Earning nearly 100 million yuan a year, Zhejiang's hot seller is heading for listing!

While the cross-border industry is experiencing ups and downs, there are still many cross-border sellers who have overcome difficulties and strived to go public. Pulaide, which has multiple sellers and retailers and owns multiple self-operated brands, is also striving to go public and will be reviewed by the Listing Committee on July 26.

Zhejiang Pulaide made a net profit of 95 million yuan a year

As an enterprise mainly engaged in the research and development, design, production and sales of power tools, Zhejiang Pulide Electric Co., Ltd. (hereinafter referred to as " Pulaide ") has covered six major product series including electric heating, spraying, nail guns, blowing and suction, punching and grinding, and steam.

In terms of business strategy, PRULDE uses the dual-wheel drive of "ODM+OBM" to sell its products to markets including Europe, America, Asia-Pacific, etc. It owns self-operated brands such as NEU MASTER, PRULDE, BATAVIA, Hengdong and Bangta, among which NEU MASTER is the best seller brand of electric nail guns on Amazon.

Its products mainly include the following:

Electric heating : hot air gun, mainly used for car maintenance film, heat shrink film, etc.; multi-functional grass burning machine, mainly used for small-scale weeding such as garden walkways and brick surface gaps.

Spraying : Electric spray guns, mainly used for interior decoration, exterior wall spraying, etc.; high-pressure airless spray guns, mainly used for ship spraying, metal spraying, etc.; atomizers, mainly used for disinfection of homes and public places; sprayers, mainly used for disinfection and cleaning of places.

Nail guns : Electric nail guns, mainly used for furniture making, handicraft manufacturing, etc.

Blowing and suction type : Vacuum cleaners are mainly used for cleaning homes, carpets, electrical appliances and other places; hair dryers are mainly used for computer dust removal, household dust removal and dust cleaning, etc.

Impact and grinding : Impact drill, mainly used for drilling holes in concrete floors, walls, etc.; light hammer, mainly used for operations on concrete, rock and other materials.

Steam type : Steam cleaning machine, which uses high temperature, high pressure steam to clean and sterilize floors, doors, windows, etc.; steam wallpaper stripping machine, which uses high temperature to strip old wallpaper.

According to the data in 2021, in terms of product revenue structure, spray products accounted for the largest revenue, which was 42.25%, reaching 282 million yuan ; electric heating ranked second, accounting for 36.81%, reaching 246 million yuan, followed by nail guns, blowing and vacuum products and other categories.

There is no doubt that good product sales have also laid the foundation for high revenue. In Pride's prospectus, we can see that its revenue from 2019 to 2021 was 295 million yuan, 392 million yuan, and 673 million yuan, respectively, and its net profit attributable to it was 37 million yuan, 69 million yuan, and 95 million yuan, respectively. Both revenue and net profit have been in a state of steady growth year after year.

In terms of details, the ODM business contributes the most to the company's revenue, accounting for 90.91% in 2021, or 607 million yuan, while the OBM business accounts for less than 10%. In the ODM business, the company's downstream customers mainly include Stanley Black&Decker, BOSCH, Makita, Metabo, Einhell, ADEO, Kingfisher, Harbor Freight Tools, etc.

The reason why Pride can maintain good relations with many customers is inseparable from its own advantages. It is reported that Pride is a national high-tech enterprise and a specialized "little giant" enterprise with strong R&D, design and production capabilities. According to the data in the prospectus, as of March 30, 2022, the company has obtained 351 domestic and foreign patents, including 21 invention patents, 175 utility model patents, and 155 design patents.

From a macro perspective, with the increase in the application scenarios of power tools and the improvement of market acceptance, the global demand for power tools is also showing an upward trend year by year. It is reported that the global power tool market size in 2019 was US$31.8 billion, an increase of 24.7% over the market size in 2016, with an average annual compound growth rate of 7.64%. It is expected that the global power tool market size will maintain a stable growth rate of more than 6% per year , which is also an opportunity for the company's development.

The proportion of R&D expenses is lower than the industry average. Is Pride no longer having an advantage?

But Pride has some shortcomings. In terms of R&D expenses, in the three consecutive years of the reporting period, its R&D investment was RMB 13.4597 million, RMB 14.4503 million, and RMB 23.0185 million, accounting for 4.56%, 3.69%, and 3.42% of its revenue, respectively. In this way, its R&D expense rate is lower than the average of its peers, and its innovation advantage may no longer exist.

According to the data in the prospectus from 2019 to 2021, Pride's export revenue was RMB 166 million, RMB 212 million, and RMB 410 million, respectively, accounting for 56.69%, 54.61%, and 61.46% of the main business revenue in the current period. Export revenue accounts for more than half of the total revenue. If the international trade situation changes unfavorably in the future, it will have a certain impact on the company's performance to a certain extent.

Furthermore, from 2019 to 2021, Pride's foreign sales revenue was mainly settled in US dollars, and the net exchange losses caused by exchange rate fluctuations were -1.2593 million yuan, 4.1275 million yuan and 1.7213 million yuan respectively . As the company's overseas sales continue to expand, if the exchange rate fluctuations between the RMB and the US dollar intensify, the company will also suffer exchange losses.

At the same time, 90% of Pride's revenue comes from ODM business. If Pride cannot meet customer needs in terms of product technology advantages, product quality and delivery time in the future, it will lead to customer loss and may have an adverse impact on its operations.

Of course, raw materials are also one of the factors that affect its performance. It is understood that the raw materials required for Pride's production and operation mainly include electronic and electrical products, hardware, plastic processing parts, packaging materials, plastic particles, metal raw materials, etc. During the reporting period, direct materials accounted for 78.93%, 76.15% and 78.75% of the main business costs, respectively, and are an important part of the main business costs. In other words, if commodity prices rise and raw material prices fluctuate , it will have a certain impact on the company's production costs.

In addition, accounts receivable is also its shortcoming. At the end of each period of the reporting period, the book value of the company's accounts receivable was RMB 47.9297 million, RMB 63.9877 million, and RMB 99.0880 million, respectively, accounting for 13.26%, 11.71%, and 12.69% of the total assets of the current period.

As Pride's business scale further expands, the book value of accounts receivable may increase accordingly. If the credit status of customers deteriorates and they cannot pay for goods in time, there may be a risk of bad debts due to the inability to collect accounts receivable in time, which will affect its operating performance and operational efficiency to a certain extent.

As the demographic dividend gradually disappears, the power tool industry is also responding to strategic changes, accelerating the dual-driven development of industrial transformation and innovation, and improving its own manufacturing level has become an important task for Pride. This requires Pride to continue to promote new product improvements and research and development while enhancing its sustainable competitiveness , so as to transform technological innovation advantages into product advantages, and then into market advantages, so as to open up and improve new profit growth points.

Zhejiang

IPO

Net Profit