With over 580,000 SKUs on sale, Santai Shares suspends its IPO!

Under the influence of the epidemic, the cross-border e-commerce industry has ushered in rapid development. Coupled with the country's strong support for cross-border e-commerce, a large number of Chinese companies have embarked on the road of brand expansion overseas. During the overseas journey, cross-border sellers gradually developed their own strength and eventually embarked on the capitalization process and sought to go public.

Cross-border e-commerce giant San Tai also applied for an IPO in June last year , but its road to listing was not smooth. On March 30, the review status of San Tai's GEM IPO was changed to "suspended".

San Tai shares suspend IPO

According to data from the Shenzhen Stock Exchange, Santai Co., Ltd. plans to raise 803 million yuan this time , and the sponsor is CITIC Securities Co., Ltd.

On March 30, 2022, due to the issuer and the sponsor updating their financial information and voluntarily applying to suspend the issuance and listing review procedures, in accordance with the relevant provisions of Article 64 of the "Shenzhen Stock Exchange ChiNext Stock Issuance and Listing Review Rules", the Shenzhen Stock Exchange suspended its issuance and listing review.

Cross-border sales of San Tai shares business model

Shenzhen is a place where cross-border e-commerce sellers gather. San Tai Co., Ltd. is one of these cross-border enterprises. One difference is that San Tai Co., Ltd. has been focusing on export cross-border e-commerce retail business since 2007, and also derived export cross-border e-commerce logistics business in 2009 .

The operating model of Santai Co., Ltd.'s export cross-border e-commerce retail business includes new product development model, procurement model, sales model, warehousing model, logistics model, promotion model, etc.

It is reported that the cycle of developing a new product for San Tai Co., Ltd. is 3-7 days. In 2020, its product development team can develop more than 200 new products on average every day. Its procurement model can be divided into online procurement and offline procurement. Online procurement is mainly carried out through the 1688 platform. In addition to online procurement, San Tai Co., Ltd. has also established stable cooperative relationships with many suppliers with good relationships, and there are more than 10,000 active suppliers. At present, it has about 580,000 SKUs on sale , with nearly 100 subcategories.

In terms of sales model, Santai Co., Ltd. mainly relies on overseas third-party e-commerce platforms, and sells various Chinese-made products to end consumers around the world in a B2C manner through platforms such as eBay, Amazon, AliExpress, Wish, Lazada, Shopee, etc.

In terms of warehousing and logistics model, San Tai Co., Ltd. has established a complete warehousing and logistics system based on its own warehousing and logistics system and relying on its own warehouses in China. In addition, San Tai Co., Ltd. has also independently developed a transportation center system that can achieve API docking with the warehousing system and automatically configure the best logistics plan by synchronizing order information to the logistics system. San Tai Co., Ltd. mainly sends goods to overseas consumers through third-party logistics channels, such as international postal services and international dedicated lines.

With the vigorous development of the cross-border e-commerce industry, the demand for export cross-border logistics is also growing. In order to meet the diverse logistics needs of cross-border sellers, San Tai Co., Ltd. has established a solid cooperative relationship with carriers, freight forwarders, customs clearance companies and other suppliers in the industry, and launched a series of fast, efficient and safe international dedicated lines, international postal services, commercial express delivery and other services.

According to the prospectus of Santai Shares, its business model is in line with the current operating conditions, and there are no factors that may lead to major changes. It is expected that the company's business model will not change significantly in the short term. At the same time, Santai Shares will continue to pay attention to and study the development trends of the industry and continue to optimize the existing business model.

Revenue of San Tai Shares

Under the business model of simultaneous development of commodity sales and warehousing and logistics services, Santai’s revenue data is also very gratifying. In the past two and a half years, its revenue has been close to 5 billion!

According to the prospectus data of Santai Co., Ltd., during the reporting period from 2018 to the first half of 2021, its main business revenue was 1.215 billion yuan, 1.567 billion yuan, 1.994 billion yuan and 1.229 billion yuan, respectively, and its net profit was 161 million yuan, 153 million yuan, 214 million yuan and 98 million yuan, respectively.

Among them, from the perspective of main business, about 70% of San Tai's revenue comes from the sales of goods in the export cross-border e-commerce retail business. During the reporting period, its commodity sales revenue was RMB 911 million, RMB 1.23 billion, RMB 1.391 billion and RMB 963 million, accounting for 76.29%, 78.81%, 69.78% and 78.39% of the main business revenue respectively.

At the same time, the logistics and warehousing revenues during the reporting period were RMB 283 million, RMB 331 million, RMB 602 million and RMB 265 million, respectively , accounting for 23.71%, 21.18%, 30.21% and 21.59% of the main business, respectively.

The comprehensive gross profit margin during the reporting period mentioned in Santai Co., Ltd.'s prospectus is also higher than that of comparable companies in the same industry. This led the Shenzhen Stock Exchange to analyze the reasons and rationality for the continued higher gross profit margin of its commodity sales business than other cross-border e-commerce companies, and whether there is a risk of a substantial decline in the gross profit margin.

Comprehensive layout of multiple platforms and balanced development

San Tai shares' layout strategy in e-commerce platforms is the same as that of most cross-border enterprises, with multi-channel and multi-platform layout. Amazon and eBay are the main sources of income for its merchandise sales business, and it also conducts sales activities on other platforms such as AliExpress, Shopee, Wish and Lazada.

As can be seen from the above figure, during the reporting period, the sales revenue of Santai Co., Ltd.'s commodity sales business on various platforms showed an overall fluctuating upward trend. Among them, the platforms with the largest changes in sales revenue and proportion are mainly Shopee platform, AliExpress platform and Lazada platform.

Due to the impact of the global epidemic on product delivery, San Tai's revenue on the Amazon platform decreased by 31.22% in 2020. This situation improved from January to June 2021. As the negative impact of the epidemic weakened, its sales on the Amazon platform recovered. This sales change trend is consistent with comparable companies in the same industry.

In comparison, the sales revenue of San Tai Co., Ltd. on the eBay platform has increased overall, but the overall revenue share has decreased. The reason for this phenomenon is that San Tai has made relatively greater efforts in expanding emerging e-commerce platforms. The rapid rise of e-commerce platforms such as Lazada and Shopee, which are mainly oriented to Southeast Asia, and the rapid increase in revenue of global platforms such as AliExpress have led to a passive decline in the revenue share of the eBay platform.

As for the Wish platform, San Tai's share of the platform increased from 2018 to 2020. The reason is that while consolidating its sales on Amazon and eBay, it increased its investment in the Wish platform and reduced its dependence on the former. From January to June 2021, its benefits on the Wish platform were low, and the corresponding investment was reduced.

San Tai Co., Ltd. focuses on cross-border e-commerce export business, adheres to software and data technology as the basis, and is committed to improving the efficiency of cross-border trade by establishing an e-commerce ecosystem. This time, due to the update of financial information by the issuer and the sponsor, San Tai Co., Ltd. took the initiative to apply for suspension of the issuance and listing review procedures. I believe that after updating the relevant information, it will appear in everyone's field of vision again.

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