Fair Value Measurement

12 Months Ended

Mar. 31, 2021

7 FAIR VALUE MEASUREMENT

As of March 31, 2020 and 2021, the Group’s assets and liabilities that are measured or disclosed at fair value on a recurring basis in periods subsequent to their initial recognition is as follows:


			Fair value measurement at reporting date using
Description	Fair value as of March 31, 2020		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	RMB		RMB		RMB		RMB
Assets:
Short-term investments		238,000		—		238,000		—
Available-for-sale debt securities		102,373		—		—		102,373

Total assets		340,373		—		238,000		102,373


			Fair value measurement at reporting date using
Description	Fair value as of March 31, 2021		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	RMB		RMB		RMB		RMB
Assets:
Short-term investments
-wealth management products		260,000		—		260,000		—
- equity securities with readily determinable fair value		245		245		—		—
Available-for-sale debt securities		51,346		—		—		51,346

Total assets		311,591		245		260,000		51,346

When available, the Group uses quoted market prices to determine the fair value of an asset or liability. If quoted market prices are not available, the Group will measure fair value using valuation techniques that use, when possible, current market-based or independently sourced market parameters, such as interest rates and currency rates. Following is a description of the valuation techniques that the Group uses to measure the fair value of assets that the Group reports in its Consolidated Balance Sheets at fair value on a recurring basis

Short-term investments

Short-term investments held by the Group include wealth management products issued by banks and equity securities with readily determinable fair value. The Group values its investments in wealth management products in using model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data, and accordingly, the Group classifies the valuation techniques that use these inputs as Level 2. The Group values its investments in equity securities with readily determinable fair value using quoted market prices and classifies the valuation technique that use these inputs within Level 1.

Available-for-sale

debt securities investments

The Group classified its

available-for-sales

debt securities as Level 3 investment. The roll forward of major Level 3 investments are as following:


	iSNOB			Ruisha Technology		Huzan			Xuanwei			Kuailaimai			Others			Total
	RMB			RMB		RMB			RMB			RMB			RMB			RMB
Fair value of Level 3 investments as at March 31, 2019		38,378			—		19,822			—			14,259			—			72,459

Addition		—			7,050		—			3,525			—			5,000			15,575
Impairment		—			—		—			—			(14,259	)		—			(14,259	)
Effect of currency translation adjustment		2,004			—		1,036			—			—			—			3,040
The change in fair value of the investments		36,459			573		(9,862	)		—			—			(1,612	)		25,558

Fair value of Level 3 investments as at March 31, 2020		76,841			7,623		10,996			3,525			—			3,388			102,373

Addition		—			—		—			—			—			8,000			8,000
Disposal*		(59,243	)		—		—			(3,525	)		—			—			(62,768	)
Impairment		—			—		(4,055	)		—			—			(3,388	)		(7,443	)
Effect of currency translation adjustment		(3,717	)		—		(110	)		—			—			—			(3,827	)
The change in fair value of the investments		8,714			11,442		(5,145	)		—			—			—			15,011

Fair value of Level 3 investments as at March 31, 2021		22,595			19,065		1,686			—			—			8,000			51,346

For the year ended March 31, 2021, the amount of disposal in the roll forward included a reclassification adjustment of RMB46,029, representing the unrealized security holding gains for the disposed portion that were previously recorded as other comprehensive income and was reclassified as the gain from investments included in net loss in connection with the disposal.

The Company determined the fair value of its investments by using market approach or income approach.

As for market approach, the determination of the fair value was based on estimates, judgments and information of other comparable public companies as well as the observable price changes based on the recent transactions of the securities, or similar securities that the Company holds. The significant unobservable inputs adopted in the valuation as of March 31, 2019, 2020 and 2021 are as following:


	For the years ended March 31,
	2019		2020		2021
Lack of marketability discount		30%		30%		30%
Risk-free rate		2.25%-2.60%		0.3%~2.29%		0.5%
Expected volatility		45%-52.68%		42%~54%		45%
Revenue multiple		2.80-18.74		5.09~11.18		7.92
Net profit multiple		21.23		8.95		16

Significant increases (decreases) in lack of marketability discount in isolation would result in significantly lower (higher) fair value measurement. Significant increases (decreases) in risk-free rate, expected volatility, revenue multiple or net profit multiple in isolation would result in significantly higher (lower) fair value measurement.

For the years ended March 31, 2020 and 2021, the Group used income approach to determine the fair value of its investment in Huzan as it was transforming its business model and market approach, as used for the year ended March 31, 2019, was no longer applicable. The income approach uses valuation techniques to convert future cash flows to a single present value amount. The measurement is based on the value indicated by current market expectations about those future cash flows. The determination of the fair value required significant judgement by management with respect to the assumptions and estimates for the revenue growth rate, weighted average cost of capital, lack of marketability discounts, expected volatility and probability in equity allocation. The significant unobservable inputs adopted in the valuation as of March 31, 2020 and 2021 are as following:


	For the years ended March 31,
	2020		2021
Unobservable Inputs
Revenue growth rate		12%~217%		8%~327%
Weighted average cost of capital		20%		30%
Lack of marketability discount		30%		30%
EBIT margin rate		(29.5%)~27.3%		17%~29%

Significant increases (decreases) in lack of marketability discount or weighted average cost of capital in isolation would result in significantly lower (higher) fair value measurement. Significant increases (decreases) in revenue growth rate or EBIT margin rate in isolation would result in significantly higher (lower) fair value measurement.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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