Annual revenue exceeds 2 billion! Another home furnishing giant is going public

Affected by the epidemic, the home furnishing market in Europe and the United States has seen rapid growth in the past two years, and the home furnishing export industry has also shown a hot state. According to Yi Enjun, another home furnishings seller is rushing to be listed on the A-share market recently , and has now passed the Shenzhen Stock Exchange's GEM inquiry.

Annual revenue exceeds 2 billion, Tianzhen shares sprints to GEM

Zhejiang Tianzhen Co., Ltd. (hereinafter referred to as Tianzhen Co., Ltd.) was founded in 2003. Its predecessor was "Anji Tianzhen Bamboo Floor Co., Ltd." and the company's headquarters is located in Anji, Zhejiang. Its official website shows that Tianzhen Co., Ltd. is a professional flooring manufacturer integrating production, research and development, and sales. The company's current main product is PVC composite flooring.

It is understood that around 2010, Tianzhen Co., Ltd. experienced a business transformation. Before that, Tianzhen Co., Ltd.'s main business was the processing and manufacturing of bamboo flooring and bamboo wood products. After 2010, the company began to transform into the production of PVC composite flooring. PVC flooring refers to flooring made of polyvinyl chloride materials, also known as "lightweight flooring", which is a popular product in Europe, the United States, Japan and South Korea.

According to its official website, Tianzhen's main products currently include wood plastic composite flooring ( WPC flooring), stone plastic composite flooring (SPC flooring), glass magnesium flooring (MGO flooring) and plastic crystal flooring (LVT flooring). In 2020, the company's annual output value exceeded 2 billion yuan, and its annual sales volume exceeded 30 million square meters.

Tianzhen's prospectus shows that WPC flooring and SPC flooring are its main products. In the first half of 2021, the combined revenue of these two products accounted for more than 87% of the total revenue. It is worth noting that the revenue share of WPC flooring has dropped from 76.44% in 2018 to 27.6%, while the revenue share of SPC flooring has increased from 18.42% to 60.12% during the same period.

In terms of revenue by region, Tianzhen Co., Ltd.'s overseas revenue accounts for more than 99%. Its products are sold to more than 20 countries and regions including North America, Latin America, Southeast Asia, and Europe. It is an authentic cross-border home furnishing brand.

In terms of revenue, the prospectus shows that in 2018, 2019, 2020 and the first half of 2021, Tianzhen Co., Ltd.'s operating income was 2.056 billion yuan, 1.727 billion yuan, 2.243 billion yuan and 1.174 billion yuan, respectively. The corresponding net profits were 283 million yuan, 338 million yuan, 372 million yuan and 105 million yuan, respectively.

Overall, Tianzhen Co., Ltd.'s financial income is relatively stable and its profit margin has remained at a relatively good level.

Competitive advantages of Tianzhen

At present, there are many domestic enterprises engaged in the export of PVC flooring, and the industry competition is fierce. Tianzhen shares can sprint to the GEM with high revenue, and it also has irreplaceable competitive advantages. According to the sponsorship letter of Tianzhen shares, the competitive advantages of Tianzhen shares are mainly reflected in the following aspects.

Technology and R&D advantages: As the first company in China to launch WPC flooring products, Tianzhen Co., Ltd. has gradually formed its own technological advantages after years of R&D accumulation. The production process and technology of Tianzhen Co., Ltd.'s main product WPC flooring are all realized through independent research and development, and have obtained the national invention patent certificate. As of the signing date of the issuance sponsor letter, Tianzhen Co., Ltd. already has 17 patents, including 8 invention patents, and many patents are still under application. In addition, Tianzhen Co., Ltd. has successively obtained authoritative certifications from international certification agencies such as the US FloorScore certification, the EU CE certification, the FSC-COC certification and the German TUV certification. The products meet international standards and are internationally competitive.

Industry position advantage: As one of the first domestic companies to develop and produce PVC flooring, Tianzhen shares has a high market share in this sector. According to the ranking data of China's PVC flooring export companies in 2019 provided by China Customs, Tianzhen shares ranked third in the country with a market share of 4.97%, and is one of the leaders in the domestic sub-industry with strong strength.

Customer resource advantage: With the advancement of globalization strategy, Tianzhen Co., Ltd. has continuously expanded and extended its five-in-one industrial chain of "purchasing, research and development, production, sales, and service". In addition to a manufacturing system with multiple high-standard modern production lines, in terms of sales system, Tianzhen Co., Ltd. has formed a "multi-channel, intensive" sales system, with products distributed in more than 20 countries including North America, Europe, and Southeast Asia.

Industry reputation advantage: Tianzhen shares has formed long-term strategic partnerships with many well-known professional building materials markets and first-line brand companies around the world. It has been awarded many honorary titles such as Zhejiang Province Export Famous Brand, China Quality Integrity Enterprise, and has been included in the first batch of Chinese forest product index mechanism enterprises and has been identified as a high-tech enterprise R&D center in Zhejiang Province.

For any enterprise, when it presents many advantages in the development process, it will also face risks and challenges from various levels. Tianzhen Co., Ltd. is no exception.

The main problems and risks of Tianzhen Shares

Innovation risk: As a high-tech enterprise with outstanding R&D capabilities and innovation awareness, Tianzhen has launched a new type of environmentally friendly and stable performance MGO flooring developed independently in the field of new PVC composite flooring in recent years . However, with the continuous trial and application of new materials, new processes and new formulas in the field of new PVC composite flooring, the entire industry has entered a stage of rapid development, which has put forward higher requirements on its R&D capabilities.

Technology risk: The company's development is inseparable from technological innovation. In recent years, the change in end-customer consumption concepts and the enhancement of environmental awareness have put greater demands on the updating and iteration of technology research and development than before. At the same time, the company also faces the risk of loss of core technical talents and technology leakage.

Operational risks: When it comes to operations, the scope is quite broad. First, Tianzhen shares has a high customer concentration. Relevant data show that the product sales revenue of the company's top five customers accounted for 87.35%, 89.61%, 83.33% and 78.12% of its operating income respectively , among which the revenue from the largest customer SHAW accounted for 50.11%, 55.40%, 37.76% and 34.35% respectively.

At the same time, the company's operations are also affected by changes in export tax rebate policies . In recent years, its export tax rebate rate has fluctuated between 13% and 16%. If the country's export trade policy undergoes major adjustments in the future, changes in the export tax rebate rate of its PVC flooring products will have a significant impact on its performance.

In addition, in terms of operations, Tianzhen Co., Ltd.'s performance also faces risks from market demand fluctuations, intensified market competition, fluctuations in raw material prices, Sino-US trade frictions, and the new coronavirus pneumonia epidemic.

It is worth noting that in addition to the above three aspects, when evaluating a company, it is also necessary to consider the factors it faces, such as finance, internal control, law, and stock price fluctuations . These are important factors that affect whether a company can be listed normally and smoothly.

In general, in recent years, with the continuous improvement of the country's requirements for ecological protection, energy conservation and emission reduction, the development of PVC flooring as a green, environmentally friendly and recyclable floor decoration material has been strongly supported by national and industrial policies.

As a pioneer in the industry, Tianzhen Co., Ltd. has formed a relatively complete PVC flooring category system and is one of the companies with the widest business coverage and the most complete product categories in the same industry in China. We hope that its listing will go smoothly and provide consumers with more high-quality products.

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