Shenzhen Dama terminates listing! Registration submission failed after 10 months

At the end of September, the Shenzhen home camera seller Ruilian Technology's listing process was suspended because the financial information recorded in the IPO registration application documents had expired and needed to be supplemented. Prior to this, it had submitted its registration for more than 9 months, but had not yet obtained the registration approval from the China Securities Regulatory Commission. At this time, it has been more than 2 years since its IPO was accepted (June 2022).

From the process point of view, Ruilian Technology is only one step away from a successful listing. Why is it so slow? In addition to the overall environment, that is, stricter regulatory review and the overall slowdown in the pace of IPOs, it is also inseparable from the many risks it faces.

Brand + first-mover advantage, Ruilian Technology's annual revenue is 2 billion

Now more and more factories are starting to transform into cross-border e-commerce. Ruilian Technology has taken this step much earlier than them. In general, its development has gone through two stages:

From 2009 to 2015, the company adopted the ODM business model, that is, OEM for other brands. During this period, it not only became a strategic partner supplier for many well-known overseas brands, and its products were sold to developed regions such as Europe and the United States, but also gradually accumulated funds and system technology innovation platform capabilities.

2015 was a watershed year for its development. In that year, Reolink Technology began to operate its own brand "Reolink" in online channels, gradually upgrading from a technology product orientation to a technology brand orientation. During this stage, the company gradually formed a virtuous mechanism for continuously transforming technological advantages into brand advantages.

Ruilian Technology is one of the earliest domestic companies to build its own brand of home video surveillance. While other companies in the same industry are still mainly ODMs, providing OEM services to overseas brands, it seized the opportunity of online channel development to build and promote its own brand, thus forming a first-mover advantage.

According to Google Trends statistics on Google web keyword search popularity, from the beginning of 2021 to the end of December 2023, the relative search popularity (i.e. the percentage relative to the highest value during the period) of its own brand "Reolink" increased by about 2-3 times, and the brand influence has increased rapidly. To this day, its search popularity continues to rise. From a global perspective, the top three countries are Germany, Finland, and Austria.

With the rapid increase in brand influence, many users began to pay attention to the company's products, which in turn led to rapid growth in its revenue. From 2021 to 2023, its operating income was 1.367 billion yuan, 1.652 billion yuan and 2.080 billion yuan respectively, with an average annual compound growth rate of 23.35% from 2021 to 2023, showing a rapid growth trend. Net profit was also very impressive, at 249 million yuan, 284 million yuan and 436 million yuan respectively.

When talking about brands, independent sites are always an important topic that cannot be avoided. For Ruilian Technology, independent sites are one of its main revenue channels. In 2023, independent sites successfully generated revenue of up to 427 million yuan, accounting for 20.66% of the company's total revenue, firmly sitting on the position of the company's second largest revenue channel.

According to data from similarweb, the average monthly visit volume of Reolink.com is as high as 2.5 million. Among its traffic sources, direct search and organic search account for nearly 80%. This data shows that it is common for users to actively search for relevant keywords through search engines to enter the website. It also means that the brand has a certain degree of popularity and has formed a certain stickiness among users.

Cross-border e-commerce sellers all know that building a brand is extremely expensive. Ruilian Technology has always been willing to invest in this regard. According to data from similarweb , " paid search " accounts for 13.4% of its traffic sources , which is a very high proportion. This fully reflects Ruilian Technology's determination to build a brand. Although it costs money, it has also won it more exposure opportunities in the fiercely competitive cross-border e-commerce field, laying a solid foundation for the long-term development of the brand.

With multiple problems blocking the way, can the final step to listing be completed?

Overall, Ruilian Technology has shown outstanding performance in both revenue and net profit in recent years. At the same time, its brand awareness is also growing. Why is the road to listing still so bumpy?

The overall pace of IPOs in the A-share market has slowed down significantly, especially the difficulty of GEM IPOs has increased. According to past data, since 2023, the average time taken for GEM IPO companies to pass the initial meeting and submit registration has been relatively long, which has also affected the registration and approval process of Ruilian Technology.

Besides, it also has some problems of its own.

1. Single product structure

The company's main products are home video cameras, video camera sets, and accessories. The revenue from these products accounts for a very high proportion of the main business revenue, and the product structure is relatively simple. For example, in 2023, these three categories of products accounted for 69%, 21.32%, and 9.04% of the total revenue respectively.

As market competition becomes increasingly fierce and technology continues to change, a single product line may expose companies to greater operational risks, which is also one of the key areas of concern for regulators.

In addition, its sales areas are mainly the United States, Europe, etc., and the regions are relatively concentrated.

2. Over-reliance on a single platform

It can be seen from the prospectus that the company's sales channels include Amazon, eBay, AliExpress, independent stations, etc. Like many cross-border e-commerce sellers, Ruilian Technology also has a serious "Amazon dependence syndrome". In recent years, sales revenue from Amazon has accounted for more than 60% of its total revenue. For example, from 2021 to 2023, sales through the Amazon platform accounted for 63.80%, 66.05% and 64.85% of the total product sales revenue of the year, respectively, which is relatively high.

The previous Amazon account ban has sounded the alarm for cross-border e-commerce sellers: over-reliance on a single channel is bound to bring many adverse effects. What’s more, Amazon’s home camera brands Ring and Blink are also eyeing this market.

In this regard, Ruilian Technology also stated in its prospectus that Amazon is the main online shopping platform for consumers in Europe and the United States. If the platform's market share decreases due to market competition, changes in business strategies or changes in the local country's political and economic environment, and the company fails to adjust its sales channel strategy in a timely manner, it may have an adverse impact on sales.

In addition, if the platform's store management, return and exchange, payment and other policies are adjusted to the disadvantage of sellers, or Amazon adjusts its business strategy to suppress non-independent brands on the platform, or the company is unable to continue to meet the platform's rules and requirements, it may also have an adverse impact on the company's business operations.

3. Large dividends were paid before the IPO application

In 2020 and 2021, the company paid out a total of more than 200 million yuan in dividends (accounting for about 50% of the net profit of the year), which attracted the attention of the Shenzhen Stock Exchange. This large dividend distribution before listing may cause regulators to have doubts about the company's use of funds and listing purposes.

IV. Issues related to core technical personnel

The company's core technical personnel have worked in companies such as Huawei and ZTE, which has aroused the attention of regulators on whether the company's patents or technological achievements involve the work results of the core technical personnel in the companies where they once worked.

In March this year , Pisen Electronics also temporarily suspended its listing because the financial information recorded in its IPO application documents had expired and needed to be supplemented and submitted. But within three months, the company withdrew its IPO application and terminated its listing process. Will Ruilian Technology also follow this path?

Ruilian Technology