Shenzhen Dama responds to rumors of account suspension: No violations

The capitalization process of Suntech Power was not smooth, and it experienced many suspensions and resumptions. This restart of the listing process has once again attracted everyone's attention.

Saiwei responded: “There is no violation”

On February 21, the Shenzhen Stock Exchange disclosed that it had resumed the review of the issuance and listing of Suntech Power. On February 26, the Shenzhen Stock Exchange updated Suntech Power's prospectus and issued an inquiry letter on the third round of review the next day. In the announcement, Suntech Power responded to issues related to the "account blocking trend" and its 2021 full-year performance.

In response to questions raised by the Shenzhen Stock Exchange regarding whether the company violated relevant regulations of the Amazon platform and whether potential risks would affect its listing when the third-party store belonged to the issuer , its sponsor, lawyers, and reporting accountants replied: In the early stages of the company's operations, the company signed an "Information Use Commitment" with the information licensor, and the business behavior of opening a third-party store on the Amazon platform in the name of the information licensor and actually obtaining ownership of the third-party store did not violate the Amazon platform's regulations on opening stores .

Data shows that in 2018 and 2019, the number of stores opened by Savi on third-party e-commerce platforms in the name of third-party natural persons or companies established by it were 2,001 and 834 respectively.

In addition, the announcement also supplemented some issues about the "account blocking wave". After verification, its sponsor and lawyer believed that Savi was not blocked by the Amazon platform due to "brushing reviews" . There was no situation in the Amazon "account blocking wave" where it received coupons through social media or self-built websites, invited reviews in social media groups, or used other companies or organizations to control reviews or brush good reviews. Its promotion method complies with the relevant rules of the Amazon platform.

"Although Savi operates multiple stores with the same brand/category in the same sales area, this does not violate the regulations of the Amazon platform and other third-party platforms. Its use of store companies to register Amazon stores does not violate the relevant regulations of the Amazon platform."

While responding to questions related to the account closure wave, Suntech also responded to the 2021 performance situation raised by the Shenzhen Stock Exchange .

Data shows that in 2021, Savi's B2C business sales revenue accounted for 95.65% of its operating income, among which the revenue on the Amazon platform increased significantly, but the revenue scale of platforms other than Amazon declined.

Amazon's platform revenue has been growing year by year. Wish and eBay's scale declines

As an export cross-border brand e-commerce company, Savi's main business includes fashion lifestyle products, clothing accessories, department stores and home furnishings, sports and entertainment, digital automobiles and motorcycles, etc. It mainly conducts export cross-border B2C retail business through third-party e-commerce platforms such as Amazon, Wish, eBay, Walmart, and self-operated websites of vertical categories such as SHESHOW and Retro Stage.

Revenue mainly comes from overseas, especially in North America and Europe, including the United States, Germany, the United Kingdom, as well as countries such as France and Canada.

In 2018, 2019, 2020 and the first half of 2021, Savi's revenue was approximately RMB 2.245 billion, RMB 2.879 billion, RMB 5.253 billion and RMB 2.906 billion , respectively . Savi also announced its third quarter, fourth quarter and full year performance and year-on-year changes in 2021. The data showed that the company's operating income in the third and fourth quarters of 2021 was RMB 1.226 billion and RMB 1.441 billion, respectively.

It can be seen from the revenue data that while expanding its business scale, Suntech has achieved continuous improvement in operational efficiency, turning losses into profits in 2019, and achieving a significant increase in performance in 2020. The company's net profit in 2018, 2019, 2020 and the first half of 2021 was -6.633 million yuan, 54.108 million yuan, 451 million yuan and 258 million yuan, respectively.

Affected by the decline in performance in the second half of the year, Savi's net profit declined compared with 2020, with net profit attributable to the parent company of 357 million yuan, a decrease of 20.81%, and net profit attributable to the parent company after deducting non-recurring items of 330 million yuan, a decrease of 24.51%. However, Savi's full-year operating income increased by 6.1% to 5.574 billion yuan compared with the previous year . Low-price clearance, platform new policies, and freight costs are all important factors affecting the decline in its net profit in the second half of the year.

In terms of e-commerce platforms, the sales revenue achieved by Savi on Amazon has shown a growing trend year by year. The sales revenue achieved in 2018, 2019, 2020 and the first half of 2021 were 1.356 billion yuan , 1.967 billion yuan, 3.682 billion yuan and 2.447 billion yuan , respectively, accounting for 60.50%, 68.33%, 70.12% and 84.23% of the main business income, respectively .

Compared with 2020, the sales revenue of Savi's clothing and accessories category on the Amazon platform has shown an upward trend. In addition, clothing and accessories are Savi's main products. The promotion of branding strategy and brand matrix has enabled Savi 's sales scale on the Amazon platform to continue to increase, and the brand influence of this type of product has continued to expand.

However , Wish and eBay platforms are not suitable for brand business development in the short term , and platform business has also shrunk to a certain extent. From 2017 to 2019, the sales scale of various products of Savi on the eBay platform declined , especially the sales scale of digital automobile and motorcycle products. After adjusting its brand strategy, Savi focused more on the operation and promotion of branded goods, thereby reducing investment in non-branded products on the eBay platform. The situation of Wish is similar.

But on the other hand , from 2018 to 2020, the sales revenue, number of customers and order volume achieved by Savi's self-operated website continued to grow, and the sales amount per customer and the sales amount per order continued to increase.

The development of Suntech also benefits from the overall industry environment.

The market is stable, but LDK faces many risks

Savi mainly deals in fashion lifestyle products including clothing accessories, department stores and home furnishings, sports and entertainment. As a category of basic needs in life, its market development is stable.

According to specific data, global retail e-commerce sales increased from US$1.3 trillion in 2014 to US$4.28 trillion in 2020, with an average annual growth rate remaining above 20%. At the same time, the proportion of e-commerce sales in total retail sales also increased, from 7.4% in 2015 to 18% in 2020.

From the perspective of layout, Savi's main operating income comes from the Amazon platform, which is currently the largest global foreign trade transaction platform. According to data from Statista in 2020, Amazon accounts for 26% of the cross-border platforms preferred by global consumers, and the US market accounts for 75%.

Consumers' demands have also changed, from simply pursuing price-oriented mass products to pursuing experience and personalized brands . The popularity of fast fashion brands such as ZARA, H&M, and SHEIN has made the fast-moving consumer goods attributes of casual clothing products gradually become a trend.

In addition, Savi Development also faces many risks. First, providing products that keep up with fashion trends, accelerating supply chain response, and improving consumer purchasing experience are the keys to improving the market competitiveness of cross-border e-commerce sellers. If major changes occur in the industry in the future, the company's information system cannot meet the new requirements, which may lead to a decline in core competitiveness.

On the other hand, Amazon is the main source of revenue for Suntech. If Sino-US trade frictions intensify, or Amazon's market share decreases, and the company fails to adjust its sales channel strategy in a timely manner, sales will also be negatively affected.

The most critical one is the risk of store closure. Overseas e-commerce platforms such as Amazon and Wish have strict requirements. If the company is found to have no reasonable business reasons for opening multiple stores with multiple accounts and is restricted, which leads to the closure of a large number of stores, Savi will also face the risk of a significant decline in operating income and profit. For example, in the recent account closure wave, many big sellers were blocked, their teams were disbanded, or even went bankrupt.

Other factors such as market competition risks, transaction dispute risks, and talent loss are also common points that sellers need to pay attention to.

The listing has been suspended and resumed for review many times, and the progress of Suntech's listing is also attracting the attention of sellers. We still need to wait and see what the result will be this time.

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