Another cross-border blockbuster successfully launched!

Suzhou Oushen Electric Co., Ltd. is one of the leading domestic manufacturers of air power equipment and cleaning equipment with comprehensive advantages. It holds many invention patents and is a key enterprise in Jiangsu Province.

On April 22 , Oushen Electric was listed on the Shenzhen Stock Exchange's Growth Enterprise Market with an issue price of 21.33 yuan per share . After many twists and turns, Oushen Electric's successful listing is bound to bring a new round of rapid development opportunities to the company.

After two suspensions of listing review, Oushen Electric finally went public

Yi En Jun learned that the sponsor of Oushen Electric's listing was Zhongtai Securities Co., Ltd., and the joint lead underwriter was Minsheng Securities Co., Ltd. Its road to listing was not smooth, but after two suspensions, it was finally successfully listed.

On November 23, 2020, due to the update of financial information by the issuer and the sponsor, Ousheng Electric voluntarily applied to suspend the issuance and listing review procedures ; on February 22, 2021, the financial information update was completed and the listing review was resumed.

On September 30, 2021, Ousheng Electric suspended its listing review again because the financial information recorded in the IPO application documents had expired and needed to be supplemented and submitted; on December 7, 2021, the financial information was updated and the listing review was resumed.

After two updates of its financial information, Oushen Electric was successfully listed on the Shenzhen Stock Exchange.

Oushen Electric's sales area is relatively concentrated, with sales to the United States accounting for more than 80% of its revenue during the reporting period, and Oushen's small air compressors and wet and dry vacuum cleaners were subject to a 25% tariff. After Oushen Electric's IPO was approved on September 23, 2021, the GEM Listing Committee also raised some questions to Oushen.

This includes asking the issuer to explain the impact of the additional tariffs on the issuer's ability to continue operating in light of changes in the sales volume, unit price, product structure and customer structure of relevant products, and to explain the issuer's response measures in light of the development trend of Sino-US trade relations.

Mainly engaged in cross-border business, Oushen Electric has a bright future

Ousheng shares is a manufacturer of air power equipment and cleaning equipment, with its main products being small air compressors and wet and dry vacuum cleaners. Its products are mainly sold to overseas markets such as North America and Europe, with overseas sales accounting for more than 99% of its revenue .

Since its establishment, Ousheng Co., Ltd. has been focusing on the technical research of small air compressors and wet and dry vacuum cleaners, accumulating a solid technical foundation and gradually establishing the company's leading position in the industry.

According to the financial report data disclosed by Ousheng Co., Ltd., its operating income in 2021 was 1.315 billion yuan, a year-on-year increase of 32.61%, and the net profit attributable to shareholders of the listed company was 116 million yuan, a year-on-year decrease of 15.41%.

In the first quarter of 2022, Ousheng Co., Ltd.'s operating income was 325 million yuan, a year-on-year decrease of 3.09%, and the net profit attributable to shareholders of the listed company was 37.39 million yuan, a year-on-year decrease of 2.12%.

It is reported that the fluctuations in Ousheng’s operating performance are mainly affected by factors such as the decline in the average exchange rate of the US dollar, the rise in prices of bulk commodity raw materials, and the rise in overseas shipping costs. If unfavorable factors such as rising raw material prices and exchange rate fluctuations continue to exist in the future, the company will face the risk of a decline in operating performance.

In terms of sales model, Ousheng Co., Ltd. has adopted targeted and diversified sales models such as ODM model, brand licensing model, OEM model, and OBM model based on the different sales characteristics of domestic and export businesses, and comprehensively considered factors such as the characteristics of the target market and the effect of independent brand promotion .

Through diversified sales models, Ousun has established stable and good cooperative relationships with many world-renowned retailers. Its main customers include Lowe's, Home Depot, Amazon, Costco, Canadian   Tire   Corporation, Wal-Mart, etc.

In addition to stable overseas sales channels, Oushen shares also has a wide range of overseas customer groups. It is reported that Oushen shares' export products are mainly sold to the United States, Europe and other places. Europe and the United States have a high degree of acceptance of small air compressors and wet and dry vacuum cleaners, and have become the main consumption areas of such products.

While consolidating the European and American markets, Ousheng Co., Ltd. is also vigorously expanding mid-to-high-end markets in Asia, Latin America, Australia and other countries. Its overseas marketing network is widely distributed in more than 20 countries and regions around the world , forming retail terminals covering the world's major small air compressor and wet and dry vacuum cleaner consuming countries and regions.

Through the optimization of product structure and the improvement of product quality, the export sales of Ousun shares have maintained a good growth trend. According to statistics from the Information Center of the General Administration of Customs of China, the export volume of wet and dry vacuum cleaners of Ousun shares accounts for about 1% of the total domestic vacuum cleaner exports , of which the export volume of wet and dry vacuum cleaners to the United States and Canada accounts for about 2% of the total domestic vacuum cleaner exports to the United States and Canada, and this proportion is showing an upward trend.

At the same time, the national industrial policy has also provided policy support to the household cleaning appliances and small air compressor industries in terms of taxation, expanding demand, and brand building. Coupled with the continuous improvement of consumers' requirements for living environment and quality of life, it is expected that the small air compressor and wet and dry vacuum cleaner market will continue to maintain a good development momentum.

Although Oushen Electric currently has good development prospects, there are still certain risk factors in its business operations and listing.

Analysis of Risk Factors of Oushen Electric's Listing

For enterprises, normal operation and listing are both risky, and the same is true for Oushen Electric. The risks it faces can generally be classified into market risk, operational risk, financial risk, innovation risk, technical risk, internal control risk and legal risk.

In terms of market risk, trade friction is a factor that cannot be ignored, and the Listing Committee has paid attention to this issue. Oushen's export products are sold to overseas markets such as North America and Europe, with the United States as the export destination. From January to June 2021, Oushen's sales to the United States accounted for 86% of its main business income.

The US government has imposed import tariffs on Chinese goods. In the future, US customers may demand lower sales prices or reduce the amount of product purchases, which may affect the sales of Ousun products in the United States. Ousun may face risks such as a decline in the scale of exports to the United States, rising costs, and a decline in gross profit margins.

At the same time, the outbreak of the COVID-19 pandemic has had a certain impact on Oushen Electric's raw material procurement and timely delivery of orders. Although the home quarantine restrictions under the pandemic have increased the overseas market's market demand for domestic small air compressors and wet and dry vacuum cleaners and other household tool products to a certain extent, with the relaxation of policies in Western countries and the resumption of work and production, the purchase of Oushen products will also be reduced.

In addition, Osun Electric's customers are relatively concentrated. Its main customers include Lowe's, The Home Depot, Amazon, Costco and Walmart. During the reporting period, Osun's sales revenue to the top five customers accounted for a high proportion of its operating income, basically above 70%. If the demand from major customers decreases in the future, it will have an adverse impact on Osun's business scale and operating performance.

In addition to the above factors, changes in e-commerce platform policies and requirements, as well as changes in market labor, raw material prices and shipping costs are all potential risk factors for operations.

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