contains business opportunities

According to the prospectus, in the whole business system of the group, "love recycling" platform is the core channel for it to obtain second-hand equipment. After the equipment is processed in the operation center, it is mainly sold through channels such as shooting machine hall and paipaipai.

As of March 31, 2021, all things new group has operated 755 offline stores nationwide, including 753 AI recycling stores and 2 paipaipai stores.

At the same time, all things new group has seven centralized operation centers in Shanghai, Shenzhen, Changzhou, Wuhan, Chengdu, Tianjin and Hong Kong, with a total construction area of about 39967 square meters. Among them, Changzhou operation center has been fully automated, with an accuracy rate of over 99% in March 2021; In addition, the group also operates 23 municipal operation stations as a supplement to the centralized operation center.

For the recycled second-hand equipment, all things new group has formulated 38 inspection standards, which can be summarized as three key steps: first, appearance inspection, such as scratch inspection; Secondly, hardware detection, such as Bluetooth detection, touch screen detection, etc; The third is internal inspection, such as water damage inspection.

After the inspection or certification, the system of the platform will automatically generate a comprehensive and standardized report. Each report contains a lot of information about the appearance, hardware, and interior of the device.

In 2020 and the first quarter of 2021, the group traded about 23.6 million and 6.4 million consumer goods, up 48.4% and 68.4% year-on-year. Over the same period, the Gmv realized by all things new group was 19.6 billion yuan and 6.2 billion yuan respectively, with a year-on-year increase of 60.7% and 106.7%.

In the whole process of recycling, processing and resale, the commercialization mode of the group is also very clear, one is to earn the difference between the recycling and resale, and the other is to charge commission to the businesses on the platform.

In 2019, 2020 and the first quarter of 2021, the revenue of all things new group is 3.931 billion yuan, 4.858 billion yuan and 1.514 billion yuan respectively. Among them, the income from products is the core income of all things new group, but the proportion has dropped from 99.6% in 2018 to 87.4% in 2020.

In terms of profit, all things are still in a state of loss. In 2019, 2020 and the first quarter of 2021, the adjusted net losses of all things new group are 538 million yuan, 202 million yuan and 36.4 million yuan respectively.

In the first quarter of this year, mobile phone products accounted for 69.7% of all consumer goods traded by all things new group, and the rest were other electronic products, such as notebook computers, tablet computers and digital cameras, luxury goods and household goods.

The CIC report shows that in the past five years alone, the number of used electronic products with high value accumulated in China has reached 2.6 billion. It is estimated that by 2025, China's second-hand electronic products (including mobile phones, tablets, laptops, etc.) are expected to reach 546 million units, and Gmv will reach 967.3 billion yuan.

An analyst told reporters that due to the highly non-standard characteristics of second-hand consumer electronic products, it is difficult for the whole industry to scale up and standardize, and the market has been extremely fragmented. The relatively standardized business model explored by all things new group can just meet the needs of the development of the whole market. However, whether it can continue to grasp the market increment in the future is also the question that the group needs to answer to investors after landing in the capital market.

Jingdong is the "key man"

Through the prospectus, we can see that Jingdong group has played an important role behind the rapid development in recent years.

The cooperation between all things new group and Jingdong can be traced back to 2015. At that time, all things new group helped JD provide users with recycling and trade in services; In 2017, the two sides further signed a three-year exclusive business cooperation agreement.

In June 2019, all things new group acquired paipaipai from Jingdong to supplement its B2C capability. In addition to the tangible and intangible assets, the group also received $21 million in net cash from JD. In consideration, the group issued about 27.5 million Series E preferred shares to JD.

In addition, at the same time of acquisition and auction, all things new group also signed a five-year business cooperation agreement with Jingdong, covering user flow, marketing, research and development, commission sharing, supply chain and logistics, customer service and after-sales service.

From the business level, the most direct embodiment is that the old for new service on the Jingdong platform will be provided by the new group of all things. In August 2019, Jingdong group further authorized AI recycling stores to use Jingdong mobile phone brand; In 2020, Jingdong transferred several brand names to wutongxinsheng group, including the brand of "wuwuxinsheng" that it is using.

In 2020 and the first quarter of 2021, the Gmv realized by the cooperation between the group and Jingdong group accounted for 10% and 9.2% of the total Gmv respectively. At the same time, the cost of flow acquisition and inventory purchase related services paid by everythings group to Jingdong was 166 million yuan and 55.4 million yuan respectively.

In terms of equity, JD holds 34.7% of the shares of all things new group, which is the largest shareholder of the company. In addition, Chen Xuefeng, the founder of the company, holds 10.9%, Chenxing capital holds 14% and Tiantu capital holds 8.5%.

According to the prospectus, JD has continuously increased the weight of all things new group from the beginning of Series C, and participated in the financing of series C-2, C-3, D-1, e and f respectively.

In the board of directors of all things new group, we can see many figures related to Jingdong. For example, Wang Yongliang, the director and President of the company, has been serving as the senior director of Jingdong paipaipai business since July 2008, until he joined the Wanyi Xinsheng group in June 2019.

In addition, Xu Lei and Tang Wei, the other two directors of the board of directors of everython group, are currently the CEO of Jingdong retail and the head of Jingdong Logistics Customer Service Center.

It can be seen that all things new group is closely bound with Jingdong group both in business and capital level, but there are also some risks.

All things new group also disclosed in the prospectus that although Jingdong has made a number of favorable commitments, these commitments depend on whether it can continue to meet certain conditions. If these conditions are not met, the scope of cooperation between the two sides may be significantly reduced, which will have a significant adverse impact on its business and business performance.