Amazon's IPO was suspended again after half-year revenue exceeded 3 billion

As the main force in the cross-border e-commerce field in central China, Zhiou has made rapid progress in recent years. Not only has it occupied a place in cross-border e-commerce platforms such as Amazon and Wayfair , it has also captured an important share of overseas home furnishing markets such as Europe and Japan. Today, Zhiou has accelerated its capitalization process and is rushing for an IPO on the Growth Enterprise Market , but the process has been quite bumpy...

Revenue may reach 8 billion? Cross-border e-commerce company suspends IPO again

Recently, Zhiou Home Furnishing Technology Co., Ltd. (hereinafter referred to as " Zhiou " ) took the initiative to apply to suspend the issuance and listing review procedures.

In fact, this cross-border home furnishing giant with an annual revenue of nearly 4 billion has not suspended its listing review process for the first time. As early as September 2021 , the IPO was suspended due to expired financial information and the need to supplement information . Now, just one month after the listing was restarted, it has announced the suspension again. However, we do not know the specific reason for the suspension yet.

However, judging from the results, Zhiou's business capabilities should not be underestimated. According to financial report data, Zhiou 's operating income in the first half of 2021 was 3.2 billion yuan, of which net profit was 140 million yuan. Industry insiders have estimated that Zhiou's operating income for the whole year of 2021 may reach 8 billion yuan based on Zhiou's performance in the first half of the year and previous performance .

Judging from the financial reports for the three years from 2018 to 2020, Zhiou Home Furnishing's operating income and net profit have been growing rapidly year after year. Its operating income for the three years was 1.595 billion yuan, 2.326 billion yuan, and 3.97 billion yuan, respectively, with an annual compound growth rate of 58.80%; its net profit for the three years was 41.647 million yuan, 108 million yuan, and 380 million yuan, respectively, with an annual compound growth rate of 205.89%.

As a cross-border e-commerce company founded in Zhengzhou, Zhiou focuses on the research and development, design and sales of home products. Its furniture, home furnishings and pet products of brands such as SONGMICS, VASAGLE and FEANDREA have long been sold to Europe, North America , Japan and other regions through cross-border B2C e-commerce platforms such as Amazon, ManoMano, Cdiscount and eBay , and have achieved good results.

Overall, the products sold by Zhiou have covered multiple categories. Data shows that in the first half of last year, the sales of furniture series alone accounted for more than half of Zhiou's revenue. In addition to the furniture series, the sales and proportions of home series, garden series and pet series were 30.68%, 12.81% and 5.72% respectively .

In terms of the composition of its main revenue, Europe is Zhiou's main battlefield, accounting for nearly 60% of its operating income; Amazon is its main sales platform, accounting for about 80% of Zhiou's revenue. Wayfair is Zhiou's second largest source of income after Amazon, with operating income of nearly 140 million yuan in the first half of the year.

In terms of product segments, Zhiou's shoe racks, console tables, folding chairs, leisure chairs, cat climbing trees and other products are often listed on the Best Seller list of Amazon Germany , and often occupy many of the top 10 best-selling products in the product segment category .

In the United States , products such as coat racks, side tables, and jewelry cabinets are very popular among consumers and are frequent visitors to the Amazon Best Seller list; in Italy , desks and PU office chairs are the best-selling products in the region.

With the help of supply chain advantages, Zhiou continues to deepen its presence in the home furnishing industry

As an old player in the field of Internet home furnishing, supply chain is also a major advantage of Zhiou. Over the years, the company has promoted efficiency improvement and business expansion through its advantages in supply chain, quality control, warehousing and logistics construction .

In the warehousing and logistics link, the company has made overseas warehouses a goal for vigorous development and established a warehousing and logistics system of " domestic and foreign self-operated warehouses + platform warehouses + third-party cooperative warehouses ", thereby achieving independent control over this link and solving the pain points of overseas product returns and exchanges.

As of the end of June last year, the company's overseas self-operated warehouses in Germany and the United States had exceeded 170,000 square meters.

Judging from the financial report data issued by Zhiou, its operating income and product sales data are in a state of rapid growth . However, after digging deeper into the financial data of Zhiou, some hidden dangers have gradually emerged, which may even affect the company's performance.

Zhiou mentioned in its prospectus that the company's inventory consists of inventory goods, in-transit inventory and shipped goods , which are mainly stored in overseas self-operated warehouses and platform warehouses. From 2018 to 2020, the book value of the company's inventory was approximately 175 million yuan, 225 million yuan and 859 million yuan respectively.

Such a high level of inventory has also increased the company's inventory depreciation risk and capital occupation pressure to a certain extent. In the prospectus, Zhiou mentioned that inventory management and inventory size are crucial. If not managed well, there may be situations such as unsalable products and inventory backlogs. But it is worth mentioning that the company's inventory turnover rate in 2020 was 3.17, which also reflects the company's ability in inventory management.

In addition, from 2018 to the first half of 2021, Zhiou's net operating cash flow was -32.82 million yuan, 88.996 million yuan, -207 million yuan, and -59.11 million yuan, respectively. In this regard, Zhiou stated that the company's business scale has grown rapidly, and the scale of inventory purchases has increased significantly accordingly. If the net cash flow from operating activities continues to be negative in the future, it will cause certain pressure and adverse effects on working capital turnover and continued operations.

But for Zhiou, attracting strategic investors is a strong boost for the company's progress. As the second largest shareholder of Zhiou, Anker Innovations currently holds 9.15% of Zhiou's shares .

In June last year , Zhiou submitted its IPO prospectus for the first time. In September, its IPO was suspended because the financial information involved in the IPO application documents had expired. After the financial information was updated in December, the IPO was in the "inquiry" status. Until January 21 this year, the IPO was again in the "suspended" status.

It is understood that the suspension of Zhiou's IPO was initiated by Zhiou, and the specific reason is not yet known. Zhiou also stated that the company's listing work is currently going smoothly and is progressing steadily.

Looking at the entire home furnishing industry, it seems to have developed significantly again since 2021. Although the impact of the epidemic, exchange rates, transportation and other aspects is inevitable, many home furnishing companies, including Zhiou, have embarked on the IPO road one after another.

According to incomplete statistics, since 2021, companies in multiple sectors of the home furnishing industry have joined the industry in the IPO sprint, and the number of companies has reached 57, including bathroom, home textiles, doors and windows , etc. But in general, among these home furnishing companies that have submitted their applications, including Sanwen Home Furnishing, which terminated its IPO some time ago, most of the companies' road to listing was not smooth. Only 18 of the 57 companies were successfully listed, including Roman Holdings and Jiangxin Home Furnishing.

It can be seen that with the increasing competition in the industry and increasingly strict IPO supervision, if a company wants to stand out, the most important thing is to make "fine products" and "fine supply chains", starting from the inside and laying a solid foundation before building a tall building.

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