On May 13, the official website of Shenzhen Stock Exchange showed that the gem IPO application of Jiangsu force Digital Technology Co., Ltd. (hereinafter referred to as "force digital") was terminated (withdrawn). Force digital is an enterprise focusing on the 3D digital content production industry. It has received comments from well-known institutions such as xinzhongli capital, Tencent investment, Dongfang Fuhai, cornerstone capital and so on.
It is worth mentioning that the path of gem IPO of force digital is quite tortuous. On June 30, 2021, force digital submitted the prospectus. On September 30, the audit was terminated because the financial data recorded in the IPO application document had expired. On December 22, force digital completed the update of financial data. On March 31 this year, the financial information recorded in the IPO application document expired again. Until May 13, force digital terminated the IPO.
Behind the digital halberd IPO of the force, the prospectus also reflects its weak performance.
Revenue depends on outsourcing, and the original film lost 286 million
Force digital was founded in 2010. Its founder Zhao Rui is a rare inter-bank entrepreneur in the industry. 22 years ago, Zhao Rui left the bank and devoted himself to the field of animation.
In 2015, due to the high quality of its game animation "Zhenmo song", force digital gradually ranked among the forefront of the industry.
In particular, in the past two years, with the vigorous layout of animation, games and other contents by Internet platforms such as Tencent, Netease and station B, force digital has appeared in the public eye in a very high-frequency state.
From the IP series "full time master", the head Guoman's work "the legend of mortals cultivating immortals", the popular mobile game "the glory of the king" and "Yin and Yang master" to IP films such as "catching demons 2" and "Juji 2" with special effects as the selling point, there are force figures behind them.
According to the prospectus, during the reporting period, force digital also participated in the production of 3D animation content of American DreamWorks series "three heroes of heaven: The Legend of paradise" and "magic master: The Legend of paradise"; And participated in the 3D content production of American Electronic Arts Company's "fifa19", "fifa220", "fifa221" series and 2K sports "nba2k19", "nba2k20" and "nba2k21" series games.
In the field of game 3D content entrusted production services, customers include Microsoft Game Studio, Sony interactive entertainment, Bethesda game studio and other companies; In the field of animation 3D content entrusted production, customers include Ningmeng film and television, golden century culture media, Anle (Beijing) Film Distribution Co., Ltd.
Force figures are therefore favored by capital. Since its establishment in 2010, force digital has experienced at least six rounds of financing. The investors include star investment institutions such as xinzhongli capital, Tencent investment, Dongfang Fuhai and cornerstone capital.
However, despite several rounds of financing, founder Zhao Rui is still the actual controller. The prospectus shows that the actual controller of force digital is Zhao Rui, who directly holds 12.14% of the shares of the company, indirectly controls 18.12% of the shares of the company through Nanjing Ruiying and Tianjin Zongli, and directly and indirectly controls 30.26% of the shares of the company in total.
Cornerstone capital holds 14.18%, Dongfang Fuhai holds 12.43%, Tencent holds 12.13% through Linzhi Lichuang, and Shanghai Hanfa holds 10.32%.
According to the prospectus, the profit model of force digital is mainly to obtain the project income by providing customers with the whole process of 3D digital content production or some production links, and earn the difference between the project income and the corresponding project procurement cost, labor cost and other costs. In short, it is to earn the money of "outsourcing".
From 2018 to 2020 and the first half of 2021, the operating revenue of force digital was 351 million yuan, 311 million yuan, 331 million yuan and 193 million yuan respectively, and the net profit attributable to the parent company in the same period was - 286 million yuan, 13.8202 million yuan, 62.9021 million yuan and 28.5821 million yuan respectively.
Among them, the revenue mainly comes from the entrusted production of game 3D content and Animation 3D content. In the first half of 2021, the revenue was 113 million yuan and 60 million yuan respectively, accounting for 59.22% and 31.28% of the total revenue respectively, accounting for more than 90% of the total revenue. It is the main source of revenue for the force.
Although the outsourcing business is going well, the original business of force digital is not so lucky.
With the rise of original domestic animation in previous years, force digital also hopes to get rid of the hat of "outsourcing" and transform to original animation.
In 2018, the force digital original film "Mommy duck" was released, but the box office of this 200 million film was less than 40 million.
The failure of "Mommy duck" directly led to the negative gross profit of the overall business of force digital that year, with a net profit loss of 286 million yuan. The amount of inventory falling price reserves withdrawn by the company at that time was as high as 207 million yuan.
The contribution of 3D digital human business is weak
The failure of the original business made the force digital recognize the reality. In response to the inquiry of the exchange, force digital frankly said: "the implementation of Mommy duck makes the company's management realize that the advantages accumulated by the company in the field of 3D digital content production cannot be directly extended to other links of the 3D digital content production service industry chain."
Even because of "Mommy duck", at the end of 2018, force digital decided to adjust its business strategy and no longer carry out new original digital content business and original investment business except for the project of "big monster in the Forbidden City". We promise to focus on the development of 3D digital content production service business in the future.
However, Zhao Rui is not satisfied that force digital is just an "outsourcing" animation company. Previously, force digital once called itself a "high-tech content company". Its core is that the force hopes to target similar companies in Hollywood. "Why can many companies in Hollywood make great works, because it is not limited to art, but a real high-tech company that uses many scientific and technological methods to realize art products."
With the take-off of virtual human, force digital has also released its 3D digital capability to industries other than film and television business, looking for new growth points.
From 2019, force digital began to expand its 3D digital human business and successively undertook projects such as Shanghai Pudong Development Bank 3D digital human, baidu 3D digital human, Xinhua News Agency 3D anchor, Shangtang technology 3D digital human and so on.
However, according to the prospectus, in the first half of 2021, the revenue of the force from other industries was only 13 million yuan, accounting for 6.70% of the main business revenue, with a weak contribution.
In addition, at present, compared with the game industry, the application businesses of other industries of force digital are very dependent on large customers. In response to the inquiry of Shenzhen Stock Exchange, force digital mentioned that from January to June 2021, the revenue realized by the top five projects accounted for 84.33% of its field, of which the largest customer, Shanghai Pudong Bank, accounted for 44.13%.
The number of customers in Pudong exceeded 45.85% in 2019, even accounting for more than the top five customers in Shanghai in 2020. The revenue from the top five customers accounted for 86.34%, and the sales revenue of Zhongzhi Tengfei, the largest customer, accounted for 51.67%. Excluding the sales revenue of the largest customer, the revenue of application business in other industries of force digital will not increase but decrease in 2020.
The force digital wants to make the 3D digital human business into the second growth curve, which has a long way to go.
(source of the first picture: force animation wechat official account)
Author Sheng Jiaying