Walmart's sales of 1.6 billion a year increased by 60%

Mainly engaged in garden machinery products, more than 90% of the products are sold to Europe and the United States

According to relevant information, Daye Co., Ltd. was established in 2006 and is headquartered in Yuyao City, Zhejiang Province. It is a garden machinery design and manufacturing company. The company's main products are lawn mowers, in addition to lawn mowers/brush cutters, and other power machinery (snow sweepers, grass combers, micro-tillage machines, leaf suction blowers, etc.). According to the power source, its products can be divided into gasoline-powered, AC-powered, and lithium-powered.

Image source: Daye shares official website

It is understood that more than 90% of the company 's products are sold abroad, mainly in Europe and the United States. Its main customers include international brands or retailers such as Walmart and Home Depot. It owns its own brands such as "MOWOX" and "Green Machine".

Daye Co., Ltd.'s revenue growth and market layout are closely related to the current market situation of garden machinery.

Affected by factors such as the development of the world economy, the growth of population and the number of households, and the popularization of gardening culture, the demand for garden machinery has maintained a steady growth trend. According to the Freedonia report, the global market for garden machinery products was US$25.08 billion in 2020, and it is expected that by 2030, the global market will reach US$30.9 billion, with a compound annual growth rate of 2.11%. Among them, the compound growth rate of lithium-powered garden machinery will reach 6.65%, which is the main growth driver of the garden machinery product market.

In developed countries, the development of the garden machinery industry is relatively mature, and Europe and the United States are the main consumer markets for garden machinery. For example, in the UK, more than 90% of households have private gardens.

Annual revenue of 1.6 billion, net profit down 27.61% year-on-year

In 2021, Daye achieved annual revenue of 1.607 billion yuan, an increase of 60.52% over the previous year, and net profit attributable to the parent company was 55.5229 million yuan, a decrease of 27.61% over the previous year. The financial report stated that the company's short-term profit decline was mainly affected by factors such as the sharp increase in global freight rates, the appreciation of the RMB, the increase in labor costs, and the increase in raw material prices.

The financial report shows that in 2021, Daye Group's revenue in the garden machinery industry reached 1.604 billion yuan, accounting for 99.85% of the total revenue; the sales volume of garden machinery industry products reached 1.546 million units, a year-on-year increase of 54.68%, and the revenue of its single products increased slightly.

By product, the company's main revenue comes from lawn mowers: revenue exceeded 1.283 billion yuan, accounting for 79.9% of the total revenue. By region, Daye's overseas revenue in 2021 was 1.517 billion yuan, accounting for 94.43%.

Among the company's expenses (excluding operating costs), the largest expenditure is sales expenses, which increased by 63.18% to 58.1 million yuan compared with last year, mainly due to overseas business expansion, increased salaries of sales staff, warehouse rental fees, and increased advertising investment. Financial expenses grew the fastest, increasing by 252.1% over last year, mainly due to exchange losses caused by exchange rate fluctuations, increased borrowing amounts, and more interest payments.

During the reporting period, the company's R&D investment was 49.3919 million yuan, accounting for 3.07% of operating income, an increase of 4.36% from 2020. The company has 195 R&D personnel, accounting for 14.54% of the company's total number of employees.

The main subsidiaries of Daye Group include Lingyue Intelligent, Daye North America, and Daye Thailand, but according to the financial reports, the profitability of these three subsidiaries is not optimistic. Among them, Lingyue Intelligent's net profit was -1.1032 million yuan, Daye North America's net profit was -43.6413 million yuan , and Daye Thailand's net profit was -13,100 yuan.

However, considering that Daye North America's main business is the sales and after-sales service of the company's products in North America, the large losses are understandable.

In addition to Daye Co., Ltd., there is another leading garden machinery company in China that mainly focuses on the European and American markets - Greebo (Jiangsu) Co., Ltd. (hereinafter referred to as "Greebo").

Net profit drops by 50%, Greebo plans to raise 3.4 billion yuan on the GEM

According to the Shenzhen Stock Exchange website, Greebo, which has been striving to go public since 2021, plans to raise 3.456 billion yuan on the Growth Enterprise Market on April 29 (this Friday).

It is understood that the company has been engaged in the research and development, design, production and sales of new energy garden machinery since 2007. Its products mainly include lawn mowers, grass trimmers, cleaning machines, hair dryers, pruning machines, chain saws, smart lawn mowing robots, and smart riding lawn mowers.

Its main customers are large American supermarkets such as Lowe's, Amazon, Walmart, and Home Depot. At the same time, Greebo products are also sold on large e-commerce platforms such as Amazon. The product links of its own brand Greenworks have also been the top seller in the Amazon "lawn mowers and outdoor power tools" category for many years.

Recently, Greebo also released its 2021 annual report. Data showed that the company's operating income in 2021 exceeded 5.003 billion yuan, a year-on-year increase of 16.6%, but its net profit fell by 50.72% year-on-year to 236 million yuan (in contrast, the company's net profit in 2020 increased by 267.46% year-on-year to more than 404 million yuan). The main reason is that the average sales price of new energy garden machinery, which contributes nearly 70% of Greebo's main business income, has fallen from 745.31 yuan in 2020 to 630.06 yuan in 2021, a year-on-year decrease of 15.46%.

At the same time, Greebo's revenue and profit development trends in the first quarter of 2022 also showed year-on-year revenue growth and year-on-year profit decline. Data showed that the company expects to achieve main business revenue of 1.59 billion yuan in January-March 2022, a year-on-year increase of 5.52%, and an estimated net profit attributable to the parent company's owners of 140 million yuan, a year-on-year decrease of 28.57%.

As both companies focus on garden machinery products, Daye Holdings and Greebo have a high degree of overlap in products, markets and sales channels, but their revenues and profits vary greatly, and their business models are also quite different.

Although both companies saw an increase in revenue and a decrease in profits in 2021, the main reasons for their profit decline were different: Greebo was due to product price cuts, and Daye shares were due to increased costs.

At the same time, both companies also have a common risk: high customer concentration. In 2021, Greebo's top five customers accounted for 63.16% of its operating income, and Daye's top five customers accounted for 69.93% of its operating income. Although this is related to the high concentration of terminal sales channels in the garden machinery market in the United States, it is undeniable that changes in the sales of major customers will have a significant impact on the company's revenue.

However, compared with the two, Daye's status as a supplier is more "pure". It mainly adopts the ODM sales model. The company only began to gradually implement the promotion of its own brands such as "MOWOX" and "Green Machine" last year, and its brand awareness is relatively low. In addition to its status as a supplier, Greebo's layout of its own-brand products on e-commerce platforms such as Amazon has begun to show results. In 2021, the sales revenue of its own-brand products accounted for 56.97%, which has become the company's main source of income.

At present, Greebo is about to go public. Can Greebo continue to widen the gap with its competitors after the financing is completed? It requires further observation.

Garden machinery products

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