With annual revenue of nearly 700 million, Huadong Dama continues to strive for IPO

There has been a home fitness craze in China recently, but compared with China, fitness in Europe and the United States has always been more popular, and many domestic sellers have also entered this field and achieved good results. In addition to the listed and popular Chuangyuan shares, Jiangsu Kangliyuan Sports Technology Co., Ltd. (hereinafter referred to as Kangliyuan) is also one of the leaders. After the last IPO was suspended, it recently updated its prospectus and continued to impact the listing.

Kangliyuan resumes listing review, with revenue and profit both increasing

Kangliyuan's IPO application was accepted on November 12, 2021. On March 31 this year, the listing review was suspended because the financial information was outdated and needed to be supplemented. The listing review was resumed after the financial information was updated on May 24.

Kangliyuan's main products include anaerobic and aerobic fitness equipment, outdoor fitness equipment and other series of products, including treadmills and exercise bikes. It also sells other supporting products such as waist beautification machines and body fat scales according to customer needs, which are suitable for a variety of home and outdoor scenes. Kangliyuan's revenue is mainly from exports, accounting for 85.18% in 2021.

Kangliyuan adopts a sales model that combines foreign sales and domestic sales, offline and online, ODM and independent brands. Online sales are mainly through the Amazon platform, covering countries and regions such as the United States, Europe, and Japan, among which the United Kingdom and Germany account for a relatively high proportion.

After years of development, Kangliyuan already has its own brands such as "JX", "Junxia" and "Kangliyuan", but the current revenue share of its own brands is still relatively low. Its overseas online direct sales platforms include Amazon, AliExpress, Walmart and Alibaba International Station, among which Amazon platform has the highest revenue share.

  (Picture from Kangliyuan Amazon store)

Kangliyuan started its cross-border e-commerce business on Amazon in 2017 and sells its products under the JX Fitness brand. Its products mainly include free weight training equipment with small size and light weight, such as weight benches and dumbbell benches. As of March 31, 2022, it has 58 and 37 sites in Europe and America, respectively.

On June 30, 2021, one of Kangliyuan's European store accounts was suspended for being associated with a third-party account, but due to its small sales, it did not have a significant impact on Kangliyuan's performance. Kangliyuan has filed a complaint with Amazon to resume store operations, but no conclusion has been reached yet.

Regarding the practice of brushing orders that Amazon has strictly investigated , Kangliyuan stated that it had stopped the practice of brushing orders in June 2020, actively rectified the situation, formulated relevant systems prohibiting brushing orders, and effectively eliminated the situation of brushing orders. The practice of brushing orders no longer exists.

According to the prospectus, Kangliyuan 's revenue from 2019 to 2021 was 382 million yuan, 675 million yuan, and 702 million yuan, respectively, and the net profit attributable to the parent company's shareholders was 35.63 million yuan, 93.37 million yuan, and 78.28 million yuan, respectively. Both revenue and profit are on a growth trend.

Under the influence of the epidemic in 2020, the habit of home fitness became more popular, and Kangliyuan's online revenue increased significantly. After the market eased last year, the proportion of overseas online revenue declined slightly.

In order to continuously expand its advantages in the market and enhance its competitiveness, Kangliyuan has always attached great importance to investment in research and development and continued to develop new products. At present, Kangliyuan has 8 invention patents, 160 appearance patents, etc., and has mastered many key technologies in the industry and has thousands of products, laying a solid foundation in product research and development and design capabilities.

With the development of the global economy, the quality of life of residents has gradually improved, health awareness has continued to increase, and the sports industry has expanded rapidly. The sales volume of related products in various channels has continued to grow, which has provided new opportunities for the rapid development of similar companies such as Kangliyuan.

Product development has achieved remarkable results, but there are still risks in future development

It is not easy to enjoy this dividend for a long time. How to stand out from many similar companies and occupy more market share has become the key to Kangliyuan's future development.

In this regard, Kangliyuan has focused on product research and development and innovation, hoping to match the ever-changing market demands with differentiated research and development capabilities. In terms of details, Kangliyuan mainly deepens the miniaturization, intelligence, and comprehensiveness of its products. From the public information, a series of measures in research and development and innovation have also achieved good results. Data shows that the company has carried out a total of 653 new product research and development projects and has completed mass production of 530 new products .

Through R&D and innovation, the company's current products have been effectively improved in terms of intelligence. Take the smart treadmill as an example. It can input the user's facial data into its application system, and synchronize and save exercise data through facial recognition login. Users can also set three target exercise modes: time, distance, and calories.

In addition, users can also select the real-life running interface in the function. The scene video is played simultaneously during the running process, giving users an immersive feeling during the running process. Users can also choose different scenes of the running interface according to their own preferences. This intelligent and humanized design makes Kangliyuan's products popular with consumers.

Other products such as adaptive treadmills, intelligent education and sports integration equipment, etc., also have obvious competitive advantages in the same category and are also very popular in the market.

In addition to product innovation, technological innovation is also a focus of Kangliyuan. Kangliyuan has been engaged in the research and development and production of fitness equipment for more than 20 years. Therefore, a lot of improvements and optimizations have been made in the production process, and the production efficiency and product quality have been effectively improved. The flexible switching production capacity of multiple varieties and small batches has also been achieved. Under the combined effect, the company's market competitive advantage has been further strengthened.

However, with the continuous changes in the current market and user demands, whether Kangliyuan's R&D and innovation capabilities in all aspects can keep up with demand and whether its advantages can be maintained in the long term has become one of Kangliyuan's potential risks.

In the latest prospectus, Kangliyuan also stated that it is promoting the optimization and upgrading of R&D and innovation capabilities by increasing R&D investment, expanding the size of the R&D team, and cooperating with third-party institutions. However, if it fails to fully meet market demand in product R&D and innovation in the future, it may have a certain adverse impact on its order acquisition ability, market competitiveness and performance growth.

In addition, with the continuous influx of new competitors in the same industry market, coupled with uncertain factors such as logistics and exchange rates, Kangliyuan's future development risks are further exacerbated.

As a "new" enterprise in the process of capitalization , Kangliyuan faces many problems: expanding sales channels, digging deep into market demand, building brand awareness, facing external doubts, etc. In the current fierce market competition, Kangliyuan still needs to play its cards well.

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