Shenzhen Suntech's IPO suspended again

There is news from the cross-border e-commerce capital market: the Shenzhen-based company Sunway’s IPO was suspended again, and the pet smart products brand DogCare completed its A+ round of financing. These two completely different pieces of news are also signals sent by the capital market to the cross-border e-commerce industry.

Shenzhen Suntech's IPO suspended again

The day before the National Day holiday, the Shenzhen Stock Exchange IPO details showed that the latest status of the Growth Enterprise Market of Suntech Power Co., Ltd. was "suspended".

This is the second time that Suntech's IPO has been suspended. The reason for the suspension is that the financial information recorded in the IPO application documents has expired and needs to be supplemented and submitted.

The first IPO of Savi was suspended on April 1 this year. The reason at that time was that the financial information recorded in the IPO application documents had expired. Six months later, Savi's IPO was suspended again, and the reasons for both times were exactly the same.

On December 18 last year , Suntech's GEM IPO was accepted, and the industry predicted that Suntech would be listed on the GEM soon. More than nine months have passed, and its road to the GEM has not been smooth! The regulatory authorities have asked dozens of questions.

Savi is a well-known seller in the industry and is named one of the "Four Heavenly Kings of South China City" by the industry , along with Aoji, Youkeshu and Tongtuo. It sells through platforms such as Amazon, Wish, eBay, Walmart and vertical category self-operated websites.

Savi has a high level of strength. After consecutive losses in 2017 and 2018, it turned losses into profits in 2019. Since then, its performance has soared. In the first half of last year alone, its revenue reached 2.29 billion and its net profit was as high as 236 million.

The products sold by Savi include clothing accessories, department store home furnishings, sports and entertainment, etc. In terms of revenue structure, clothing accessories account for almost half of the company's revenue. The company's clothing accessories brands include Ekouaer, Avidlove, Coofandy, Zeagoo, Hotouch, Arshiner, SHESHOW, Retro Stage, ADOME, etc., covering home wear, women's wear, men's wear, functional wear and other categories.

Savi has incubated 28 private brands with revenues exceeding 10 million yuan, accounting for 66.4% of the company's merchandise sales revenue. Among them, 14 brands including homewear brand Ekouaer, menswear brand Coofandy, underwear brand Avidlove, and sports equipment brand ANCHEER had revenues exceeding 100 million yuan during the period, accounting for 60.4% of the company's merchandise sales revenue.

From 2017 to the first half of 2020, the gross profit margin of Suntech's main business was 61.62%, 65.70%, 66.21% and 68.61% respectively. The gross profit margin of the main business has exceeded 60% for three consecutive years. Compared with the big sellers in the same industry such as Anker, Cross-border Communication, and Aoki, Suntech's main business gross profit margin is higher than that of companies in the same industry.

However, Savi's sales expense ratio is also higher than that of comparable companies in the same industry such as Anker and Aoki. From 2017 to the first half of 2020, Savi's operating costs and sales expenses accounted for 93.55%, 94.90%, 91.50% and 82.82% of its operating income respectively. As a result, its net profits were -65.98 million, -6.63 million, 54.10 million and 236 million respectively.

Savi's sales revenue through the Amazon platform accounts for a high proportion, and there is a trend of increasing year by year. From 2018 to 2020, its sales revenue on the Amazon platform was 1.36 billion yuan, 1.97 billion yuan and 3.68 billion yuan, respectively, accounting for 60.50%, 68.33% and 70.12% of its main business revenue, respectively.

China Business News mentioned that if third-party e-commerce platforms such as Amazon, Wish, eBay and Walmart determine in the future that the company's multi-account store operation model does not have reasonable business reasons and violates the platform's registration and operation policies, resulting in a large number of the company's stores being closed, the company may face the risk of a significant decline in revenue and profit.

In addition, Savi is also opening subsidiaries and stores. As of the end of 2017, the end of 2018, the end of 2019, and the end of June 2020, Savi had 304, 384, 767, and 832 subsidiaries that were only used to open stores and were not actually operated. The addition of so many companies that are not actually operated inevitably makes people wonder about their purpose.

With strong strength, companies are seeking independent listings, and capital is also frequently extending olive branches to cross-border potential stocks.

DogCare Completes Series A+ Financing

Although Amazon and other cross-border e-commerce companies have undergone tremendous changes this year, with benchmarks such as Anker Innovations and SHEIN, the outside world is confident that the industry will continue to export high-quality brands. In the first half of the year, there were 29 financings in domestic cross-border e-commerce, an increase of more than two times year-on-year, with a total financing amount of 7.81 billion yuan.

Cross-border e-commerce companies that received financing can be divided into two categories : service companies and seller companies. The former accounted for a larger proportion, while the sellers that received investment were mainly clothing (such as Xike and Kapeshi) and pet supplies. In the past two months, news of financing for smart pet brands has continued to come.

In September, the smart pet products brand "DogCare" completed its A+ round of financing, invested by Jinding Capital. The financing will mainly be used for product research and development and team building.

(Photo source: Douai official website)

Shenzhen Douai Innovation Technology is focused on the research and development of smart pet products. Among domestic smart pet product brands, Douai is the first to go overseas. Since the launch of its first product under the DOGCARE brand in North America at the end of 2016, Douai's smart pet products have become popular in the US market. In 2020, Douai products entered the European market. In 2019-2020, Douai became the BEST SELLER of similar products on the Amazon platform.

"Building a harmonious relationship between people and pets" is the product concept of Douai. The product line is rich and diverse, focusing on dog accessories, and has layouts in cat, fish, horse and other sub-sectors. The company's independently developed dog training devices, barking control devices, training mats, water dispensers, smart pet electric clippers, pet nail grinders and other smart products are sought after by senior pet owners and pet industry professionals in the United States. According to the official website, Douai will also enter the domestic market.

Going back in time, in mid-August, the one-stop pet consumption platform Xiaopei Pet announced the completion of a $50 million Series D financing round. This round of financing was led by Sofina and CDH Baifu, and followed by existing shareholders GGV, Qiming Venture Partners, Zhichun Capital, Qice Capital, and Kunyan Capital.

Xiaopei Pet is the company that owns Amazon's big-name pet smart product brand "PETKIT". It has created a series of popular smart pet products such as smart water dispensers, smart feeders, smart cat toilets, etc., and has a place in the Amazon smart pet product segment.

At present, Xiaopei's business includes four parts: pet stores, pet hospitals, pet smart products, and pet food. In the field of pet smart products, it has six sections: feeding, drinking water, sleeping, outdoor, cleaning, and playing. On the e-commerce platform, Xiaopei provides pet food and smart products, as well as pet washing and care products, toys, clothing, bedding, backpacks, traction, environmental cleaning and other daily necessities, etc., to solve the food, clothing, housing and transportation of pets in one stop. It is understood that Xiaopei's product sales network has covered more than 30 countries around the world .

There is a basis for capital’s preference for the pet supplies sector.

According to relevant statistics, about 43% of American households have pets, and the sales of pet products have exceeded 600 billion yuan, with an annual growth rate of more than 5%. In the first quarter, the US pet industry expenditure exceeded 95 billion US dollars. Pet food, pet care products and cleaning products are ranked high in the hot-selling categories.

APPA said that Americans spent $95.7 billion on their pets in 2019. Among them, the cost of food reached $36.9 billion, accounting for the largest proportion, followed by veterinary care ($30.2 billion), daily necessities ($19.8 billion), and grooming services ($10.7 billion).

The pet smart products track is gaining momentum.

Shenzhen sells well, Savi