The stock price was nearly halved in 19 trading days, with a market value evaporating by billions. Where is MARKETINGFORCE (02556) headed?

Marketingforce (02556) can be said to be a big winner among the new stocks in 2024. Since its listing in May, as of December 12, the company has accumulated a 207% increase. However, since December 12, Marketingforce has been in a continuous deepening downtrend. On January 10, the stock touched 68.85 Hong Kong dollars, reaching a new low since May 30, 2024. It is worth noting that in the past 20 trading days, the stock price of Marketingforce has been halved. The cumulative decline in the past 19 trading days is nearly 48%. Following a continuous increase, Marketingforce has fallen into a downturn, almost halving its stock price. As of the close on January 10, the company was trading at 72.5 Hong Kong dollars, with a trading volume of 847,900 shares and a total market value of approximately 17.12 billion Hong Kong dollars. Currently, Marketingforce's market value has evaporated nearly 16.9 billion Hong Kong dollars from its peak of 144 Hong Kong dollars, making it difficult for investors who entered at high levels to smile satisfactorily. According to observations, the downtrend in the stock price of Marketingforce may be divided into two phases, with December 27 as a dividing line. The first phase is from December 12 to 24, during which the stock fell by 24.21% over nine trading days, with a total trading volume of 5.1464 million shares and a total trading value of 607 million Hong Kong dollars. The logic behind this decline may be profit-taking and a price correction. Based on changes in the chip peak, it can be inferred that after the significant increase in the stock price over the first three trading days (from the 9th to the 11th), the main capital's selling action may have been largely completed. After a period of high turnover, the stock began to fall continuously, entering a downtrend. Specifically, the top chips of Marketingforce have shifted significantly downwards. On December 24, 70% of the chips were concentrated in the range of 94.6 to 113.7 Hong Kong dollars. On December 12, 70% of the chips were in the range of 91.2 to 111.4 Hong Kong dollars. It can be seen that the chips on the 24th were more concentrated and the peak was lower. As trading volume became exceptionally quiet and stable, related funds entered the market to collect chips. However, after December 27, the downturn of Marketingforce deepened. From December 30 to January 10, over nine trading days, the company's stock fell by 32.56%, with a total volume of 5.6321 million shares. It can be seen that both in terms of volume and price decline, the second phase of the downturn was more severe than the first phase. Looking deeper into the reasons behind this, it cannot be separated from the rights issue announcement on December 27. The announcement revealed that the company completed a placement of new shares on December 27, totaling 1 million shares, accounting for approximately 0.42% of the issued share capital after the placement. The price of the placement was 110 Hong Kong dollars per share, with a total amount raised of approximately 110 million Hong Kong dollars. After deducting related expenses, the net amount was approximately 110 million Hong Kong dollars. The allocation plan for the funds raised in the placement was that approximately 70% (76.65 million) would be used for research and development in the areas of marketing and sales AI big data technology, and 30% (32.85 million) for supplementing operating funds and general corporate purposes. It is worth noting that this placement also had a certain impact on the company's equity structure, with the shareholding percentage of the controlling shareholder decreasing from 49.72% to 49.51%, and the shareholding percentage of public shareholders increasing from 25% to 25.32%. With the increase in the shareholding percentage of public shareholders, if they want to boost the stock price again, the cost of controlling the market by the main funds will increase significantly. According to the current shareholding of brokers, the top two brokers of Marketingforce are Nuclear Aggregation Securities and China Merchants International Securities, with holdings of 1.33 billion shares and 34.65 million shares, accounting for 56.31% and 14.67% respectively, with a total shareholding of the two major brokers reaching 70.98%. It is worth noting that the shareholding of China Merchants International Securities all comes from the transfer of Nuclear Aggregation Securities. In September 2024, Nuclear Aggregation Securities reduced its shareholding by 346.528 million shares, worth 3.163 billion Hong Kong dollars, by transferring holdings twice via the "warehouse transfer" method from 71.29% to 56.31%. Specifically, on September 19, Nuclear Aggregation Securities transferred out 15.401 million shares to China Merchants International Securities, worth approximately 1.334 billion Hong Kong dollars. On September 23, Nuclear Aggregation Securities transferred 19.2518 million shares to China Merchants International Securities, worth approximately 1.829 billion Hong Kong dollars. Of course, we do not know the source of funds behind Nuclear Aggregation Securities and China Merchants International Securities. However, does the reduction in shareholding through the transfer of holdings imply agreement with Marketingforce's stock price? Despite the recent continuous decline in Marketingforce, there are still funds willing to take over. Looking at the buyers over the past 20 days, those buying through the Hong Kong Stock Connect program are the main players. The Hong Kong Stock Connect (Shenzhen) and Hong Kong Stock Connect (Shanghai) have a net buy of 3.0085 million shares and 1.0552 million shares respectively. Leading domestic marketing and sales SaaS Liquidity crisis cannot be underestimated Due to factors such as fierce market competition, reduced corporate investment, and difficulty in profitability, SaaS companies have performed very poorly in the capital market in recent years. Taking YOUZAN (08083) as a representative SaaS target, its price decline from 2021 to 2023 was 76.62%, 63.7%, and 26.53% respectively, and after three consecutive years of decline, YOUZAN's price in China fell by more than 13% in 2024. Currently, the company's market value has shrunk by over 95% from its peak. The reason why Marketingforce has attracted so much attention from the market is due to its position as a leading domestic marketing and sales SaaS company, with promising fundamentals. In the first half of 2024, the company achieved a revenue of 739 million yuan, a year-on-year increase of 26.72%, with SaaS business revenue of 400 million yuan, a year-on-year increase of 30.45%; post-tax profit was -820 million yuan, with losses expanding year-on-year. However, after adjusting for net profit, the company achieved a profit of 48 million yuan. After turning a profit, securities firms have given positive signals for its performance. For example, Western Securities estimates 2From 2024 to 2026, MARKETINGFORCE's revenue was 14.9, 18.7, and 24.1 billion yuan respectively, and net profit attributable to the parent company was -7.94, 0.37, and 1.38 billion yuan respectively. MARKETINGFORCE is a leading domestic full-chain marketing and sales SaaS company. With optimism about the company's performance growth potential under AI empowerment, it has been rated as "hold".However, behind the return to profitability after adjustments, the company's liquidity crisis remains significant. Currently, MARKETINGFORCE's operating cash flow is still negative. From 2021 to the first half of 2024, the net cash flow generated from operating activities was -470 million yuan, 65 million yuan, -122 million yuan, and -56 million yuan respectively. The fact that there is a deficit behind the expenses indicates that MARKETINGFORCE's cash generation ability still needs improvement. More critically, as of the end of June 2024, the company only had cash and cash equivalents of 361 million yuan, while short-term liabilities were as high as 900 million yuan, with a debt-to-asset ratio close to 80%. Whether short-term or long-term, it is an indisputable fact that MARKETINGFORCE's debt repayment ability is under pressure. Moreover, from a more macro perspective, MARKETINGFORCE's growth prospects do not seem optimistic. According to Frost & Sullivan data, although MARKETINGFORCE is already the largest domestic provider of marketing and sales SaaS solutions, its market share in 2022 was only 2.6%. The leading players in the market only have a low single-digit market share, indicating that the market is extremely fragmented and competitive. More importantly, MARKETINGFORCE has not yet developed a synergistic strategic advantage in product layout under intense market competition. MARKETINGFORCE's current SaaS solutions mainly rely on two flagship products, the marketing SaaS product T Cloud and the sales SaaS product Jane. These two products only focus on the marketing and sales aspects in the enterprise operation process. However, other leading SaaS players in the market have extended their products and services to cover all aspects of enterprise operation including marketing and sales, covering dimensions such as supply chain management and human resources. Currently, MARKETINGFORCE's price-to-book ratio is 30.56 times, while YOUZAN's price-to-book ratio is only 3.25 times. The price-to-book ratios of core SaaS companies in the Hong Kong stock market are around 1-3 times, showing that MARKETINGFORCE is not considered "cheap" in the Hong Kong stock market. In conclusion, the reasons for the decline in MARKETINGFORCE's stock price may be partly related to capital market operations, and partly because investors may believe that its previous valuation was too high and have concerns about its growth prospects. In the future, we can continue to monitor whether MARKETINGFORCE can withstand liquidity pressure and demonstrate its leadership in the domestic marketing and sales SaaS industry.