Tuniu Corporation — FY2020 Form 20-F
Reporting period: Fiscal year ended December 31, 2020. This is an annual report, not a standalone fourth-quarter filing; the filing does not provide clear standalone Q4 financial results. Financial statements are prepared under U.S. GAAP. Amounts below are in RMB millions unless otherwise stated.
Business context and financial performance
Tuniu operates an online leisure travel platform in China, with packaged tours as its primary revenue source. COVID-19 restrictions, cancellations and refunds sharply reduced travel activity and revenue in 2020.
| Metric | FY2020 | FY2019 | Change / context |
|---|---|---|---|
| Net revenue | 450.3 | 2,281.0 | Down 80.3% |
| Packaged-tour revenue | 302.4 | 1,886.8 | Down 84.0% |
| Other revenue | 147.9 | 394.2 | Down 62.5% |
| Gross profit / margin | 213.2 / 47.3% | 1,081.0 / 47.4% | Margin broadly unchanged |
| Operating loss | 1,340.8 | 870.8 | Loss widened |
| Net loss | 1,343.6 | 729.4 | Loss widened; FY2020 loss attributable to Tuniu was 1,308.0 |
| Net loss per ordinary share | RMB3.53 | RMB1.89 | ADS loss per ADS was RMB10.59 |
| Operating cash flow | (1,313.1) | (120.5) | Greater outflow, including customer refunds |
| Investing / financing cash flow | 1,159.1 / (209.5) | (578.1) / 485.1 | Investing inflow reflected investment maturities and loan-receivable reductions |
| Cash and cash equivalents | 213.5 | 295.5 | At year-end |
| Restricted cash | 50.6 | 327.1 | At year-end; not freely available |
| Short-term investments | 1,353.7 | 1,305.4 | At year-end |
| Total assets / liabilities / equity | 3,196.6 / 1,819.4 / 1,350.0 | 6,596.6 / 3,847.8 / 2,711.6 | Balance sheet contracted substantially |
| Short- and long-term borrowings | 60.7 / 22.6 | 203.8 / 9.7 | Reported bank borrowings; see liquidity and obligations below |
Material changes and unusual items
- General and administrative expense rose 48.0% to RMB1,109.3 million, largely due to RMB829.7 million of expected credit-loss allowances. The filing cites pandemic-related collection uncertainty, including large exposures to related parties.
- Management disclosed impairment provisions against long-term and short-term assets of RMB639.0 million and RMB272.1 million, respectively. Separately, the filing reports RMB49.5 million of impairment losses on certain equity investments and RMB31.9 million of impairment charges on intangible assets.
- Sales and marketing expense fell 59.7% to RMB372.0 million, and research and product development expense fell 66.9% to RMB100.5 million, reflecting reduced personnel-related and promotional costs.
- Interest and investment income fell to RMB3.5 million from RMB156.9 million. Foreign-exchange results shifted to a gain of RMB18.7 million from a loss of RMB1.1 million.
- Year-end cash, restricted cash and short-term investments totaled RMB1,617.8 million. Cash, cash equivalents and short-term investments, excluding restricted cash, totaled RMB1,567.2 million. Management says it relied in part on investment maturities to support liquidity.
- Year-end accounts payable were RMB705.8 million and customer advances were RMB208.8 million, both down substantially as travel sales declined. The cash-flow statement also reports RMB482.0 million of discounted bank acceptance notes within accrued expenses and other current liabilities; investors should distinguish these from borrowings presented on the balance sheet.
- Employees declined to 2,113 at year-end from 6,188 in 2019. Capital expenditures were RMB28.3 million; capital commitments for leasehold improvements, equipment and office construction were RMB211.3 million.
Outlook, risks and contingencies
- Management reported that China’s travel market began recovering in the second half of 2020, while overseas travel recovered more slowly. It said revenue, gross margin and other key metrics generally improved in Q3 and Q4, but did not provide standalone quarterly figures or numerical guidance.
- Management expected COVID-19 restrictions and reduced travel to materially adversely affect results in Q1 2021 and potentially beyond; it also expected material adverse effects on revenue and operating cash flow in the first two quarters of 2021. The duration and ultimate financial impact remained uncertain.
- COVID-19-related cash outflows, losses and accumulated deficit initially raised substantial doubt about the company’s ability to continue as a going concern. Management concluded that cash, available investment maturities, cost controls and its operating plan would cover ordinary working-capital and capital-expenditure needs for the next 12 months after filing, alleviating that doubt. The auditor identified the going-concern assessment as a critical audit matter.
- HNA-related lending and receivables were a material credit risk. Tuniu recorded full allowances on outstanding notes and factoring balances of RMB44.8 million and RMB512.8 million, plus RMB30.8 million of current amounts due from HNA Tourism, after missed repayment and HNA Group’s bankruptcy restructuring proceedings.
- Other key risks include dependence on discretionary travel demand, supplier performance and customer refunds; the PRC variable-interest-entity structure and evolving foreign-investment rules; data and online-platform regulation; and potential U.S. trading consequences if the PCAOB cannot inspect the China-based auditor under the Holding Foreign Companies Accountable Act.
- The filing reports no material pending legal or administrative proceedings and no off-balance-sheet guarantees. It discloses operating lease obligations of RMB61.6 million and purchase commitments of RMB211.3 million.
- In February 2021, after year-end, Tuniu restructured ownership of its VIE and entered replacement contractual arrangements with substantially similar terms. Management states the financial statements were audited and internal control over financial reporting was effective at December 31, 2020. No cash dividends were planned for the foreseeable future.
Important facts for investors to verify
- Whether the expected credit-loss allowances and impairments adequately reflect collectability and asset values, particularly the HNA exposures and other receivables.
- Whether cash and investment maturities are accessible when needed, considering restricted cash, discounted bank acceptance notes, debt repayments and the company’s continuing operating cash outflow.
- Whether domestic travel recovery can offset ongoing weakness in international travel, and how actual 2021 quarterly revenue, margins, cancellations and refunds compare with management’s expectations.
- Whether assumptions underlying management’s 12-month liquidity forecast and goodwill valuation remain supportable; the auditor identified both going concern and impairment assessments as critical audit matters.
- Whether the post-year-end VIE contractual arrangements remain enforceable and whether PCAOB inspection and U.S. listing risks have changed since the filing.