IFLYTEK Clarifies Market Rumors That Share Price Rises Against The Trend

IFLYTEK has been a bit upset recently, and institutional investors have disagreed on its performance growth. There is also a rumor that iFLYTEK's performance in 2020 is not up to expectations.

This rumor directly led to iFLYTEK closing at RMB 44.41 at the down limit on February 3. Judging from the after hours trading information, seats of the two institutions were sold by RMB 87.5228 million and RMB 55.3286 million respectively.

However, on that day, there was also an institutional seat that bought 45.9187 million yuan, which is obviously a prominent manifestation of the divergence among institutional investors.

On the evening of February 3, iFLYTEK issued a statement on the rumors, "iFLYTEK has disclosed the performance forecast of 2020 in the third quarter report of 2020 issued on October 27, 2020. The company expects that the accumulated net profit in 2020 will be 1064928600 yuan - 1392599900 yuan, with a year-on-year increase of 30% - 70%. In the fourth quarter of 2020, the company's operation continued to improve. According to the latest financial audit work progress, the performance forecast range was further defined to: the accumulated net profit in 2020 was 1228.7639 million yuan - 1392.599 million yuan, with a year-on-year growth of 50% - 70%

At the same time, Jiang Tao, co-founder and senior vice president of iFLYTEK, held a stock price fluctuation explanation meeting for investors at 8:00 p.m. on February 3.

IFLYTEK has been a bit upset recently, and institutional investors have disagreed on its performance growth. -Photo by Gan Jun

Clarify rumors

The reporter of the 21st century economic report got the full record of the meeting. It is worth noting that the briefing ended in less than 10 minutes.

On the issue of whether the company's operation meets the expectation, Jiang Tao said at the explanation meeting, "iFLYTEK disclosed the annual performance forecast in the middle of the third quarter report on October 27, 2020. At that time, the forecast was that the annual net profit was expected to increase by 30% - 70% year-on-year. With the continuous improvement of our business in the fourth quarter, the annual report work is also in full swing. According to the latest progress, we further narrowed down the expected range, and further clarified that the cumulative net profit in 2020 will increase by 50% - 70%, that is to say, more than 50%. This is the basic situation of the company's operation. It should be said that we have responded to some people's worries about the business fundamentals in the rumors about stocks. "

Another rumor is that "the issue of non-public offering of shares in 2021 has not been approved by the general meeting of shareholders", which has been confirmed to be false news in the announcement of iFLYTEK on the evening of February 3. According to the announcement of the resolution of the first extraordinary general meeting of shareholders in 2021, its non-public offering of shares has been approved by more than two-thirds of the total number of shares with valid voting rights.

"We have issued relevant announcements, and the progress of fixed increase items is in line with expectations." Jiang Tao said that for the purpose of further improving the stability of the company's equity structure, chairman Liu Qingfeng launched the fixed increase project after the company's market value rose to 100 billion yuan. "It also reflects his determination as the actual controller to share weal and woe with the company and develop together, reflecting his confidence in the long-term, sustainable and healthy development of the company's future stock price."

The rumor that investors are most concerned about is that "the situation of a private placement has led to the decline of its heavily held stocks". Jiang Tao admitted at the explanation meeting on the evening of February 3 that, according to the relevant management regulations of Shenzhen Stock Exchange, "we can't timely query the latest changes of shareholders on that day, so there are some investors on the platform asking us whether this is the reason. We do It can't be confirmed. We need to look further. This is what we investors will want to explain to you. "

The rumored "private placement" refers to Gaoyi capital. However, Gaoyi capital issued a clarification announcement soon afterwards, "first, according to the fund contract, there is no" forced redemption "clause in the products managed by Feng Liu. The so-called" forced redemption "is rumored on the Internet. At present, Fengliu's products have been in the state of closed subscription, and most of the customers have been locked for more than three years, and the recent monthly open redemption accounts for less than 1%. Second, the recent media reports on the holding of funds managed by Feng Liu are based on the announcement of Listed Companies in the third quarter of 2020, which is not referential. At present, the fund is operating well, and the position is not disclosed due to the regulatory requirements of private equity funds. Third, the company reserves the right to investigate the legal responsibility of the rumor mongers according to law. "

Institutional differences

According to the data, iFLYTEK has long been engaged in the research of artificial intelligence core technologies such as speech and language, natural language understanding, machine learning reasoning and autonomous learning. Its main business is software and information technology services, education and teaching.

According to the latest data disclosed by iFLYTEK, its net profit growth rates from 2018 to 2020 are 28.96%, 52.61% and 50% - 70% respectively. However, these net profits include the "non recurring profit and loss". For example, the net profit in 2019 is 819 million yuan, and the net profit of deducting non recurring items is only 489 million yuan. Among them, the government subsidy included in the current profit and loss reaches 412 million yuan, which is also the reason why iFLYTEK has been questioned repeatedly in the market.

According to the data of Dongfang fortune.com, in the past six months, there were 33 investment ratings given by the institution to iFLYTEK, including 25 for buying, 7 for increasing holding and 1 for neutral.

The only neutral rating comes from the research report published by Tan Zhiyong, an analyst of Huajin securities, on August 23, 2020. Its rating is "neutral-b (down)". The risk hint is that "the epidemic situation affects the poor development of business activities; the industrial competition intensifies; the product R & D falls short of the expected risks."

"The key is that the institutions are now quite different from iFLYTEK, which can also be seen from the after hours trading data on February 3." A private equity fund manager in Shanghai told 21st century economic report that iFLYTEK's current problem is that its net profit growth is too slow, especially the net profit of "withholding non-profit". In 2015, the revenue of iFLYTEK was 2.5 billion yuan, and the net profit of "withholding non-profit" was 316 million yuan; but by 2019, the revenue had reached 10 billion yuan, and the net profit of "withholding non-profit" was only 489 million yuan, less than 500 million yuan. ”

In the view of the above private fund managers, iFLYTEK's revenue has increased by three times from 2015 to 2019, but the net profit of "non deduction" has only increased by about 55%. Now, the annual report of 2020 has not been disclosed, so we can not know how much the contribution of government subsidies to its profits, and what is the net profit of "non deduction"

From 2015 to 2019, the growth rate of net profit of iFLYTEK was lower than that of revenue. In the Research Report on February 3, 2021, Ma Xiao, an analyst of new era securities, pointed out that "the main reason is that the company continues to increase R & D investment, enhance core competitiveness and expand market share."

At present, iFLYTEK's development strategy is mainly based on the combination of platform and track.

In terms of platform, iFLYTEK open platform takes intelligent voice and human-computer interaction as the core, continuously provides AI development and service capabilities for entrepreneurial developers and users of mobile Internet and intelligent hardware, and the core technology is deeply enabling the industry. In terms of track, HKUST sunfly has widely used AI technology in education, medical care, politics and law, industry and other fields.

A Securities researcher told the 21st century economic report that the divergence of institutions comes from the fact that some government orders issued by iFLYTEK are not transparent enough. "This is a very divergent place. Secondly, QFII is more optimistic about it, but some domestic institutional investors are not so optimistic about it. It mainly depends on whether its performance in 2021 can be realized. If it can, it can be said; once the performance fails, it can be said Cashing in is more troublesome. "

From the past financial reports of iFLYTEK, we can see that at present, education is one of the most in-depth application fields of AI technology, followed by smart city, politics and law, medical and other fields.

According to relevant data, in 2019, iFLYTEK's smart education business achieved revenue of 2.498 billion yuan, a year-on-year increase of 16.52%, and its business scale continued to expand. At present, iFLYTEK's smart education products and services have been used in 38000 schools, serving more than 100 million teachers and students, generating nearly 30 billion pieces of learning data each year, realizing the continuous iterative upgrading of "data + algorithm".

"Now it's up to you to see if its education can make a profit. There are too many competitors in this field, and the advantages are not obvious. Giants such as bat and many start-up companies are focusing on education. The intensified market competition may affect the company's performance. " The above-mentioned securities researchers believe that iFLYTEK's future focus is on smart education. "If iFLYTEK's technical progress and market promotion are not as expected, especially the development of education market outside Anhui Province is not satisfactory, the company's high R & D investment may cause losses, which is the last result investors want to see."

Anxin securities analyst Hu Youwen in the previous research paper prompted a risk is that the new business progress is not as expected.

It is worth mentioning that in December 2020, at the on-site meeting of the Ministry of Education held in Bengbu City, Anhui Province, the participating leaders discussed and evaluated the overall construction mode of iFLYTEK's regional smart education solution in accordance with their aptitude from the aspects of effect, efficiency and social impact. The application effect of the scheme was unanimously affirmed by the leaders attending the meeting.

According to the Research Report of Ping An Securities, at present, iFLYTEK's individualized teaching program has been implemented in Bengbu City, Lu'an City, Wuhu County, Jingde County, Liangjiang District of Chongqing and Wuhua District of Kunming.

On February 4, iFLYTEK's share price rose 2% to 45.30 yuan after the performance rumors were clarified.