Cross-border big-selling suppliers such as Anker and Dreame Technology failed to be acquired

For enterprises, when they develop to a certain stage and scale, they generally choose to complete capitalization through listing and other channels. In recent years, under the background of the rapid development of the cross-border e-commerce industry driven by the global epidemic, some cross-border e-commerce giants have completed their listings, and many other giants are striving for IPOs .

Cross-border e-commerce is a complete industrial chain. While these cross-border giants are striving to go public, some companies in their supply chain have also completed their listings. For example, Oni Electronics, a big seller of Amazon cameras and also a supplier of Zebo, completed its listing last year.

In addition, some other companies in this industry are also seeking capital and waiting for the opportunity to achieve further development. Suzhou Shangteng Technology Manufacturing Co., Ltd., a supplier to cross-border big sellers such as Anker and Xunmi Technology, is one of them. However, Suzhou Shangteng's development road does not seem to be smooth.

The acquisition of the remaining 45% of Suzhou Shangteng shares failed

On March 25 , 2022 , Chunguang Technology held a board meeting to review and approve the proposal to acquire 45% of the equity of its holding subsidiary Suzhou Shangteng and related transactions. At the same time, it was mentioned in the supplementary agreement that Chunguang Technology intends to use its own funds of RMB 115 million to acquire 45% of the equity of its holding subsidiary Suzhou Shangteng . In addition, the parties to the transaction agreed to assess the profit value of Suzhou Shangteng as a prerequisite for the payment of part of the equity.

It is worth noting that the two parties agreed that if any of the payment preconditions are not met, the overall valuation of the target company will be 10 times of Suzhou Shangteng ’s 2022 annual assessment profit , and the acquisition price of the target company will be finally determined based on 45% of the overall valuation .

However, just twenty days later, Chunguan Technology stated at the board meeting on April 15 that since there were still matters in the acquisition agreement that needed further supplementation and improvement, it decided to cancel the transaction.

After checking the relevant inquiry letter, Yienjun found that there are still many issues that need to be explained in this transaction, including:

According to Chunguang Technology's 2021 third quarter report, the company's cash balance on the books is 417 million, of which about 200 million is raised funds and 170 million is short-term loans. Chunguang Technology needs to explain the source of funds for this transaction and the specific impact it may have on the company's financial situation based on its funding situation and recent investment and financing arrangements.

At the same time, Chunguan Technology needs to distinguish different foundry business models and list Suzhou Shangteng’s core products, revenue and costs, as well as major customers and suppliers, purchase and sales content and amounts, whether there is an affiliated relationship with the listed company, etc., to explain whether it has significant dependence on major customers or suppliers.

After Chunguan Technology issued an announcement on April 16 regarding its reply to the inquiry letter from the Shanghai Stock Exchange, it also issued an announcement on the same day to cancel the acquisition of the remaining 45% shares of Suzhou Shangteng , and the acquisition came to a temporary end.

Focusing on small cleaning appliances, Shangteng has become a supplier of many cross-border sellers

Suzhou Shangteng is mainly engaged in the research and development, production and sales of cleaning appliances such as handheld vacuum cleaners, floor scrubbers, sweeping robots, and cloth washing machines, and belongs to the cleaning small appliance industry. Its business model is to produce according to sales, that is, after receiving a purchase order, it generates a sales order, and based on this, it issues a production task order and then organizes production.

At present, Suzhou Shangteng's main customers include Shunzao, Dreame, Jiandan Youwei, Anker, etc. Among them, Shunzao Technology and Dreame Technology are both Xiaomi ecological chain companies, and Anker is the world's number one digital charging brand, with main products covering mobile power supplies, chargers, data cables, Bluetooth peripherals and other smart digital peripherals.

Shunzao Technology is an innovative technology company focused on the research and development of high-end cleaning appliances such as vacuum cleaners and smart sweeping robots. Its products cover many cleaning scenarios such as home spaces, car spaces, and office spaces; Dreame Technology is responsible for the smart cleaning category, and currently has four major categories: cordless vacuum cleaners, sweeping robots, high-speed hair dryers, and floor scrubbers.

With an annual revenue of 330 million, the small cleaning appliance industry has a bright future!

Suzhou Shangteng Company was established on December 25 , 2020 and officially started operations in March 2021. Although it has been established for a short time, it has the ability to cope with market demands in different periods and has high-quality and stable customer resources .

According to the latest disclosed annual report data, Suzhou Shangteng's operating income in 2021 was 330 million yuan. In 2021 , its complete machine sales were 513,200 units. Affected by the sales model of e-commerce platforms, revenue was mainly concentrated in the second half of the year, with complete machine sales of 397,000 units from July to December .

Suzhou Shangteng has achieved such success in less than two years, which is closely related to the prospects of the cleaning small appliance industry it is in. With the continuous upgrading of home appliance technology and the explosion of consumer demand, the cleaning appliance industry has developed rapidly.

These household cleaning appliances can free your hands to a certain extent, and have become a must-have consumer product for every household. It is reported that the overall scale of China's cleaning appliance industry will grow to 24 billion yuan in 2020 , a year-on-year increase of 20.2% . It is expected that by 2026 , the scale of China's cleaning appliance market will reach 85.2 billion yuan.

In addition to the domestic market, the overseas prospects of small cleaning appliances are also very broad. As there are many pet-keeping families abroad and the penetration rate of household cleaning appliances is high, Chinese small appliance brands are rapidly opening up overseas markets. It is reported that 90% of the global production and manufacturing of sweeping robots are concentrated in China.

In addition, thanks to the mature domestic supply chain system and low product manufacturing costs, the cost-effectiveness of my country's cleaning appliances is much higher than that of overseas companies. It is expected that the market share of domestic brands in overseas markets will further increase in the future.

As an upstream OEM company of cleaning appliances, Suzhou Shangteng Company has maintained close cooperative relations with cross-border sellers such as Shunzao, Dreame, and Anker, which also provides a more reliable guarantee for its future revenue growth.

However, in 2021, Suzhou Shangteng's return on net assets, return on total assets and cost-profit ratio were all negative, mainly due to its relatively small production and sales of previous products, high fixed costs, and operating losses in 2021. However, as Shangteng's sales scale continues to expand, it is expected that future revenue will soon be on track.

At present, Suzhou Shangteng still faces risks such as changes in market demand , excessively high costs, and fierce market competition from similar companies . In the future, it will still need to continuously improve its service system in product development, product supply, after-sales service, etc., enhance its own competitiveness, and actively seize market development opportunities.

With the improvement of residents' living standards, the consumption upgrade brought about by the change of people's consumption concepts and the continuous iteration and upgrading of household cleaning appliance technology, it is expected that the penetration rate of cleaning appliance categories will continue to increase in the future, and Suzhou Shangteng's future development prospects are still very broad.

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