Listing imminent! Best-selling Zhiou Home Furnishing successfully passed the review

As a leading seller in the home furnishing industry, Zhiou Home Furnishing has been developing rapidly in recent years. Its own brands SONGMICS, VASAGLE and FEANDREA have already successfully become popular home furnishing brands in the European and American markets.

Zhiou Home Furnishing's road to capitalization has been full of twists and turns, and the company has suspended its IPO several times on the road to listing. But good things come to those who wait, and recently, Zhiou Home Furnishing finally passed the initial public offering.

Zhiou Home Furnishing successfully passed the review!

On July 20, the announcement of the results of the 41st review meeting of the GEM Listing Committee in 2022 showed that Zhiou Home Furnishing Technology Co., Ltd. met the issuance conditions, listing conditions and information disclosure requirements, and successfully passed the initial public offering!

Zhiou Home Furnishing is one of the largest cross-border e-commerce export companies in Henan Province. The successful approval of Zhiou Home Furnishing also means that Henan is expected to welcome its first branded home furnishing listed company.

Zhiou Home Furnishing is mainly engaged in the research and development, design and sales of its own-brand home furnishing products. Its products mainly include furniture series, home furnishing series, garden series, pet series and other categories. Among them, furniture and home furnishing series are Zhiou’s most important source of sales revenue .

From 2019 to 2021, the sales share of Zhiou furniture series products was 43.37%, 49.62% and 51.90% respectively; the sales share of home furnishing series products was 38.39%, 34.35% and 31.50% respectively.

Zhiou Home's products are mainly sold through overseas online platforms such as Amazon, Cdiscount, ManoMano, and eBay . Among them, Amazon is Zhiou Home's most important sales channel. From 2019 to 2021, the sales revenue achieved by Zhiou Home through the Amazon platform accounted for 81.13%, 71.80% and 67.87% of its main business revenue respectively.

As a world-renowned Internet home furnishing brand, Zhiou Home Furnishing also attaches great importance to product R&D investment. From 2019 to 2021, Zhiou Home Furnishing's R&D expenses were RMB 10.4295 million, RMB 12.7693 million and RMB 24.5104 million, respectively, with an annual compound growth rate of 53.30%.

Thanks to this, Zhiou Home Furnishing’s market competitiveness has been continuously enhanced and its revenue scale has been expanding year by year .

In the filing for the meeting, Zhiou Home Furnishing revealed that the company's operating income in 2019-2021 was RMB 2.326 billion, RMB 3.970 billion and RMB 5.967 billion, respectively; the net profit attributable to the parent company's shareholders was RMB 108 million, RMB 380 million and RMB 240 million, respectively.

From 2019 to 2021, the compound annual growth rate of Zhiou Home Furnishing's revenue reached 60.19% , showing a good growth trend. However, its profit growth in recent years has been unstable , especially in 2021, when its operating income increased by 50.27% compared with the same period last year, but the net profit attributable to the parent company's shareholders fell by 36.93% compared with the same period last year.

Zhiou Home Furnishing said that the main reason for the fluctuation in profit scale was the impact of unfavorable factors such as the continued rise in shipping prices and the volatile downward exchange rates of the euro and the US dollar against the RMB .

At the same time, the gross profit margin of Zhiou Home's main business has also been declining year by year. From 2019 to 2021, its main business gross profit margin was 55.82%, 54.78% and 49.64% respectively. This is mainly due to the repeated global epidemic, the sharp increase in shipping costs, and the increase in the cost of main business.

In the meeting draft, Zhiou Home Furnishing also disclosed its operating conditions in the first half of 2022. According to preliminary estimates, Zhiou Home Furnishing's operating income in the first half of the year was 2.73 billion yuan to 2.83 billion yuan, down 11.55% to 14.68% from the same period last year; the net profit attributable to the parent company's owners was 106 million yuan to 120 million yuan, down 14.54% to 24.51% from the same period last year.

With the decline in shipping prices and the recovery of market demand, although Zhiou Home Furnishing's profit level in the first half of 2022 still declined year-on-year, the decline has gradually narrowed significantly, and the future development prospects are still very bright.

Raised 1.486 billion yuan, Zhiou invested in four major projects

After the successful meeting, Zhiou's related projects will be gradually promoted. According to the previous prospectus, the 1.486 billion yuan of funds raised by Zhiou this time will be mainly used for the construction of the R&D and design center, the expansion of the warehousing and logistics system, the construction of the Zhengzhou headquarters operation and management center, and the replenishment of working capital. The investment amounts of the raised funds are 318 million yuan, 517 million yuan, 351 million yuan, and 300 million yuan respectively.

In recent years, competition in the overseas home furnishing market where Zhiou is located has become increasingly fierce, the penetration rate of overseas e-commerce has increased, and consumers have higher requirements for the design and personalized experience of home furnishing products. If Zhiou wants to adapt to and catch up with the progress of consumer demand, it needs to speed up product updates, improve R&D capabilities, and expand business scale, which is also the purpose of its project.

As one of Zhiou's key areas of focus, the R&D and design center construction project is becoming increasingly important to Zhiou's future development. The project will mainly upgrade the company's existing R&D and design center, mainly including the construction of an R&D and design center, an innovation training center, and a visual creative center, with a planned construction period of 36 months.

The R&D and design center will not be located in Zhengzhou, but will be located in Dongguan, with a planned investment of RMB 95.3 million. At the same time, it will also rent office space in Shenzhen, with a planned investment of RMB 14.4 million, to further expand its R&D and design team, build a sample proofing center and a product quality testing center, thus forming a collaborative model in the three locations. After the project is successfully implemented, Zhiou's R&D efficiency and product launch cycle will be improved.

It is worth noting that Zhiou invested the most in the expansion of its warehousing and logistics system, reaching 517 million yuan . According to the data, this is mainly due to the continuous expansion of Zhiou's product sales scale, and its original warehousing system has achieved a high utilization efficiency, which has increased the demand for future warehousing capacity.

Zhiou said that its warehousing and logistics system expansion project plans to build multiple warehousing and logistics centers at home and abroad, with a total storage area of ​​181,000 square meters. Among them, the implementation body of the overseas warehousing center construction project is Zhiou Technology, and the implementation body of the domestic warehousing and logistics center project is Dongguan Zhiou, and the construction period is 36 months. In addition, the project will also improve the operation automation level and turnover speed of its warehousing and logistics by introducing automatic picking trucks, automatic assembly lines, automatic labeling machines and other automated equipment and WMS warehouse management information systems.

Although the investment amount of the other two projects is not as much as that of the warehouse expansion project, the proportion is not small, accounting for about 23.62% and 20.18% of the total investment of the raised funds respectively. Judging from the construction entities and scale of the four major projects, Zhiou's business development is currently in an expansion and growth period, and it has a great advantage in the same industry.

Regarding the next development plan, Zhiou said that it will continue to increase R&D investment, enhance brand image, expand the market and other aspects. In the future, it will also increase investment in other overseas e-commerce platforms and self-operated independent websites besides Amazon, and expand the B2B offline market, with promising development prospects.

As a company that started in central China, the successful approval of this review will have an incentive and radiating effect on cross-border sellers in central China. It will also help domestic brands to go overseas and build their reputation in overseas markets.

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