With a net profit of more than 60 million in half a year, Amazon's outdoor seller successfully IPOs!

In today's complex and ever-changing international situation, the cross-border e-commerce industry is surging, but there are still many cross-border sellers that break through the siege and strive to go public, and Zhejiang Zhengte is one of them. In its public information, its performance, business categories, etc. are all listed at a glance.

Focusing on outdoor activities, Zhejiang Zhengte Co., Ltd. is listed on the Shenzhen Main Board

On September 19, Zhejiang Zhengte Co., Ltd. (hereinafter referred to as "Zhejiang Zhengte") was listed on the main board of Shenzhen Stock Exchange. The sponsor was Guotai Junan Securities. The issue price was 16.05 yuan per share, and the issue price-earnings ratio was 22.98 times. The funds raised from this IPO will be mainly used for "annual production of 900,000 pieces of outdoor leisure products project" and "R&D testing and experience center construction project".

As a veteran seller in the outdoor furniture industry, Zhejiang Zhengte's predecessor, "Zhengte Limited", was established in September 1996, when it mainly dealt in sun umbrellas and wooden products. In 2015, the company changed "Zhengte Limited" to "Zhengte Shares" and began to introduce foreign capital. At present, Zhejiang Zhengte mainly focuses on two product lines: sunshade products and outdoor leisure furniture . Among them, sunshade products mainly include awnings and parasols; outdoor leisure furniture mainly includes pet houses, outdoor furniture and drying utensils.

In the early days of its establishment, the company's products were mainly sold in the European market through foreign trade companies, and it maintained close cooperation with large supermarkets such as Walmart, Costco, and Lucky Dog, and later changed to self-operated exports. Since 2014, Zhejiang Zhengte has begun to deploy cross-border e-commerce. The company's own brands Abba Patio and Sorara related products have been sold in the United States and Europe through e-commerce platforms such as Amazon, and have achieved some success.

In terms of brands, Abba Patio is mainly operated by agents, while Sorara is operated independently by the company. Currently, both are best-selling brands on Amazon. Among them, a parasol under the Abba Patio brand has accumulated more than 10,000 ratings on Amazon, which is very popular and favored by consumers.

Sunshade products are also the company's main source of sales revenue. The sales revenue of this product line has accounted for more than 70% of the company's main business revenue in the past three years. Another folding awning belonging to sunshade products is mainly supplied to B-end customers. According to the data in 2021, Walmart purchased folding awnings worth up to 325 million yuan that year.

In 2022, the company's revenue in the first half of the year was 882 million yuan, and the net profit attributable to the parent company was 63.7533 million yuan, with both revenue and profit growing. It is expected that the operating income from January to September will be between 1.122 billion yuan and 1.181 billion yuan; the net profit attributable to the company is expected to be between 84 million yuan and 92 million yuan, and the net profit after deducting non-recurring gains and losses will be between 97 million yuan and 105 million yuan. At the same time, the company's cash flow this year is much better than the same period last year.

The company's revenue growth mainly includes two reasons: the sales of new products including the starry sky tent have increased significantly; the company maintains stable cooperation with major customers such as Walmart. Among them, the sales revenue brought by Walmart to the company has also increased from 210 million yuan in the first half of last year to 258 million yuan in the first half of 2022.

As the company attaches great importance to original design and has a high level of research and development in the outdoor industry, the company has multiple patents including domestic invention patents, overseas invention patents and overseas appearance design patents. It has also won the "Red Dot Award", known as the international Oscar in the design industry, five times , becoming one of the companies in the domestic outdoor leisure furniture and supplies industry that has won this award many times.

Outdoor tracks are in the ascendant, and these products are very popular

However, for the company, the profitability of the company has been affected due to multiple reasons such as raw materials and high proportion of exports. It is reported that the main production cost of the company's products is direct raw materials, such as steel, cloth and aluminum, but during the reporting period, the company's direct materials accounted for more than 70% of the company's main business costs , which means that the company's profitability will fluctuate with the fluctuation of raw material prices.

In addition, the company is highly dependent on foreign markets . From 2019 to 2021, the company's export revenue accounted for 95.66%, 97.01% and 94.10% of its main business revenue, respectively, which is a high proportion. At the same time, export products are priced in US dollars, and the risk of exchange rate fluctuations is also inevitable. During the reporting period, the company's net foreign exchange gains and losses were 5.8108 million yuan, -15.8211 million yuan and -9.8971 million yuan, respectively, accounting for 12.13%, -14.58% and -9.25% of the current operating profit, respectively.

Although risks remain, it is undeniable that the outdoor furniture market remains hot.

With the development of the economy and the improvement of people's living standards, various forms of outdoor leisure life experiences have also been favored by people. Due to the epidemic, the advantages of outdoor space have also been magnified, and they have made considerable investments in related decorative accessories, tables, chairs and carpets. According to the United Nations Commodity Trade Statistics, the global import value of major outdoor leisure furniture and products in 2020 was about US$37 billion.

North America is one of the main consumption areas of outdoor leisure furniture and products, among which the United States is the world's largest single-country market for outdoor leisure furniture and products. According to statistics from the United Nations Commodity Trade Statistics Database, the import scale of major products of outdoor furniture and products in the United States in 2020 was US$10.624 billion, accounting for nearly one-third of the global market share.

In the eyes of European and American consumers, the replacement cycle of outdoor leisure furniture and supplies is relatively short, and the demand for replacement of existing stock is stable. Generally, the replacement cycle of outdoor leisure furniture and supplies is 1-3 years, which means that in addition to daily purchases of new products, they also need to regularly update outdoor products, which means that the market share will continue to grow.

In addition, a survey of American consumers by the International Leisure Furniture Association shows that nearly 90% of the respondents have outdoor living spaces such as porches and courtyards where they can relax, and they spend an average of more than 7 hours a week in outdoor spaces. During this period, they tidy up their gardens and buy corresponding outdoor furniture, including not only lighting, lounge chairs and fire pots, but also dining tables, umbrellas, sofas, pillows and carpets.

In the shopping list of Generation Z, the first choice of millennials when shopping online is dining tables and chairs, outdoor lighting and carpets, while Generation X and baby boomers mainly choose outdoor umbrellas. Their budget for outdoor products generally does not exceed US$1,000.

In the post-epidemic era, the outdoor products market in the United States has begun to show an explosive growth trend. China has long been the largest importer of furniture from the United States. In 2021, it exported $9.127 billion worth of furniture to the US market, an increase of 24% over the previous year, and is still growing. For sellers, they can seize this opportunity and deploy related products on the premise of understanding the needs of overseas consumers.

Amazon

outdoor

IPO