Net profit in half a year increased nearly 27 times, East China made huge profits from sales!

If we talk about the categories that are still popular in 2022, sports equipment is one of them. Whether during the epidemic or after it is under control, the popularity of national fitness remains unabated, and there are many companies that have made a fortune by selling products in this category. Chuangyuan Co., Ltd., which owns sports products, has also reaped great rewards.

It is expected that Chuangyuan shares' half-year net profit will surge nearly 27 times

Recently, Ningbo Chuangyuan Cultural Development Co., Ltd. (hereinafter referred to as "Chuangyuan Co., Ltd.") released its 2022 semi-annual performance forecast, showing that its net profit attributable to listed shareholders in the first half of 2022 was between 49.5 million yuan and 69.5 million yuan, compared with the profit of 2.4838 million yuan in the same period last year, an increase of 1892.91%-2698.13% .

In other words, the estimated net profit of Chuangyuan Co., Ltd. in the first half of 2022 has increased by nearly 27 times, which is several times higher than the net profit of 9.4767 million yuan for the whole year of 2021. It also makes people curious about the road to this hot sales.

As a big seller headquartered in Ningbo, Chuangyuan Co., Ltd. focuses on overseas markets. Nearly 90% of its revenue comes from overseas markets. It mainly sells fashion stationery, handmade educational toys, social emotions, sports and fitness, home furnishings and other categories. With multiple platforms such as Amazon, self-operated websites and Alibaba International Station, Chuangyuan Co., Ltd. is like a fish in water in the North American and European markets.

Take the subsidiary American Zhiyuan as an example . It has three sub-brands PAPERAGE , Elyn , and Heypop. It mainly sells fashion stationery and home products on the Amazon platform. It has won wide acclaim from consumers for its simple design and excellent quality . Among them, office stationery products are on multiple Amazon best seller lists . In 2021, sales on the Amazon platform reached US$9.01 million.

In terms of products, the highest revenue share in 2021 was fashion stationery, accounting for 53.30% and revenue of 737 million yuan; followed by handmade educational products, accounting for 12.20% and revenue of 168 million yuan. Although the revenue share of the home furnishing and sports and fitness categories is relatively low, their growth rate is relatively fast . Among them, the revenue of the home furnishing category in 2021 increased by 253.83% year-on-year.

The fact that Chuangyuan shares can achieve such great results is inseparable from its company's strong layout.

In terms of product layout, the subsidiaries of Chuangyuan Co., Ltd. each have their own responsibilities. Among them, American Zhiyuan focuses on creating its own brand of fashionable and leisure products such as stationery and gifts; Ruitefei, American Ruitefei and Tuofan Sports mainly deal in sports and fitness products, such as dumbbell benches, trampolines, etc., mainly through Amazon and independent stations . The two major channels, its order volume in 2021 exceeded 250,000, and its sales on Amazon US alone reached US$14.46 million ; Heyuan Textiles mainly deal in garden flags, colorful flags, outdoor flags and daily household textile products , combining traditional foreign trade business and cross-border e-commerce operations, and its products are exported to Europe, the United States, Japan, South America and other places.

In addition, there are several subsidiaries to safeguard the export of its products. Among them, Ningbo Chuangyuan and Anhui Chuangyuan are its dual "production and export bases" , focusing on creating an integrated supply chain of research, production and sales; Vietnam Chuangyuan in Southeast Asia has laid out a "Vietnam production base + Hong Kong trade center", taking core customers and core products as its business strategy, and establishing an international supply system ; Chuangyuan Haina mainly manages the construction, development and operation of marketing and R&D headquarters; Chuangyuan Unicorn mainly operates Douyin platform brand marketing and live streaming.

In addition, Chuangyuan shares also understand the importance of scientific research capabilities. Compared with a number of cross-border e-commerce companies, its investment in research and development is relatively high. According to the data from 2019 to 2021, its research and development expenses exceeded 50 million yuan, accounting for more than 5% of its revenue, which is a strong support for its new product development, production line speed-up and diversified layout.

At the same time, in March this year, Chuangyuan shares also completed a major change in the company's equity. Ningbo State-owned Assets Supervision and Administration Commission took over and became the actual controller of the company, and Chuangyuan shares also became a state-owned enterprise. With such support, the future of Chuangyuan shares is also promising, but for Chuangyuan shares, the risks should not be underestimated.

The decline in net profit in 2021 was due to multiple factors

In 2021, Chuangyuan’s full-year net profit fell by 81.73%, and there were multiple influencing factors, including external factors such as the depreciation of the US dollar exchange rate, rising international logistics costs, and increased internal capital investment of the company.

Since Chuangyuan shares mainly target the US market, its revenue is mainly settled in US dollars, so the fluctuation of the US dollar exchange rate is very uncertain for it. Among them, due to the continuous decline in the US dollar against the RMB exchange rate, the company's comprehensive gross profit margin of the three major categories of cultural, educational and leisure products has dropped by about 7% compared with the same period last year .

At the same time, external factors affecting Chuangyuan’s profits include the impact of the epidemic, tight international shipping capacity, and an increase of about 96% in cross-border e-commerce shipping logistics, inland transportation, and terminal distribution costs compared with the same period last year, with related costs increasing by approximately RMB 39.8 million; advertising expenses increased by approximately 63% compared with the same period last year , with costs increasing by approximately RMB 9.6 million.

In addition to external factors, there are also multiple internal factors that affect its net profit. According to the financial report data of Chuangyuan Shares, the interest expenses in its financial expenses increased by about 7.36 million yuan compared with the same period last year, an increase of about 87%. At the same time, it established a new subsidiary during the reporting period, but because its subsidiary was in the early stage of business expansion and had a small sales scale, it incurred losses.

In this regard, Chuangyuan shares also stated that it will improve its overall operating profitability by increasing R&D investment, improving incentive mechanisms, expanding new categories, and increasing the market share of its own brands. Looking at the skyrocketing net profit in 2022, it can be seen that these problems have been gradually resolved.

At the same time, the products mainly promoted by Chuangyuan Co., Ltd., such as cultural, educational, leisure, and sports and fitness, have been well received by consumers and have maintained a relatively high dominant position among its peers.

Data shows that the global stationery revenue in 2021 is about 80.8 billion US dollars, and it is expected to reach 97.9 billion US dollars in 2028. The compound annual growth rate is about 2.8% from 2022 to 2028. Among them, the repurchase rate of products such as school bags, stationery storage boxes, sticky notes, puzzles, and calipers is relatively obvious.

In the sports and fitness category, not only is the market size of fitness apparel growing, but sports-related products such as rackets, treadmills, weightlifting dumbbells, and sports water bottles are also maintaining a high level of popularity in the North American market.

Survey data shows that Americans who like outdoor sports spend a considerable amount of money on outdoor sports equipment every year, and the cost of outdoor sports for the US citizens can reach 887 billion US dollars each year. With the public's attention to health and outdoor sports, the scale of global sports and outdoor products consumers is expected to reach a new height in the future.

For sellers, they can learn from the successful experience of Chuangyuan Shares and explore more potential subcategories. Of course, they must also remain vigilant to internal and external factors that affect the company's net profit.

Chuangyuan Shares

Semi-annual report

East China