LeTV plans to raise another 4.5 billion yuan to fill the biggest shortcoming of LeTV ecosystem

Due to the rapid development of terminal and other businesses, it seems that it is no longer a secret in the market that LeTV's capital chain is tight. However, with the release of a refinancing plan, LeTV's shortcoming will be solved. Less than 8 trading days after announcing the suspension of trading due to refinancing, LeTV quickly submitted a refinancing plan yesterday. The announcement stated that it plans to issue 129 million shares to 5 institutions at a price of 34.76 yuan per share in a private placement, raising funds of 4.5 billion yuan. According to the amount of 4.5 billion yuan, LeTV will set a record for the amount of refinancing on the Growth Enterprise Market. If the refinancing is successful, it will inject "live water" into LeTV's cash flow, which is tight due to the rapid development of its business. LeTV's shortcoming of tight capital chain will no longer exist. At the same time, LeTV's ecological model of vertical integration of "platform + content + terminal + application" will also obtain the most sufficient ammunition, and LeTV's ecology will usher in major benefits.

LeEco's funding gap is relieved in a timely manner

On the evening of August 7, LeTV released a notice of additional issuance, stating that the amount of this additional issuance was 129 million yuan and the financing amount was 4.5 billion yuan. This additional issuance was highly sought after in the capital market. It is understood that 5 institutions participated in the subscription, among which LeTV Holdings subscribed 28.76 million shares, with a subscription amount of about 1 billion yuan; CITIC Securities subscribed 14.38 million shares, with a subscription amount of about 500 million yuan; Blue Giant Investment subscribed 43.15 million shares, with a subscription amount of about 1.5 billion yuan; Ningbo Jiuyuan subscribed 28.76 million shares, with a subscription amount of about 1 billion yuan; Jintai Zhonghe subscribed 14.38 million shares, with a subscription amount of about 500 million yuan. The lock-up period for the projects of all investors is 3 years.

After the introduction of the relevant regulations on refinancing on the Growth Enterprise Market, many companies such as Huayi Brothers and Enlight Media have announced refinancing plans. However, a simple comparison shows that LeTV's refinancing plan is obviously different from that of other companies. It adopts a fixed-price issuance, and the issued shares need to be locked for three years. In this regard, some analysts said that the long lock-up period fully demonstrates that the subscribers and LeTV itself have full confidence in its future business. In fact, compared with its peers, LeTV's financing amount is very small. Data shows that before this, LeTV only raised 690 million yuan in equity financing at the time of its IPO in 2010. Youku, also a video website, had completed six rounds of financing before its listing, with a financing amount of 1.1 billion yuan. After its listing, it conducted two rounds of refinancing, raising 400 million US dollars and 1.22 billion US dollars respectively, but it did not start to make a profit until the first quarter of this year. In comparison, LeTV's performance is excellent.

As industry competition intensifies and LeEco's LeEco ecosystem extends, LeEco does have a shortcoming of tight capital chain. LeEco's capital situation has always been the most concerned point for investors. Therefore, with LeEco's business expanding, this refinancing is undoubtedly a timely relief for LeEco. In this way, not only will LeEco's original main business have sufficient funds to support it, but LeEco's ecosystem will also have a solid foundation to expand its capabilities. In other words, the biggest problem in the future development of LeEco's ecosystem has been successfully solved.

Major shareholder invests another 1 billion yuan and continues to be optimistic about LeEco's ecosystem

According to the announcement, Jia Yueting plans to invest another 1 billion yuan in LeEco through LeEco Holdings, which he actually controls, to increase his stake in LeEco and continue to be the largest shareholder of LeEco. This also shows that as a major shareholder, Jia Yueting has great confidence in the future development of LeEco's ecosystem.

According to public information, when LeTV acquired Huaer Film and Television, a major asset restructuring, Jia Yueting also increased his stake in LeTV by hundreds of millions of yuan through LeTV Holdings. In addition, he also invested in many companies such as LeTV Zhixin, LeTV Cloud Computing, LeTV Sports, and LeTV Mobile Intelligence. According to rough statistics, Jia Yueting's capital support for LeTV's various listed businesses has accumulated to nearly 2 billion yuan, and he has never sold his personal LeTV shares, fully demonstrating his personal confidence and responsibility for the company's future.

In addition, the complete LeEco ecosystem also includes non-listed businesses such as LeTV Pictures and Wangjiu.com. Jia Yueting has also invested nearly 2 billion yuan in the upstream and downstream non-listed business systems of the LeEco ecosystem to support LeEco's vertically integrated ecological chain of "platform + content + terminal + application".

Some analysts believe that Jia Yueting's move effectively countered the suspicion that he used his stocks as collateral but the funds were not used in an unknown way. Obviously, these funds were used in the entire LeEco ecosystem. Jia Yueting's move of not selling stocks but investing more funds will greatly stabilize the confidence of investment institutions and shareholders in the company's future. If the refinancing is successful, LeEco will have more sufficient funds to inject into the LeEco ecosystem's listed business system.

Funding may strengthen overseas copyright business

In the plan for the use of funds announced this time, LeTV clearly stated that in the future the company will adopt a strategy of covering all content categories such as film and television dramas, animation, music, variety shows, sports, etc., combining external procurement with internal self-production, to continuously consolidate and strengthen the company's dominant position in the content field. Once the funds are invested in the content end, it will undoubtedly continue to consolidate LeTV's position as the king of content.

It is worth mentioning that at the shareholders' meeting held at LeTV earlier this year, Jia Yueting officially announced his overseas strategy. LeTV's recent announcement also indicated that Jia Yueting's main task in going abroad recently is to implement and execute LeTV's overseas strategy, including the establishment of subsidiaries, the formation of overseas teams, and business negotiations with relevant partners and potential partners. Therefore, it is conceivable that if the refinancing is successful, LeTV is likely to invest the funds in the introduction of overseas content, such as in-depth cooperation with overseas film and television production agencies, etc.

LeTV has always maintained a unique advantage in content. For example, a few days ago, LeTV joined hands with Wang Feng to create a super concert that shocked the industry. LeTV Super TV sold nearly 80,000 live and on-demand concert tickets on TV. LeTV Sports has obtained the exclusive new media broadcasting rights for the F1 event in mainland China for the next four years. At the same time, "Coming Home" and "Tiny Times 3" produced by LeTV Pictures this year have been popular in the market. According to data, the box office of "Tiny Times 3" reached 400 million yuan in 7 days after it was launched. Data shows that by the end of 2013, LeTV.com had the copyrights of more than 5,000 movies and more than 100,000 TV series.

Thanks to LeTV's high-quality content, the growth of LeTV's traffic is obvious to all. According to iResearch data, by the first half of 2014, LeTV's UV had increased by 72% year-on-year, ranking first among mainstream video media, surpassing the second place by nearly 30 percentage points.

LeEco Cloud Platform may benefit

With cloud computing becoming the "infrastructure" supporting the development of the IT industry and the national economy, LeTV Cloud has ushered in the best opportunity for development. As an especially important "platform end" in the LeTV ecosystem, LeTV Cloud may benefit from this refinancing.

LeTV Cloud is a cloud computing video open platform based on bandwidth, storage, CDN and other hardware support. It focuses on providing enterprise customers with video services in six aspects: video shooting, uploading, storage, transcoding, distribution and playback, as well as the smoothest and clearest multi-terminal video playback experience. Currently, LeTV Cloud Video has provided high-quality services for e-commerce, the gaming industry, traditional media websites with mainly pictures and texts, and corporate-level video live broadcast and information communication needs.

It is understood that after more than a year of accumulation, LeTV Cloud's customer range has covered Taobao, JD.com, Suning.com, Gome Online and other well-known companies, and saved them hundreds of millions of yuan in costs. At the same time, LeTV Cloud's service objects include Hunan Satellite TV, Zhejiang Satellite TV, Jiangsu Satellite TV and other satellite TV Internet platforms. In other words, there is a 50% chance that the wonderful satellite TV programs that users watch on PCs, mobile phones and tablets are from LeTV Cloud services.

In response to this, LeTV announced that technology research and development is the basis for optimizing user experience and enhancing user stickiness. Adhering to the Internet thinking of continuous innovation, the company will continue to increase investment in improving software and hardware levels, introducing core technical talents, and improving the R&D system.

Terminal business is developing rapidly

LeTV Super TV has been on the market for less than a year and has subverted the home appliance industry with its unique ecosystem model. According to third-party data, LeTV TV has a number of super TV models, including X60, S40, S50, Max70, X50 Air, S40 Air, S50 Air, etc. Since the launch of Super TV X60 on July 3 last year, LeTV Super TV has sold nearly 1 million units a year.

Even so, it is not impossible for a company that considers itself a disruptor to develop new terminal businesses. LeEco’s entry into the mobile phone market is a hot rumor in the market. On July 18, at the investor briefing held by LeEco, Jia Yueting and former Meizu Technology Vice President Mo Cuitian attended. At the meeting, Jia Yueting announced that Mo Cuitian had joined LeEco as the general manager of the overseas business department. This incident also seems to prove the reliability of the rumors about LeEco’s development of smartphone business. Assuming that the LeEco mobile phone incident is true, it means that the vertical industry chain integration model of LeEco’s ecosystem has begun to release greater new energy.

In addition to entering the mobile phone business, new energy vehicles are another rumor surrounding LeTV recently. Recently, there are reports that Jia Yueting, who has been on a business trip for many days, has not only made a breakthrough in overseas business, but also had a secret meeting with BAIC Chairman Xu Heyi in Silicon Valley, the United States, and the content of their discussion was new energy vehicles. In addition, a concept sketch of LeTV's car has been exposed in the market, which seems to indicate the possibility of LeTV producing cars. It is understood that in April this year, Xu Heyi named LeTV and expressed his willingness to "OEM LeTV cars." Although there has been no more official news to confirm the truth of LeTV's entry into new energy vehicles, there is indeed room for imagination.

Funding may focus on industry investment and integration

Looking at the leading Internet companies at home and abroad, most of them have grown rapidly by continuously investing and acquiring related companies with technological advantages, talent advantages, and market advantages, such as Google, Facebook, Baidu, Tencent and other well-known companies. Assuming that this round of financing is successful, LeTV will not miss any of them and will adopt dual measures of endogenous growth and external development to achieve the goal of becoming a leading domestic online video operation platform.

It is understood that the company has previously successfully purchased 100% of the equity of Huaer Film and Television held by Cao Yong and Bai Yu in a combination of cash and share issuance, and purchased 99.50% of the equity of LeTV New Media held by LeTV Holdings and Red Soil Ventures in a combination of share issuance. This move further consolidates LeTV's leading position in the content field. It is believed that with the support of funds, LeTV will carry out the next expansion plan in the future, that is, it will focus on the upstream and downstream of the "LeTV Ecosystem" industrial chain, look for high-quality investment and acquisition targets, improve and improve the "LeTV Ecosystem" with higher efficiency, and achieve rapid expansion of business scale.

Capital market supports LeEco in building a global brand

LeEco has recently announced the establishment of two subsidiaries in the U.S. LeEco CEO Jia Yueting even went to the U.S. to supervise LeEco's landing and expansion in the U.S.

In an exclusive interview with the media in the United States, Jia Yueting said that the Internet era is the best opportunity for Chinese brands to go global. He believes that LeTV's original vertically integrated "platform + content + terminal + application" ecosystem has strong competitiveness and can gain a foothold and grow stronger in the fierce overseas competition.

If the refinancing is successful, it will certainly provide sufficient ammunition for LeEco's overseas expansion and lay a solid foundation for LeEco, the only domestic Internet company, to go abroad. From a financial perspective, the refinancing will also reduce LeEco's asset-liability ratio, enhance its ability to resist risks, optimize its revenue structure and improve its cash flow.

The funds from this refinancing are a timely help for the development of LeEco's ecosystem. Although LeEco has encountered policy turmoil in radio and television and its performance in the capital market has been up and down, the capital market has shown a very positive response to LeEco's share increase and is highly optimistic about the long-term development of LeEco's ecosystem.

Industry analysts believe that after refinancing, LeTV will enter a new period of rapid growth. The risk of funds has been basically resolved. What remains is the execution of LeTV's team. Recently, LeTV has frequently recruited industry elites in mobile phones, automobiles, and Internet agriculture. It is rumored that He Yi, former general manager of Sohu's automotive division, has resigned from Sohu to join LeTV, Lenovo's vice president has joined LeTV, and former Meizu executive Ma Lin has also joined LeTV. This shows LeTV's strong appeal and expansion ambition. Whether it is domestic business or overseas business, LeTV's future is highly anticipated by the capital market. The Internet industry has already regarded LeTV as one of the future BAT-level Internet giants.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.