2020-11-21

Valued at US$3 billion to 49.45 million in market value, Youke has not been listed on the bank, and it is too difficult to work together

By yqqlm yqqlm

Article | AI Finance and Economics Zhou Jing

Editor | Sun Jing

November 18, US Eastern Time, the head of the joint office The company Youke Workshop officially listed in the United States through the form of SPAC (that is, the acquisition of an operating company within a specified period of time).

The founder Mao Daqing revealed that it was listed in 2017 It is planned that in 2018, YoukeWorks will complete USD 200 million in Series D financing, with a post-investment valuation of USD 3 billion; In December 2019, YoukeWorks submitted an IPO application to the US Securities Regulatory Commission for the first time, with a financing target of USD 100 million; The independent IPO application was withdrawn in August of this year, and the SPAC method was launched 14 days later. The estimated market value of the combined company is approximately US$769 million. But as of November 19, Eastern Time, its closing price was $8.55, and its total market value was only $49.45 million.

The listing of Youke Workshop has been twists and turns, and its valuation has fallen again and again. The current market value is close to the market value of small and medium property management companies in Hong Kong stocks.

The founder of a project who has withdrawn from the co-working industry told AI Finance and Economics that he was not optimistic about the listing of Youke Workshop,”the business model is not working and there are too many problems.”. In October last year, WeWork, the originator of co-working offices and a star US company, stopped its IPO. The profitability data aroused strong doubts from investors, and problems such as the heavy sharing of office models and the difficulty in profitability were also exposed.

5 years and 7 months, Youke Workshop bleeds on the market, but how far can the joint office go?

The long-planned listing

The listing has been planned for a long time.

After 2017, the main action of Youke Workshop is mergers and acquisitions. From 2017 to 2018, it has successively acquired 7 joint office enterprises including Wujie Space, Wedo Joint Venture, Hongtai Innovation Space, and Aite Zhongchuang, to accelerate the expansion of scale.

It is worth noting that in the above-mentioned mergers and acquisitions, Youke Workshop only paid a very small amount of cash, and most of the purchase consideration was paid through equity replacement. Most of these mergers and acquisitions are premium mergers and acquisitions, which have formed a large amount of goodwill, which also means that once the performance of the merged company declines, there will be a huge risk of impairment.

On the one hand, Youkechang must rely on more mergers and acquisitions to increase its valuation. On the other hand, the sustainability of mergers and acquisitions depends on proving the market’s viability of its model. Sustainability, this development path determines that Youke Workshop must be listed as soon as possible.

In addition, according to”China Business News”, Youke Workshop has successively acquired 61%of Daguan Architectural Design, 51%of Dongyiyuanda, The entire equity of Melo Inc. (Rocket Technology) is also paid for by issuing shares.

Under various pressures, Youke Workshop began to build the VIE structure in September 2018, and secretly submitted an application to the US SEC. At that time, the VIE structure had not The closing shows the urgency of its listing.

Unexpectedly, after WeWork, which was an early listing process, submitted its prospectus in August 2019, it suffered from Waterloo because its profit model was questioned. The fate of WeWork, which stopped IPO, was very tragic-it suspended its overseas deployment, sold assets, and closed some business lines.

This is not good news for Youke Workshop. Not only was its listing process dragged down, in December of the same year, due to differences in valuation, Citi, Credit Suisse also withdrew The ranks of the IPO underwriters of Youke Workshop. At that time, Mao Daqing told the media that he was experiencing the most difficult moment in five years of starting a business.

But in fact, the more difficult time has yet to come. The outbreak of the new crown epidemic this year has almost suspended offline offices. Financial data shows that in the first half of 2020, due to the impact of the epidemic, Ucommune’s revenue fell to 398 million yuan, compared with 486 million yuan in the same period last year. However, the profit of YoukeWorks has been declining in recent years. In 2017, 2018, and 2019, the net loss of YoukeWorks was 373 million yuan, 445 million yuan, and 807 million yuan, respectively. The loss exceeded 1.6 billion yuan in three years.

getInterUrl?uicrIvZQ=90193c55343a1ced3ecda07dda44dffa - Valued at US$3 billion to 49.45 million in market value, Youke has not been listed on the bank, and it is too difficult to work together

Picture/Prospectus of Youke Workshop

In any case, the pace of listing can no longer be stopped, and SPAC rescued Youke Workshop. Backdoor SPACs do not need to be strictly reviewed like traditional IPOs. YoukeWorks has finally landed on Nasdaq.

Not long after the listing, shareholders GLAZER CAPITAL and LLC, which hold more than 10%of Youke Workshop, were sold on November 16 at a price of 10.2 US dollars. 700,000 shares, the intention to leave is very obvious.

Is asset-light transformation the antidote to co-working?

The co-working model originated from the United States, represented by WeWork. The original intention was to provide a shared workspace for start-ups, freelancers and multinational companies And office.

And WeWork’s business model is to buy or lease the office building for a long time, then renovate and lease it, and provide standardized services, which is essentially the same as the “second landlord” No difference.

In 2015, under the tide of the sharing economy, domestic co-working offices also began to run wild. A group of co-working companies such as Youke Workshop, Krypton Space, Distrii Office Partners, Dream Plus, etc. have all raced to encircle the land.

Mao Daqing came out from Vanke with many years of real estate experience , Quickly seized the trend, and was favored by the capital market.

However, the model of joint office in the later period has been questioned. Yiou has done data research, and the average occupancy rate of joint office can reach 85%. , Once the funds can’t work, the pressure on the”second landlords” to collect payments will increase. In fact, after madly burning money, most players are hovering between life and death.

The model is heavy, profitability is difficult, and it is difficult to get rid of the”second landlord” nature. The bubble blown out by capital for co-working will eventually burst.

getInterUrl?uicrIvZQ=3d05879a7830d1b33cb902ae1127b7a7 - Valued at US$3 billion to 49.45 million in market value, Youke has not been listed on the bank, and it is too difficult to work together

So in After 2019, domestic co-working players have invariably begun to transform from the”two landlord” model to the asset-light model.

Weng Junjie, head of Bee Technology, told AI Finance and Economics, “The company began to be a youth crowd-creation space in 2015, and in 2019 it began to explore a light asset model and shift to office space. Create and space refined operation management services, 80%of the business is currently in commercial enterprises and industrial space customization.”

The entire industry has reached the point where it has to change. Weng Junjie found that everyone is seeking to get rid of the second landlord business model and find their own value points.

The same is true for Youke Workshop. In April of this year, Mao Daqing announced that Youke Workshop will carry out a strategic transformation of”light assets and heavy empowerment”, mainly export brand services, and provide space design, construction and management services.

Will asset-light transformation be the antidote to co-working? Some insiders analyze that in the long run, the asset-light model has more scale effects and higher operational efficiency.

“But it needs output management and branding, which is also a challenge for the team.” Weng Junjie admitted frankly. Another practitioner is also worried that although the asset-light model is lighter, it also means that profits are thinner, and investors have to take most of the profits.

Where the co-working office will go, it remains to be seen. The listing is not the end of Youke Workshop. As Mao Daqing said,”This is the end, and Starting point.”

This article was originally produced by AI Finance and Economics, an account of”Finance World” Weekly. Please do not reprint it on any channel or platform without permission. Offenders must be investigated.