The product won the Amazon Best Seller, sold well in Shenzhen and is expected to be listed again

Recently, the road to listing for many big sellers has not been smooth, but after the Spring Festival, the big sellers are ready to go again.

With a half-year revenue of nearly 1 billion, Huabao is going public again

On June 24 last year , the IPO of Shenzhen Huabao New Energy Co., Ltd. (hereinafter referred to as Huabao) was accepted. On September 30, the review was suspended due to expired financial information. Recently, the prospectus was updated and the company continued to strive for listing.

Huabao is mainly engaged in the research and development, production and sales of lithium battery energy storage products and their supporting products. Its products include solar panels, power banks, and portable energy storage products. Among them, portable energy storage products are the core of the company. They are suitable for outdoor travel scenarios such as self-driving camping and RV travel. They can power smart phones, projectors, lighting, car refrigerators and other equipment to meet the diverse portable power needs during outdoor travel.

According to the prospectus, Huabao's operating income from 2018 to 2020 and the first half of 2021 was approximately RMB 205 million, RMB 319 million, RMB 1.07 billion and RMB 968 million , respectively. Sales revenue showed an increasing year by year, of which online sales accounted for more than 80%.

In terms of brand, Huabao relies on the two major brands "Jackery" and "Dianxiaoer" to layout domestic and overseas markets, adopting a combination of online and offline models. Its sales scope covers China, the United States, Japan, the United Kingdom, Germany, Canada and many other countries. It has now developed into a leading brand in the vertical field of portable energy storage.

Huabao mainly sells its products through well-known domestic and foreign third-party e-commerce platforms such as Amazon, Rakuten Japan, Yahoo Japan, Tmall and JD.com. Its products are often among the popular lists of portable energy storage keywords.

For overseas markets, Amazon is an important layout platform. Since 2020, the company's portable energy storage products have continued to be selected as the best-selling products (Best Seller) and Amazon's Choice on the Amazon platform.

In terms of marketing, Huabao uses foreign influencers in the outdoor field to promote its brand on social platforms such as Youtube, Facebook and Instagram. It also establishes cooperative relationships with well-known brands to effectively ensure high exposure of the brand and improve its market visibility in many ways.

The new energy industry is naturally inseparable from innovation. Huabao attaches great importance to R&D innovation. As of June 30, 2021, the company has a total of 141 R&D technicians, and the core technicians have an average of more than 20 years of experience in the lithium battery field. At present, the company has a total of 189 domestic and foreign patents, including 25 invention patents.

In addition, Huabao's portable energy storage products have been selected for CNET and the New York Times' annual best portable energy storage lists, and have appeared in Forbes, the Wall Street Journal, USA Today and other media, and the brand's global influence continues to increase.

While developing rapidly, Huabao also faces many risks.

As the market becomes more competitive, Huabao faces increasing risks

These risks include platform operation risks, risks of intensified industry market competition, risks of changes in overseas business environment, risks of research and development of new technologies and new products, and risks of a relatively single corporate product structure .

Huabao New Energy mainly sells its products through third-party e-commerce platforms , including Amazon, Rakuten Japan, Yahoo Japan, Tmall, JD.com and other well-known domestic and foreign third-party e-commerce platforms. From the end of 2018 to the first half of 2021, the company's sales on third-party e-commerce platforms accounted for 35.04%, 67.83%, 75.99% and 73.67% of its main business income, respectively .

The stability of Huabao's operational cooperation with third-party e-commerce platforms such as Amazon, Rakuten Japan, Yahoo Japan, and domestic Tmall and JD.com has an important impact on the company's operations and financial condition .

In addition, since portable energy storage products have relatively high profits , the market space for this product is relatively broad at present, and more well-known brands will be attracted to enter the industry in the future . The continuous innovation of industry technology and marketing methods will also make the industry scale continue to expand. At that time, the number of industry competitors will increase and the market competition risks will intensify , which may make Huabao New Energy face greater challenges .

As the portable energy storage industry market continues to be standardized, some low-end production capacity that competes through low prices will also face elimination . If Huabao New Energy fails to maintain its competitive advantages in technology and brand through technology research and development and product innovation in the future, it may face the risk of intensified competition, compressed profit margins or market share being squeezed .

Huabao's overseas business covers many countries and regions around the world, and it has many overseas subsidiaries. From the end of 2018 to the first half of 2021 , Huabao's overseas sales accounted for 91.53%, 87.27%, 90.09% and 93.29% of its main business income respectively .

Since overseas revenue accounts for a high proportion and is the main source of Huabao's income and profits, the overseas operating market has a great impact on Huabao. It is understood that among foreign markets, the US market is one of Huabao's main sources of income . From the end of 2018 to the first half of 2021, Huabao's main business income in the US market accounted for 43.22%, 45.69%, 42.62% and 47.69% respectively .

Since market access standards vary from country to country , Huabao needs to invest in professionals to improve its production management capabilities in order to obtain the corresponding quality system certification and product registration certificates to adapt to the constantly changing access standards and related access qualifications. Otherwise, Huabao’s sales in overseas markets will decline.

The rapid replacement of new energy products has also required Huabao to continue investing in R&D resources and the size of its R&D team . However, once the R&D investment in new technologies and new products cannot achieve results in the short term , some of Huabao's R&D projects will be at risk of failure , which will also threaten Huabao's short- term revenue .

Huabao 's main products are portable energy storage products and power banks of different capacity specifications, as well as solar panels and related accessories that can be used with portable energy storage products. The product structure is relatively simple. If Huabao fails to successfully launch new products and expand the market, Huabao's performance may fluctuate greatly .

It is understood that in order to ensure the adequacy of inventory supply and the timeliness of logistics and transportation, Huabao has a certain scale of inventory , and the scale of inventory is on an upward trend . From the end of 2018 to the first half of 2021 , the book value of Huabao's inventory was RMB 26.2659 million, RMB 93.5326 million, RMB 201 million and RMB 379 million, respectively , accounting for 27.03%, 47.39%, 36.65% and 45.38% of the company's current assets, respectively .

Some of Huabao's inventory includes Amazon warehouses around the world, goods in transit on ocean-going cargo ships, and products stored in overseas third-party warehouses and domestic warehouses. Once the inventory management is poor, it will directly affect Huabao's sales.

The new energy market is heating up, and development faces high standards and strict requirements

Since Huabao is mainly engaged in the research and development, production and sales of lithium battery energy storage products and their supporting products, it belongs to the lithium battery energy storage industry, and its sub-industry is the portable energy storage industry. Its products are different from other companies in terms of export.

While the development of such enterprises is improving, they are also facing higher standards and stricter requirements.

According to the prospectus, due to the reduction of lithium battery costs and continuous breakthroughs in technical performance, lithium batteries have been commercialized and applied on a large scale worldwide. Relevant statistics show that the global lithium battery market size will grow to nearly US$94.4 billion in 2025, with a compound growth rate of 16.4%, which is in line with the trend of energy development. It can be seen that the market prospects are good.

In addition, as relevant departments have issued a number of energy storage-related laws, regulations and policies to support the development of the energy storage industry, a good environment has been created for the development of such companies, and related brands have been further promoted to go global. Under the guidance of policies, various companies have continued to increase their R&D investment.

The lithium battery energy storage products that Huabao is engaged in can be mainly divided into portable energy storage products, household energy storage products, commercial energy storage products, etc. Among them, portable energy storage products such as power banks and emergency power supplies are favored by many consumers due to their safety, portability, noiselessness, green environmental protection, and multiple applicable scenarios, and the consumer group is constantly expanding.

However, as the international market has paid more and more attention to environmental protection in recent years, emphasizing the importance of sustainability and "carbon neutrality", the requirements for the above products have also increased. Both domestic and foreign laws and regulations have made more stringent requirements, including product quality levels, clear product quality responsibilities, and products must comply with relevant technical regulations.

According to public information, the company's products exported to North America, Japan, Europe and other overseas regions must meet the corresponding lithium-ion battery or energy storage system management requirements, such as the United Nations Transport Safety UN certification, Japan PSE, EU CE, EU RoHS testing and other certifications to ensure that energy storage products entering these markets are safe and compliant. This also further illustrates the rigor of the international market for such products.

On the one hand, there is a constantly improving market environment, and on the other hand, there are high and strict standards in many aspects. The development of such enterprises faces many uncertain factors, and how to make good products is still the main issue that such sellers have to consider.

Huabao

Continue to strive for listing