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organizing | huawei

on september 26, chongqing terminus smart technology co., ltd. (hereinafter referred to as "terminist") submitted a listing application to the hong kong stock exchange, with citic securities and haitong international serving as joint sponsors. terminus disclosed that this financing will be mainly used to enhance research and development capabilities, large model development, commercialization and urban expansion and potential strategic acquisition opportunities.

according to its prospectus, terminus provides full-stack aiot products (including software, hardware and services) to enterprises, public managers and other public space participants mainly through the aiot operating system tacos. aiot refers to the system’s real-time collection of various types of information through information sensors, and intelligent analysis of data through machine learning on terminal devices, the cloud, etc., including positioning, comparison, prediction, and scheduling technologies.

if it is successfully listed in hong kong, terminus will become the first aiot stock in china.

backed by the "china everbright department",

valuation surged hundreds of times in 7 years

since its establishment in 2015, terminus has been highly sought after by capital. before the ipo, terminus completed a total of nine rounds of financing from angel round to d++ round, with a total financing of more than 4.9 billion yuan. china everbright holdings, jd.com technology, sensetime group, iflytek, idg capital and other capitals gathered to invest in the company. there are also state-owned bets from zhuhai, nanchang, xuzhou and other places.

at the end of august this year, terminus received investment from the hong kong-listed company megaland. according to megaoyu's announcement, the investment amount is 50 million yuan, accounting for 0.24% of the total equity. based on the financing price of 20 yuan/share, terminus's post-investment valuation reaches as high as 21.226 billion yuan. compared with the valuation when the angel round of financing was completed in 2017, it has increased by nearly 303 times.

source: terminus prospectus

it is worth mentioning that everbright holdings and its related parties have participated in the investment in terminus many times, holding 26.37% of the shares so far, and are the largest institutional shareholder of terminus; based on the latest post-investment valuation of 21.226 billion yuan, everbright holdings’ investment in terminus silian's investment return rate has reached as high as 146.58%. china everbright also provided approximately rmb 360 million in loans to terminus through related parties, with loan interest rates ranging from 7% to 8%.

public information shows that wang ou, chairman of terminus, is still a member of the management decision-making committee and senior overseas investment director of everbright holdings. he has served as deputy director of the institutional supervision department of the china securities regulatory commission and deputy director of the innovative business supervision department, and has a regulatory background. . wang ou joined terminus in october 2022 and was appointed as a director. he is mainly responsible for providing guidance on the company's overall strategic planning, corporate governance and business direction.

ai yu, the founder of terminus, was also a senior executive of everbright holdings and had been there for nearly 12 years. when ai yu resigned in may 2020, he was the managing director of everbright holdings, mainly responsible for private equity in the primary market. invest. during his tenure, ai yu served as the core founder of everbright anshi, the largest real estate fund in china, and later founded everbright capital, everbright zhongying capital, etc. as a managing partner. he led the cumulative scale of rmb and us dollar funds exceeding rmb 50 billion. he has invested in well-known technology companies such as netease cloud music, iqiyi, meituan-dianping, cambrian, sensetime, 4paradigm, nio, xpeng motors, jd logistics, unionpay business, and meituan-dianping.

it can be said that the “everbright department” has always been an important support to terminus since its establishment.

previously, ai yu once said: "terminus will be china's first large-scale profitable ai company." however, despite the company's lofty valuation, terminus is still not profitable and its financial situation does not appear to be ideal.

loss of 7.1 billion in three and a half years,

liabilities exceed three times the company's assets

terminus has been operating at a loss for the past three years. according to the prospectus, from 2021 to 2023 and the six months ending june 30, 2024, terminus’ revenue was 1.207 billion yuan, 738 million yuan, 1.006 billion yuan, and 357 million yuan respectively; its net losses during the same period were 2.828 billion yuan, respectively. billion, 2.387 billion yuan, 803 million yuan and 1.128 billion yuan.

in the first half of this year, terminus's revenue fell 30.11% year-on-year to 357 million yuan. as of the end of the first half of the year, there were accounts receivable of up to 1.236 billion yuan, which was approximately 3.5 times the revenue in the same period, but only decreased by 1.75% from the end of 2023. at the same time, the number of customers in the digital intelligence sector of the ai ​​​​industry dropped from 148 in the same period last year to 90, a decrease of 58. the company’s total number of customers dropped from 186 in the first half of 2023 to 150 in the first half of 2024. .

regarding the continued large losses, terminus explained in its prospectus that it was mainly due to losses in the fair value of shares with preference rights, share-based payment expenses, research and development expenses, etc., which had a greater impact on net profits.

from 2021 to 2023 and the six months ended june 30, 2024, terminus's r&d expenses were 287 million yuan, 329 million yuan, 322 million yuan and 145 million yuan respectively, accounting for 23.8% and 44.6% of revenue in the same period respectively. , 32.0% and 40.7%; as of june 30, 2024, terminus had 363 r&d personnel, accounting for 52.2% of the total number of employees.

according to ai yu's previous disclosure, terminus has been looking for talents around the world in 2021 and once made a list of 100 top scientists in the aiot field. in the end, six scientists were willing to join the company, and the company selected three ieee fellow-level scientists under the age of 50.

today, terminus is led by three ieee fellow (international institute of electrical and electronics engineers) level scientists, including cto hua xiansheng, chief scientist shao ling and chief scientist yang yang. all three of them were selected into the list released by stanford university. the list of the top 2% of the world's top scientists includes both the lifetime scientific impact ranking and the annual scientific impact ranking. this is the fourth consecutive year that these three scientists have been selected since the first edition of the list was released in 2019. .

in addition, terminus' sales and marketing expenses were 248 million yuan, 190 million yuan, 133 million yuan and 82 million yuan respectively, accounting for 20.5%, 25.8%, 13.2% and 22.9% of revenue respectively. due to high expenses, terminus's comprehensive gross profit margin has been on a downward trend in the past three years. from 2021 to the first half of this year, the company's comprehensive gross profit margin was 44.16%, 10.10%, 31.03%, and 24.73% respectively.

the company's revenue in the past three years has mainly come from the four sectors of ai industry digital intelligence, ai city intelligence, ai smart life and ai smart energy. among them, the ai ​​industry digitalization and ai city intelligence business contributed more than 70% to terminus’ revenue.

source: terminus prospectus

in addition to the financial pressure of long-term imbalance of revenue and expenditure, terminus's cash reserves are also relatively insufficient. the prospectus shows that as of the end of june this year, terminus’ asset-liability ratio was 315.38%. at the end of the period, the company's monetary capital was 255 million yuan, short-term borrowings were 1.599 billion yuan, long-term borrowings were 487 million yuan, and financial expenses in the first half of this year were 36 million yuan. as of july 31, 2024, terminus bank's balance and cash were only 73.9 million yuan, total current liabilities reached 11 billion yuan, and net current liabilities reached 8.73 billion yuan.