Once confronted with Apple! Shenzhen 3C sales are booming and it is preparing for IPO

The 3C category has always been a popular category for cross-border e-commerce. The demand for products in this category has always been very high overseas. The sales of many best-selling products have also been soaring, and they have begun to actively rush to go public.

Pisen Electronics' IPO has made new progress

Not long ago, Pisen Electronics disclosed the response to the first round of review inquiry letters from the Shenzhen Stock Exchange and updated its financial data, and the IPO progress was updated again.

However, PISEN Electronics' IPO journey was not smooth sailing, and the issuance and listing review procedures were once suspended.

Since the first round of listing guidance in January 2022, PISEN Electronics has undergone a total of 5 rounds of guidance and finally submitted the application.

On June 30, 2023, the official website of the Shenzhen Stock Exchange disclosed the prospectus (draft filing) for the initial public offering of shares of PISEN Electronics, and the company's IPO materials were officially accepted.

At the end of July 2023, the Shenzhen Stock Exchange issued the first review inquiry letter.

On September 28, 2023, the official website of the Shenzhen Stock Exchange showed that Pisen Electronics voluntarily applied to suspend the issuance and listing review procedures due to the update of financial information.

On December 27, 2023, PISEN Electronics announced its IPO prospectus and restarted its IPO journey.

PISEN Electronics plans to raise 757 million yuan in this IPO to invest in the relocation and expansion project of its Shenzhen production base, the construction of its R&D center and headquarters office, brand building and marketing promotion projects, and to strengthen its production capacity layout in cutting-edge product areas such as high-power power adapters, energy storage power supplies and smart homes.

Not long ago, Pisen Electronics disclosed its responses to the first round of review inquiry letters from the Shenzhen Stock Exchange and updated its financial data.

The first round of review inquiry letters from the Shenzhen Stock Exchange require PISEN Electronics to explain whether there were any payment disputes caused by third-party repayments during the reporting period, whether the third-party repayments had a real transaction background, and whether it was a common phenomenon in the industry.

PISEN Electronics responded that the company's main marketing management model is the distribution model. Some customers under this model have small business scales, so they will pay for goods through relevant personnel and affiliated companies for their own capital arrangements, trading habits, payment convenience and other factors. The issuer's export revenue involves third-party repayments, which is mainly due to foreign exchange controls in the country where the customer is located. Both of the above situations are commercially necessary and reasonable.

PISEN Electronics also stated that among companies in the same industry, Anker Innovations, AVIC International Holdings Group and UGREEN Technology all involve third-party repayments, which is in line with industry practices and is a common phenomenon in the industry.

In the inquiry letter, Pisen Electronics also answered questions such as whether there are significant differences with peer technology companies. Pisen Electronics responded that compared with its competitors in the same industry, Anker Innovations and Green Link Technology, the company has focused on operating and expanding the domestic market since its establishment, and its penetration rate in overseas markets is relatively low. The company's products and brands need to be better known and competitive in the global market. At the same time, the company's current financing channels are relatively single, and it needs to improve its financial strength and expand financing channels through the capital market to strengthen product research and development, expand the company's business scale, and further expand product categories.

It is worth noting that this IPO is not the first time that Pisen Electronics has made an impact on the capital market.

In 2015, Pisen Electronics was listed on the New Third Board as the "first stock in 3C accessories", but was delisted from the New Third Board in 2017.

PISEN Electronics' revenue growth slowed down, and it once sued Apple!

Pisen Electronics was founded in 2003. Its headquarters is located in Shenzhen, a cross-border e-commerce hub. As a manufacturer and brand owner in the field of consumer electronics, the company's main business is the research and development, design, production and sales of 3C smart peripheral products such as mobile power supplies, chargers, data cables, built-in batteries and other smart hardware. Its products have been exported to overseas markets such as the United States, the United Kingdom, Russia, Singapore, Vietnam, Malaysia, etc.

Pisen Electronics started out as a power bank and calls itself the "inventor and creator of power banks." After years of development, Pisen Electronics has basically formed a comprehensive product matrix with three core series: charging series, mobile phone accessories, and innovative electronics.

At present, PISEN Electronics' revenue is mainly from charging products. From 2020 to 2023, the revenue from charging series products was approximately RMB 592 million, RMB 786 million, RMB 780 million and RMB 430 million, respectively, accounting for approximately 52.66%, 60.03%, 59.14% and 64.19% of the main business income in the current period.

In terms of overall performance, from 2020 to 2022 and the first half of 2023, PISEN Electronics achieved operating income of approximately RMB 1.142 billion, RMB 1.328 billion, RMB 1.329 billion and RMB 674 million, respectively, and net profit attributable to the parent company's owners was approximately RMB 102 million, RMB 101 million, RMB 97.1403 million and RMB 45.8075 million, respectively.

Although the company's revenue maintained a growth trend, the growth rate slowed significantly and net profit showed a downward trend.

As early as 2013, PISEN Electronics' revenue had reached 834 million yuan, which made it a leading company in the industry at that time.

However, compared with the current revenue situation, it has only grown by nearly 500 million yuan in 10 years, which is a huge gap compared with other top sellers, and its profitability is worrying.

In addition, when talking about PISEN Electronics, we have to mention its feud with Apple.

In April 2017, Apple took Pisen Electronics to court, claiming that Pisen Electronics produced and sold Apple-related products and accessories without permission, which was an infringement. At the same time, it also filed a request for invalidation of patents such as data cables held by Pisen Electronics, and complained to major e-commerce platforms, causing many of its products to be removed from the e-commerce platforms.

The final verdict was that PISEN Electronics lost the case and five of the company’s patents were declared invalid. The patented products involved included charging cables, chargers, earphones, and adapters.

In August 2017, Pisen Electronics issued a statement saying that it had filed a lawsuit against Apple for alleged monopoly in the Beijing Intellectual Property Court and claimed RMB 1. Pisen Electronics believed that Apple abused its dominant position in the product accessories market, set up MFI certification, excluded and restricted market competition, damaged the interests of consumers, and was suspected of monopoly.

It is understood that MFi certification is a logo usage license issued by Apple to external accessories produced by its authorized accessory manufacturers.

However, MFi certification is very strict, with a pass rate of only 2%, and the certification fee is not low. According to foreign media Appleinsider, Apple can earn about $5 billion in revenue from MFi certification every year.

According to industry insiders, products that have passed the MFi certification have certain advantages in price and sales , and will also seize the market of manufacturers without MFi certification.

At present, more than 700 manufacturers in China have passed Apple's MFi certification, including large manufacturers such as Anker Innovations, UGREEN Technology, and Bull Group.

Pisen Electronics clearly stated in its prospectus that all accessories currently sold by the company are products of its own brand. If Apple subsequently asserts rights against the company due to MFi certification, it will have an adverse impact on the company 's production and operations .

In addition to the above risk factors, Pisen Electronics also has a large gap in product research and development compared with the industry's top sellers. Among the patents, which are more valuable, Pisen Electronics only has 7 invention patents, accounting for less than 1%.

In addition, PISEN Electronics also faces the risk of inventory depreciation and accounts receivable impairment.

At the end of each period of the reporting period, the book balance of PISEN Electronics' inventory was RMB 275 million, RMB 214 million and RMB 177 million, respectively , showing a downward trend year by year .

Under the influence of multiple risk factors, it remains unknown whether Pisen Electronics can ultimately succeed in its listing.

IPO

PISEN Electronics