Fundraising has shrunk nearly 80% after Jianan Technology went public

After several folds on the IPO road, the 6-and-a-half-year-old bitcoin miner Hangzhou Jianan Zhizhi Information Technology Co., Ltd. (hereinafter referred to as "Jianan Technology") finally ushered in the highlight moment. On November 21st, Beijing time, Jianan Technology officially landed on NASDAQ under the ticker symbol “CAN”. The issue price was US$9, raising a total of US$90 million, but it has shrunk by nearly 80% compared with the previously disclosed US$400 million. In this regard, some analysts said that the substantial reduction in the amount of funds raised was mainly due to the strong correlation between the main business of Jianan Technology and the price of Bitcoin. As for the future, the next problem facing Jianan Technology, which has gone through the market, may be how far it can go on the road to transforming AI chips.

Shrinking "high light moment"

"The birth of a listed company represents the maturity of an industry. After more than six years of hard work, Jianan Technology has finally ushered in a moment of high light." For the listing, Shao Jianliang, general manager of Jianan Technology Blockchain, described it as such. However, this highlight moment has faded a bit. On the evening of November 21st, Beijing time, Jianan Technology officially listed on the NASDAQ, finalizing the issue price of 9 US dollars, which was the lowest price in the previous pricing range of 9-11 US dollars. The amount of capital is 90 million US dollars, which is more than 400 million US dollars raised by the previous prospectus. The amount has shrunk by nearly 80%.

The listing of Jianan Technology can be described as a thorny road. Prior to the listing, Jianan Technology had revised the US IPO prospectus for three times. The revised content has two major concerns: on the one hand, Jianan Technology's proposed fund is reduced from up to US$400 million to US$126.5 million; On the one hand, when Jianan Technology entered the final stage of the listing sprint, the withdrawal of its lead underwriter, Credit Suisse, also attracted industry shackles.

Some analysts said that the reason for the withdrawal of Credit Suisse was mainly due to the lack of fundraising and the inability to obtain income. The reason for the shrinking of the amount of funds raised by Jianan Technology, the aforementioned people pointed out that it is mainly the strong correlation between the main business of Jianan Technology and the price of Bitcoin. This year, domestic policy tightened and bitcoin prices fell, which in turn aggravated the price cuts of mining machines, so expectations for valuation and fundraising also shrank.

It is worth noting that this is not the first time that Jianan Technology has seen a shrinking fundraising. In May 2018, Jianan Technology plans to go public in Hong Kong and plans to raise US$1 billion, but it has not been successful. Prior to 2016 and 2017, Jianan Technology also listed in the domestic market, but repeatedly failed.

Hard to get rid of bitcoin "shadow"

Jianan Technology was established in 2013, mainly producing Avalon mining machines. In order to smooth the risk of bitcoin, Jianan Technology subsequently added artificial intelligence chip business. Currently, the company positions itself as "an Internet company engaged in the development of independent AI chips and providing high-performance computing services."

Jianan Technology is trying to transform from a bitcoin miner enterprise to an AI technology company, but from the operational data, the transformation of Jianan Technology is still difficult. On the one hand, from the perspective of the company's business, Jianan Technology's main business is Bitcoin mining and sales, which account for more than 99% of Canaan's revenue sources; growth business is chip design, artificial intelligence products, and intelligence. Hardware products. It is worth noting that although Jianan Technology has frequently promoted the business of chip design and artificial intelligence, it has not yet produced a large-scale commercialized product that can seize the market and form an increase. From the financial data, in the nine months ended September 30, 2019, Jianan Technology's net income was 959 million yuan, and the net loss has reached 236 million yuan.

Regarding the loss, Jianan Technology said, “The various factors may affect the bitcoin price. Our business performance has been and is expected to continue to be negatively affected by the sharp drop in bitcoin prices. If we are unable to market in the AI ​​market or other new applications, In the midst of success, our revenue growth prospects and financial conditions will be significantly adversely affected." In addition, Jianan Technology also hints at the risk factors that once the Bitcoin mining machine market is substantially reduced or ceases to exist, its business and operations will be significantly damaged.

"Mine mining machine manufacturers have made a lot of money before, but the mining industry policy is too uncertain, and efforts to transform chip manufacturers, taking the technology route is worthy of recognition. But although he told the story of the long-term technology route, in addition to mine Machine, there is no industry-level application for other types of chips yet." Senior industry insider Li Xin (a pseudonym) bluntly, although Jianan Technology once positioned itself as a chip company, and did not publicly promote the mining machine and bit The currency business, but in fact the company's revenue is mainly derived from the Avalon mining machine, and this situation cannot be changed in the short term.

For the listing and business related issues, the Beijing Business Daily reporter has contacted Jianan Technology many times, and has not received a corresponding reply as of the press release.

Future happiness and coexistence

Three years of layout, three degrees of disappointment, three changes, Jianan technology listing is full of controversy and uncertainty, until the official ringing, Jianan Technology really ushered in the highlight moment, but after the dream of Nasdaq, How far can the next road go?

In an interview with the Beijing Business Daily, many industry insiders believe that listing is a common concern for Jianan Technology. On the one hand, it can raise funds through listing and issuing stocks, and obtain positive capital flow, which is conducive to the company's diversified business layout; On the other hand, Jianan Technology, which has entered the capital market, will boost its share price, and the resulting profit pressure will be correspondingly larger. Therefore, the space for its easy transition will be smaller.

Liu Feng, a professor of business at Binjiang College of Nanjing University of Information Science and a member of the China Chain Society's blockchain professional committee, pointed out that the listing of Jianan Technology on the NASDAQ is undoubtedly beneficial in terms of capital adequacy and cash flow, and is also beneficial to its Increase investment in R&D and market to accelerate the market share of its products. However, after the listing, Jianan Technology will also be affected by the capital market, which will inevitably affect the formulation and decision-making of the Group's strategy. The biggest risk is that the sharp fluctuations in the price of the currency often directly affect its main performance, and such abnormal fluctuations in the business are easily transmitted to the capital market, which brings irrational stock prices, which ultimately affects the normal business. Operation.

Hu Jie, a professor of practice at the School of Advanced Finance at Shanghai Jiaotong University, bluntly said, “Jianan Technology started from the chip and seized the application of bitcoin mining. It seized the slogan in a short period of time and has certain advantages in the short term. However, the advantage of bitcoin mining is also a disadvantage in the long run, mainly reflected in two aspects. First, the market for mining is too small, and the market demand will soon reach saturation, which will have a fatal impact on its later development. On the other hand, the industry will also face policy impacts and regulatory risks."

Hu Jie further added that the chip industry is particularly competitive, with various Internet companies and technology giants gathering. In the subdivision of mining, because of the small number of competitors, Jianan Technology has a development advantage, but in the highly competitive artificial intelligence chip industry, it may be difficult to go on.

Li Xin also pointed out that currently Jianan Technology has mastered the two cash flow businesses of “mining machine production itself” and “bitcoin mining”, which is the advantage of its development. However, it is a waste of power resources, mining machine recycling, environmental protection, etc. The problem will directly affect the listed company's brand image and stock price. In addition, Jianan Technology's income source is too single, the customer base is concentrated in China, and the risk resistance against policy risk, natural risk and capital reclamation is relatively low. From this point of view, the future of its incremental business "artificial intelligence" and " The road to breakout in overseas markets is still very resistant.

Source: Beijing Business Daily

Reporter Meng Fanxia Intern reporter Liu Sihong