Viewpoint Real Estate Network:After nearly three months of waiting, artificial intelligence software company Shangtang Technology finally ushered in good news.

On the evening of November 22, Hong Kong Stock Exchange filings showed that Shangtang passed the listing hearing. From the submission of the application on August 27 this year to now through the hearing, Shangtang Technology's IPO journey has gone smoothly and will soon launch an IPO and list in Hong Kong.

According to the new media of View Real Estate, Shangtang Technology, founded in 2014, is one of the earliest AI start-ups in the field of computer vision at the application level, and has the title of "four Little Dragons of AI" in the industry, together with Xia Technology, Yitu Technology and Yuncong Technology.

Smooth listing road

According to the point of view of real estate new media, over the past year, the "four Little Dragons of AI" have made strenuous preparations for listing, launching an impact on the "first share of visual AI".

In this regard, some market participants said that listing is the common goal of the leading companies in the current AI field. On the one hand, listing can help them get new financing channels, on the other hand, investors who have joined the board are also eager to cash out through the IPO of these head companies.

However, it seems that with the exception of Shangtang Technology, the listing of the other three companies has not been very smooth.

For example, Yuncong Technology was accepted by Kochuang Board in December last year. After two rounds of inquiries, the listing was suspended until July this year; in the same month, Science and Technology Innovation Board's IPO plan, which had been prepared by Tu Technology for eight months, failed; while ignoring the failure of technology to list in Hong Kong in 2019, it chose to change the track to Science and Technology Innovation Board, and finally Science and Technology Innovation Board IPO was approved in September this year.

Some analysts pointed out that, on the whole, the core business model of Shangtang Technology is not much different from the other three "AI four Little Dragons". However, because it has created its own underlying algorithm platform, Shangtang Technology has a certain prominence in the eyes of the capital, and has gradually become a "hot cake" in the eyes of the capital.

According to the prospectus, Shangtang Technology's revenue mainly comes from the sales of software platforms, including software licenses, AI software and hardware integrated products and corresponding services.

At present, the core product of the company is SenseCore, the lowest artificial intelligence infrastructure, with specific products for four directions, namely, the Ark Enterprise Open platform for Smart Business scenarios, the Ark City Open platform for Smart City, the SenseME, SenseMARS and SenseCare platforms for Smart Life, and SenseAuto (Shang Tang Shadow Intelligent vehicle platform) for smart cars.

In addition, the newly disclosed post-hearing data set also announced for the first time the number of customers in each major business of Shangtang Technology. In the first half of 2021, its smart business business has 635 customers, smart city business has 119 customers, smart life business has 155 customers, and smart car business has 13 customers, showing an increase over the same period last year.

As of June 30, 2021, the total number of customers of Shangtang software platform has exceeded 2400, including 250 Fortune 500 companies and listed companies, 119 cities and more than 30 automobile companies, with more than 450 million mobile phones and more than 200 mobile applications.

From the perspective of financing, whether from the number of financing or the scale of financing, Shangtang Technology is proud of the existence of Qunfang.

According to the enterprise survey data, since its establishment, Shangtang Technology has completed a total of 12 rounds of financing, with a total financing amount of 5.2 billion US dollars. (about 33.189 billion yuan). Of these, the most recent round of financing was the $703 million (about 4.487 billion yuan) D+ round completed in June 2021.

At present, Shangtang's largest shareholder is founder Tang Xiaoou, with a stake of 21.73%. Core institutional investors include Softbank Corp. (14.88%), Taobao China (7.59%), Chunhua Capital (3.08%), Silver Lake Capital (3.05%) and so on.

Raise 60% for research

According to a report released by Frost&Sullivan, a third-party consulting machine, by the end of 2020, Shangtang had become the largest artificial intelligence software supplier in Asia and the largest computer vision software supplier in China, with a market share of 11%.

With the deepening of digital transformation, the global demand for artificial intelligence software continues to increase, and the revenue and gross profit margin of Shangtang Technology are also increasing year by year.

According to the prospectus, Shangtang's revenue from 2018 to the first half of 2021 was 1.853 billion yuan, 3.026 billion yuan, 3.446 billion yuan and 1.65 billion yuan respectively, and its gross profit margin was 56.5%, 56.8%, 70.6% and 73%, respectively.

However, Shangtang Technology, like most AI companies at this stage, is unable to solve the problem of losses. From 2018 to the first half of 2021, the net losses of Shangtang Technology were 3.432 billion yuan, 4.96 billion yuan, 12.158 billion yuan and 3.712 billion yuan respectively, with a total loss of 24.2 billion yuan. The net adjusted losses were 220 million yuan, 1.037 billion yuan, 878 million yuan and 726 million yuan respectively.

According to the prospectus, the reason behind the loss is the huge cost of research and development. AI as a cutting-edge field of science and technology, high R & D is recognized by the industry. And Shangtang Technology is a typical example of large investment in infrastructure and technology research, and the investment in the Shanghai Lingang AI Supercomputing Center built by the company in September 2020 is as high as 5 billion.

Data show that from 2018 to the first half of 2021, its R & D expenditure was 848 million yuan, 1.916 billion yuan, 2.453 billion yuan and 1.77 billion yuan respectively, accounting for 45.9%, 63.3%, 71.3% and 107.3% of revenue in the same period, respectively. In the first half of this year, R & D expenses even exceeded revenue.

In addition, with regard to the fund-raising use of the IPO, Shangtang Technology said that it is expected to spend 60% on research and development, of which 10% will be used to expand the computing power of AIDC (Shanghai Lingang large artificial Intelligence Computing and enabling data Center), 10% will be used to enhance the design capability of artificial intelligence chips and develop their own artificial intelligence chip solutions, 15% will be used to improve the capabilities related to artificial intelligence models, and 25% will be used to further develop products. And enhance other artificial intelligence research and development capabilities to maintain a leading position in the industry.

In addition to the huge investment in infrastructure, the high salary of R & D personnel is also another important reason.

As of June 30, 2021, Shangtang Technology has 40 professors and 3593 technical R & D personnel (including more than 250 doctoral and doctoral candidates), accounting for more than 2/3 of the company's total number (5286).

From 2018 to the first half of 2021, Shangtang spent a total of about 4.46 billion yuan on R & D staff salaries and benefits (including equity incentives), accounting for 63.8% of the R & D expenditure in the same period. Among them, in the first half of 2021 alone, the salary of the company's R & D personnel was as high as 1.285 billion yuan.

However, although Shangtang Technology is losing money, the company still has plenty of money. As of June 30, Shangtang Technology had 8.926 billion in cash and cash equivalents, as well as 7.94 billion yuan in time deposits, according to the prospectus.