If you want to sprint into the “first stock of the Metaverse” in Hong Kong stocks, can Feitian Yundong’s listing relieve anxiety?

The “Spear and Shield” of Flying Clouds

Since the second half of 2021, Metaverse has continued to explode, and many companies have successfully landed in the capital market in the name of Metaverse. Many A-share listed companies related to Metaverse have also received a lot of attention, and Internet giants such as Baidu, Tencent, Byte, and Ali are also promoting the implementation of related products.

Recently, Feitian Yundong submitted materials to the Hong Kong Stock Exchange, and is preparing to apply for listing on the main board of the Hong Kong Stock Exchange again. Investment institutions such as Tongchuangweiye , Saifu, Nanjing Cultural Investment, Tellhow Investment have participated in the investment of Feitian Yundong.

The “Hong Kong Stock Research Institute” learned that this is the second time Feitian Yundong has submitted a form on the Hong Kong Stock Exchange. On December 28 last year, Feitian Yundong was submitted for the first time on the Hong Kong Stock Exchange, but it “automatically expired” because it failed to inquire within 6 months. And this prospectus has also been interpreted by the outside world as a “PPT-style Metaverse” prospectus.

However, to a certain extent, if Feitian Yundong is successfully listed, it will also become the first real Metaverse listed company in China.

A “Metaverse” company focusing on AR/VR services

The predecessor of Feitian Yundong was Feitian, a listed company on the New Third Board. The company was listed on the New Third Board on July 14, 2017, and was subsequently terminated in 2019. It is quite interesting that the new “Flying in the Palm” seems to be specially born for the Metaverse and also for the listing.

According to Qichacha data, Feitian Yundong was established on November 17, 2021. Whether it is the old carrier and business model, or the new name, once it was established, Feitian Yundong’s enthusiasm for the Metaverse went out of control. At the end of the same month, Feitian Yundong held a strategic conference with the theme of “Yuan Kai” in Beijing, and released the “Feitian Metaverse Platform”.

However, what is interesting is that Feitianyun’s entry into the Metaverse is also carried out from the field of games, and games, as the primary application scenario, are also considered to be the initial entrance to the Metaverse. Feitian Yundong has independently developed a number of stand-alone mobile games, including “God of Racing”, “Alice in Wonderland”, “Battlefield Gunslinger” and so on.The game platform Roblox and A-share Zhongqingbao have borrowed the concept of the Metaverse, and their stock prices have risen sharply.

But unlike Roblox and Zhongqingbao, Feitian Yundong has set its sights on AR/VR services.According to the prospectus, Feitian Yundong is mainly active in the scene application and underlying technology layer in the Metaverse ecosystem by providing AR/VR content and services and AR/VR technology.

The underlying technology layer referred to here also refers to low-code platforms and technology engines. At present, Feitian Yundong is involved in these two aspects, and has launched the FTE 3D engine. This technology engine is based on the American Unity, including the Uni-Play engine. , Uni-AR engine, Uni-VR engine and rendering engine. Another category is Feitian Yundong’s aPaaS low-code platform.

The core competitiveness of Feitian Yundong comes from the self-developed FTE 3D engine. On the one hand, it can efficiently provide professional content production services for large-scale B-end customers and platform customers, and on the other hand, it has launched a low-code SaaS platform for China Small customers develop and produce AR/VR content independently.

On the business matrix, the prospectus shows that Feitian Yundong has four business segments: AR/VR marketing services, AR/VR content, AR/VR SaaS and IP business. Among them, AR/VR marketing services, AR/VR content and AR/VR SaaS business are the main sources of revenue, and the overall revenue structure tends to be diversified.

If you want to sprint into the "first stock of the Metaverse" in Hong Kong stocks, can Feitian Yundong's listing relieve anxiety?

The prospectus shows that from 2019 to 2021, Feitian Yundong’s revenue will reach 251 million yuan, 339 million yuan and 595 million yuan respectively. In the first quarter of this year, Feitian Yundong’s revenue was 229 million yuan, an increase of 64.95% from 139 million yuan in the same period in 2021, and Feitian Yundong’s revenue was on the rise.

Overall, Feitian Yundong’s profitability is acceptable, and the overall gross profit margin is relatively stable. According to the prospectus, in 2019, 2020 and 2021, Feitian Yundong’s gross profit margins reached 30.0%, 30.9%, and 29.5%, respectively, but in the first quarter of this year, the gross profit margin increased to 32.0%.

However, Feitian Yundong, which is focusing too much on AR/VR services, seems to have some hidden concerns.

The “Spear and Shield” of Flying Clouds

At present, Feitian Yundong’s revenue mainly comes from AR/VR content and services, of which AR/VR marketing service revenue accounts for the highest proportion.

According to the prospectus, from the revenue contribution from 2019 to 2021, Feitian Yundong’s revenue from AR/VR marketing services reached 137 million yuan, 142 million yuan, and 367 million yuan respectively, accounting for 54.6% of the revenue and 54.6% of the revenue. 41.9% and 63.2%, the revenue share of AR/VR marketing services is on the rise as a whole.

In the first quarter of this year, the revenue of AR/VR marketing services reached 166 million yuan, and the proportion of revenue reached 72.3%. From this point of view, Feitian Yundong’s revenue is dependent on and more dependent on AR/VR marketing service revenue. The structure tends to be centralized.

Compared with traditional marketing methods, AR/VR advertising can capture the attention of end users and arouse their interest. According to iResearch, the click conversion rate of traditional advertising forms is 0.3% to 15%, while the click conversion rate of AR/VR advertising forms is as high as 25%. Behind Feitian Yundong’s emphasis on AR/VR marketing services, there is a high probability that it is also interested in the high click-through conversion rate in the form of AR/VR advertisements.

This revenue method corresponds to the need to continuously buy traffic to increase your exposure.With the growth of scale, Feitian Yundong’s customer acquisition cost continues to increase. The prospectus shows that Feitian Yundong’s traffic acquisition cost has further increased from 115 million yuan in 2019 to 312 million yuan in 2021, and the proportion of traffic cost has increased from about 60% of the total revenue cost in 2019 to the third in 2022. Eighty percent of the first quarter.

If you want to sprint into the "first stock of the Metaverse" in Hong Kong stocks, can Feitian Yundong's listing relieve anxiety?

But this way of constantly relying on marketing for growth seems to have also reduced the gross profit margin of Feitian Yundong AR/VR marketing services. According to the prospectus, from 2019 to the first quarter of 2022, the gross profit margin of Feitian Yundong’s AR/VR marketing services was 21.2%, 19.4%, 21.7% and 23.0%, respectively, and the annual average gross profit margin of AR/VR content was over 46%. It’s a little embarrassing in comparison.

In this regard, Feitian Yundong stated in the prospectus that the gross profit margin of different products and services may also be different, and the overall gross profit margin may vary depending on the product and service mix, so changes in product mix affect the overall gross profit margin. The explanation for Feitian Yundong seems a little far-fetched. The core of affecting the gross profit margin of AR/VR marketing services is the investment in traffic acquisition.

Compared with the financial data disclosed in the prospectus, it is obvious that the outside world pays more attention to the “Metaverse” mentioned by Feitian Yundong.

Can you take on the title of “Metaverse Platform”?

In Feitian Yundong’s prospectus, the term “Metaverse” was mentioned more than 240 times.

However, the “Hong Kong Stock Research Institute” noticed that although the company’s prospectus listed “Metaverse” as the core selling point, the “Flying Metaverse” platform, which is the cornerstone of the company’s Metaverse, was actually established in November 2021, only a short period of time since then. There are 8 months. Also, AR/VR doesn’t equate to the Metaverse. The Metaverse is a broad and vague world, and VR/AR is just one of the industrial fields. Although the company’s prospectus uses “Metaverse” as its core selling point, it may still be considered a Metaverse platform company.

At present, there are three paths for the layout of the Metaverse ecology: software platform, hardware, and the Internet. However, I learned from Feitian Yundong’s official website that there is no product information related to Metaverse hardware, which seems puzzling to a company that is mainly engaged in VR/AR-related business.

There is no plan for hardware products, perhaps the company wants to be like Roblox, cut in from the perspective of the Internet, and take the road of “social + game + engine + economy”, this road needs to rely on strong technical strength to conquer the country. But the problem is that Feitian Yundong’s R&D investment in the most important technical field of the Metaverse industry is only at the level of tens of millions of yuan.

According to the prospectus, from 2019 to 2021, Feitian Yundong’s R&D expenditures were only 11.425 million yuan, 15.046 million yuan and 21.703 million yuan, accounting for 4.6%, 4.4% and 3.6% respectively, showing an overall downward trend. In addition, in terms of related patent technologies, the prospectus shows that Feitian Yundong has only 5 invention patents, 1 design patent, and 3 invention patents are being applied for.

An investor once said, “In terms of building the Metaverse alone, this is an investment of billions or even tens of billions. Therefore, it is difficult to create a true Metaverse without sufficient investment.”

If you want to sprint into the "first stock of the Metaverse" in Hong Kong stocks, can Feitian Yundong's listing relieve anxiety?

The prospectus shows that as of the end of the first quarter of 2022, Feitian Yundong’s cash and cash equivalents were 198 million yuan, a relative decrease of 15.944 million yuan; as of the end of 2021, it was 214 million yuan, an increase of 110 million yuan.

Interestingly, in 2020, Feitian Yundong has also become a partner of Tencent, and its AR/VR SaaS platform has become the only AR/VR product supplier selected for Tencent’s Qianfan plan. Therefore, strictly speaking, at present, Feitian Yundong is more like a company related to the Metaverse industry chain than a “Metaverse” company.

At present, while Feitian Yundong is chasing the concept of “Metaverse”, the implementation of new technologies and the development of hardware are even more crucial and basic conditions. How to be down-to-earth and focus on improving your software and hardware strength. Not only the listing this time, but also the issues that need to be considered for the future development of Feitian Yundong.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/if-you-want-to-sprint-into-the-first-stock-of-the-metaverse-in-hong-kong-stocks-can-feitian-yundongs-listing-relieve-anxiety/
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