The death of storm group of small LETV: from market value of more than 40 billion to vanishing in five years

 The death of storm group of small LETV: from market value of more than 40 billion to vanishing in five years

Fengfeng Group (300431), known as little LETV, also has a similar ending with LETV.

On August 28, the Shenzhen Stock Exchange announced that Fengfeng Group failed to disclose its 2019 annual report within one month after the suspension of listing of its shares, which touched the relevant provisions of the exchange, and the Exchange decided to terminate the listing of the shares of Fengfeng Group.

As early as July 8, a month ago, the companys shares were suspended from listing due to windstorm groups failure to disclose its 2019 annual report within two months from the expiration of the statutory disclosure period.

In 2015, Fengfeng Group, which was listed on the gem, was once regarded as a demon stock with 30 trading limits. Since then, the market value of Fengfeng Group exceeded 40 billion yuan at the highest time. But now, the stock price of Fengfeng Group stays at 1.48 yuan, the market value is only 488 million yuan, the share price has shrunk nearly 100 times.

The stories in the history of business are always astonishingly similar, and the storm has not been far away from the center of the storm.

It is said that the storm is small LETV, and Feng Xin is Jia Yueting. Although Feng Xin himself does not agree, but from the companys development and decline trajectory, there are certain similarities.

Lawyer Xu Feng, senior partner of Shanghai Chuangyuan law firm, told surging journalists: Fengfeng Group and LETV are typical representatives of the impetuous period of the capital market, and they are not in awe of the market and investors. Whether windstorm group has cheated on investors may still need to wait for the investigation conclusion of the CSRC.

Like LETV, which has been running all the way around the world, in addition to its player storm video, Fengfeng Group has also set foot in many fields such as Internet TV (storm TV), VR (storm mirror), sports (storm sports).

The end of the storm group, when Feng Xin was arrested a year ago, seemed to have been doomed.

On the evening of July 28, 2019, Fengfeng Group announced that Feng Xin, the actual controller of the company, was taken compulsory measures by the public security organs for suspected crimes.

At that time, Fengfeng Group did not disclose why Feng Xin was forced to take measures by the public security organs, or even when he got the news.

The mystery was solved a year later on July 31, 2020. On the same day, Fengfeng Group announced that the company had recently learned through Feng Xins defenders that the peoples Procuratorate of Jingan District, Shanghai, had filed a public prosecution against Mr. Feng Xin, the legal representative of the company, for suspected bribery of non-state employees.

However, on the evening of August 3, Fengfeng Group announced that up to now, the company has not received judicial investigation documents against the company, and it is not known whether Feng Xins suspected bribery of non-state staff is related to the company. The case is under further processing.

From the market value of more than 40 billion demon shares to the stock price of 1.48 yuan

Fengfeng Groups star product, Fengfeng audio and video, was completely suspended in November 2019.

A netizen on the microblog sighed: windstorm video is really a youth. Storm video, popular, fast broadcast, PPS and QQ audio and video were used in those years. In the past, when I was in junior high school, I used to download movies and then open them with storm video.

At the beginning of 2020, it seems that there is an opportunity to bring the dead back to life. On the evening of February 11, Fengfeng Group announced that the company would sign a cooperation agreement with Beijing FengXing Online Technology Co., Ltd. (Fengxing online), and the two sides would cooperate in the field of Internet audio-visual services based on their respective situations. According to the announcement, Party A Fengfeng Group will transfer the operation rights of Fengfeng AV app, Fengfeng AV PC client and Fengfeng AV advertising system to Party Bs Fengxing online exclusive operation.

However, half a year later, investors are only waiting for the news that storm group has been suspended from listing.

Feng Xin, CEO of windstorm group, wrote his last microblog on June 5, 2019, I said one thing at the meeting: the best way to commemorate a thing is to give it a new life -bao16 , a new seed planted today

Storm 16 is a new video player launched by storm group in June 2019, and the story of storm group begins with video player.

Feng Xin, 48, was the soul of Fengfeng Group. According to the annual report of Fengfeng Group in 2018, Feng Xin holds 21.34% of the companys equity directly and 4.45% of the equity indirectly. He is the actual controller, chairman and general manager of Fengfeng Group.

Feng Xin started his own business in 2005. In early 2007, Fengxin team acquired windstorm video and began to operate as a company. According to Feng Xins self-report, he was a jerk and barely graduated from university. After that, he did sales in Jinshan software, until he was dismissed from the general manager of the drug business division, went to Yahoo China, and later started a business. In short, his whole life was reckless. In the era of Internet 1.0, the market share of windstorm audio and video in this field was unprecedented.

In 2010, the storm restructuring, Feng Xin decided to return to the domestic listing. After that, the US dollar capital withdrew and introduced domestic capital such as Huawei investment and Jinshi investment. However, the CSRCs approval of a shares was suspended and the listing was delayed.

In 2013, Fengfeng contacted Alibaba, led by Alibaba CEO Lu Zhaoxi. If successful, Fengfeng will be acquired by Alibaba, and Alibaba will invest about $900 million in the next few years. Talking with ALI, I suddenly received a text message saying that A-share is going to be unlocked. In an interview in 2015, Feng Xin told surging journalists that A-share was the strategic place of the storm, so he resolutely decided to do it by himself.

In 2015, Fengfeng Group was listed on the gem. There is a saying that, at that time, the gem technology stocks were relatively scarce, so the storm group was hot capital, once blowing out 30 trading limits, envious of others.

According to media reports, 10 billionaires, 31 multimillionaires and 66 millionaires were born in the company because of its listing. Feng Xin, the founder, chairman and CEO of Fengfeng Group, has a book worth of more than 10 billion yuan. Since then, the market value of the storm once exceeded 40 billion yuan.

Before Feng Xin was arrested, Fengfeng Groups dismissal notice seemed to foretell the end of the company.

In May 2019, according to Red Star News, several storm TV employees revealed that they had received dismissal notices from the regional head office, which mentioned that the headquarters had officially issued a notice and the team had been dissolved.

Until the actual controller Feng Xin was arrested, Fengfeng Groups operation was unsustainable. On August 15, 2019, Fengfeng Group held a shareholders meeting without shareholders. One investor said that around August 7, storm group offices were empty. At 10 a.m. on August 9, the door of the storm group was still closed.

In addition, Fengfeng Groups part of the Storm Financial Products delayed cashing.

The overall financial situation of Fengfeng Group is also deteriorating. According to the annual report of windstorm group in 2018, the operating income of Fengfeng Group in 2018 was 1.127 billion yuan, a decrease of 41.15% year-on-year. The net profit attributable to shareholders of listed companies was a loss of 1.09 billion yuan. Fengfeng Group disclosed that the first quarter report of 2019 showed that the operating income of Fengfeng Group in the first quarter was 71.205 million yuan, a year-on-year decrease of 81.6%, and the net profit attributable to the shareholders of the listed company was a loss of 17.495 million yuan,

The semi annual report of 2019 shows that the companys net loss in the first half of 2019 is 264 million yuan. According to the report of the third quarter of 2019, as of September 30, 2019, the total assets and liabilities of the companys consolidated financial statements were 360 million yuan and 1.017 billion yuan respectively.

In 2020, Fengfeng Group has difficulty in paying employees salaries, and the companys staff has been losing a lot. In addition to Feng Xin, all senior managers of the company have resigned, and the securities affairs representative assisting in information disclosure has also resigned. At the same time, the company is in arrears with some employees wages.

Within nine months from August 30, 2019, about 40 suggestive announcements on the risk of suspension of listing of shares issued by Fengfeng Group have been published, with an average of one week.

Why does leecos crisis whirlwind blow into the storm?

Lawyer Xu Feng, senior partner of Shanghai Chuangyuan law firm, told surging journalists: Fengfeng Group and LETV are typical representatives of the impetuous period of the capital market, and they are not in awe of the market and investors. Whether windstorm group has cheated on investors may still need to wait for the investigation conclusion of the CSRC.

Feng Xin peoples visual data map

Feng Xin

In September 2017, at the internal annual meeting of Fengfeng Group, we reflected on why LETVs crisis whirlwind blew into the storm. Feng Xin candidly said, storm up to today, there is really no very strong business. Storm used to be a second-class video platform. Although storm mirror and storm TV have done very well, they are not very strong today.

Feng Xins last public appearance was ten days before his arrest. Now it seems that there is a clear boost meaning.

On July 18, 2019, on the collective reception day for investors of Listed Companies in Beijing in 2019 participated by Fengfeng Group, Feng Xin answered a number of investors questions online, saying that at present, the company actively carries out production and operation activities, adheres to the difficulties it faces, and has not touched upon the delisting conditions.

Now it seems that Feng Xins shouting has little effect, and the financial results of the demon stocks storm may not match its ability to create wealth.

In the trend of legalization and mobile Internet, LETV, which was the first to legalize the copyright, became a storm on the copyright issue, and the importance of content copyright was greatly promoted. In the following years, the integration mode of windstorm audio and video was gradually replaced by the self-made mode of iqiyi, Tencent video and Youku, which relied on the copyright of giant investors to make their own decisions.

The VR tuyere is proved to be immature after being heated by capital. As for Internet TV storm TV, its competitors are not only Xiaomi TV, which is a new Internet hardware enterprise. Traditional TV players are still strong. Whats more, storm TV has adopted a low-cost market strategy similar to LETV: selling one set will lose one, which has seriously affected the financial reports of listed companies.

Due to the same video background, and entered the hardware field, storm is often compared with LETV, the leading company on GEM. Similar to LETV, in 2016, Fengfeng Group once wanted to acquire a film and television company (Wu Qilongs straw bear film and television) at a price of 1 billion. However, with the tightening of A-share acquisition of film and television culture, the fixed increase plan of Fengfeng Group failed. Since then, Fengfeng Groups luck has not been very good.

In 2017, the LETV system fell into a financial crisis, Jia Yueting avoided the United States, and the storm of LETVs Apprentice was accidentally affected - the capital markets fear of LETV mode extended to the storm.

Feng Xin tried to keep the storm away from leeco.

In 2018, the storm put forward a new strategy: focus on TV business in an all-round way, and seek to inject storm TV business into listed companies as a whole. At that time, windstorm commander-in-chief announced that he had obtained 800 million yuan of financing. The investors included Suzhou Dongshan Precision Manufacturing Co., Ltd. (002384, Dongshan precision) and Rudong Xinhao industrial investment fund management center (hereinafter referred to as rudongxinhao). This financing was hard won. In an interview in February 2018, Feng Xin recalled to surging journalists that after the Spring Festival of 2017, the two businesses of storm TV and storm mirror started financing. In May and June, they respectively found two FA (Financing Consultant intermediary). But surprisingly, the feedback of the two FA was very poor, and even they were lack of confidence.

In fact, windstorm TV has suffered huge losses every year since 2016: its main operator, storm intelligence, has lost 358 million yuan, 320 million yuan and 1191 million yuan respectively from 2016 to 2018. To some extent, the introduction of Dongshan precision is due to the relationship between Liu Yaoping, CEO of storm TV. Liu Yaoping, a veteran of the TV industry, has cooperated with Dongshan precision for ten years during Skyworth.

However, this financing has failed to get storm TV out of its predicament. In the inquiry letter of 2018 annual report, storm group disclosed the gross profit rate of storm TV in 2018: the Internet TV business was affected by the financing progress, the inventory was insufficient, and the revenue decreased by 29.76% year on year. In order to increase the market share, the policy of low price sales was adopted, and the gross profit rate decreased from - 7.15% in the previous period to - 31.97%. The effect of losing money and earning cry was not very good, and the surging journalists were in a storm According to the official website of wind TV, many products listed are in temporary out of stock.

Fatal M & A

The merger and acquisition that pushed Stormwind into the abyss dates back to 2016.

In 2016, Fengfeng Group, which had just been listed for one year, announced that it was planning to sign agreements with Fengfeng investment, Everbright Investment Management (Shanghai) Co., Ltd., Shanghai qunchang Financial Services Co., Ltd. and other limited partners, aiming to raise RMB 5.203 billion. After the completion of the capital increase, Fengfeng Group announced that it would sign agreements with Fengfeng investment, Everbright Investment Management (Shanghai) Co., Ltd., Shanghai qunchang Financial Services Co., Ltd., and other limited partners The group, as a limited partner, has a total capital contribution of RMB 200 million from Linxin investment, Fengfeng investment as a general partner, Everbright linhui as a general partner, Shanghai Quchang as a general partner, and other limited partners Linxin invested 5 billion yuan.

At that time, sports copyright was sought after, and LETV sports financing speed and scale were no different. Storm group also launched storm sports products. With the help of funds, Feng Xin looks to overseas mature sports copyright trading companies. In May 2016, Baptist fund acquired 65% shares of MP & Silva, a top international sports media service company.

As one of the investors, Xue Feng, then CEO of Everbright Securities, commented that it was an unforgettable experience. He said: China has the largest number of sports fans, and the sports industry has become one of the most popular investment fields.

But unexpectedly, Feng Xin and Everbrights hot money in China were cut by Italians. On the one hand, after the change of control right, the original founder of MP & Silva faded out of the company and even started a new business. On the other hand, MP & Silva gradually lost in the increasingly fierce competition in the sports version market and was beset with lawsuits.

According to the announcement of storm group, in an official statement in mid August 2018, Arsenal club confirmed in an official statement that they had terminated the cooperation agreement with MP & Silva, a sports media company. On October 17 of the same year, the British High Court ruled that MP & Silva was officially bankrupt and liquidated.

According to the announcement, Fengfeng Group, Feng Xin and Everbright linhui signed the repurchase agreement on the acquisition of shares of MP & Silva holdings S.A. in March 2016, it was agreed that after the initial delivery of 65% equity of MPS by Linxin fund, according to the then effective regulatory rules, both parties should make reasonable efforts to make the final acquisition as soon as possible, in principle, no later than 18 months after the completion of the preliminary delivery Within. In short, this is equivalent to Feng Xin and Fengfengs commitment to Guangda, the investor of this acquisition.

However, due to the situation of MP & Silva, the implementation of the above-mentioned agreement has been unable to be realized, which eventually led to the prosecution of Everbright.

It is not only Everbright. Looking back on the investors of Linxin fund, we also include China Merchants wealth Asset Management Co., Ltd., Shanghai Aijian Trust Co., Ltd., and Guizhou Guian Financial Investment Co., Ltd.

Yicais report mentioned that the acquisition of MP & Silva resulted in a 5.2 billion capital loss, which dragged Chinese consortia, including China Everbright, China Merchants Bank, Huarui bank, Aijian Trust and other well-known financial institutions into the mire. According to people familiar with the matter, due to the involvement of subsidiaries of state-owned enterprises and financial institutions, the case has a high level of concern.

According to the annual report of Everbright Securities in 2018, on March 13, 2019, due to the equity repurchase contract dispute, Everbright linhui, a secondary subsidiary of the company, acted as the executive partner of Linxin fund and jointly acted as the plaintiff with Fengfeng Group and its actual controller Feng Xin as the defendant and filed a civil lawsuit with Beijing high court.

Everbright sued that Fengfeng Group and Feng Xin failed to fulfill their equity repurchase obligations under the relevant agreements, which constituted a breach of contract. The plaintiff asked the defendant to compensate for part of the losses caused by the non performance of the repurchase obligations, including the bank loan interest of the special purpose company under the immersion fund, the interest paid to the relevant investors and other expenses, totaling about 750 million yuan.

Feng Xin: the understanding of financing is wrong, there is greed in the business layout

From star companies, demon stocks, and then to the person who was executed and the actual controller was taken compulsory measures, Fengfeng Group has experienced such ups and downs in only five years since its listing in 2015.

LETV has now suffocated with Jia Yuetings dream. Obviously, the storm has been poisoned by the same poison as LETV: greedy and rash to spread its stalls too large, and its core business lacks profitability. Moreover, compared with LETV, the value mark left by storm in the market is shallower.

Feng Xin has been interviewed many times or talked about his entrepreneurial mind in public, reflecting on the strategy of Fengfeng Group.

On July 9, 2018, the subscription number of Fengfeng Group released the dialogue record between Richard and Feng Xin, the head of storm marketing department. At that time, CITIC Capital (Shenzhen) Asset Management Co., Ltd., one of the shareholders of storm mirror, applied to Beijing Chaoyang District Peoples court for property preservation on the ground of equity transfer contract dispute, and froze some shares of Fengxins Fengfeng Group.

Asked what caused the current storm capital predicament, Feng Xin said that there are three core reasons: listed companies do not have financing and mergers and acquisitions, have a wrong understanding of debt financing and equity financing, and are greedy in business layout.

Feng Xin believes that first, as a listed company, the biggest difference and capability between Fengfeng and non listed companies should be smooth financing and M & A channels. After listing, we found capital help from many of our financial institutions, which also aimed at this point. We hope that the projects invested will be realized and withdrawn by windstorm one day. As a listed company, Fengfeng has been listed for three years. Because my team and I have no experience in this field and have poor ability, we have not completed any financing and M & A.

Compared with other Internet companies listed in the same period, Kunlun wanwei or Xunyu have successfully completed financing and M & A in the past three years, but Fengfeng has not completed it once. This directly led to the storm after the listing, the most valuable capacity has not been released at all.

Second, corresponding to the first question, we do not understand the different properties of money after listing. Some of the capital cooperation that we encounter after going public has an exit commitment. Financial institutions like CITIC Capital are totally different from VC investment before listing.

Now, if I am the actual controller of the listed company, I am required to guarantee when financing. If I make corresponding agreements on the guarantee terms or dispute settlement clauses, or plan ahead of time, and take the shares of listed companies held by limited liability companies as the guarantee subject, we can avoid the disputes of non listed companies directly affect me, and then affect the market on the listed companies To judge.

The third thing is that you cant blame others. You can only blame yourself. Now looking back, there was still an inflated mentality at that time. For example, having 100 yuan for 50 yuan is a state, and 100 yuan for 200 yuan is another state. Or you think there are five things that are right, but you and the team can only do one or two things.

The challenge is whether you can control yourself or not. The task of the storm is to find a new Internet platform. Now it is 100% correct. If were focused enough to just do this, then well only do TV and magic mirror. If you are sensitive enough to see the changes in the industrial environment of magic mirror, the problem of magic mirror will not be so big. It will focus on TV a year earlier, and the current situation will be very different.

What I can do is that, in fact, Fengxin has not cashed in any shares since the listing of Fengfeng, and only a small part of the money pledged by the shares is used to subsidize the household. The rest is used for business development, and has undertaken the guarantee pressure of a lot of companys business. This one is completely exposed and transparent. If I really have a problem, it is at most my own ability. I dont understand the A-share capital market, and I have problems with capital control and judgment experience. At most, this is the problem. There is no immorality or quality problem in this, and there is no problem of seeking private interests for the public. In addition, so far today, I have focused as much as I can on the business itself. I am also willing to do my last duty to all debtors and storm shareholders for every penny they put into the storm.

Source: surging news editor: Qiao JunJing_ NBJ11279