With annual sales of nearly 3.2 billion, another blockbuster is about to be launched!

Affected by the epidemic, people spend more time at home, and more and more consumers are starting to decorate their "love nests". Under such circumstances, the home furnishing industry has ushered in rapid development.

Zhejiang Tianzhen Technology, which specializes in new PVC composite flooring, has also grown rapidly in this development boom. According to Yienjun, Tianzhen Technology has submitted its registration application and is about to go public.

Plans to raise 1.373 billion yuan, Tianzhen Technology is sprinting to go public

Zhejiang Tianzhen Technology Co., Ltd. is an enterprise that mainly engages in the research and development, production and export of new PVC composite flooring. Its specific products include wood plastic composite flooring (WPC flooring), stone plastic composite flooring (SPC flooring), etc.

It is reported that Tianzhen Technology expects to raise 1.373 billion yuan, and the funds raised will mainly be used for projects such as "intelligent production line for new inorganic material composite flooring with an annual output of 30 million square meters", "intelligent production line for new inorganic material composite flooring with an annual output of 25 million square meters" and to supplement working capital.

Tianzhen Technology is a typical foreign trade enterprise, with exports accounting for more than 99%, and its products are mainly sold to North America, Europe, South America and other regions. Among them, North America (especially the United States) is Tianzhen Technology's most important sales market, with sales in North America accounting for as much as 95.99% in 2021. In addition, sales in Europe and South America accounted for 2.74% and 0.51% respectively.

In terms of production mode, Tianzhen Technology implements the mode of "production based on sales + appropriate stocking". Its current mode of arranging production plans according to customer orders is conducive to reducing the occupation of the company's funds and inventory to a certain extent, and reducing the risk of product unsalability.

With the continuous expansion of its business, Tianzhen Technology's operating income has also ushered in rapid growth. From 2019 to 2021, Tianzhen Technology's operating income was 1.728 billion yuan, 2.243 billion yuan, and 3.181 billion yuan, respectively. In 2020 and 2021, the revenue growth rate was as high as 29.82% and 41.81%.

However, despite the substantial growth in Tianzhen Technology's operating income, its net profit showed a downward trend. In 2021, Tianzhen Technology's net profit was 279 million yuan, down nearly 25% from the net profit of 372 million yuan in 2020.

In this regard, Tianzhen Technology stated that the decline in the US dollar-RMB exchange rate, the rise in raw material prices and the tense international shipping situation in the past two years are important factors affecting the company's profit level. In addition, factors that have a negative impact on revenue and profits also include futures investment losses and a fire in a raw material warehouse in Vietnam in 2021.

In terms of sub-products, WPC and SPC flooring are the company's main products, and their combined revenue has accounted for more than 85% of the main business revenue in recent years. Among them, the sales revenue of WPC flooring is relatively stable, with a change rate of -3.20% and 9.84% in 2020 and 2021 respectively, and an overall increase; the revenue of SPC flooring has grown rapidly, with a growth rate of 78.53% and 62.37% in 2020 and 2021 respectively.

With the continuous development of its business, Tianzhen Technology's operating costs are also increasing year by year. From 2019 to 2021, Tianzhen Technology's main business costs were 1.112 billion yuan, 1.55 billion yuan and 2.526 billion yuan respectively. The increase in operating costs was mainly affected by the increase in raw material prices, labor costs, manufacturing costs, and transportation and miscellaneous expenses.

Thanks to the continued development of the flooring industry, Tianzhen Technology's future prospects are still very bright. From January to March 2022 , Tianzhen Technology achieved operating income of 898.9854 million yuan, a year-on-year increase of 51.94%; of which the net profit attributable to the parent company's shareholders was 84.9263 million yuan, an increase of 13.73% over the same period last year.

Combined with the current operating conditions, Tianzhen Technology also made a bold prediction for its performance from January to June 2022. Tianzhen Technology said that it expects the company's operating income in the first half of 2022 to increase by 36.91% to 61.86% year-on-year to 160,789.03-190,089.05 million yuan; of which the net profit attributable to the parent company's shareholders is expected to increase by 73.14% to 115.53% year-on-year to 18,198.24-22,654.24 million yuan.

The market size exceeds 100 billion yuan, small floor has great potential

Floor decoration materials are an important component of the building decoration industry. Different types of floor decoration materials have different performances and can greatly affect the comfort, aesthetics and safety of interior design.

With the improvement of people's living standards and the rapid development of social production technology, the demand for floor decoration materials in public buildings, private residences and other places is increasing, and their functions and varieties are constantly enriched and improved. The industry is developing gratifyingly around the world.

According to Statista's research data on the global flooring and carpet market, the market size of the global floor decoration materials industry was approximately US$380.5 billion in 2018 and is expected to reach US$450 billion in 2025. This shows that the industry has very broad market development prospects.

At the same time, Tarkett, a world-renowned flooring brand, also conducted relevant research on the market share distribution of various types of floor decoration materials around the world. According to its report, excluding special products such as concrete floors, bamboo floors and metal floors, the total sales volume of global floor decoration materials in 2019 was approximately 14.1 billion square meters.

Tarkett 's report on the global market share of various floor covering materials in 2019 is as follows:

Although the demands for floor decoration materials vary from region to region due to differences in culture, climate, local laws and regulations, with the advancement of globalization, some multinational hotel chains and multinational corporations have emerged, which to some extent have once again enriched the local choices for floor decoration materials.

Tianzhen Technology mainly deals in PVC flooring. Traditional floor decoration materials, such as carpets, wooden floors, stone floors and tile floors, often have some problems such as pungent odor, easy to wear or corrosion, poor safety and environmental protection performance, complicated installation and maintenance procedures or high prices.

Compared with traditional floor decoration materials, PVC flooring has incomparable advantages. PVC products are green and environmentally friendly, recyclable, non-slip, wear-resistant and corrosion-resistant, sound-absorbing and noise-reducing, waterproof and moisture-proof, fire-retardant, thermally conductive and warm, and easy to install and maintain.

PVC floor products started early in developed countries such as Europe and the United States . The United States had already started industrial production of PVC floor in the 1930s . At present, PVC floor has a high market recognition in Europe and the United States, and the annual demand is in a steady growth state.

PVC flooring has a market share second only to carpets in North America and is very popular among consumers in the region . North America is currently the world's largest consumer of PVC flooring. According to the Tarkett report, the total sales volume of PVC flooring in North America in 2019 was 575 million square meters, accounting for about 38.10% of the global PVC flooring market size.

Moreover, the sales of PVC flooring in the North American market has been increasing year by year, especially in the past two years. Taking the US market as an example, according to research data from Catalina Research, the sales of PVC flooring in the US in 2020 increased by 23.3% compared with 2019, and the sales area increased by 34.1% compared with 2019. During the same period, the sales and area of ​​other flooring products remained stable or even decreased compared with last year.

Although PVC flooring was introduced into China relatively late and is restricted by residents' traditional consumption concepts, its series of products have a low market share in domestic floor decoration materials. However, due to the advantages of low production costs and a complete industrial chain, China has now become the world's main production and export base for PVC flooring.

There are numerous domestic flooring companies including Tianzhen, Shengxiang and Nature. Under the favorable market background, if Tianzhen Technology can be successfully listed, it will be of great benefit to its subsequent development. However, it is undeniable that the market is full of opportunities and challenges.

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