Though leading bike-sharing companies like ofo and Mobike have not put getting listed on their agenda, A-share companies strive to cooperate with bike-sharing companies. Shanghai Phoenix Enterprise (Group) Co., Ltd. (600679.SH), which just announced its strategic cooperation with ofo, saw its stock price once surged over 8 percent on May 8. According to statistics made by the journalist, multiple A-share companies including Shanghai Phoenix Enterprise, Zhonglu Co., Ltd. (600818.SH) and HL Corp (Shenzhen) (002105.SZ) have entered the industrial chain of the bike-sharing industry, and they are involved in areas like bike manufacturing, components supply, investment in capital and etc.
Though bike-sharing business is booming now, it is still in the stage of cash burning, and its development prospect and profit model are still uncertain. Greatly driven by capital, A-share companies compete to have a finger in the pie. It is worth pondering whether these A-share companies can finally truly reap profits from the bike-sharing industry.
Shanghai Phoenix Enterprise announced on May 6 that Shanghai Phoenix Bicycle Co., Ltd., a holding subsidiary under Shanghai Phoenix Enterprise, has entered into strategic cooperation agreement with ofo to provide at least 5 million bikes for the latter over next 12 months.
The journalist learnt that Phoenix will become ofo’s R&D and manufacturing base in eastern China. Overseas shared bikes jointly produced by the two parties will reach 1 million.
Shanghai Phoenix Enterprise is not the first listed company to team up with bike-sharing companies. Similarly, listed companies like Zhonglu and Shenzhen China Bicycle Company (Holdings) Limited (000017.SZ), which have advantages in bicycle business, also attach great importance to the development prospect of shared bikes. Shenzhen China Bicycle Company recently remarked on an interactive platform that the company pays close attention to the development of bike-sharing business. The company is mulling on advancing its private placement now, and upgrading projects aiming at enhancing sales and R&D abilities are included.
Bike-sharing company U-Bicycle obtained tens of millions of yuan angel investment from consortium led by Zhonglu Capital, and the support of leading bicycle producer Forever in R&D, production and operation of public bicycles just one month after its establishment in July 2016. Zhonglu Capital is an investment platform under listed company Zhonglu. Shanghai Forever Bicycle Co., Ltd., a fully-owned subsidiary under Zhonglu, also made investment in Shanghai Yaolu Information Technology Co., Ltd., which is the operator of U-Bicycle.
As to upstream material and components field, HL Corp (Shenzhen) started to supply components, mainly including handlebar and standpipe, for Mobike from October 2016. It is learnt that though HL Corp (Shenzhen) is not the only supplier of Mobike, the company enjoys more advantages in scale, technology and manufacturing when compared with other suppliers. As a components supplier of Guangzhou Cronus Co., Ltd., the company also indirectly enters the supply chain of Xiaoming Bike, another bike-sharing company in China. In addition, Nanjing Yunhai Special Metals Co., Ltd. (002182.SZ) once also disclosed that it is the second-level supplier of Mobike and ofo.
Besides listed companies engaged in the industrial chain of bicycles, booming bike-sharing industry is also interested in by cross-industry capital. For instance, Keda Group Co., Ltd. (600986.SH), focusing on digital marketing, announced in April that it proposed to invest 20 million yuan in Beijing Beefly Technology Co., Ltd., an electric bicycle-sharing service provider. Upon completion of the transaction, Keda will hold around 3 percent equities of Beijing Beefly Technology. Unlike Shanghai Phoenix Enterprise, Shenzhen China Bicycle Company and Zhonglu engaged in the industrial chain of the bicycles industry, Keda makes investment in the industry for exploring the possibility of combining its digital marketing business and shared-travelling business together. In addition, Shenzhen Sunrise New Energy Co., Ltd. (002256.SZ), principally engaged in photovoltaic and chemical business, also proposed to invest tens of millions of yuan in co-establishment of Shenzhen Dudu-bike Network Technology Co., Ltd. with Shenzhen Lotto Bao Network Technology Co., Ltd. to set foot in the operation of high-end shared bikes.
Noticeably, the Shared Bicycle Specialized Committee of China Bicycles Association officially announced its inception on May 7, 2017 and its member enterprises include ofo. It is learnt that the specialized committee will take part in the formulation of standards for bike-sharing groups and the piloting, and will advance the formulation of relevant compulsory standards. As the bike-sharing industry develops rapidly, regulation and compliance issues catch great attention of the society and competent authorities. At present, places like Beijing and Shanghai are all working on the opinions for the standardized development and management of the bike-sharing industry. Once efforts made in management step up, regulations on the positioning, recycling and use of bikes will set higher technology standards, including the application of NB-loT technology and intelligent locks with GPS, for enterprises. The demand on relevant intelligent parts might further increase.
Companies like EVE Energy Co., Ltd. (300014.SZ) have been working on providing bike-sharing enterprises with some intelligent parts or solutions, and the contribution to be made remains to be seen. Responsible person of EVE Energy disclosed on an investor exchange meeting earlier that critical equipment of both Mobike and ofo is intelligent lock. As an important power supply solution supplier in the intelligent lock industry, EVE Energy has joined the banquet of the bike-sharing industry.
It must be pointed out that though bike-sharing is an emerging Internet-based service quite alluring in the capital circles, its development prospect and profit model are uncertain. Financing competition between archrivals ofo and Mobike shows that the industry is still in cash-burning promotion. It makes some listed companies take a wait-and-see attitude and even give up relevant investment. For instance, Shanghai Yaoji Playing Card Co., Ltd. (002605.SZ) once indicated in end 2016 that given sluggish macro economy and unclear market demand, the company reduced its investment in SOLOMO Bicycle Co., Ltd. and held only 19.5 percent equities of the latter now.
Translated by Jennifer Lu
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