On the last day of 2020, Royole Technology, a so-called “flexible screen” unicorn, filed its IPO prospectus and put its house on the table. Royole has reported a net loss of 3.195 billion yuan in the last three and a half years and is seeking to raise 14.434 billion yuan. It is the second largest company on the board after SMIC.
Royole Technology was founded in 2012 by Liu Zihong, 29. In the last financing in 2019, the seven-year-old Royole Technology was valued at nearly 42 billion yuan, including many well-known venture capital companies such as CITIC Capital, IDG and Shenzhen Venture Capital.
The capital market is highly sought after, but Royole’s products have been only heard of its appearance. Royole technology around the “PPT mass production”, “speculation concept”, “liar company” questions, Royole clarification is difficult to change the public opinion.
As more information is revealed in the prospectus, the mystery surrounding Royole Technology does not abate.
Sohu Finance made an in-depth analysis of its prospectus and found that Royole Technology had a revenue volume of 200 million yuan, and its receivables accounted for more than 80% of the revenue in the first half of 2020. In the last three and a half years, its losses have been expanding year by year, and its “hematopoietic” ability is extremely poor. It relies on equity financing and bank loans to maintain operating funds for a long time.
Based on Royole’s 2019 revenue of 227 million yuan, the raised investment of 14.434 billion yuan is equivalent to more than 60 years of revenue.
In terms of products and sales, Royole did not provide convincing products and data. Relying on its own flexible screen products, its own brand mobile phones manufactured by mobile phone manufacturers shipped less than 15,000 units in half a year, or even less than Gree mobile phones. After an interview with sohu Finance, Royole Technology repeatedly mentioned in the prospectus that the enterprise-class products in cooperation with Louis Vuitton and Luzhou Laojiao have not been mass-produced or commercialized.
In three and a half years, the total loss was 3.2 billion yuan. In the middle of the year, 2.16 million yuan was borrowed from senior executives
Royole’s performance in recent years has been weak, according to data disclosed in the prospectus.
Royole’s revenue in 2017, 2018 and 2019 was 64.7267 million yuan, 109 million yuan and 227 million yuan respectively, representing a two-year compound revenue growth rate of 87.3%. But its net loss also widened, reaching 359 million yuan, 802 million yuan and 1.073 billion yuan, respectively, in the same period.
In the first half of 2020, Royole Technology realized a revenue of 116 million yuan and its net loss further widened to 961 million yuan. Royole posted a cumulative net loss of 3.195 billion yuan in the last three years. As of the end of June 2020, Royole Technology’s accumulative undistributed profit is as high as -2.427 billion yuan.
It is worth noting that Royole also faces the risk that its accounts receivable will not be collected due to its relatively small revenue. In the last three years and at the end of the first year, the book value of its accounts receivable was 29.195,500 yuan, 41.494,100 yuan, 87.593 million yuan and 97.602,600 yuan respectively, accounting for 45.1%, 38.1%, 38.6% and 84.1% of the revenue of the current period.
In addition, Royole Technology has a part of the accounts receivable provision for bad debts. At the end of the last three years and the first year, the provision for bad debts of accounts receivable was 1.608,500 yuan, 3.468,300 yuan, 15.246,700 yuan and 9.433,800 yuan, respectively, accounting for 5.2%, 7.7%, 14.8% and 8.8% of the balance of accounts receivable in the current period.
Take Shenzhen Boyi Media Co., Ltd. as an example. This company is Royole’s largest customer in 2019, with Royole’s sales volume of 46.2316 million yuan in that year. As of the end of June 2020, Royole’s book balance of receivables from Shenzhen Boyi was 32.68 million yuan, among which the provision for bad debts was 1.6519 million yuan.
Due to their “hematopoietic” ability is weak, financing has become the main source of Royole technology supplementary funds. In the last three years, its net cash flow from operation and investment is negative, while its net cash flow from financing is positive.
In the last three years, Royole Technology received 4.573 billion yuan in cash from investment. Due to multiple capital increase and share expansion, its monetary capital in the recent three years and the end of the first year were 832 million yuan, 133 million yuan, 1.454 billion yuan and 848 million yuan respectively.
In the last three years, Royole Technology has received a total of 2.976 billion yuan in cash from loans, which are mainly long-term loans provided by the syndicated banks.
In September 2017, Royole Display, a subsidiary of Royole Technology, signed a syndicated loan contract with five banks, including China CITIC Bank Shenzhen Branch, and obtained a line of credit of 3.64 billion yuan. As of the end of June 2020, Royole Display has drawn money from the bank for four times, with a total amount of 2.856 billion yuan, for the construction of the first phase of Royole International Flexible Display Base Project.
Royole’s short-term interest-bearing liabilities for the most recent three years and the end of the first year were $119 million, $0 million, $37,023,600 million and $83,655,300 million. Compared with the monetary funds of the same period, the amount of these short – interest – bearing bonds is not outstanding.
However, Royole Technology, which continuously held over 100 million yuan of monetary funds at the end of the year, borrowed 2.16 million yuan from four founders and senior executives including Liu Zihong, the actual controller, from July to September 2019. Among them, Yu Xiaojun, the deputy general manager of the two loan amounts are only 100,000 yuan, 60,000 yuan.
In addition, Royole had long-term borrowings of 2.788 billion yuan as of the end of June 2020. Since the long-term borrowings will be converted into non-current liabilities due within one year, Royole’s short-term debt repayment pressure will also rise.