Anker spends 1.54 billion to buy a building in Shenzhen! Layout of southern headquarters

As a leading seller in the cross-border circle, Anker Innovations has set up an office in Shenzhen for many years, but has never had its own office building. Last week, Anker Innovations officially signed a real estate sales contract and bought a property in Bao'an District for RMB 1.54 billion, with a floor area of ​​51,000 square meters. This may become Anker's southern headquarters.

Anker estimated the growth rate of Shenzhen employees and the company's other housing needs, and believed that the purchase of the building was in line with the company's five-year plan. After the building is delivered, Anker can save a lot of house rent, improve the R&D and office environment of the Shenzhen team, improve work efficiency, and attract more outstanding talents to join.

Buying a building is indeed a big deal, but Anker has the ability to do so. According to forecasts from multiple institutions, Anker Innovations' net profit in 2022 will be around 1.2 billion, a year-on-year increase of about 20%.

Anker spends 1.54 billion to buy a building in Shenzhen, setting up southern headquarters

At the recent 2022 Shenzhen Global Investment Promotion Conference, Shenzhen negotiated and signed more than 300 projects. At the scene, the Bao'an District Government signed contracts with four companies including Anker Innovations.

Anker Innovations signed the contract for the Southern Headquarters Project. It is understood that Anker Innovations plans to build the Southern Headquarters in Shenzhen, which will undertake its management, R&D, sales, supply chain, personnel training and other functions in the Greater Bay Area, and use it as a global R&D design and brand development center.

Now the project seems to have come to fruition.

This week, Anker announced the latest progress of its Shenzhen real estate purchase. On December 23, it formally signed the "Shenzhen Real Estate Sales Contract (Pre-sale)" with Shenzhen Runxue, stipulating that Anker Innovations' wholly-owned subsidiary will purchase the relevant real estate of Runzhi R&D Center located at the intersection of Liuxian Avenue and Chuangye 2nd Road, Xin'an Street, Bao'an District from the latter, for the company's Shenzhen office and the construction of the "Shenzhen Product Technology R&D Center Upgrade Project" for fundraising investment projects.

The total floor area of ​​the contracted assets is 51,017.18 square meters (tentative estimate), and the transaction price is RMB 1,541,942,500, of which RMB 466,021,700 is raised funds, and the remaining funds are from self-owned funds. Currently, the property is still under construction.

Why did Anker spend huge sums of money to buy a building?

An important reason is that Anker's R&D and office space in Shenzhen are all rented, which carries the risk of the leased space being reclaimed or not being renewed upon expiration, and rental costs continuing to increase. Moreover, changes in leased space will also bring about repeated renovation costs and relocation costs, which is not conducive to the company's long-term stable operation and development.

In contrast, purchasing the company's own R&D and office space can provide independent and stable R&D and office space, which is conducive to ensuring the company's long-term operations and business stability.

Anker has done some calculations and found that the company currently has a total of about 2,300 employees in Shenzhen, an increase of about 1,085 from the end of 2020, with an average annual compound growth rate of about 37.59%; based on an average annual growth rate of 20% for the company's Shenzhen employees in the future, it is expected to reach about 4,800 in 2027. Based on an average office area of ​​8 square meters per person, the company will need a total of about 38,400 square meters of office space in Shenzhen in 2027.

In addition, the company also needs a variety of functional spaces such as product laboratories and conference rooms, with a usable area of ​​about 10,000 square meters. The property purchased by the company this time has a floor area of ​​51,000 square meters, which basically meets the company's five-year plan.

In addition to the basic need for housing, the purchase of this house can also improve the company's R&D and office environment, which will help Anker continue to attract outstanding talents and promote its R&D upgrades in the consumer electronics field.

Anker currently has more than 2,000 employees in Shenzhen, but due to limited conditions, its Shenzhen R&D and office locations are distributed in multiple parks. The scattered working environment has caused obstacles to management, communication, and efficiency, affecting the collaborative efficiency of business and management, and also increased management costs. The unified construction of R&D centers and office spaces can improve the company's R&D and office intensiveness, which is conducive to the company's group management, improving R&D and management efficiency, and reducing operating costs.

In addition, Anker also needs a complete and centralized office environment after its listing, which is conducive to improving its brand image and helping to expand its business.

For these considerations, in October 2021, Anker Innovations internally passed a resolution to purchase a house, agreeing that Anker Innovations and its subsidiaries would use no more than 1.65 billion of their own funds and raised funds to purchase real estate in Shenzhen.

The purchase of the house was completed through six wholly-owned subsidiaries. These companies were just established in October this year and have not yet started actual operations. Their business scope includes home appliance research and development, intelligent robot research and development, 3D printing services, etc.

(The corresponding purchase area of ​​each subsidiary)

Anker is not short of money, and buying a building is reasonable from the perspective of long-term development, but the outside world is skeptical as to whether spending a huge amount of money on buying a house can boost its business development.

An investor once asked Anker: " Has the management considered increasing the cost-effectiveness of fixed asset investment in the context of a downward trend in the real estate market and lower office rental returns? The company responded that the annual rent is over 10 million. Is it reasonable for the company to spend 1.6 billion to buy an office building? Wouldn't it be more effective to use this money on research and development or to open offline stores in China to promote the company's products? " The investor believes that with Anker's scale, tax revenue and employment contribution, there should be a way to obtain office resources at a lower cost.

Development focus shifts southward? Anker increases R&D investment

Previously, Anker had paid 30% of the total price of the property, another 50% will be paid in one lump sum before today (December 30), and the remaining 20% ​​will be paid in one lump sum after delivery.

Judging from the action of purchasing a building, Anker seems to be shifting its development center from its base in Hunan to Shenzhen.

As for the use of funds raised from the IPO, Anker had planned to invest in the Shenzhen Product Technology R&D Center Upgrade Project, Changsha Software R&D and Product Testing Center Project, etc., among which the investment amount for the Shenzhen R&D Center Upgrade Project was 461 million yuan.

But afterwards, Anker adjusted some of its fundraising and investment projects and increased the investment amounts of some projects. Among them, the investment amount of the Shenzhen product technology research and development upgrade project was adjusted to 826 million yuan, and 797 million yuan has been invested so far, with the investment amount ratio reaching 96.45%.

As for the reason for the adjustment, Anker said that after the construction and upgrading of the Changsha headquarters operation management center is completed, the company will have an integrated sales operation, marketing communication and other management centers. However, R&D has always been the top priority for Anker, and Shenzhen has gathered high-end talents and a systematic industrial chain, which is more capable of taking on this responsibility.

Anker said that since the company's main products are consumer electronics, the relevant upstream and downstream industrial chains are mostly concentrated in the Guangdong-Hong Kong-Macao Greater Bay Area, and the company's main R&D technicians are concentrated in Shenzhen. In order to meet the integrated needs of product R&D, design and sales, the company provides sales, marketing, supply chain and functional operations management services in Shenzhen, and supports them through an integrated integrated operation platform . In order to facilitate the implementation of the project, Shenzhen was added as the implementation location.

Combined with Anker's layout of the southern headquarters project in Shenzhen, Shenzhen will indeed undertake more business. This is the common development idea of ​​many cross-border e-commerce companies in inland cities - the company started in the mainland, but in order to keep up with the industry, obtain the most cutting-edge information and technology, and attract more outstanding talents, it is a general trend to set up branches in Guangzhou and Shenzhen or even gradually transfer business.

Anker has always attached great importance to research and development. In 2019, 2020 and 2021, Anker Innovations' R&D investment reached 394 million yuan, 567 million yuan and 778 million yuan respectively, accounting for 5.92%, 6.07% and 6.19% of total operating income respectively. This year, this trend is likely to continue.

As of the end of last year, Anker had 1,605 R&D personnel, accounting for 45.44% of the company's total number of employees, nearly half of the total. This supports Anker's R&D depth and product category expansion.

In addition to continuing to focus on its three mature product series: charging, smart innovation, and wireless audio, Anker is also unlocking new categories.

In April this year , Anker launched the AnkerMake M5 3D printer on the crowdfunding platform Kickstarter. In just a few days, more than 8,300 supporters raised $5.31 million for it, far exceeding its crowdfunding goal of $50,000. This has become a highlight product of Anker this year.

The topic of overseas energy crisis continues to be hot, and the demand for energy storage products continues to increase in many places. Anker has also seized this opportunity. In June, Anker surpassed Japan's online market share to become the first, and its flagship product Anker757 outdoor power supply 1500W ranked first in the Amazon category. Its products are mainly outdoor portable energy storage equipment. At present, Anker is gradually supplementing all series of outdoor energy storage products in all medium and large power and capacity segments.

A large sum of money is used to retain talents, and equity incentives are awarded to technical backbones as the core

Anker Innovations attaches great importance to technology, which is also reflected in its heavy investment in retaining core personnel. In June of this year, the company issued the 2022 restricted stock incentive draft, planning to grant 6.4932 million restricted shares, accounting for approximately 1.60% of the company's total share capital, of which 5.1945 million shares were granted for the first time, accounting for 80%, and 20% were reserved. The initial grant price was 40 yuan per share, and the number of incentive targets did not exceed 426. The company has deep ties with the core members through the incentive plan.

Anker Innovations' equity incentive is mainly aimed at core technical personnel, and the scope of incentives is relatively wide: the number of incentive recipients for the first time does not exceed 426. Except for directors, secretaries and financial directors, the recipients are all core technical and business personnel, including some foreign employees, totaling 423 people. As of 2021, the company has 1,605 R&D technicians, and the coverage rate of this incentive is 26.36%.

According to the announcement released by Anker Innovations, the company's equity incentive assessment is based on the revenue growth rate as the redemption condition, superimposed on the personal performance assessment: the first grant assessment year is 2022-2024, and the reserved grant assessment year is 2023-2025. The target is an annual operating revenue growth of no less than 15% year-on-year; among them, the individual's attribution ratio for the year is determined based on personal performance evaluation.

The personal assessment of the incentive object determines the vesting ratio of the current year based on the individual's performance evaluation results. The actual vesting amount of the individual in the current year = the vesting ratio × the individual's planned vesting amount in the current year. Special circumstances in the performance evaluation shall be determined by the board of directors. The performance evaluation results of the incentive object are divided into five levels: S, A+, A, B, and C. In the performance evaluation of a year, if the result is B for two consecutive times or C for any one time, it is unqualified, and other situations are qualified.

It has to be said that Anker Innovations' equity incentives for core technical personnel account for a relatively high proportion, which also shows the company's sincerity in retaining people. Obviously, Anker Innovations' development scale is already huge, but it hopes to move forward more steadily, which requires stable core personnel and teams to "row the oars".

Anker has always been sincere in binding its core employees. In the first half of this year, the company issued an "Employee Loan Management Measures", stating that it would further improve the employee welfare system and set aside a loan quota of 40 million yuan for employees to buy houses, medical expenses, etc.

The loan method is applicable to personnel in important positions of Anker Innovations and its domestic and overseas holding subsidiaries. The loan purposes mainly include: to attract core talents; to purchase houses for company employees; to pay for medical expenses for major illnesses and accidents of employees or their immediate family members; and other approved fund turnover purposes. In order to ensure the reasonable allocation of loans in the fund pool, the application quota shall be planned uniformly by the Human Resources Department and submitted to the Board of Directors for approval.

In the loan process, eligible employees fill out the application form and submit the relevant information truthfully. The Human Resources Department will then review the applicant's qualifications, application form and information, and the Finance Department will review the applicant's qualifications, application form and information and submit it to the Board of Directors for approval. Finally, for employees whose applications are approved by the Board of Directors, the Finance Department will remit the approved loan amount to the employee's personal bank card in one lump sum.

After the loan is completed, the borrower needs to repay the loan annually within the repayment period specified in the contract. Within the specified repayment period, employees can choose to repay part of the loan or repay the loan in advance. The interest on the funds will be calculated based on the central bank's base loan interest rate or be interest-free depending on the purpose.

Whether it is setting up a fund pool to help employees buy houses or equity incentives for core technical personnel, it is enough to prove that Anker Innovations attaches great importance to its employees. In this year's overall environment is not good, when many companies are prone to layoffs, salary cuts, and holidays, this company provides such preferential conditions for employees, which is a model.

Ultimately, companies that focus on employees and retain core talents can have long-term competitiveness. Of course, retaining talents requires a certain amount of funds, and Anker Innovations is relatively strong in fund management. In addition to its own considerable revenue and profits, the company itself has done corresponding fund management to provide certain guarantees for business development.

Manage funds to meet business development needs

In 2021, Anker Innovations used more than 4.5 billion yuan of idle funds to purchase financial products and trusts, which generated a considerable amount of income. Combined with the disposal of some investment stocks and government subsidies, the company's total income was about 300 million yuan .

In 2021, Anker's revenue was 12.574 billion yuan, a year-on-year increase of 34.45%; the net profit attributable to shareholders of the listed company was 981 million yuan, a year-on-year increase of 14.7%; the net profit attributable to shareholders after deducting non-recurring items was 707 million yuan, nearly 20 million yuan less than the previous year, a decrease of 2.69%.

The net profit attributable to shareholders of listed companies has been whitewashed, and the main channel is income from non-routine operating activities. Anker's income of this type mainly comes from investment income and government subsidies. The total income in 2021 is as high as 300 million, which is almost one-third of the pre-tax profit. The impact is significant. It can be seen that the income generated by Anker's purchase of financial products and trusts is not small!

However, there are certain risks in purchasing financial products and trusts, and Anker Innovations has also stepped on the thunder. As of the end of 2021, the company still has 2.268 billion yuan of unexpired financial products, including 472 million yuan of trust products. Trusts with high returns have higher risks. Anker once purchased the AVIC No. 651 Trust with a subscription amount of 100 million yuan and held for 365 days. The expected rate of return is 5.5%, and it has received an investment income of 2.7575 million yuan.

In the middle of this year, the company suddenly received an extension notice from AVIC Trust, stating that the principal of 100 million yuan and the remaining investment income of 2.6068 million yuan were at risk of overdue. Anker Innovations said that the principal of 100 million yuan and the investment income of 2.6068 million yuan of the trust product were originally scheduled to expire on June 12. According to the "Extension Notice", the principal and investment income to be recovered under the trust plan are at risk of overdue.

In addition, Anker Innovations is also providing financial guarantees for its subsidiaries to ensure business development. In the first half of this year, Anker held its 2021 Annual General Meeting of Shareholders and reviewed and approved the "Proposal on the Estimated Guarantee Amount for 2022". The company plans to provide a total guarantee amount of no more than RMB 5 billion (including RMB 5 billion) for its wholly-owned subsidiaries in 2022 .

The company signed a "Guarantee Contract" with the bank to provide joint and several liability guarantee for its wholly-owned subsidiaries Anker Zhicai, Anker Huiju, Anker Huihe, Shenzhen Anker Innovations, Anker Wisdom, and Anker Huizhi. This guarantee matter is within the guarantee limit approved by the company's board of directors and shareholders' meeting, and does not need to be submitted to the company's board of directors or shareholders' meeting for review again.

Anker provided financial guarantees for its subsidiaries in Shenzhen. The 1.5 billion yuan spent on purchasing buildings in Shenzhen was also for these subsidiaries. In the future, these subsidiaries may become the core force of Anker's southern headquarters.

Whether purchasing financial products and trusts or buying a house, financial strength is required. Anker Innovations' revenue this year is relatively strong.

In the first three quarters of this year, Anker Innovations' overall operating income reached 9.537 billion yuan, an increase of 13.19% over the same period last year, and its revenue reached 10 billion yuan. Its net profit attributable to the parent company was 830 million yuan, an increase of 28.6% over the same period last year. Among them, Anker achieved operating income of 3.649 billion yuan in the third quarter, compared with 3.055 billion yuan in the same period last year, a year-on-year increase of 19.46%. Its net profit attributable to the parent company was 254 million yuan, compared with 237 million yuan in the same period last year, a year-on-year increase of 7.24%.

Many industry insiders believe that in terms of performance growth, Anker's overall performance this year is expected to exceed that of last year, and Anker Innovations' performance in the fourth quarter is expected to be good. At the end of last month, Anker Innovations added one more institution to make predictions for its 2022 annual performance. A total of 21 institutions in 6 months predicted that the average net profit in 2022 would be 1.188 billion yuan, a year-on-year increase of 20.98%.

In addition to strong operating capabilities, the company's R&D and innovation efforts have continued to rise steadily in the first three quarters of this year, with R&D investment approaching RMB 700 million, a year-on-year increase of more than 40%, accounting for 7.33% of its operating income. In the third quarter, R&D investment exceeded RMB 200 million, and its R&D staff continued to increase.

The increase in R&D investment is also reflected in the equity incentives mentioned above. The continuous investment in R&D also provides strong support for the company to launch new products. This year, Anker has launched a number of new product categories in smart innovation, wireless audio, and charging categories. The contribution of the company's outdoor energy storage categories cannot be underestimated. In the future, Anker Innovations will continue to focus on related mobile energy storage products.

Anker Innovations

Southern Headquarters

Shenzhen