Jiangsu Dama’s debt exceeds 4.5 billion

Jiangsu's big seller Greebo's 2024 performance changed, starting from the second quarter to make losses, and by the end of the third quarter, the company's total debt exceeded 4.5 billion. In the hot track of lawn mowers, can Greebo have the last laugh?

Total liabilities exceed 4.5 billion

Recently, Greebo issued an "Announcement on the Guarantee Provided by the Subsidiary to the Company", which disclosed a data showing that the company's total liabilities have exceeded 4.5 billion yuan.

The announcement showed that Greebo 's total assets in 2023 were 8.763 billion yuan, and total liabilities were 3.778 billion yuan. In the first nine months of 2024, the total assets were 9.499 billion yuan, and the total liabilities reached 4.540 billion yuan, of which the total bank loans exceeded 1.8 billion yuan, and the total current liabilities were nearly 4 billion yuan. The asset-liability ratio increased from 43.12% in 2023 to 47.79%.

The guarantee this time was provided by a wholly-owned subsidiary to Greebo, and the company applied for a loan from the bank. After providing the guarantee, the subsidiary's guarantee amount for Greebo was RMB 2.3935 billion, and the actual guarantee balance was RMB 1.266 billion, accounting for 28.15% of Greebo's latest audited net assets.

Previously, Greebo had reviewed and approved the "Proposal on the Company and its Controlling Subsidiaries Applying for Comprehensive Credit Lines and Guarantees from Banks". Based on the production and operation development and working capital needs of the company and its controlling subsidiaries, the company and its controlling subsidiaries intend to apply to the bank for a total comprehensive credit line of no more than RMB 6 billion or its equivalent in foreign currency.

Within the approved credit line, the company applied for credit business from Industrial and Commercial Bank of China Changzhou Zhongwu Branch. The company's wholly-owned subsidiaries Changzhou Geteng Auto Parts Manufacturing Co., Ltd. and Changzhou Weika Plastics Co., Ltd. signed the "Maximum Guarantee Contract" with ICBC Changzhou Zhongwu Branch respectively, providing joint and several liability guarantee for the company's above-mentioned credit business, and the maximum principal balance of the guaranteed debt is 540 million yuan.

Greebo (Jiangsu) Co., Ltd. was established in 2002. Since 2007, it has been engaged in the research and development, design, production and sales of new energy garden machinery. It is one of the leading companies in China's new energy garden machinery industry.

The company has the independent design and manufacturing capabilities for more than 80% of core components such as new energy battery packs, brushless motors, intelligent controllers, chargers, etc. The product line is rich, including lawn mowers, trimmers, cleaning machines, hair dryers, pruning machines, chain saws, as well as intelligent lawn mowing robots and intelligent riding lawn mowers. Currently, it has three major manufacturing bases in Changzhou, Vietnam and the United States.

Performance turned around, profitability is weak

Behind the high debt, Greebo’s performance in the past two years has not been optimistic.

In the first three quarters of 2024, Greebo achieved operating income of 3.98 billion yuan, a year-on-year increase of 14.77%, and revenue of nearly 4 billion yuan, but the net profit attributable to the parent was only 9.2964 million yuan, a year- on-year increase of 105.32%. In terms of a single quarter, the total operating income in the third quarter was 988 million yuan, a year-on-year increase of 11.42%, a month-on-month decrease of 27.10%; the net profit attributable to the parent was -112 million yuan, a year-on-year increase of 7.47%.

In the first half of 2024, the company achieved revenue of 2.992 billion yuan, a year-on-year increase of 15.92% ; net profit attributable to shareholders was 121 million yuan, a year-on-year increase of 324.81%, turning losses into profits.

That is to say , by the third quarter of 2024, Greebo has lost the 100 million yuan it earned in the first half of the year. Overall, Greebo's overall financial situation is lower than the industry average.

When asked about the reasons for the company's net loss in the third quarter, Greebo said that it was mainly because the quarter has always been a low season for business, and the sales scale is relatively small compared with other quarters, so the gross profit contribution is low. At the same time, the exchange rate of RMB against the US dollar has appreciated in the quarter, which has increased exchange losses. However, the company has sufficient orders in hand in the fourth quarter, totaling about US$220 million, some of which have been sold in October.

In the first three quarters of 2024, the company's gross profit margin was 25.45% and its net profit margin was 0.24%. In the third quarter, the company's gross profit margin was 20.80% and its net profit margin was -11.31%.

Looking back to 2023, Greebo suffered even greater losses. In 2023, the company achieved a total operating income of 4.617 billion yuan, a year-on-year decrease of 11.4%; the net profit attributable to the parent company was -474 million yuan, turning from profit to loss compared with the same period last year. The company's sales + management + R&D expenses totaled more than 1.6 billion yuan, accounting for more than 35% of its revenue.

The company's revenue and net profit both declined in 2023. Revenue fell by 594 million yuan year-on-year in 2022, and the decline in revenue was mainly affected by the destocking of downstream channels; net profit attributable to the parent company fell by 649 million yuan year-on-year in 2022, and the main reasons for the large decline included the decline in revenue and gross profit margin, which affected the company's gross profit by 291 million yuan; sales expenses, R&D expenses, and administrative expenses increased by 288 million yuan year-on-year.

The scenery may be difficult to continue

As the "first stock of new energy garden machinery", Greebo was listed on the Shenzhen Stock Exchange on February 8, 2023. Before its listing, its brand had a high degree of popularity and reputation in Europe and the United States.

Since 2009, Greebo has successively established brands such as greenworks and POWERWORKS, and has rapidly opened up overseas markets through channels such as Amazon, Walmart, Lowes, and Costco, with "online + offline" dual-drive. Overseas market revenue accounts for the majority of the company's total revenue.

Many of its own-brand greenworks products, including lawn mowers and hair dryers, have long been listed as "Best Sellers" on the Amazon platform, and rank among the top three in market share in the U.S. new energy garden machinery market.

Greenworks' independent website has better performance than third-party platforms. Similarweb data shows that whether it is divided by global market, US market or category website, the traffic ranking of greenworks' independent website greenworkstools.com is constantly rising.

On the first day of listing, Greebo's stock price fell below the issue price, and its market value soared to 18.6 billion yuan, which was a great success for a while. However, this glory soon ended, and Greebo lost nearly 500 million yuan at the end of 2023. After listing, Greebo repeatedly received letters of concern from the Shenzhen Stock Exchange due to poor performance.

In September 2024, Greebo Vietnam's wholly-owned subsidiary was affected by a typhoon disaster, which resulted in damage to some assets and an estimated economic loss of RMB 30 million to 50 million. This incident may have an impact on the company's operating performance in 2024.

Due to various reasons, Greebo 's overall performance in 2024 will not be good. However, in terms of the overall trend, the future market of lawn mowers is still worth looking forward to.

Many families in Europe and the United States live in independent houses with their own yards and lawns. According to Statista data, by 2023, 234 million Americans will own lawn maintenance and gardening tools.

With the advancement of technology, the intelligence and informationization of lawn mower robots are constantly increasing, which can improve work efficiency and reduce labor costs. According to forecasts by Mordor Intelligence and other institutions, the global market size of lawn mower robots will be US$1.3 billion in 2020, and by 2026, its market size is expected to grow to US$3.5 billion.

As the track heats up, big sellers such as Ecovacs and Dreame have entered this field. Since the beginning of 2024, overseas sales of lawn mowing robots including Ninebot, Ecovacs, Songling, and Dreame have increased significantly, with order volumes reaching tens of thousands of units , which has undoubtedly intensified competition in the industry.

At the same time, the consumption trend of lawn mowers has also changed, and environmental protection and product performance have become the focus of consumers. In the face of new development trends, lawn mower companies going overseas need to continue to innovate and optimize product performance to better meet current consumer demand.

Greebo

Loss