With a net profit of 20 million in the first quarter, the parent company of Jiazhilian has delivered its answer sheet!

As big sellers handed in their first-quarter results for 2022, Xunxing Co., Ltd., the parent company of Jiazhilian, also released its performance report, with both its operating income and net profit showing an upward trend.

Xunxing shares' net profit exceeded 10 million in the first quarter of 2022

The financial report shows that in the first quarter of 2022, Fujian Xunxing Zipper Technology Co., Ltd. (hereinafter referred to as "Xunxing Co., Ltd.") had an operating income of 474 million yuan, an increase of 24.71% compared with the same period last year, of which cross-border e-commerce business increased by 23.46% year-on-year ; the net profit attributable to shareholders of listed companies was 20.2961 million yuan, an increase of 16.48% compared with the same period last year.

Among them, operating costs in the first quarter of 2022 reached 300 million yuan, an increase of 26.6% compared with the same period last year , higher than the 24.7% increase in operating income, resulting in a 0.9% decrease in its gross profit margin.

In contrast, Xunxing 's 2021 financial report showed that its operating income was 2.262 billion yuan and its net profit attributable to shareholders of listed companies was 126 million yuan. Among them, the cross-border e-commerce business achieved operating income of 550 million yuan, but the profit was a loss of 9.8891 million yuan. In addition, due to the recognition of 192 million yuan in performance compensation for the acquisition price chain in 2020, the net profit attributable to the parent company's owners decreased by 37.05% year-on-year.

For Xunxing Co., Ltd., its revenue in 2021 is also affected by the acquisition of Jiazhilian. Xunxing Co., Ltd. stated that because Gan Qingcao and Zhu Ling concealed their property, fled abroad, and refused to execute the effective ruling , except for the 129 million bank deposits that have been executed, the 31.337% Jiazhilian equity pledged to the company, and the 2,126,036 shares of the company held by Gan Qingcao that were sealed and frozen by the Chongqing Public Security Bureau, the company does not have other property information of the performance compensation party, which constitutes an obstacle to further execution.

As for Xunxing Co., Ltd.'s business, its cross-border e-commerce sector is mainly owned by its subsidiary Jiazhilian. All products sold under its subsidiary are self-owned brands. Its products cover household goods, health and beauty, 3C electronic products, automotive peripherals and other products. The products are mainly sold to the United States, Europe, Japan and other regions through third-party platforms such as Amazon and Shopify independent stations .

In 2021, Jiazhilian achieved online sales revenue of 521 million yuan through third-party sales platforms , an increase of 49.80% over the same period last year. The revenues from home furnishings, beauty, 3C, automotive peripherals and other products were 105 million yuan, 168 million yuan, 171 million yuan, 55 million yuan and 21 million yuan respectively, accounting for 20.21%, 32.34%, 32.8%, 10.56% and 4.09% of the total annual e-commerce business revenue respectively.

It is worth noting that in 2021, Jiazhilian's logistics expenses on the first and second legs were 6,584.92 yuan. In addition, since more than 30% of the company's inventory is stored in Amazon FBA warehouses and 70% of its inventory is stored in temporary turnover warehouses in the UK, Japan, etc., it incurred storage costs of up to 12.4158 million yuan in 2021.

Although warehousing costs have resulted in profit losses in its cross-border e-commerce segment, as a long-standing and popular brand, Jiazhilian's successful methods are still worth learning from.

Earlier, Jiazhilian set up a supply chain procurement department, which is mainly responsible for the purchase of goods and packaging materials, the payment of purchases, and the maintenance of supplier relationships, to ensure that Jiazhilian purchases products on time and smoothly . Secondly , it is to prepare stocks in advance according to market conditions through small batches and multiple batches .

In addition, PriceChain also collects massive amounts of information through big data for data mining to discover best-selling products. Based on the SAP HANA system, PriceChain has established a dynamic self-repairing sales forecast model and inventory allocation model to continuously improve inventory turnover efficiency.

It is understood that Jiazhilian mainly purchases household products and electronic products, and the purchasing model is mainly divided into planned purchasing, new product purchasing and sporadic purchasing. Among them, planned purchasing is mainly for hot-selling products on the platform. The purchasing department analyzes purchasing needs and prepares stocks based on the historical sales of products and user clicks ; new product purchasing is accurately selected by big data, and the new product department conducts research on new products, and suppliers cooperate to optimize and customize products; sporadic purchasing is targeted purchases from suppliers after users place sales orders .

With revenue exceeding 1.7 billion yuan, zipper business has become the backbone of Xunxing Co., Ltd.

As for Xunxing Co., Ltd., its main operating income does not come from Jiazhilian. As a company specializing in the research and development, production and sales of zippers, precision molds, metal and plastic stamping castings, Xunxing Co., Ltd. has five major production bases in Fujian, Shanghai, Tianjin, Chengdu and Dongguan.

The company mainly sells various zippers of metal, nylon and plastic steel series, various types of zippers, sliders and zipper accessories of various specifications and models, etc. Its "SBS" brand enjoys a high reputation in the industry, and its products are exported to more than 70 countries and regions in Europe, America, the Middle East, Africa and Southeast Asia , and it has established long-term and stable cooperative relations with many well-known domestic and foreign brands .

There is no doubt that as another main business of Xunxing Co., Ltd., the achievements of the zipper business cannot be underestimated.

In 2021, the zipper business contributed more than 70% of Xunxing's revenue, with operating income of 1.712 billion yuan, an increase of 40.95% compared with 2020; the total profit was 147 million yuan, a year-on-year decrease of 46.48%. In the first quarter of 2022, the operating income of the zipper business increased by 25.07% year-on-year.

In terms of products, strip zippers contributed the most, with operating income of 1.106 billion yuan , followed by code zippers, with operating income of 276 million yuan; sliders, fine buckles and other businesses followed.

As for the company's zipper business, its strip zippers mainly adopt an order-based production model. The company makes samples based on customer orders and arranges production after customer confirmation. The production of code-mounted zippers is mainly based on the production plan formulated at the beginning of the year, and is adjusted every quarter according to market conditions. Buttons are mainly purchased from outside, and the company is responsible for the design and quality control of some molds.

Generally speaking, the company will produce a small amount of conventional products as inventory based on market forecasts, production capacity and inventory status to increase delivery speed, give full play to production capacity and improve equipment utilization.

As a supporting sub-industry of the textile and garment industry, the zipper industry has benefited from the development of the garment industry, and consumer sentiment has also rebounded significantly. According to data from the National Bureau of Statistics, in 2021, the industrial added value of enterprises above designated size in China's garment industry increased by 8.5% year-on-year, an increase of 17.5 percentage points year-on-year from 2020; enterprises above designated size completed a garment output of 23.541 billion pieces, an increase of 8.38% year-on-year.

In addition, with favorable factors such as the control of the epidemic in Europe and the United States, the recovery of external demand and the return of orders from Southeast Asia, China's clothing exports maintained rapid growth in 2021. According to statistics from China Customs, China's clothing (including clothing accessories) exports in 2021 were US$175.83 billion, a year-on-year increase of 24.4%, once again breaking the US$170 billion mark. Benefiting from this, China's zipper industry grew by 25%-30% compared with 2020 and 5% compared with 2019.

There is no doubt that the development of the clothing industry is driving the recovery of the zipper business. Coupled with the support of cross-border e-commerce business, Xunxing Co., Ltd. may usher in new development.

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