With half-year revenue of nearly 500 million, Shenzhen's best seller is about to go public!

Under the impact of the successive account bans caused by the epidemic, the current situation of big sellers is like heaven and hell. Some sellers are unable to make enough money to cover their expenses, and amid the gloom, there are constant news of layoffs and bankruptcy; some sellers have taken advantage of the situation to see a sharp increase in profits, and are beginning to seek listing with the help of capital.

Shenzhen Aoni Electronics is about to be listed on the GEM

Recently, information on the Shenzhen Stock Exchange's official website showed that Shenzhen Aoni Electronics Co., Ltd. (hereinafter referred to as "Aoni Electronics") has submitted its registration and is about to be listed on the Shenzhen Stock Exchange's Growth Enterprise Market.

Shenzhen Aoni Electronics Co., Ltd. was established in 2005. It is mainly engaged in the research and development, production and sales of Internet of Things audio-visual terminals. Its main products are PC/TV external cameras, driving recorders, network cameras, Bluetooth headsets and other smart audio-visual hardware. It has its own brands such as Aoni, aoni, ANC, BaiNaoTong, AUSDOM, papalook, etc. It has currently laid out third-party platforms such as Amazon and AliExpress , and also provides ODM customization for domestic and foreign companies such as Owlet Baby and Linyoutong. Global Easy Buy is also one of its traders.

The prospectus shows that from 2018 to 2020, Aoni Electronics' operating income was 295 million, 528 million, and 1.084 billion yuan, respectively , and the corresponding net profits were 3 million, 48 million, and 193 million yuan, respectively . In addition, Aoni Electronics' products are mainly sold overseas (European and American countries and regions), accounting for a high proportion, with the highest proportion exceeding 60%.

For Aoni Electronics, the COVID-19 pandemic in 2020 was undoubtedly the main driving force behind its performance growth, and working from home drove up sales of external cameras. Data shows that in 2020, the search volume and purchase volume of its PC/TV external cameras on Amazon US increased by 5.94 times and 5.37 times respectively, which led to a rapid growth in its performance.

Behind the continued high growth of performance, hidden worries are gradually emerging. The prospectus shows that its operating income in the first half of 2021 was 489 million yuan, an increase of 57.45% compared with the same period in 2020, and its net profit attributable to the parent company was 69 million yuan. In addition, the sales revenue and orders on hand of PC/TV external cameras, which had a large increase in 2020, fell in the first half of 2021.

In terms of the sales of its own brands overseas, Amazon stores are the main ones, accounting for 73.18%, 65.67% and 70.56% of the operating income in 2018-2021 , and the operating income was 22 million, 24 million and 117 million respectively . It seems that Aoni Electronics is relatively affected by Amazon. AliExpress, another sales channel, has a relatively small share of operating income, and its share has not exceeded 10% for three consecutive years.

Operating income soared 956.57%, PC/TV external cameras sold well

As a big seller in the electronics category, Oni Electronics mainly sells smart video terminal products . In terms of operating income in the past three years, this category accounted for 63%, 62.73% and 88.39% respectively .

In terms of sub-segments, the proportion of PC/TV external cameras in the past three years was 15.16%, 11.10% and 56.99%; the proportion of driving recorders in the past three years was 37.67%, 32.49% and 17.52%; and the proportion of smart network cameras in the past three years was 10.17%, 19.14% and 13.88%.

Among them, PC/TV external cameras still contributed the largest revenue to Aoni Electronics in 2020, with the largest increase in operating income of 956.57%. As for the reason for its soaring operating income, Aoni Electronics said that due to the global spread of the new crown epidemic, European and American countries were greatly affected, and thus achieved overseas operating income of 106 million yuan. This is also the reason why its own brand overseas e-commerce revenue accounted for 74.62% in 2020, which remained at a high level. However, this value, including gross profit margin, has declined in the first half of 2021.

In the category of smart audio terminals, Aoni Electronics mainly sells Bluetooth headsets and speaker products, and its operating income share is decreasing year by year, from over 36.30% in 2018 to 10.90%. Among them, Bluetooth headsets account for a relatively high proportion, accounting for 32.53%, 32.45% and 10.26% in the past three years respectively . However, as far as the data for the first half of 2021 is concerned, the sales of products in this category are in a slight growth.

In addition, the products of Aoni Electronics are greatly affected by raw materials. As far as raw materials are concerned, the main raw materials needed by the company are main control and peripheral function ICs, display screens, lenses/lens mounts, etc., but these raw materials mainly rely on imports from Taiwan, the United States, Japan and other countries, and account for a high proportion of the company's main business costs , which are 82.66%, 84.44% and 82.73% respectively .

This means that as the market environment changes, the company's raw material prices are also subject to certain uncertainties, and the selling price of products will also be adjusted with the fluctuations in the prices of major raw materials. According to the data for the first half of 2021, under the multiple influences of product prices and raw material procurement costs, the gross profit margin of the company's main business has dropped from 40.46% in 2020 to 32.74% in the first half of 2021, which will directly affect the company's profitability.

Risks are increasing? Bad debts on accounts receivable and inventory depreciation continue

According to the data in the prospectus, Aoni Electronics' accounts receivable account for a high proportion of revenue. At the end of the reporting period, the book value of Aoni Electronics' accounts receivable was RMB 61.3065 million, RMB 59.0098 million and RMB 105.0885 million, respectively , accounting for up to 29.41% of the total assets at the end of each period . This means that if there is a major adverse change in the financial or operating conditions of the customer, there is a high risk of bad debts.

The large proportion of inventory is also a major risk for Aoni Electronics. The prospectus shows that at the end of each reporting period, the book value of Aoni Electronics' inventory was RMB 60.4345 million, RMB 75.6462 million and RMB 199.6570 million, respectively , accounting for more than 25% of total assets. If the prices of raw materials or finished products drop significantly, the company will still face a certain risk of inventory depreciation, which may have an adverse impact on the company's operating performance.

In addition, the excessively high ODM model of Oni Electronics is also an important reason for lowering the company's total gross profit margin . Data in the prospectus shows that the gross profit margins of ODM in the past three years were 23.62%, 27.68% and 33.77% respectively. Compared with the gross profit margins of its own brands in the past three years of 46.40%, 50.72% and 61.04% respectively, the ODM gross profit margin is indeed too low and has lowered the gross profit margin of its total revenue.

However, Oni Electronics also stated that in the future it will combine the development of its own brand and ODM model, and leverage the advantages of ODM's sales channels, brand awareness, etc. to expand its own brand and even the company's total sales , thereby increasing the company's gross profit margin while reducing multiple risks such as the company's single operation.

For big sellers who have developed to a certain level, most of them choose to go public to accelerate the capitalization process, take advantage of the foreign trade dividends, go public to transform and develop, and then expand their own business blueprint. But for some sellers, the capitalization process is not the only development channel, and there are many who choose to make a fortune in silence. In short, it is best for sellers to choose the one that suits their company's development according to their own company's model and development plan.

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