Sales exceeded 500 million in the first three months of this year! Shenzhen's first IPO was approved

As we enter 2022, many cross-border e-commerce companies are developing in a positive direction, with continuous news of financing and listing. Recently, Shenzhen Huabao New Energy Co., Ltd. successfully passed the review .

As a well-known Shenzhen seller in the cross-border e-commerce circle, the company has been developing rapidly in recent years . With the help of the new energy industry, it has created a series of portable energy storage products that meet the needs of consumers. These products continue to be selected as Amazon Best Sellers, contributing to the company's revenue.

IPO passed the review, Huabao New Energy's revenue last year was 2.3 billion

On March 29, the announcement of the 16th review meeting of the Shenzhen Stock Exchange's ChiNext Listing Committee in 2022 showed that the review result was "3 passed 2", among which the initial public offering of Shenzhen Huabao New Energy Co., Ltd. was approved .

In the filing for the meeting, Huabao New Energy mentioned that the issuer's net profit attributable to the parent company's owners in 2020 and 2021 was RMB 231 million and RMB 269 million, respectively. The net profit has been positive in the last two years , and the cumulative net profit is not less than RMB 50 million, therefore meeting the selected listing standards.

It is understood that Huabao New Energy is committed to the research and development, production and sales of lithium battery energy storage products and their supporting products. Among them, portable energy storage products are the company's core products, which can be used in outdoor travel, emergency preparedness and other scenarios.

In recent years , the company's overall development momentum has been good. From 2019 to 2021, Huabao New Energy's revenue was 319 million yuan, 1.07 billion yuan and 2.315 billion yuan respectively.

In 2020 and 2021, Huabao New Energy's operating income grew by leaps and bounds, with year-on-year growth of 235.44% and 116.38% respectively , and net profit increased by 541.43% and 19.46% year-on-year, with net profit growing in tandem with operating income.

It is worth noting that Huabao New Energy's revenue and net profit grew significantly in 2020. The main reason was related to its products. The company's portable energy storage products achieved rapid growth . In 2021, the company's net profit growth rate slowed down , mainly due to factors such as rising material costs and shipping costs.

Just entering April, the " top student " Huabao New Energy has announced its first quarter revenue forecast. The operating income from January to March 2022 is 504 million to 616 million yuan, a year-on-year increase of 25.21% to 53.04% ; the net profit is expected to be 61.2 million to 74.8 million yuan, a year-on-year decrease of 9.07% to 25.60%.

The company also mentioned that the decline in net profit was mainly due to the increase in purchasing prices of major raw materials such as battery cells and the increase in first-mile freight costs due to the impact of the "new crown" epidemic, as well as the company's increased investment in sales and R&D expenses such as product marketing and promotion, new product design and development.

Among the excellent revenue performance, Huabao New Energy's overseas online revenue accounts for a large proportion.

Huabao New Energy adopts a sales model that combines online and offline sales, with online sales as the main focus. During the reporting period, the online sales revenue of the company's main business accounted for 67.83%, 83.53% and 86.85% respectively.

Overall, the company's sales area is mainly concentrated in overseas markets. During the reporting period, the company's overseas sales accounted for 87.27%, 90.09% and 92.55% of the main business income respectively .

Among Huabao New Energy's overseas sales revenue , the United States is one of the company's main sources of income. During the reporting period, the company's main business revenue in the US market accounted for 45.69%, 42.62% and 48.40% respectively.

As a veritable cross-border e-commerce giant, Huabao New Energy has deployed well-known domestic and foreign third-party e-commerce platforms such as Amazon, Japan Rakuten, Japan Yahoo, Tmall and JD.com. The company's main business income is shown in the following table by sales platform:

The company's sales revenue achieved through third-party platforms has increased year by year, accounting for 67.83%, 75.99% and 68.89% of the main business income in 2019-2021 respectively. It has now become the company's most important sales channel.

Among them, the sales revenue of the Amazon platform showed an increasing trend year by year during the reporting period, accounting for 51.81% of the main business revenue in 2021, and is one of the company's main sales channels.

Since 2020, the company's portable energy storage products have continued to be the Best Seller and Amazon's Choice on the Amazon platform, and have won the Japan "Disaster Prevention and Safety Association Recommendation Award" medal for two consecutive years. The company won the 2021 Innovation Brand Award from Amazon Japan.

Focus on portable energy storage products

Huabao New Energy's main product lines include four categories, namely portable energy storage products, power banks, solar panels and related accessories that can be used with portable energy storage products. The company has created two independent brands based on the differences in cultural background and brand awareness of domestic and foreign consumers, of which the "Jackery" brand is aimed at overseas markets and the "Dianxiaoer" brand is aimed at the Chinese market.

In the overall product line, portable energy storage products occupy the most important position. The company's portable energy storage products are widely used, especially in recent epidemics and disaster weather, meeting the needs of many European and American consumers.

For example, portable energy storage products can power smartphones, tablets, drones, projectors, lighting, car refrigerators, rice cookers and other devices, which is just right for outdoor travel scenarios such as self-driving camping, RV travel, fishing, hunting, etc. At the same time, this type of product can solve power shortage problems such as power shortages during disasters, power outages, and emergency rescue , and is suitable for areas prone to natural disasters such as earthquakes, tsunamis, hurricanes, fires, and blizzards .

Of course, portable energy storage products also make a huge contribution to Huabao New Energy's overall revenue. In 2021, the sales of its portable energy storage products reached 1.835 billion yuan.

In the search lists of search engines or e-commerce platforms such as Google, Amazon, Rakuten Japan, Yahoo Japan, Tmall, and JD.com, the company's brand ranks first in the search popularity of keywords for portable energy storage products.

From 2019 to 2021, the proportion of offline sales of portable energy storage products decreased year by year, from 32.37% in 2019 to 14.77% in 2021; however, the proportion of online sales increased year by year, from 63.31% in 2019 to 85.23% in 2021. The transformation from offline to online has effectively increased the sales unit price of the company's portable energy storage products, resulting in a rapid increase in the sales scale of the company's portable energy storage products, which increased from 172,600 units in 2019 to 663,600 units in 2021, with an average annual compound growth rate of approximately 96.10%.

From 2019 to 2021, the company's revenue from solar panels was RMB 15.0335 million, RMB 155 million and RMB 440 million, respectively, with year-on-year growth rates of 933.77% and 182.80% in 2020 and 2021, respectively.

In recent years, Huabao New Energy's solar panel sales revenue has also increased rapidly, mainly because solar panels are supporting outdoor charging equipment for portable energy storage products. As the number of customers of portable energy storage products increases, customer penetration continues to increase, thereby driving the growth of product sales scale, and the sales volume of solar panels has rapidly increased from 11,300 units in 2019 to 316,200 units in 2021.

The revenue of another major product category, power banks, has been declining year by year. The revenues from 2019 to 2021 were 50.0491 million yuan, 10.5612 million yuan, and 19,700 yuan, respectively, and the amount has shrunk year by year. This is because the company adjusted its product structure, proactively cut ODM orders for power banks, and reduced its production capacity, resulting in a year-on-year decline in its revenue.

In addition, the company's other accessories are mainly supporting products such as charging cables, storage bags, and connecting cables. During the reporting period, the revenue from other accessories was RMB 1.9733 million, RMB 10.1409 million, and RMB 24.4727 million, respectively, with year-on-year growth rates of 413.91% and 141.33% in 2020 and 2021, respectively.

The revenue from other accessories in 2020 and 2021 increased significantly year-on-year, mainly due to the significant increase in sales of products such as storage bags and connecting cables that are compatible with portable energy storage products and solar panels.

There are four major categories of products in total, and the sales of three of them have increased significantly year by year. The first category of these three categories is portable energy storage products, and the other two categories are related products. Huabao New Energy's overall product line is highly focused.

Today, relying on its highly focused product line, Huabao New Energy has become an industry-leading portable energy storage brand enterprise, dedicated to the research and development, production and sales of lithium battery energy storage products and their supporting products. The company's core technologies all come from independent research and development.

Huabao New Energy continues to invest resources every year to carry out research and development of new products and new technologies. In recent years, the company's R&D investment has maintained rapid growth, and the annual compound growth rate of the company's R&D expenses during the reporting period reached 167.13%. The company attaches great importance to the introduction and training of R&D technical talents. As of the end of the reporting period, the company had 197 R&D technicians, accounting for 22.93% of the total number of employees.

At present, the company and its holding subsidiaries have obtained 25 domestic and foreign invention patents and 16 computer software copyrights. The company's products have won many awards in the global consumer electronics field, including 2 CES Innovation Awards in the United States, 4 German Red Dot Design Awards, 2 Hannover Industrial (IF) Design Awards, and 4 A'DesignAward & Competition Design Awards.

Gross profit margin remains high, exceeding Anker Innovations in the past two years

Like many big sellers in the industry, Huabao New Energy attaches great importance to marketing. Overseas, it uses online celebrities in the field of outdoor travel to introduce and recommend the "Jackery" brand on social platforms such as Youtube, Facebook and Instagram. The number of clicks on related product promotion videos is high; and it cooperates with well-known American retailers such as Home Depot to enhance the brand's overseas popularity.

So far, Huabao New Energy’s independent brand advantages have become apparent.

In the past two years, Huabao New Energy's portable energy storage products have been continuously selected as Best Seller and Amazon's Choice on the Amazon platform. The company won the "2021 Innovation Brand Award" from Amazon Japan, and its portable energy storage products have been selected for the annual best portable energy storage list of CNET and the New York Times, and have appeared in Forbes, The Wall Street Journal, USA Today and other media, accumulating strong brand influence in the niche field.

At the same time, with the adjustment of product structure, Huabao New Energy's gross profit margin began to increase visibly. From 2019 to 2021, Huabao New Energy's gross profit was 155 million, 600 million and 1.095 billion yuan respectively, and the gross profit margin of its main business was 48.87%, 56.14% and 47.62% respectively.

The main reason for the increase in gross profit margin is the change in product structure and sales channels. During this period, the company's product structure changed from mainly selling power banks to mainly selling portable energy storage products, and from mainly offline ODM corporate customers to mainly online retail customers of its own brands. The intermediate links were reduced to achieve product premium, and the gross profit margin was naturally improved.

Specifically, the fluctuation of Huabao New Energy's gross profit margin is mainly affected by several factors:

1. Changes in sales channels. During the above period, the company's online sales channel revenue accounted for 67.83%, 83.53% and 86.85% of its main business revenue. In 2021, the company's online and offline channel gross profit margins were approximately 50% and 31%, respectively.

2. Adjustment of product structure. Before 2019, the company's main business was ODM sales of power banks. With the development of new products under its own brand, the sales of portable energy storage products as a new product series continued to increase, and the proportion of main business revenue gradually increased to 79.82% in 2021. The unit value of portable energy storage products is higher than that of power banks, and the gross profit margin of high-capacity products is generally higher than that of low-capacity products, thus pushing up the gross profit margin level.

3. Scale effect of sales growth. From 2019 to 2021, the company's sales of portable energy storage products increased from 172,600 units in 2019 to 663,600 units in 2021, with an average annual compound growth rate of approximately 96.10%; during the same period, solar panels increased from 11,300 units to 316,200 units in 2021, with an average annual compound growth rate of 430.09%. This brings about scale effects.

From a product perspective, the gross profit contribution of the company's portable energy storage products has increased rapidly year by year, accounting for 77.84%, 85.91% and 83.00% respectively, becoming the main source of the company's gross profit.

From the perspective of sales platforms, Amazon contributed the highest gross profit, accounting for 54.8%. From 2019 to 2021, the gross profit contribution of Huabao New Energy's different platforms is as follows:

By continuously expanding third-party platforms and selling its own brand products online, Huabao New Energy's sales and gross profit have grown rapidly, and the proportion of online gross profit has increased. Since 2020, its brand official website has started to sell to the outside world in a self-delivery mode, becoming an important supplement to the online sales model.

During the listing application process, high gross profit margins have always been a focus of attention. Huabao New Energy compared its gross profit margin with that of related products of comparable listed companies in the same industry, such as Anker Innovations and Xinghui Shares.

In 2020 and 2021, with the increase in the proportion of online sales, Huabao New Energy's gross profit margin was higher than that of Anker Innovations.

The products of Huabao New Energy and Anker Innovations both have high added value and relatively high gross profit margins. However, in terms of production model, the former adopts "production based on sales", has independent production capacity, guaranteed delivery capacity, and higher gross profit margins; Anker Innovations adopts the supply model of "independent R&D design + outsourcing production". Since it has no independent production capacity, its delivery capacity is relatively weaker than the former.

In addition, due to factors such as the fact that the gross profit margin of portable energy storage products is generally higher than that of power bank products, in 2020 and 2021, Huabao New Energy's gross profit margin was higher than that of Anker Innovations.

In addition, with the increase in the proportion of online sales of portable energy storage products, Huabao New Energy's gross profit margin for portable energy storage products has been higher than that of Xinghui Shares since 2019.

To a certain extent, its core products also have shortcomings. Portable energy storage products are still in the early stages of industry development, with low product penetration. In addition, due to the limited number of companies in the industry and their small scale, it is difficult to form large-scale market education. This requires it to use more promotion and marketing scenarios for marketing, thereby increasing market penetration.

Fortunately, the prospects for portable energy storage-related products are very promising.

The industry is booming, and the portable energy storage market has great potential

Due to the reduction in cost and continuous breakthroughs in technical performance, lithium batteries have been commercialized and applied on a large scale worldwide. According to statistics from Markets and Markets, the global lithium battery market size will reach US$44.2 billion in 2020 and will grow to nearly US$94.4 billion by 2025, with a compound growth rate of 16.4%.

Among them, portable energy storage products are green, environmentally friendly, safe and portable. They can be widely used in outdoor activities and household emergency backup power supplies, and are attracting increasing attention.

According to the report data of the China Chemical and Physical Power Sources Industry Association, the market size of the global portable energy storage industry has rapidly increased from 60 million yuan in 2016 to 4.26 billion yuan in 2020, with an average annual compound growth rate of 190.28%. It is estimated that by 2026, the market size will reach 88.23 billion yuan, and the average annual compound growth rate will remain at 65.72%. The portable energy storage industry will continue to maintain a rapid growth trend, and the market development potential is relatively large.

(Data source: China Chemical and Physical Power Industry Association )

In developed countries such as Europe and the United States, the popularity of outdoor activities is relatively high. In their spare time, people tend to choose outdoor activities such as outdoor travel, camping, fishing, etc. The number of participants and the frequency of participation in related outdoor activities are relatively high, and there is a large market demand for supplies and equipment related to outdoor sports.

Take the United States as an example. According to statistics from the authoritative outdoor portal Outdoor Foundation, the population participating in outdoor activities each year in the United States has remained above 48% all year round. When the "new crown" epidemic broke out in 2020, many places in the United States successively launched epidemic prevention and control restrictions, including closing indoor venues, theme parks and other entertainment facilities, and prohibiting large-scale gatherings. These measures have further promoted the popularity of outdoor activities in the United States.

According to statistics from the American Outdoor Association ( OIA), the number of people participating in outdoor sports and the participation rate in the United States have continued to grow in recent years. In 2020, the number of residents in the United States who actively participated in outdoor sports reached 161 million, and the participation rate in outdoor sports also increased from 49% in 2017 to 53% in 2020.

The demand for off-grid electricity in outdoor activities is gradually being stimulated, and the market demand for portable energy storage products is constantly increasing.

On the one hand, due to the popularity of community platforms such as short videos, self-media and life sharing, more and more outdoor activity participants are willing to use mobile phones, cameras, DVs, drones and other shooting devices to record their outdoor activity scenes and share them with others, and even directly share their outdoor experiences anytime and anywhere through outdoor live broadcasts;

On the other hand, the concept of sophisticated camping is gradually becoming popular in the outdoor camping circle. Therefore, people are willing to carry electrical appliances for lighting and cooking when camping outdoors to improve the quality of camping life. As the electronic equipment and electrical appliances required for outdoor activities increase, this provides growth space for portable energy storage products.

In addition, due to global climate change, natural disasters have become more frequent in recent years, seriously affecting the stability of global power supply. People's awareness of disaster prevention and preparedness has been continuously enhanced, and emergency backup power supplies have gradually become an important emergency backup product in family life.

Driven by these factors, the overall market size of portable energy storage products has grown rapidly.

According to Statista's statistics and forecast data, the size of the US outdoor sports products e-commerce market reached US$35.1 billion in 2020, a year-on-year increase of 38.38%, and is expected to reach US$52.5 billion in 2025; the size of the European outdoor sports products e-commerce market reached US$20.7 billion in 2020, a year-on-year increase of 25.7%, and is expected to reach US$31.2 billion in 2025.

In addition, as the COVID-19 pandemic continues, people have developed the habit of online shopping. In the future, global retail e-commerce sales will continue to increase. It is estimated that global retail e-commerce sales will reach 6.39 trillion US dollars in 2024, accounting for 21.8% of the total retail sales. Overseas companies such as Huabao New Energy can also benefit from this major trend.

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