The main business of fortune trend has two parts: b-end business of domestic securities market trading system software and C-end business of providing securities information service for investors. The main customers of b-end business are securities companies and other financial institutions, and the products are mainly market trading terminals, end-user information systems and customer service systems. The most famous product of the company is tongdaxin, which has established business cooperation relationship with most securities companies in China.
For the wealth trend, there is a ceiling above the b-end business that cannot be broken through.
In the b-end market of securities information system, there are few competitors at present, and the main market share is occupied by flush flush (300033. SZ), great wisdom (601519. SH) and wealth trend. Influenced by investors usage habits, system security, stability and system upgrade and maintenance complexity and other factors, the securities market trading software products are more viscous.
In terms of revenue, wealth trend is in the leading position in the b-end market. As big wisdom has not released the revenue of each business in the first half of this year, according to the revenue data of 2019, the revenue of fortune trend, flush and big wisdom are 190 million yuan, 160 million yuan and 97 million yuan respectively, and fortune trend accounts for 42.51% of the total revenue of the three companies, ranking first.
However, it should be noted that the market space of b-end business is limited, and the business has been saturated. In terms of market scale, the total revenue of the three leading enterprises in 2019 is less than 500 million yuan. Moreover, wealth trend products have covered the vast majority of domestic securities companies with brokerage qualification, and the number of new securities company customers available to the company is small when the customer coverage has reached a high proportion. The saturation of the industry and the single structure of existing customers have hindered the future development of wealth trend.
The single main business makes the operating performance of the company fluctuate greatly under the influence of changes in the securities market. From the perspective of operation, the companys operating performance is closely related to the operation of securities companies and the overall environment of domestic capital market. Once the stock market falls into a downturn, the number of active investors will decrease, which will lead to the decrease of the demand of securities companies for expanding the securities trading system. At the same time, the sharp decrease of the trading amount in the securities market will also cause the decline of the operating performance of the securities company, which will reduce or limit the relevant investment, thus making the companys operating performance decline.
Left behind C-end business
The C-end business products of fortune trend mainly provide investors with enhanced market services, including level-2 market of each exchange and analysis platform and analysis tools based on financial engineering. In addition, the company also provides short-term treasure and other data services based on cloud computing and AI platform.
At present, the suppliers providing securities information services in the industry include flush, great wisdom, compass (300803. SZ), Oriental Fortune (300059. SZ) and wealth trend. According to the data in 2019, the revenue of the above listed companies is 885 million yuan, 303 million yuan, 576 million yuan, 158 million yuan and 35 million yuan respectively, of which the proportion of wealth trend in the total revenue of C-end business of the five companies is only 1.79%. At the same time, its C-end business gross margin is only 29.61%, while other peers are generally above 80%. With small business volume and low gross profit margin, the position of wealth trend industry can be seen.
In recent years, while the wealth trend is still struggling for the development of C-end business, the top two companies in the industry have realized diversified business.
Dongfang fortune won the securities license and public offering license respectively in 2015 and 2018, and successively entered the fund, securities, futures, third-party payment, credit reporting and other businesses, laying a solid position in the industry. In the first half of this year, Dongfang fortunes financial e-commerce service business (fund sales) alone generated 1.143 billion yuan in revenue, which has exceeded ten times the trend of wealth.
Tonghuashun has been focusing on the main business of Internet financial information services. Relying on the development of AI platform, tonghuashun provides AI related products and services to downstream customers. At the same time, through cloud computing, financial big data and other technologies, we can enhance our core competitiveness from the data side. In the first half of this year, the advertising business alone generated 150 million yuan, which exceeded all the revenue in the first three quarters of fortune trend.
In contrast, in recent years, the main business of wealth trend has not changed substantially, and the clients are still mainly securities companies.
Three times of closing, abnormal data
Whether the development of the b-end market is hindered or the business of the C-end market falls behind, it is an appearance to the wealth trend. Im afraid that the root cause of the business problems in recent years is that the company has fallen into the market continuously.
The way of listing wealth trend can be said to be ill fated. In May 2012, fortune trend submitted IPO application materials to the CSRC for the first time, and planned to land on the gem. Because there are still related matters to be further implemented, the wealth trend is on the way to the first listing. The first IPO of the company was rejected mainly because the authenticity of its financial data was in doubt. At that time, wealth trend was reported to have two versions of the prospectus. The authenticity of its performance data was widely questioned by the industry, and it was even accused of over whitewashing the financial statements.
In 2014, fortune trend applied for IPO again. This time, it adjusted its listing target to the small and medium-sized board. However, in 2016, after queuing for more than two years, the company was rejected again because there are still relevant matters to be further implemented. Whether the companys trading system has been cracked or not, there are problems in the market, such as external procedures, lack of rationality of listing financing.
Whether the IPO of wealth trend is continuous or not is more or less related to its abnormal data.
However, what is strange is that in 2018, the revenue of fortune trend shows a double-digit positive growth of 15.36%, and the net profit increases by 20.68%, which is the only double-digit growth company in the industry.
Image source: wind, interface news research department
The gross margin of wealth trend B end business is also abnormal. In 2019, the gross profit margin of its b-end business is as high as 96.77%, including 96.77% for maintenance services and 100% for software sales. As a comparison, the gross profit rates of the related businesses of the two companies were 85.56% and 36.71%, respectively.
Compared with the abnormal financial data, the valuation of wealth trend has been soaring, especially the market sales rate. At present, the rolling sales rate of the company is as high as 60 times, far higher than the average valuation of the other four peers by 42 times. In terms of P / E ratio, Dongfang fortune and flush are 59 times and 64 times respectively, and 71 times of wealth trend are relatively high.
Image source: wind, interface news research department