After successive declines in stock prices, Duodi Digital Intelligence (02586) ushered in three consecutive rebounds. As of the close of trading on December 30, Multi-Point Intelligence reported HK$6.48, an increase of 6.23%, with a total market capitalization of HK$5.746 billion.

Although it still shrank significantly from the listed issue price of HK$30.21, the stock rebounded nearly 34% from the low of HK$4.78.

Is this wave of rebound by multiple points sounding the trumpet for the Hong Kong stock market?

The average daily market value of HK$6.119 billion stands at the entry threshold?

Hong Kong Stock Connect has increasingly become a key pillar of liquidity in the Hong Kong stock market. Its share of turnover rose again in November, highlighting the importance of entering Hong Kong Stock Connect. In the case of Longpan Technology, on November 25, when it was officially incorporated into the Hong Kong Stock Connect, the stock price once soared more than 80%. The main buying force was Hong Kong Stock Connect.

Therefore, for the multi-point wisdom of the sharp drop in stock prices, inclusion in the Hong Kong Stock Connect may be a key step to change its life against the sky.

According to the observations of the Zhitong Finance App, since the sharp drop two days before listing, Multi-Point Smart's stock price has been in a state of decline for a long time. Over the period of nearly 12 trading days (December 11 to December 30), the top chips of Multi-Point Smart gradually decreased, and a large number of chips were piled up at the bottom, and mobile costs were distributed at a low level and formed a single peak. On December 30Chip distributionLooking at the situation, 70% of the company's chip range is between HK$5.9 and HK$9.94. Compared with the 70% chip range of HK$6.48 to HK$14.7 on December 11, there was a significant increase in both cost and concentration.

Once the stock price volume breaks through a single peak and concentration, it is a sign of a round of upward market growth. Currently, more intellectuallySupport levelIt was HK$6.06, and the average cost was HK$7.76,pressure levelHK$7.76. Although there is still a certain morphological gap from the low point of the single peak to high density, a trend has taken shape. Once the trading volume and turnover ratio increase, the stock's upward trend is expected to begin.

It is worth noting that fromDistribution of fundsLooking at the situation, on December 30, there were many inflows of oversized orders and 0.4698 million and 1.6511 million, respectively. The net inflow of mega-order and large orders was 1.197 million, accounting for 54% of the total net inflow. Overall, the total capital inflow was 5.305 million and the outflow was 3.1072 million, and market sentiment has recovered.

Who is continuing to buy? In terms of trading seats, the top three buying brokers in the past 10 days were CMB International Securities, Futu Securities International Hong Kong, and Hong Kong and Shanghai HSBC, which bought 11.8918 million shares, 1.0347 million shares, and 0.8531 million shares respectively. During the same period, the three major sellers were China Merchants Securities Hong Kong, CITIC Lyon Securities, and BNP Paribas, which sold 2.2651 million shares, 1.7133 million shares, and 0.1988 million shares respectively.

As of December 27, CMB International Securities, Hong Kong and Shanghai Banking Corporation, Huatai Bank, and Guoxin Securities (Hong Kong) brokers were the company's top four shareholders, with shareholding ratios of 8.9%, 4.36%, 2.85% and 2.57%, respectively. In addition, Guoxin Securities (Hong Kong) brokers' shareholding increased due to changes in positions on December 9. Specifically, 22.7346 million shares were deposited at the Guoxin Securities (Hong Kong) broker at the time, and the market value of the deposit was HK$0.4 billion.

The capital seems to be ready to be distributed. What standards do so many points of wisdom have to meet before they can get through? According to the Zhitong Finance App, the company currently has an average daily market value of HK$6.119 billion, which has already crossed the entry threshold. However, as long as the ratio level is maintained for half of the trading day on December 31, the probability that the company will pass through is greater.

Successive losses are highly dependent on big customers such as Wumei

Behind this sharp decline in IPO valuations, the prospectus may be able to provide an answer to the question of how smart things actually are.

In terms of performance, from 2021 to the first half of 2024, Multi-Point Smart's revenue was 0.848 billion yuan, 1.328 billion yuan, 1.585 billion yuan, and 939 million yuan respectively. The year-on-year revenue growth rates for 2022 to the first half of 2024 were 56.59%, 19.36%, and 22.93%, respectively. Net profit for the same period was -1.81 billion yuan, -0.9 billion yuan, -0.75 billion yuan, and 0.48 billion yuan, respectively, and losses showed a clear narrowing trend.

Looking at the three-fee expenses, it can be seen that the drastic reduction in sales and marketing expenses is one of the important reasons why Multi-Point Intelligence continues to reduce losses. From 2021 to mid-2023, sales and marketing expenses accounted for 58.2%, 20.5%, and 10.3% respectively, and the amount of sales and marketing expenses was drastically reduced from 0.607 billion yuan in 2021 to 0.18 billion yuan in 2023.

In recent years, the revenue structure of Multi-Point Intelligence has changed markedly: the retail core service cloud, which uses commissions and subscription collection as the business model, has become the main force, and revenue has increased year by year, accounting for 99.4% in the first half of this year. Meanwhile, e-commerce service cloud revenue declined sharply from 48.3% in 2021 to 0.4% in the first half of this year. Furthermore, the revenue share of other businesses has been below 1% for a long time.

Seen from this perspective, under the current commission ratio, it may still be very difficult to achieve profits in the short term. After all, there is not much room for continued reduction in sales and marketing expenses, and if the company increases the speed of business expansion, it will surely lead to an increase in sales and marketing expenses, and the room for improving gross margin is also suppressed by low-margin AIoT services, so it is not appropriate to expect Taoji's profit too high in the short term.

In addition to a break-even point or short-term hopelessness, heavy reliance on big customers is also one of the potential risks of being smart. According to the prospectus, from 2021 to 2023, Multipoint Smart's revenue from the top five customers, including Wumei Group, accounted for 70.2%, 76.6%, and 81.7%, respectively. Multipoint Digital Intelligence said that although the company plans to expand and diversify its customer base, the company will still rely on major customers for the foreseeable future.

It is easy to see from the data that Duodi Digital Intelligence's dependence on the top five customers continues to rise. The number of the company's customers reached 677 in 2023, but the top five accounted for 81.7% of revenue, and the remaining less than 20% of the revenue came from 672 customers.

More importantly, from 2021 to 2023, the share of revenue from related entities was 67.9%, 71.3%, and 74.9%, respectively, while the share of revenue from independent customers showed a downward trend year by year, at 32.1%, 28.7%, and 25.1%, respectively, and revenue growth from independent customers slowed significantly in 2023. Among the five major related entities, Wumei Group and METRO's Chinese entities both contributed the main sources of revenue, accounting for about 68% of revenue from both in 2023. However, if you expand your perspective, the current development of the cloud service market is not only fiercely competitive, but it is also still very expensive, posing more difficult challenges for industry participants. As far as multi-point digital intelligence is concerned, while maintaining its own moat in the Wumei system, it is still facing downgrade attacks from Internet giants in the industry.

In addition to this, this strong binding relationship will also hinder more cooperation with leading supermarkets. After all, other supermarket brands can cooperate with pure online platforms such as Meituan, Are You Hungry, and JD SecondDelivery; there is absolutely no need to disclose their business data to rivals Wumei through more points. Multiple prospectuses also confirm this. The so-called “independent customers” are regional supermarkets and convenience stores such as Zhongbai Group, Guangdong 711, Fat Donglai, and Dennis Department Store, which are not within Wumei's sphere of influence. This shows the industry's concerns about Wumei and many “being both judges and athletes.”

As far as I'm concerned, I'm afraid I need to figure out how to put eggs in more baskets and walk on multiple legs.

In addition, tight liquid cash flow is also known as a sequelae of continued losses. As of the end of the second quarter of this year, the balance of multi-point smart cash and cash equivalents was $0.47 billion. Liquidity liabilities, mainly short-term loans, reached 8.27 billion yuan, and short-term debt repayment pressure was quite high.

Multipoint Smart's tight cash flow is rooted in its ongoing indebtedness. According to prospectus data, from 2021 to 2023 and the first half of 2024, its net operating cash flow was 1.275 billion yuan, 0.206 billion yuan, 0.179 billion yuan, and 567.43 million yuan, respectively, showing a downward trend.

In the same period, the company's total assets increased from 1.281 billion yuan to 1.378 billion yuan and then fell slightly to 1.355 billion yuan, but total liabilities continued to rise, from 6.02 billion yuan to 8.409 billion yuan, far exceeding total assets.

Investors' previous pessimistic expectations have already been reflected in stock prices for multi-point intelligence, which is not able to make its own hematopoiesis in the short term and requires a large amount of capital investment. We can continue to pay attention to whether the company can achieve a “successful” transformation in the future.