Net profit fell by 72.67%, 3C sales must continue to focus on own brands!

The first half of the year has passed, and the financial reports of major cross-border sellers have been released one after another. Come and have a look!

In 2020, many cross-border sellers started their journey to go public. The "first mobile phone case stock" JMET also successfully landed on the A-share market, becoming one of the first listed companies under the GEM registration system.

After going public, what is the revenue situation of Gemtek in the first half of 2021? Let's take a look below.

JMET's semi-annual report shows that its net profit was RMB 15.5457 million, down 72.67% year-on-year

According to public information, it was established on May 30, 2006 and listed on the Shenzhen Stock Exchange on August 24, 2020. The current general manager is Huang Xin. Its main business is the research and development, design, production and sales of mobile smart terminal protection accessories. JMET has launched a series of fashionable and high-quality mobile smart terminal protection products. Its best-selling products include mobile phone protective cases, tablet protective cases, wearable device protective cases, watch straps and other products.

On August 18, Gemtek released its 2021 semi-annual report. The report showed that Gemtek achieved operating income of 300 million yuan from January to June 2021, a year-on-year decrease of 21.27%. The net profit attributable to shareholders of the listed company was 15.5457 million yuan, a year-on-year decrease of 72.67%, and earnings per share was 0.1215 yuan.

The editor learned in detail that during the reporting period, JMET's main business income was 287.2926 million yuan, and the main business income accounted for 95.64% of the company's operating income.

The business of JMET consists of two major businesses: ODM/OEM business and private label business. Among them, the ODM/OEM business has formed a multi-dimensional structure of major customers, serving well-known domestic and foreign terminal manufacturers, large chain supermarkets, trendy brands, etc., with diverse product types and sophisticated production processes, forming an efficient, good and stable cooperative relationship with customers. During the reporting period , the revenue of ODM/OEM business was RMB 179.5848 million; the private label business has gradually formed a good brand awareness and brand effect in the foreign market with its excellent product quality and fashionable product design.

GMT's own brand revenue share increased

Although Gemtek's revenue in the first half of the year decreased year-on-year, Gemtek's own-brand business showed a positive trend.

It is reported that since 2020, JMET's own brand has started operating in the domestic market, taking the Chinese name "Juese". During the reporting period, JMET increased its investment in its own brands, steadily and orderly expanded the domestic market, and achieved certain results. In the first half of this year, JMET's own brand business achieved revenue of 120.8137 million yuan. The proportion of JMET's own brand business revenue in JMET's revenue reached 40.22%, compared with 35.52% in the same period last year, which is a certain improvement.

All along, JMET has been using the industry experience and market technology accumulated from the ODM/OEM business to create its own brand X-doria. Online, the X-doria brand has long been on the Amazon platform, and in 2019 it also began selling on eBay and Shopifyd. However, among the three online platforms, Amazon still accounts for the majority of sales revenue, reaching 51.1358 million yuan in 2019, while eBay only accounted for 44,300 yuan.

Data shows that from 2017 to 2019, the proportion of JMET's own-brand business in total revenue was 27.01%, 27.88% and 29.72% respectively, showing a steady growth.

In fact, the editor summarized the financial reports of major sellers and found that more than one major seller stated that it will increase its investment in its own brands in the future. At the same time, the proportion of revenue from its own brand channels is gradually increasing for many sellers.

The semi-annual report of Giant Star Technology shows that in the first half of 2021, the company's own brand achieved revenue of 1.617 billion yuan, a year-on-year increase of 19.75%, and the customer brand achieved revenue of 2.813 billion yuan, a year-on-year increase of 14.89%. The own brand business accounted for 36.34% of the revenue in the first half of the year, and it is expected to exceed 40% in the whole year of 2021. The company's own brands, especially e-commerce brands, continue to exert their strength, and the sales revenue of brands such as WORKPRO, PONYJORGENSE, DURATECH, and SWISSTECH has achieved a significant year-on-year increase.

Big sales also bring troubles, the risks that Gemtek may face

Although Gemtek has been successfully listed and continues to focus on ODM/OEM business and private brand business, Gemtek will still face three major risks in the future development process.

1. Risks brought about by changes in the downstream industry situation. The mobile smart terminal market in the downstream industry of JMET has changed, bringing about adjustments in the shipment volume and market structure of mobile smart terminals. It is reported that the shortage of chips has limited the shipment volume of mobile phones in the domestic market, the progress of 5G promotion is lower than expected, the growth rate of the mobile phone industry has slowed down, and the smart terminal business of some important customers of JMET has been greatly affected by the external environment, which in turn affects the company's ODM/OEM business, bringing a certain degree of production and operation risks to JMET.

Facing the impact of the overall environment, Gemtek's response measures are as follows:

JMET closely monitors changes in the downstream industry market and will make targeted adjustments to continue to expand markets and customers, enrich and improve JMET's multi-level customer structure, and build a business layout in more regions at home and abroad.

2. Risk of strategic investment affecting profits. The "brand building and marketing network upgrade project" and "technology research and development center construction project" of GEMET have been put into construction one after another with the funds raised. Strategic investment has led to an increase in GEMET's related expenses. The exploration of intelligent manufacturing and the corresponding equipment upgrades also require continuous investment of a large amount of funds. It is difficult to generate year-on-year returns in the short term. If GEMET's main business fails to maintain sufficient market influence and growth after long-term investment in construction, or fails to highlight its competitive advantages in a fiercely competitive environment, it may bring certain profit risks to GEMET.

Facing the risk of strategic investment affecting profits, Gemtek's response measures are as follows:

JMET will strengthen the management of expense budget, improve the quality of internal team, actively introduce excellent external groups, improve the feedback speed of market information, actively develop key customers at home and abroad, expand the customer base, and deepen the depth and breadth of cooperation with existing customers.

3. Risk of exchange rate fluctuations. Gemtech's export business is mainly settled in US dollars, so fluctuations in the RMB exchange rate will have an impact on Gemtech's operating performance to a certain extent. If Gemtech's export revenue continues to rise in the future, and the RMB exchange rate fluctuates significantly due to the domestic and foreign economic environment, Gemtech may face certain exchange rate fluctuation risks.

Facing the risk of exchange rate fluctuations, Gemtek's response measures are as follows:

In order to effectively avoid risks in the foreign exchange market, prevent large fluctuations in exchange rates from having an adverse impact on JMET, improve the efficiency of using foreign exchange funds, and reasonably reduce financial expenses, JMET will strengthen cash management, rationally utilize foreign exchange hedging and other businesses , improve its ability to cope with foreign exchange fluctuation risks, and enhance financial stability.

Summarizing the risks that JMET may encounter in the process of development, we can find that some of the things that small sellers worry about will also happen to big sellers. Therefore, when the majority of cross-border sellers face the same difficulties, they might as well learn and absorb the excellent practices of big sellers to help themselves overcome the difficulties.