As soon as the Dragon Boat Festival holiday ended, ArcherMind (300598, SZ), a concept stock of Huawei Hongmeng, threw a big thunder on the capital market.
This morning, ArcherMind issued an announcement stating that the company received a notice from the Jindong District Supervisory Committee of Jinhua City, Zhejiang Province on June 2 that the company’s actual controller and chairman, Mr. Wang Jiping, was placed on file for investigation and implementation of lien measures.
After the news was released, ArcherMind fell sharply at the opening. As of the close on the 6th, it fell 12.58%, and the stock price closed at 39.11 yuan, which is beyond recognition compared to last year’s highest price of 180.90 yuan.
The once bull stock has now fallen to the “altar”, what has ArcherMind experienced?
What was the reason for being investigated?
According to public information, Wang Jiping, the actual controller of ArcherMind , was born in January 1968, with Chinese nationality, no overseas permanent residency, and a master’s degree. In February 2001, he founded Yisoft Technology (Nanjing) Co., Ltd. and served as the chairman. In September 2006, he founded ArcherMind Technology (Nanjing) Co., Ltd. and served as the chairman. In 2017, ArcherMind officially landed in the capital market.
In the announcement, ArcherMind did not indicate why Wang Jiping was under investigation. However, according to the announcement, the company received a notice from the Supervisory Committee of Jinhua City, Zhejiang Province. Why did ArcherMind , as a Nanjing-based company, accept the investigation by the Supervisory Committee of Zhejiang Jinhua?
It is also understood that the Jinhua City Supervisory Committee, as a new institution established by Jinhua City’s institutional reform, is co-located with the Municipal Commission for Discipline Inspection, and its main accusations are supervision, investigation, and disposal. Specifically, the Supervisory Committee mainly supervises and inspects public officials’ performance of duties according to law, upholding public rights, honesty in political practice and moral conduct. For those who commit crimes such as fraud and waste of state assets, the supervisory organ will also, in accordance with the relevant laws, make governmental sanctions, put forward supervisory suggestions, and transfer the investigation results to the procuratorial organ for public prosecution in accordance with the law.
In other words, the supervision objects of the Jinhua Supervisory Committee are mainly state officials, and Wang Jiping, as the head of a private enterprise, should not be investigated by the supervisory organs if he is only suspected of illegal commercial activities. Therefore, it is very likely that Wang Jiping participated in the illegal case of a public official in Zhejiang, but the specific reason is still unknown. On the 6th, Titanium Media APP also tried to call ArcherMind for relevant information, but no one answered.
Rely on hot spots to brush the sense of existence
In fact, ArcherMind ‘s thunderstorm is not without warning.
Since the company went public, it has repeatedly tried to gain a sense of existence by rubbing hot spots and speculating on concepts, and successfully promoted to one of the super bull stocks on the GEM. From the blockchain concept to the Hongmeng system and the Metaverse. However, a lot of news has been released, but the actual business carried out by the company is very small, and its contribution to the overall performance is even less.
For example, on September 30, 2019, ArcherMind issued the “Announcement on Foreign Investment with Subsidiary Equity”. In the announcement, ArcherMind mentioned that it plans to use 100% equity of Wuhan ArcherMind, a wholly-owned subsidiary, as the price. RMB 225 million, and jointly established a new company with Beijing Xinghui Technology and other companies to engage in software development business.
The parent company of Xinghui Technology is 360 Technology, and its actual controller is Zhou Hongyi. Subsequently, the following rumors appeared on social media and other websites: ArcherMind and 360 owner Zhou Hongyi cooperated to establish a new software company to develop an operating system.
In November of the same year, ArcherMind announced that it “plans to indirectly hold 44.44% of the shares of Wuhan Shenzhidu through capital increase in Tongxin Software.” Wuhan Shenzhidu focuses on the research and development and services of Linux-based domestic operating systems. Later, there were rumors that Wuhan Shenzhidu, an affiliate of ArcherMind , cooperated with Huawei to develop Hongmeng system software.
Along with this series of “good” concepts, by March 17, 2020, ArcherMind ‘s stock price has hit an “astronomical price” of 180.90 yuan, compared with the closing price of 35.15 yuan per share on September 30, 2019, a record high. A six-fold increase in half a year.
During the period, although the company responded to the exchange’s inquiries. On the other hand, the company has continuously released favorable concepts related to the Hongmeng system and 5G new infrastructure through interactive platforms, announcements and other external windows.
This year, ArcherMind has applied the same routine to the concept of the Metaverse. The company responded on the interactive platform that the company is not involved in the “Metaverse” business. The “VR Solutions” content in the “Industry and Solutions” section of the company’s website appeared before the recent concept of the “metaverse” in the capital market, when the company was a VR business partner for some clients. The company currently has no VR business going on.
But on June 1, it was mentioned in the company’s press release to the media that Beijing Future Cat Technology Co., Ltd., a holding company of ArcherMind , officially released the intelligent learning hardware product – Future Cat AI Intelligent Learning Machine in Beijing. , which is the first professional mathematics learning intelligent hardware with the concept of metaverse in China. He also said, “With the support of ArcherMind ‘s strong scientific and technological strength, the future Mao AI intelligent hardware will organically integrate AI artificial intelligence, VR virtual reality, big data analysis and other technologies with mathematics learning content, empowering education, and helping students learn scientifically and efficiently. Learning, precise learning. This is also a new attempt by domestic technology giants in the field of education metaverse and digitalization.”
Appropriately clarify, while building momentum.
It is also worth noting that the original shareholders of ArcherMind soon carried out various substantial reductions after being highly sought after by shareholders through the concept of hype. According to the statistics of the Titanium Media APP, since 2019, the company has released 19 pre-disclosure announcements of the reduction plan and 16 announcements of the completion of the implementation of the reduction plan, and many original shareholders have even cleared their positions.
Less than a month ago, Nanjing Debo, the controlling shareholder of ArcherMind , once again disclosed its shareholding reduction plan, which planned to reduce its holdings by no more than 4.8 million shares in total, accounting for 3% of the company’s total share capital. As of the end of the first quarter, Nanjing Debo held 47.4184 million shares of ArcherMind , accounting for 29.63% of the total share capital.
In addition, as of now, only Denuo Fund has held ArcherMind Technology , accounting for only 0.35%. At the end of 2021, 28 funds hold shares in the company.
an unprofitable business
The reason why ArcherMind is “disgusted” by various fund managers is that its performance is not as hot as the concept of speculation.
According to public information, ArcherMind is located in Nanjing City, Jiangsu Province, focusing on the research and development of embedded software technology in the fields of smart phones, smart cars, smart hardware, artificial intelligence and mobile Internet. To put it simply, ArcherMind is mainly engaged in software outsourcing service providers, and its service customers include well-known companies such as Huawei and Intel, so it is fairly well-known in the industry.
From 2018 to 2020, ArcherMind ‘s operating income increased from 534 million yuan to 938 million yuan, and the net profit attributable to the parent was 15.9179 million yuan, 169 million yuan and 58.8584 million yuan, a year-on-year increase of -59.57%, 964.29% and – 65.26%. Although operating income has increased year by year, net profit performance is very unstable.
In 2021, ArcherMind will achieve a revenue of 1.42 billion yuan, a year-on-year increase of 51.88%, a record high; however, the net profit attributable to the parent is 29.934 million yuan, a year-on-year decrease of 49.14%. It is mentioned in the financial report that in 2021, the company will realize an investment income of -49.8429 million yuan. After deducting investment income, the actual profit of the company’s own business in 2021 will be about 79.78 million yuan, and its own business profit will increase by about 78% compared with 2020. The company’s main structure remains unchanged.
Entering 2022, ArcherMind will continue to increase revenue but not profit, and has suffered losses. It is reported that in the first quarter of 2022, the company achieved revenue of 420 million yuan, a year-on-year increase of 48.81%; net profit attributable to the parent was -45.99 million, a year-on-year decrease of 341.36%; net profit after deduction was -51.04 million yuan, a year-on-year increase down 305.90%.
In this regard, ArcherMind stated that the main reason for the loss in the first quarter was the loss of the joint venture Tongxin Software Technology Co., Ltd. (hereinafter referred to as “Tongxin Software”), which was caused by the company’s investment income accrued by the equity method. In addition, the announcement shows that ArcherMind ‘s staff wages increased sharply in the first quarter, and its operating costs also increased significantly.
According to ArcherMind ‘s business model, as an outsourcing company, there are no technical barriers. Therefore, the difference between its revenue and net profit is relatively large. As a technology downstream enterprise, ArcherMind ‘s bargaining power is also relatively weak. , With the increase in labor costs, ArcherMind ‘s profit margins are also being continuously compressed. In 2021, ArcherMind ‘s net profit margin is not even 3%, and in the first quarter of this year, the company’s net profit margin has fallen to a negative value.
The tide goes out to know who is swimming naked. For ArcherMind , if it had focused on how to improve performance rather than speculating on concepts, it might not have “shooting itself in the foot” like it is today.
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