The e-commerce bonus period has nurtured a large number of e-commerce brands, and these brands are seeking financing to establish their advantages. Although most e-commerce brands do not follow the road to IPO, they do not hinder the army’s determination to dock with the capital market.
Recently, Xiao Xiong of Meng Departmental Small Home Appliances Co., Ltd. pre-disclosed the prospectus (submission draft) on the website of the China Securities Regulatory Commission and was proposed to be listed on the SME Board of the Shenzhen Stock Exchange. Xiao Xiong Electric intends to publicly issue no more than 30 million shares and plans to raise funds by 10.79. Billion yuan is used to invest in creative small home appliances, smart home appliances and production and construction projects, R&D center construction and information construction.
Although the performance of Bear Electronics, which has an overly high proportion of online accounts, has been growing well, it has also been hampered by a number of constraints. This has brought with it seasonal fluctuations, low inventory turnover, and high debt-to-liability ratios.
The characteristics of the consumer industry that have money to endorse the lack of money for research and development are also apparent in Xiao Xiong’s electrical appliances. Xiao Gong Electronics’ R&D investment accounted for only about 1.5% of revenue for three consecutive years. It is the lowest level of listed companies in the home appliance industry, and it is also an industry. More than ten years ago, of the 342 patents, there were as many as 231 design patents and only eight patents for inventions. The company’s brand promotion expenses increased significantly.
Excessive online revenue accounts for multiple risks
Xiao Xiong Electric was established in March 2006, has its own brand 'Xiao Xiong', the main production and sales of creative small appliances, its subdivision products yogurt machine, electric egg beater, electric lunch box, humidifier, toaster, egg cooker / Egg steamer, etc. ranked first in the Lynx Mall hot brand list in 2017.
Xiao Xiong’s financial data performed well. In the past three years, the asset growth rate, operating income, and net profit were all in a relatively fast growth trend. The prospectus shows that the company’s total operating revenue from 2015 to 2017 was 725 million yuan, 10.54. Billion yuan and 1.647 billion yuan, the year-on-year growth rate reached 56.17%; the net profit attributable to shareholders of the parent company was 0.72 billion yuan, 106 million yuan and 147 million yuan, and the year-on-year growth rate reached 38.91% .
Among them, online revenue accounted for more than 90%. From 2015 to 2017, the sales revenue of Xiao Xiong's online sales were 633 million yuan, 956 million yuan and 1.504 billion yuan respectively.
The online sales-based model is the main reason for the rapid expansion of the company. However, the relatively high proportion of online sales can not be ignored for a series of problems brought about by bear electronics.
First, it is the risk of seasonal fluctuations.
Various marketing strategies are a major means of e-commerce marketing. Sales channels rely heavily on online brands. Their sales revenue naturally follows the festival. The seasonal changes in the small household electrical appliance industry are not prominent, but as e-commerce Brand, Bear's electrical seasonal fluctuation risk is difficult to avoid.
The main domestic e-commerce promotion activities are generally carried out in the second half of the year, such as 'Double 11', 'Double 12', etc. Therefore, the sales revenue of Xiaoxiong Electric has a relatively large amount in the fourth quarter, accounting for a relatively high level, and the company’s income and profits have seasonal fluctuations. , The corresponding operating performance also has a certain seasonal fluctuation risk.
From the data of the past three years, the company’s fourth quarter is the peak, accounting for about 40% of revenue. The first quarter and the third quarter are basically the same, the second quarter is the lowest, and the revenue accounts for less than 20%. For example, the company's revenue in the fourth quarter accounted for 22%, 16%, 22% and 40%, respectively.
Of course, this is also related to the seasonality of some small household appliances, such as humidifiers, health pots, and electric cookers, which have higher demand in the fourth quarter.
Second, the online sales-oriented model led to the company's inventory balance is relatively large, inventory turnover rate is low.
The bear inventory turnover was 4.52 times, 4.72 times and 5.09 times, respectively, far below the average of 6.87, 7.01 and 6.75 times of the comparable target.
Generally speaking, the greater the number of inventory turnovers, the faster the inventory turnover rate, the lower the inventory occupancy level, and the stronger the liquidity, the faster the inventory is converted into cash or accounts receivable, which will enhance the company's short-term compensation. Debt capacity and profitability.
In this regard, the inventory balance of Xiao Xiong Electric also maintained a high level. From 2015 to 2017, the book value of the company's inventory was respectively 118 million yuan, 166 million yuan and 251 million yuan, accounting for 44.22 of the total assets of the current period. %, 38.41% and 34.39%.
Xiao Xiongdian stated that for the peak sales period of sales events such as 'Double 11' and 'Double Twelve' as well as the Lunar New Year festival, they are generally stocked in advance to meet short-term large-volume supply requirements. This results in ending stock balances. Larger, inventory turnover rate is lower than the industry average.
In addition, the centralized stocking at the end of the year also leads to an increase in accounts payable and bills payable.
The bear debt ratio of the bears is also the highest in the industry. From 2015 to 2017, the company’s parent company’s asset-liability ratio was 83.26%, 51.59% and 71.50%, respectively, far higher than the 41.37%, 34.71%, and the comparable target average. 33.86%.
Therefore, Xiaoxiong Electric also has a thirst for financing. After the funds are put into place, the company's asset-liability ratio will be significantly reduced, and the liquidity of assets will be significantly improved.
3. Thirdly, the policy of charging, promotion and other services by the e-commerce platform has great influence.
Online sales flow is king, relying heavily on channels, it will only become a channel, and it will lose.
In the current consumer market, the proportion of online sales is still rising, and the market is gradually increasing its dividend. However, once Xiao Xiong cannot maintain a good relationship with the e-commerce platform, or the pricing policy of these platforms may change, or other small household appliances brands may increase traffic. In the war, the first-mover advantage established by the bear electronics will be threatened.
Or, if the e-commerce platform launches its own brand or buys a small household appliance brand, the referee joins the stadium as an athlete, so the flow of 'non-legal brands' such as bears may be squeezed. Ali, Jingdong will also attack the industry Most of them have not paid any attention to this, but this is not impossible.
After all, in the traffic world, consumers are fickle, their memory points, brand loyalty, etc. are greatly reduced. The market share and profitability of brands such as Xiaoxiong Electric are closely related to consumers' attention.
Most of the above are the prevalent development of e-commerce brands. Xiaoxiong Electric is also aware of this. Therefore, it is exploring new lines to improve its sales channels. During the reporting period, Xiaoxiong Electric gradually developed offline dealers and even laid out export sales.
Then the question came again. How can Xiao Xiong, which is not good at offline channel distribution, open the offline sales situation, how should the company solve the high cost of offline marketing?
It can be seen from Xiao Xiong’s ongoing offline sales channels that it does not enter into the marketing circle of mainstream home appliances. The sales method is that dealers buy out the company’s products, and then sell at supermarkets, pharmacies, bakeries and gas stations. .
The company also stated that there are two major risks in offline channel expansion. First, can the effective development of distributors and the continuous effective management of dealers; Second, if it is unable to effectively provide management support, offline channel expansion may be delayed. Some distributors have poor sales or their business activities are contrary to the company's brand objectives.
Judging from the sales situation in the past three years, offline promotion has a limited effect. Xiao Xiong's offline growth is far less than online, and it also makes the proportion of offline sales and export sales shrink year after year. The sales ratio of offline + exports accounted for from 2015 12.45% in the year dropped to 8.41% in 2017.
Less than 2% R&D investment is lower than the industry average
The small household appliance industry itself is a low threshold, highly competitive market. For Bear Electronics, in addition to the above risks, it also faces a variety of competitive pressures, including domestic traditional giants, international brands, Internet appliance brands and small brands. .
On the one hand, the traditional home appliance giants such as Midea and Haier have all laid out their profitable small household appliances market. The same is true for the internet appliance brands with strong marketing capabilities and financing capabilities, such as Xiaomi. This may be a 'dimensionality reduction'.
On the other hand, transnational small household appliance companies have also entered the small household appliance market with low penetration rate and large growth potential. According to statistics, the household households have less than 10 households per household, which is far less than the developed countries in Europe and America. Household 30 levels.
In the third aspect, the threshold of the small household appliance industry is not high, and an effective technology threshold has not yet been formed. Before the brand threshold, Xiao Xiong Electronics also faced a 'price war' from a large number of latecomers, namely emerging e-commerce brands.
Foshan, home of bear appliances, is a traditional home appliance town. There are a large number of similar manufacturers. The difference is that the bear brand's positioning and online marketing model is in line with the new generation consumer preferences after 80 and 90. Bear Electronics, small Dog electrical appliances (in the middle of the IPO) can be so, in the future, kitten electrical appliances, duckling electrical appliances can also appear. And in this environment, in the field of small household appliances, there is a high elimination rate, rapid replacement, and a serious price war. Such phenomena.
R&D capability is the true source of breakthrough for small home appliance brands. However, compared with the same industry, Xiao Xiong’s R&D expenditures accounted for a low proportion, and there was a small amount of invention patents with high gold content.
The prospectus shows that the research and development investment of Xiaoxiong Electric from 2015 to 2017 were 9.924 million yuan, 165.3333 million yuan and 25.7868 million yuan, respectively, and the ratio of R&D input to operating revenue was 1.37%, 1.57%, and 1.52%, respectively.
Bear Electronics' R&D investment in the past three years
Less than 2%, this is not a normal level of R&D investment, or even the R&D investment level of the home appliance industry ten years ago.
As early as in 2009 when the Ministry of Industry and Information Technology instructed the transformation and upgrading of the home appliance industry, a clear goal was set forth in the “Guidance on Accelerating the Transformation and Upgrading of the Household Appliance Industry in China”: By 2015, the average R&D investment of the industry in the proportion of sales revenue. Reached 3%. In 2011, “Guiding Opinions on Accelerating the Construction of Independent Brands in China's Household Appliance Industry”, it was once again clear that by 2015, the R&D input intensity should not be less than 3%.
At present, the R&D investment of the household appliance industry has basically reached the target of 3%. In 2017, the three major home appliances giants in the United States, Gree, and Haier had R&D expenses of 8.5 billion yuan, 5.767 billion yuan and 4.589 billion yuan, respectively. 3.53%, 3.89% and 2.88%.
In addition to the three giants, Nine Yang shares (002242.SZ) and Supor (002032.SZ), which are mainly small household appliances, also far outpaced R&D expenditures of Xiao Xiong. The R&D expenditures in 2017 accounted for 3.68% and 2.71%, respectively.
In the limited research and development expenses, bear electronics is devoted most of its energy to appearance patents, inventing design patents.
Bear Electronics has 342 patents, of which only 8 invention patents, accounting for only 2.3%; 231 for the design patents, accounting for up to 67.6%; there are 103 utility model patents.
Although beautiful products can attract consumers, the company's products still need to be upgraded from the core technical level in order to gain a firm foothold in the highly competitive market.
The research and development input industry is the lowest, and bear electronics spends money on advertising. The company's sales expense rate is higher than the industry average. In 2017, the US sales expense rate was 11.51%, the industry average was 10.75%, and the bear sales expense rate was 14.36%, which is basically the same as the sales expense ratio of Jiuyang and Supor.
Bear's electrical appliances and the same industry company sales expense ratio
Among the sales expenses, the highest rate of increase was in brand promotion fees, which accounted for less than 20% of sales expenses in 2015, up from 35.56% in 2017. The amount increased from less than 20 million yuan in 2015 to 8781.45 in 2017. Ten thousand yuan.
In August 2017, Xiao Xiong invited artist Zhang Yixing as its spokesperson. Although Zhang Yixing’s specific endorsement fee was unknown, the company’s brand promotion fee increased 52.299 million yuan in the same year. This increased brand promotion fee was twice as much as the R&D investment that year. The company stated that it has increased the results of star propaganda, outdoor advertising and e-commerce platform advertising.
Bear electrical sales costs details