Single product sold 460 million in half a year, another Zhejiang hot seller listed

On February 18, Zhejiang Biyi Electric Appliance Co., Ltd. (hereinafter referred to as " Biyi Shares ") was officially listed on the main board of the Shanghai Stock Exchange, and the first air fryer stock embarked on a new journey. After listing on the A-share market, Biyi Shares' development speed seemed to have accelerated, and its market value increased by 100% in a few days . The outstanding performance has impressed many industry insiders.

In recent years, as consumers' demand for small household appliances continues to grow, the market share of small kitchen appliances has also grown visibly.

3.98 million units sold in one year , air fryer becomes a "money-making tool"

Biyi Co., Ltd. was established in 2001. As a high-tech enterprise with the core business of designing, manufacturing and selling small heating kitchen appliances such as air fryers, air ovens, deep fryers, and grills , Biyi Co., Ltd. has exported its products to many countries and regions around the world and gained a good reputation.

Biyi started exporting deep fryers two years after its establishment, and successfully developed air fryers in 2015 and began selling them. Biyi is still moving forward on the "road of new products", and launched and sold air ovens again in 2018.

As an enterprise mainly based on ODM/OEM model, Biyi’s products have been sold to many countries in the world, including the United Kingdom, the United States, Colombia and more than 70 other countries and regions.

At present, the company has launched representative products such as grills, air ovens, air fryers, deep fryers, etc., among which air ovens and air fryers are its flagship products.

The company's main business revenue also mainly comes from air ovens, air fryers and deep fryers. Data shows that in the first half of 2021, the sales revenue of air ovens, air fryers and deep fryers accounted for 15.46%, 60.96% and 15.41% of the main business revenue respectively . Judging from the data, the sales of air fryers alone accounted for more than half.

In 2020, Biyi Co., Ltd. sold a total of 3.89 million air fryers , 2.06 million deep fryers , and nearly 600,000 air ovens.

The popularity of products is a key factor in profit growth. The prospectus shows that the company achieved operating income of 1.206 billion yuan from January to September 2021, a year-on-year increase of 57.10% ; the net profit attributable to the parent company's shareholders after deducting non-recurring gains and losses was 83.0729 million yuan, a year-on-year increase of 22.21%. One of the reasons for the data growth is the substantial increase in Philips orders.

It is understood that Biyi shares cooperated with Bear Electric and Philips in 2020, and the order volume soared. It was precisely because of the large-scale supply of Philips in September 2020 that the company's revenue in the fourth quarter of 2020 achieved a significant increase. It is worth mentioning that SharkNinja, a big brand of Amazon air cauldron, is also one of Biyi shares' customers.

It was reported that on March 7, Biyi shares opened down 5% and closed at 22.88 yuan as of 11:30.

In an announcement recently released, Biyi shares stated that the company's current production and operation activities are normal, there have been no major adjustments to the market environment and industry policies, there have been no significant fluctuations in production costs and sales, and the internal production and operation order is normal.

Although the growth rate of Biyi shares is obvious to all, and the potential of small kitchen appliances is unquestionable, compared with the 44% increase in Biyi shares on the first day of listing, some industry insiders can't help but question whether it will be the "peak" on the first day, and how much room will the stock price have in the future?

The debt ratio has exceeded 70% for four consecutive years, and the gross profit margin of Biyi shares has been squeezed

With the rapid development of the stay-at-home economy, small kitchen appliances are rising against the trend. Biyi shares has rapidly increased sales by relying on heating kitchen appliances such as air fryers and air ovens. However, for Biyi shares, which mainly engages in OEM and whose own brand is in the initial development stage, hidden worries are gradually emerging.

Comparing the data of Biyi Shares in the past two years, its rapid growth in operating income is inseparable from the increase in orders from its main customer Newway brand , but as of now, its main customer Newway accounts for only about 13% of its operating income. In addition, the order volume of some major customers of Biyi Shares showed a downward trend in the first half of 2021, and future market changes are very likely to have an impact on Biyi Shares.

As far as the small home appliance market is concerned, the technical threshold is low and there are many OEM companies, so Biyi shares do not have much say in the brand. Data in the prospectus show that Biyi shares' accounts receivable once soared, from 68.48 million yuan in 2018 to 290 million yuan in the first half of 2021, accounting for 38.1% of its operating income in the first half of 2021, and the increase in accounts receivable was higher than the increase in operating income.

Moreover, Biyi's debt ratio has been above 70% for four consecutive years, far higher than the industry average. From 2018 to the first half of 2021, the debt ratios were 75.789%, 74.71%, and 72.68%, respectively. In 2020, when Biyi's liquidity coefficient was only 0.98, it had to extend the relevant payment terms of major customers.

With weak voice, Biyi shares are also facing a series of risks brought about by rising raw material costs. Raw material prices are rising, and product unit prices, except for air fryers, are falling to varying degrees . Under the double pressure, Biyi shares' profit margins are undoubtedly being greatly squeezed.

Relevant data show that since 2018-2020, Biyi’s gross profit margin has been in a state of growth, reaching 18.09%, 22.81% and 23.08% respectively . However , in the first half of 2021, its gross profit margin showed a significant decline to 13.5%, and factors such as rising raw material prices were also brought to the fore .

Some industry insiders pointed out that small household appliances have experienced a brief moment of glory. At a time when many small household appliance stocks have been experiencing a long bear market, the timing for Biyi shares to go public is not good, especially when Biyi shares' sales product categories are too single and its R&D capabilities urgently need to be improved.

But it is undeniable that the prospects of the global small appliance market are very broad. According to the survey data of the employment industry, the total revenue of the global small appliance market in 2019 was US$201.9 billion, and the kitchen small appliance category accounted for 49%. It is expected that by 2025, the proportion of kitchen small appliances in the small appliance market will be around 51%.

China's small home appliance ODM/OEM mainly exports small kitchen appliances, such as rice cookers, kettles, microwave ovens, etc. Europe and the United States are the main markets for the sales of small kitchen appliances. According to the data, Chinese-made home appliances account for nearly half of the global small home appliance market.

At present, heating kitchen appliances have become a niche industry. With the advancement of technology, users' awareness of intelligence and healthy eating awareness, the market demand for heating kitchen appliances will continue to grow in the future, and may also usher in explosive growth. For sellers, it is also a good sales category.

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