In the 18th century, during the gold rush in San Francisco, the United States, speculators from all over the world flocked to the area to realize their dreams of getting rich overnight. At that time, the most profitable method was not to search for gold but to sell shovels to those who were gold prospecting.
In the current internet gold rush, from short videos to various social platforms, there are countless "mentors" teaching people how to make money, sharing the secrets of how to earn money. No matter what the content is, it will eventually lead the vast number of "spectators" to sell the courses they have developed.
In the capital market, teaching people to trade stocks is equivalent to selling shovels to gold prospectors during the gold rush. Recently, Jiufang Zhitou Holdings (formerly known as Jiufang Wealth, 09636.HK), which claims to be the "first stock of investment education," released its interim performance announcement for 2024. This company, whose main business is selling online investment education courses and teaching people to trade stocks, may now be facing a situation where "shovels are not easy to sell."
During the reporting period, the company's net profit attributable to the parent company was a loss of 174 million yuan, an increase of 360.8% compared to the same period last year. According to its interim report, the company's significant loss is attributed to factors such as the domestic capital market's prosperity and the low trading sentiment of investors, coupled with the impact of malicious agency rights protection refunds in securities investment consulting, leading to a decrease in the group's order amount. The order amount generated by the sale of Jiufang Zhitou's flagship series was approximately 475 million yuan, a decrease of about 37.6% compared to the same period; the order amount generated by the sale of Jiufang Zhitou's Dragon Catching series was approximately 451 million yuan, a decrease of about 9.7% compared to the same period.
The net loss is gradually expanding.
From Jiufang Zhitou's interim performance announcement, it can be seen that the group's total revenue for the six months ended June 30, 2024, was approximately 898 million yuan, an increase of about 4.4% compared to the same period last year. The net profit attributable to the parent company was a loss of 174 million yuan, an increase of 360.8% compared to the same period last year, with a gross profit margin as high as 80%, showing a situation of "increasing revenue but not increasing profits."
Looking back at Jiufang Zhitou's previous performance, it is not difficult to see that the company has shown a trend of weak performance growth. Before the company's name was "Jiufang Wealth," in the 2023 interim performance disclosure, the company achieved a revenue of 861 million yuan, a year-on-year decrease of 5.4%; the loss during the period reached 38 million yuan, a significant year-on-year decrease of about 117%. It should be noted that Jiufang Wealth's performance was very impressive before its listing on the Hong Kong stock market. Data shows that from 2020 to 2022, Jiufang Wealth's revenue was 709 million yuan, 1.452 billion yuan, and 1.85 billion yuan, with year-on-year increases of 158.43%, 104.88%, and 27.43%, respectively; the net profit attributable to the parent company was 86 million yuan, 232 million yuan, and 461 million yuan, with year-on-year increases of 249.62%, 169.52%, and 98.36%, respectively.
In just about a year after listing, Jiufang Wealth's performance has undergone a 180-degree "big change" in embarrassment. In addition to unsatisfactory performance, the company's business is also troubled by refunds.
In the first half of this year, the refund rates for Jiufang Zhitou's two products, the flagship series and the Dragon Catching series, were 30.3% and 31%, respectively, which is nearly double compared to the same period last year, when the refund rates were only 14.7% and 18.5%. Jiufang Zhitou attributes the increase in refund rates to the domestic market's sluggishness and fluctuations, as well as the company being subjected to a large number of malicious agency rights protection activities and other factors.Urgently Seeking New Growth Points to "Extend Life"
From online complaint platforms, it has been observed that many consumers, after learning about Jiufang Zhitou through social platforms, enter private groups through its investment assistants. They receive daily messages from the investment assistants sharing chat records of others making money or copywriting about individual stocks hitting the daily limit. Users are induced to purchase the company's products and services for 29,800 yuan, and after following the investment advice from Jiufang's investment consultants, they suffer even greater losses and demand a refund of the service fees.
Although Jiufang Zhitou claims to be a leading online investment decision-making solution provider in China, promoting itself as offering diversified products and services to help investors master financial knowledge, and even changing its slogan to "New Generation Stock Investment Assistant," there have been multiple media reports that the company's sales personnel often "skirt the edge," using stock recommendations, practical combat, insider information, and other users' profit-making cases as promotional gimmicks, and implicitly suggesting to users that they can earn steadily and with a guarantee.
According to data from Yidong, as of July this year, 15 local securities regulatory bureaus have issued 46 penalty notices to securities investment consulting institutions, with a total of 23 investment advisory institutions receiving penalties. Among them, 7 institutions were subject to supervisory management measures to suspend the addition of new clients; 30 practitioners were penalized, including executives from 9 institutions.
Looking at the reasons for the penalties, most are concentrated on two main causes. First, many institutions have the illegal act of providing investment advice to clients without being registered as securities investment consultants, which is mentioned in 36 penalty notices. The other main reason for the penalty is improper marketing promotion, with 30 out of 46 penalty notices involving violations of improper marketing promotion.
According to relevant regulations, personnel of investment consulting institutions, financial advisory institutions, and credit rating institutions engaged in securities service business must have securities professional knowledge and more than two years of experience in securities business or securities service business. Moreover, securities investment consultants are not allowed to make investment recommendations to buy, sell, or hold specific securities through public media such as radio, television, the internet, and newspapers.
As financial industry regulation becomes increasingly strict, how Jiufang Zhitou, which mainly operates in securities investment consulting, can turn losses into profits and regain its profit growth momentum under regulation is an urgent issue that needs to be resolved.
However, it is worth mentioning that Jiufang Zhitou is also actively seeking a second profit growth point. Media reports indicate that on March 8, 2024, Jiufang Wealth announced that the company's indirect wholly-owned subsidiary, Jifu (Shanghai) Information Technology Co., Ltd., signed a share transfer agreement with Shanghai Qiji Technology Information Co., Ltd. and Beijing Guangfa Insurance Brokers Co., Ltd., to acquire all the shares of Guangfa Insurance for 52 million yuan. After the acquisition, Guangfa Insurance will become a wholly-owned subsidiary of Jifu Information.
At present, as the target of the acquisition, Guangfa Insurance's asset value performance is not ideal. The announcement disclosed that before the acquisition, the book value of Guangfa Insurance's total assets was only 8.5 million yuan, and it suffered consecutive losses in 2022 and 2023, with a total loss of about 9.894 million yuan.
In addition, in July of this year, Jiufang Zhitou also launched its first stock learning machine, "Yizhi Gudao," which mainly serves investors at different levels to learn stock courses. However, after its launch, the market response has been lukewarm. On a certain e-commerce platform, as of September 4, only 48 units of the product have been sold on that platform.Significant Personnel Overhaul
Over the past year, Jiufang Zhitou has experienced frequent personnel changes. According to public information, in November of last year, the former Chief Financial Officer and Company Secretary, Qian Di, resigned from all positions. In December of the same year, Cai Zi successively resigned as the company's Chief Executive Officer, with Chen Wenbin taking over as the new CEO and Chen Jigeng as the company's Chief Administrative Officer. In April of this year, Cai Zi resigned as an executive director.
The announcement revealed that Mr. Chen Wenbin has previously held senior positions in various financial and investment institutions, with over 20 years of industry experience. He has served as the Chairman, CEO, and Director of Yinke Holdings. Mr. Chen Jigeng has over 10 years of experience in the financial industry and has held positions at Beijing Litong Tianxia Technology Co., Ltd., the Beijing branch of Shanghai Zhuosheng Information Technology Co., Ltd., and Yinke Holdings.
Media reports indicate that Yinke Investment Holdings Co., Ltd. (referred to as "Yinke Holdings"), established in 2011, focuses on spot investment services. Originating from the bulk commodity spot trading service platform "Yin Tianxia," the Yin Tianxia Group (now renamed: Shanghai Yinke Chuangzhan Investment Group Co., Ltd.) was once a leading brand in China's precious metal investment services. Previously, Yin Tianxia was embroiled in disputes over illegal futures trading, suspected of directing traffic to an illegal futures trading platform. At that time, Yinke Holdings entered the Shanghai Gold Exchange in 2015 and integrated with the platform Jinda Shi the following year. The China Judgments Online also published a civil judgment on property damage compensation disputes between the Shanghai Gold Exchange, Shanghai Jinda Shi Internet Financial Information Service Co., Ltd. (referred to as "Jinda Shi Hujin"), and the plaintiff. The Futian District People's Court of Shenzhen, Guangdong Province, ruled that Jinda Shi Hujin and Shenzhen Financial Electronic Settlement Center compensate users for 50% of their investment losses.
As a company that teaches people to invest and make money, Jiufang Zhitou has also suffered losses in its own investments. According to the mid-term performance report for 2024, during the period, the group's financial assets suffered a loss of 94.61 million yuan due to the group's purchase of some equity-based financial products that did not yield positive returns, compared to a loss of 6.01 million yuan in the same period last year. Specifically, the company's fund equity has dropped from 687 million yuan at the end of last year to 467 million yuan by the end of June this year, and bond equity has dropped from 138 million yuan at the end of last year to 108 million yuan during the reporting period.
Moreover, Jiufang Zhitou made two single investments exceeding 5% of total assets in the first half of this year, namely the Pan Hou Wei Ran - Smart Selection No. 10 Private Securities Investment Fund and the Galaxy Income Product No. 10. As of the end of June, the net equity value of these two investments was 254 million yuan and 117 million yuan, respectively. However, in the 2023 annual report, the net equity value of these two investments was 278 million yuan and 250 million yuan, respectively.
On September 4, Jiufang Zhitou's share price closed at 6.69 Hong Kong dollars per share, a drop of more than 50% compared to the initial public offering price of 17 Hong Kong dollars per share. Although the company has been continuously repurchasing shares recently, a total of 17.73 million ordinary shares listed on the Hong Kong Stock Exchange have been repurchased and canceled, with a total amount of approximately 198 million Hong Kong dollars, and an average repurchase price of about 11.17 Hong Kong dollars per share, it has still not been able to reverse the downward trend in share prices. It seems that more measures are needed to boost investor confidence in the future.
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