6.6 million yuan to motivate employees, Shenzhen sales performance is improving

After three consecutive years of losses, Shenzhen-based Jiemite turned a profit this year and its performance has been improving. The company recently invested heavily in employee incentives, granting four employees restricted stocks, with a total amortization cost of 6.61 million yuan.

JMET motivates 4 employees

On January 4, Gemtek issued an announcement that, based on the authorization of the second extraordinary general meeting of shareholders in 2024, the company reviewed and approved the "Proposal on Granting Reserved Restricted Stocks to the Incentive Targets of the 2024 Restricted Stock Incentive Plan" on January 3, 2025, and determined January 3, 2025 as the reserved grant date, and granted 380,103 restricted shares to the four eligible incentive targets at a grant price of RMB 9.50 per share.

The fair value of the restricted shares is calculated based on the closing data on the grant date, and the total cost to be amortized is expected to be RMB 6.61 million.

The four recipients of this incentive plan include the company's directors, senior managers, middle managers and core backbone personnel, namely, Board Secretary Zhou Bo, Financial Director He Xiaonen, Director and Deputy General Manager Shao Xianfei and Director and Deputy General Manager Zhang Yuhui, all of whom belong to the company's management.

Employee incentive plans generally include assessments of company performance and individual employee performance. The assessment year for the first restricted stock granted under this incentive plan of JMET is the three fiscal years from 2024 to 2026.

In terms of the company's performance, an assessment will be conducted once every fiscal year. Taking the 2023 operating income as the base, the operating income growth rate in 2024 will be no less than 12%, the operating income growth rate in 2025 will be no less than 24%, and the operating income growth rate in 2026 will be no less than 36%.

The individual assessment results of the incentive targets are divided into four levels: "excellent", "good", "qualified" and "unqualified", with excellent being 100%, good being 80%, and qualified and unqualified both being 0.

Located in Longhua District, Shenzhen City, Guangdong Province, GMT was established in May 2006. It is an integrated industrial and trade enterprise engaged in the research and development, design and production of 3C accessories such as mobile phone cases. Its core product is mobile phone cases. The company has in-depth cooperation with mobile phone manufacturers such as Huawei, Samsung and Apple. On August 24, 2020, GMT and Anker Innovations were listed on the A-share market on the same day.

3C is a battleground for big sales in Shenzhen. JMET can finally enter the capital market and become the "first mobile phone case stock" in China. It must have its unique advantages. It is one of the companies in the industry that has been engaged in the research and development, design, production and sales of mobile smart terminal accessories earlier. It has the first-mover advantage, and is supported by OEM/ODM business, a large number of high-quality B-end customers, and the brand has excellent performance on platforms such as Amazon.

Reversing three consecutive years of losses

The reason behind this employee incentive is that Gemtek is making money. In 2024, this big seller finally reversed three consecutive years of losses and started to make a profit.

In the first three quarters of 2024, JMET's operating income was 558 million yuan, a year-on-year increase of 19.36%; its net profit attributable to shareholders was 10.0847 million yuan, a year-on-year increase of 144.84%.

In the third quarter, Gemtek achieved total operating revenue of 127 million yuan, a year-on-year decrease of 43.20%, and net profit attributable to the parent company was -8.548 million yuan, a year-on-year decrease of 276.31%. There was no profit in the third quarter, but the peak season for cross-border e-commerce is in the fourth quarter, and the company is expected to make money in the fourth quarter.

In the first half of 2024, Gemtek achieved a good result of more than 1.6 times growth. The company achieved operating income of 431 million yuan, an increase of 76.65% over the same period last year; and achieved net profit attributable to shareholders of 18.6327 million yuan, an increase of 168.15% over the same period last year.

In the first three quarters of 2024, the company's gross profit margin was 22.48%, up 3.15 percentage points year-on-year; the net profit margin was 1.26%, up 5.88 percentage points from the same period last year. In terms of the overall situation in 2024, the company should be able to smoothly achieve profitability and get rid of the loss-making hat.

After going public in August 2020, Gemtek has been losing money since 2021. In 2021, its revenue was 715 million yuan, and its non-net profit loss was 5.7 million yuan; in 2022, its revenue was 719 million yuan, and its net profit loss was 116 million yuan; in 2023, its revenue was 676 million yuan, and its net profit attributable to the parent company was a loss of 91.6229 million yuan.

Competition in the cross-border e-commerce market is becoming increasingly fierce, especially on mainstream platforms such as Amazon. The continuous increase in new entrants has made the market competition fierce. This competition is not only reflected in price wars, but also in many aspects such as brand building and market promotion.

In 2024, Gemtek will not lose money, with a net profit of 10.08 million yuan at the end of the third quarter and a net cash flow of 99.09 million yuan from operating activities. This is a good momentum!

Gross margins are under pressure

While its performance is improving, Gemtek still faces some uncertain risks.

One of the reasons for Gemtek's profitability in the first half of this year was the increase in orders from downstream customers. The company's ODM/OEM segment benefited from the increase in orders from downstream customers. ODM/OEM is Gemtek's main business. In the first half of this year, the company's ODM/OEM business revenue was 372.4604 million yuan, accounting for 86.48% of its revenue, compared with 80.87% in the same period last year.

In recent years, the market competition landscape in the downstream of the industry has changed, and the speed of overcapacity in the industry will accelerate in the future, resulting in more intense competition in the ODM/OEM industry and higher customer requirements for product quality and cost.

The company's ODM/OEM business, which accounts for nearly 90%, is not very profitable. In the first half of this year, the gross profit margin of GMT's ODM/OEM business was 18.26%, while the gross profit margin of its own brands was as high as 51.29%. However, GMT's own brand revenue, which has a higher gross profit margin, is declining year by year.

In terms of payment collection, Gemet is also under considerable pressure, and there are certain risks in the company's accounts receivable collection. In October 2024, Gemet filed a major lawsuit, requiring the defendant Incipio LLC to pay overdue payments and compensate for losses, with the amount involved being US$5,120,944.16. The amount owed for goods is more than US$5 million, which is a considerable amount, and it is still unknown when the money will be paid back.

As for the overall market environment, although the 3C track in which JMET is located faces greater opportunities, the competition is extremely fierce.

With the popularity of smartphones and the acceleration of digital transformation, the 3C digital accessories market is showing a booming trend. It is understood that the global 3C digital accessories market size has reached 1028 billion US dollars in 2023. It is expected that by 2030, the value of the mobile phone accessories market will reach 413.2 billion US dollars.

Data released by Cognitive Market Research also shows that from 2024 to 2031, the compound annual growth rate of the global 3C digital market is expected to remain at around 7.5%.

The market size has been growing continuously and is huge. However, many Shenzhen sellers started out by relying on 3C products. This track has become a "bloodbath". With the intensification of internal competition and the increase in fees related to platforms such as Amazon, the profits of sellers are constantly being eaten up.

However, in the future, with the popularization of 5G technology and the development of the Internet of Things, as well as consumers' increasing demand for intelligent, personalized, and high-quality products, the 3C digital accessories market will also usher in more opportunities.

For companies in the 3C market, they should continue to strengthen technology research and development, improve product quality, and enhance brand awareness and consumer recognition through refined operations and diversified marketing. However, as the e-commerce industry matures, compliance supervision has become a trend, and the export of 3C products must meet the strict requirements of various countries on product quality, safety and environmental protection.

JAMET

Motivating employees