Rich family? Shenzhen's big seller of financial products made tens of millions in a year

In the cross-border e-commerce environment this year, the performance of most big sellers was unsatisfactory. Some big sellers saw a decline in both revenue and profit, while others had to borrow money from lending platforms to maintain their company operations. However, there were also big sellers that were slightly different. Although their performance declined, they made tens of millions through investment and financial management, which made other sellers in the circle envious.

Financial management has made tens of millions of dollars, and the big sellers have too much money

Recently, an announcement from Shenzhen 3C brand Jiemite attracted the attention of many sellers.

In the announcement, JMET mentioned the company's multiple idle funds investment and financial management projects, using no more than 1.068 billion yuan of idle raised funds for cash management and no more than 600 million yuan of idle own funds for investment and financial management . Just seeing this string of idle funds figures, many sellers were salivating.

Of course, the sellers are not only envious of this, but also of the profits that Gemtek has made from its idle funds. In the announcement, Gemtek mentioned that a deposit of the company in the Bank of China has expired. The amount of the deposit is 200 million yuan, for a period of one year, and the income generated is more than 6 million yuan , which can be said to be quite considerable.

The above deposits are just one of the idle raised funds of Gemtek. As of the date of this announcement, Gemtek had several deposits in Bank of China, Bank of Communications, Huaxia Bank and other banks in the previous twelve months. Currently, many deposits have matured, generating income of more than 10 million yuan, and the balance that has not yet matured (including this time) is 1.048 billion yuan.

The huge amount of deposit funds plus the huge returns have led to a shareholder comment: "We can just close the factory and earn stable profits just from the interest every year." In fact, the shareholder's words are not without reason. Judging from the semi-annual and third-quarter reports issued by Gemtek, both the revenue and the net profit attributable to the shareholders of the listed company are not satisfactory.

In the third quarter, Gemtek mentioned that its revenue for the quarter was 190 million yuan, and its net profit attributable to shareholders of the parent company was 499,900 yuan. In the first three quarters of 2022, although Gemtek's revenue increased to 552 million yuan, its net profit attributable to shareholders of the listed company did not increase accordingly, at -15 million yuan.

Looking at the above data, we can find that the profit of Gemtek in the first three quarters of this year was negative. It is hard to imagine how impressive the profit in the fourth quarter must be to turn this year's profit from loss to profit. At this time, taking the deposit interest of more than 6 million mentioned at the beginning for comparison, it is no wonder that some shareholders want Gemtek to close the factory and earn interest. After all, the profit generated by the main business is far less than the deposit interest.

Of course, in contrast, the stability of deposit interest rates also attracts many shareholders. In the financial report, Gemtek mentioned that the main reasons for the decline in its revenue and profits were the decrease in customer orders, the decrease in order payments, the increase in promotion expenses, and exchange rate fluctuations.

According to the editor, it is not only JMET that has the same reasons for the decline in revenue and profits. Many big sellers have reported that they have not made money due to the above reasons. This may also be an important reason why most big sellers choose to continuously invest in establishing subsidiaries, developing new product categories, depositing money in banks, and even planning their business around cross-border e-commerce.

Net profit plummeted, and Gemtek's road to breakthrough was too difficult

For Gemtek, although the stable deposit income is considerable, it cannot fill the gap left by the main business. The sharp drop in net profit has undoubtedly lengthened Gemtek's muddy road.

As an enterprise focusing on the research and development, design, production and sales of smart terminal accessories, JMET mainly provides users with protective accessories for mobile phones and other mobile smart terminals, such as mobile phone cases, tablet computer protective cases, etc. The company mainly provides products to consumers through ODM/OEM direct sales model and own brand sales model.

The editor noticed that the gross profit margin of Gemtek's ODM/OEM business was low, only 9.55%, but its revenue increased by 50.46% to 270 million yuan in the first half of 2022; on the other hand, its own-brand business, with a gross profit margin of 60.93%, saw a year-on-year revenue decline of 25.90% to 89 million yuan. This may also be an important reason why Gemtek's revenue increased but its profit did not increase in the first half of the year.

Different from other brands, the products of JMET mainly focus on drop resistance and waterproofness. Its mobile phone cases are favored by European and American consumers for their practicality, simplicity, mechanical style and tough style. However, as consumer habits change, mobile phone case brands with strong sense of design and bright colors have emerged one after another, and JMET's cake is being eaten.

Unlike Gemtek, which is highly dependent on suppliers, most mobile phone case brands are well aware of the advantages of the C-end. For example, CASETiFY, which we mentioned earlier, has maintained a doubling of growth and profitability every year for more than 10 years since its establishment, with an average annual sales volume of more than 3 million mobile phone cases. Currently, CASETiFY has a presence on Amazon and its own website, and has captured a lot of market share.

At the same time, JMET seems to be fatigued in R&D. The average salary growth of the company's sales staff once exceeded that of technical staff, and the energy spent on R&D has also decreased. This seems to be a dangerous signal. Looking at cross-border e-commerce, those who can make achievements in the industry and gain a long-term foothold have strong R&D capabilities, and the proportion of R&D is constantly increasing.

Perhaps JMET has realized its own shortcomings and is trying to break through through some measures. In February this year, it announced the establishment of a joint venture subsidiary with Shenzhen Tycosun Technology Co., Ltd. (hereinafter referred to as "Tycosun"), named Shenzhen JMET Technology Co., Ltd., whose main business scope includes the research and development, production and sales of plastic products, electronic products, communication products, smart electronic products, mobile smart terminal protective cases, mobile phone accessories, etc.

In the announcement, JMET pointed out that it hopes to further expand the company's business through this investment, allowing the company to take a step forward in the field of production and manufacturing, while promoting the coordinated development of the company's upstream and downstream businesses. In this way, JMET is building an exclusive industrial chain of its own by establishing a joint venture, hoping that the joint venture can become another growth curve for the company.

At present, according to the financial report data of the joint venture company Taikosheng, the revenue in the three years from 2019 to 2021 has been in a state of continuous growth, reaching 179 million yuan, 230 million yuan and 258 million yuan respectively, and its net profit attributable to the parent company was 21.86 million yuan, 28.72 million yuan and 28.52 million yuan respectively.

Judging from the performance of the partner, the performance of the partner is still good, but we still don’t know whether Gemtek can rely on the joint venture to create another growth curve for the company. Gemtek itself still has a long way to go.

Shenzhen

Financial Management

JAMET