Annual revenue exceeded 10 billion for the first time, but the gross profit margin of the best seller hit a new low

When reviewing 2021, many sellers unexpectedly found that compared with last year, this year's sales were not too bad, but the profits were far from it. The top sellers seemed to be unable to escape this vicious circle. Yesterday, 3C seller JMET released its performance forecast, with a year-on-year net profit drop of more than 70% in 2021; Hangzhou's big seller Juxing Technology expects annual revenue to exceed 10 billion for the first time, but its gross profit margin hit a record low...

Revenue exceeded 10 billion for the first time , but gross profit fell to a new low

Giant Star Technology is a leading seller of domestic tool products. Its main products include hand tools and power tools, laser measuring instruments, and storage cabinets. They are mainly used in home maintenance, construction projects, vehicle repair and maintenance, robotics and automation, map measurement and mapping, personal protection and other fields. In 2020 , Giant Star Technology has become the number one domestic export seller of hand tools on Amazon , and is well-known among sellers.

Yesterday, the company released its 2021 performance forecast, predicting that the company's annual operating income will exceed 10 billion yuan for the first time, and the net profit attributable to shareholders of listed companies will be 1.283 billion to 1.418 billion , a year-on-year change of -5.00% to 5.00% . However, this year, the company's gross profit margin has fallen to a historical low, which is exactly the same as the "high sales and low profits in 2021 " situation reflected by many sellers in the industry .

Giant Star Technology analyzed the reasons for the changes in performance and profits as follows:

1. In 2021, the global economy continued to be turbulent amid the recurring COVID-19 pandemic, and the demand and supply chain structure of the global tool market continued to change. Mainly including:

(1) The U.S. real estate market continues to remain prosperous, and the demand for various tools is steadily rising;

(2) Since the second quarter , the prices of raw materials and bulk commodities have continued to rise, global freight rates have continued to rise, and international logistics have been blocked, which has had a significant negative impact on the company's profitability . However , with the advantages of a global layout of the entire industrial chain, the market share has continued to increase ;

(3) Although some international small and medium-sized tool companies have obtained orders by relying on the market boom , their cash flow has continued to deteriorate as costs have risen much faster than revenues, leading to further clearing of the industry.

Against this backdrop, Giant Star Technology continues to gain market share, and the company's operating revenue is expected to exceed 10 billion yuan for the first time , with its main business growing by more than 30%.

2. During the reporting period, the RMB continued to strengthen , and the average mid-point of the USD/RMB exchange rate for the whole year appreciated by 6.9% compared with 2020; at the same time , the company's international logistics costs rose sharply, with international shipping costs and port detention charges increasing by more than 100% year -on-year ; finally, the company's main raw material prices rose significantly year-on-year in 2020 , and various procurement costs were inevitably rising.

These cost factors have unprecedentedly acted simultaneously, which is very unfavorable to the company's profitability. Therefore, although Giant Star Technology has raised prices to different degrees for customers and terminals, various costs have increased beyond expectations and cannot fully cover the impact of cost changes, resulting in the company's gross profit margin hitting a record low during the reporting period .

3. During the reporting period, the company's laser measuring instrument business increased by more than 100% year-on-year , and the DTC business mainly based on cross-border e-commerce increased by more than 50% year-on-year. Power tools achieved revenue of more than US$200 million and became a new focus of the company's business.

In addition, the decline in profitability of some of Giant Technology 's shareholding companies also led to a year-on-year decline in its investment income.

Giant Star Technology is a typical example of a factory-type seller entering the cross-border e-commerce market. In terms of sales channels, it is one of the largest tool and locker suppliers for many large supermarket chains such as Walmart in the United States. Now, cross-border e-commerce direct sales have become the company's most important sales channel besides traditional supermarkets. Giant Star Technology plans to gradually develop online multi-brand sales. Through 3-5 years of efforts, the company's own hand tool brand will have a market share of no less than 20% in the European and American e-commerce field.

Giant Star Technology's gross profit hit a new low, and another major seller, Gemtek, saw a sharp drop in net profit.

Annual revenue exceeded 700 million, and 3C sales net profit fell by more than 70%

On the evening of January 14, 3C big seller JMET released its 2021 performance forecast, estimating revenue of 720 million to 740 million yuan in 2021, a year-on-year decrease of 13% to 16%, and net profit attributable to shareholders of listed companies of 24 million to 31 million yuan, a year-on-year decrease of 71% to 77%.

As the "first stock of mobile phone cases" in China , JMET once sold 58.04 million mobile phone cases in a year, which was very popular. The company integrates R&D, design, manufacturing, sales and service, and is mainly engaged in the R&D, sales and brand operation of global high-end electronic accessories. Its mobile phone cases, tablet computer cases, other 3C products, car sun visors and other products are sold well all over the world.

In 2021, JMET's net profit declined sharply. The main reasons for the performance changes include the following three points:

1. Declining sales

Affected by the global epidemic, chip market supply, exchange rate and other external factors, the competition landscape of the mobile smart terminal product industry has changed, and the business of some important customers of the company has been affected, resulting in the company's sales revenue this year.

Decline , resulting in a decline in profits.

2. Rising costs

This year, due to the increase in upstream raw material prices, material costs increased, resulting in a decline in gross profit.

3. Increased strategic investment

The strategic investment increased this year, and the continued investment in the fundraising projects "R&D center construction project" and "brand building and marketing network upgrade project" led to a significant increase in R&D expenses, sales expenses and administrative expenses, causing a decline in profits.

Among the reasons mentioned by Gemette, declining sales and rising costs are the common pain points encountered by almost all sellers in 2021.

The decline in sales is related to many factors. For cross-border sellers, the sales in 2021 are compared with those in 2020. In 2020, the global epidemic broke out and many purchasing demands quickly shifted to online. As an industry insider said, it is not that sales in 2021 have fallen sharply, but that the reference is different. Seeing the outbreak in 2020, many new sellers have poured into the cross-border e-commerce track in the first quarter of 2021. The cake is still as big, but there are more people sharing the cake. In addition, the sellers whose accounts were banned in the second half of the year were eager to clear their inventory, which, to a certain extent, also affected the sellers' sales.

Rising costs are a direct factor affecting profits, and the price increase of raw materials is a factor that sellers cannot control. In addition, competition among sellers on third-party platforms such as Amazon has intensified, and many sellers have begun a low-price spiral, causing profits to be further impacted.

The decline in GMT's sales and net profit was reflected in the middle of 2021. From January to June 2021, GMT achieved revenue of 300 million yuan, a year-on-year decrease of 21.27%, and net profit attributable to shareholders of listed companies was 15.5457 million yuan, a year-on-year decrease of 72.67%. Its sales and net profit in the second half of the year were almost the same as those in the first half of the year.

Looking closely at the 2021 performance, Gemtek's net profit has fallen significantly. In fact, the company's net profit decline can be traced back to 2020.

In 2020, JMET achieved annual revenue of 855 million yuan, a year-on-year increase of 3.06%, and net profit attributable to shareholders of listed companies of 106 million yuan, a year-on-year decrease of 18.90%.

From 2016 to 2018, JMET's revenue was 556 million yuan, 541 million yuan, and 647 million yuan, respectively; net profit attributable to the parent company was 33.686 million yuan, 39.8284 million yuan, and 61.2954 million yuan. In 2019, the company's development accelerated, with revenue of 830 million yuan, an increase of 28.2%, and net profit of 130 million yuan, an increase of 113.98%.

Net profit fell by 18.90% in 2020, and this figure was as high as 70% in 2021. It seems that Gemtek has a tortuous road ahead!

According to the situation of the two major sellers, in 2021, Giant Star Technology's gross profit hit a new low; Gemtech's net profit fell sharply. Affected by many factors such as rising raw material prices, falling exchange rates, and rising logistics costs, even the profits of major sellers have been severely hit. Perhaps more cross-border sellers will sigh: It turns out that I am not the only one who did not make money in 2021!

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