Started with a data cable, Shenzhen is selling like hot cakes and preparing for IPO!

The 3C category has always been a red ocean category in the field of cross-border e-commerce, and has long occupied the top few positions in the best-selling categories on major platforms. Many sellers have seized the business opportunities and have become Amazon's top sellers, and have immediately started the road to IPO.

GreenLink Technology officially submitted its registration

On February 26, UGREEN Technology, which is striving for a listing on the ChiNext, officially submitted its registration application, bringing it one step closer to listing.

It is reported that Greenlink Technology plans to be listed on the Shenzhen Stock Exchange's Growth Enterprise Market. The company plans to issue no more than 41.5 million shares in this IPO, and no less than 10% of the total share capital after issuance. The company plans to raise 1.504 billion yuan, of which 550 million yuan will be used for product research and development and industrialization construction projects, 110 million yuan for intelligent warehousing and logistics construction projects, 392 million yuan for headquarters operation center and brand construction projects, and 450 million yuan for replenishing working capital.

It took UGREEN Technology more than 20 months from the acceptance of its IPO application to the recent submission for registration.

On June 2, 2022, GreenLink Technology's application for listing on the GEM was accepted.

On July 1, 2022, GreenLink Technology’s listing on the ChiNext entered the inquiry stage.

On January 6, 2023, UGREEN Technology passed the listing committee meeting.

On February 26, 2024, UGREEN Technology officially submitted its registration.

UGREEN Technology is a company mainly engaged in the research and development, design, production and sales of 3C consumer electronic products. It is located in Shenzhen, a domestic cross-border e-commerce concentration area. Its products mainly cover five major series: transmission, audio and video, charging, mobile peripherals, and storage.

At first, UGREEN Technology started out by selling data cables and doing OEM for major international brands. Later, it gradually transformed from an OEM factory to independent research and development, production and sales.

In 2014, UGREEN Technology began to enter overseas markets and entered multiple international platforms.

UGREEN's overseas sales are mainly online B2C models, and its overseas sales channels mainly include Amazon, AliExpress, Shopee, Lazada, etc. UGREEN's products are quite popular in overseas markets, and are continuously selected as Amazon's Best Seller and Amazon's Choice, and are at the top of the product lists of many mainstream platforms.

From 2020 to 2022 and the first half of 2023, Green Link Technology's operating income was approximately RMB 2.738 billion, RMB 3.446 billion, RMB 3.839 billion and RMB 2.121 billion, respectively, and the net profit attributable to the parent company's owners was approximately RMB 298 million, RMB 297 million, RMB 327 million and RMB 186 million, respectively.

In 2023, the operating income of UGREEN Technology was approximately RMB 4.803 billion, an increase of 25.09% compared to 2022, and the net profit attributable to the issuer's ordinary shareholders was approximately RMB 387 million, an increase of 18.27% compared to 2022.

From 2020 to 2023, UGREEN Technology's revenue and net profit maintained a steady growth trend.

Judging from UGREEN Technology’s major sales platforms, Amazon is the company’s largest sales channel, and Amazon’s revenue source has also been growing year by year.

In the past two years, UGREEN Technology has achieved outstanding results on the platform. Many of its products are ranked in the top ten on the Amazon platform, covering a variety of products including charging, transmission, audio and video categories, with cumulative revenue exceeding 150 million yuan. On average, each SKU can contribute about 15 million yuan in revenue each year. At the same time, many of its products continue to be selected as Best Sellers and Amazon's Choice on the Amazon platform.

When broken down into three levels of categories, products such as docking stations, travel chargers/desk chargers, shared switches, hubs, wired network cards, card readers, and Bluetooth headsets are very popular, especially the docking station, which ranks first in SKU ranking.

In 2021 and 2022, the revenue of UGREEN Technology's expansion dock was around 20 million yuan. In the first half of 2023, the revenue of the expansion dock reached 8.5 million yuan, making it a veritable hit product.

There are multiple risk factors behind the rapid growth of GreenLink Technology 's business !

Judging from the current product sales and rankings on Amazon, UGREEN's business is still improving, but it still faces multiple risk factors in the process of applying for listing.

First of all, UGREEN Technology has certain shortcomings in product research and development.

Although UGREEN Technology owns 774 domestic patents and 561 foreign patents, most of them are appearance patents, with only 1,109 invention patents and only 12 invention patents, which is a huge gap compared with its competitors.

Moreover, among the three core technical personnel disclosed in the prospectus of GreenLink Technology , only one has a bachelor's degree, and the other two have college degrees, which inevitably makes people worry about its R&D capabilities.

Moreover, UGREEN Technology's investment in research and development is also very low.

From 2020 to 2022 and the first half of 2023, the proportion of UGREEN Technology's R&D investment to operating income was only 3.47%, 4.54%, 4.78% and 4.59%, all less than 5%.

Due to factors such as the fierce competition in electronic consumer products and the speed of product updates, UGREEN Technology's R&D capabilities have been questioned, and the Shenzhen Stock Exchange has also inquired about this.

Secondly, there are also hidden dangers in UGREEN Technology's product quality control.

During the reporting period, GreenLink Technology had multiple products that were found to be non-compliant during random inspections. After the products were removed from the shelves, some were rectified and put back on the shelves, while some were directly sealed and isolated after being removed from the shelves. The Audit Center also sent an inquiry about this issue. As of the reply date of the inquiry letter, GreenLink Technology had a total of 6 products with quality problems, including mobile power supplies, laser page-turning pens, desktop tablet stands, USB chargers and fans.

In response to the Shenzhen Stock Exchange's inquiry, UGREEN Technology also disclosed two additional lawsuits arising from product quality issues. Both lawsuits have now been settled and compensation has been paid respectively.

Thirdly, UGREEN Technology has also committed violations on many occasions.

The company was accused in the administrative penalty decision of the Market Supervision Administration of using false or misleading pricing methods to deceive consumers into doing business with it.

In addition, GreenLink Technology's subsidiary Zhize Technology was also given an administrative penalty of a warning by the Shenzhen Longhua District Health and Health Bureau.

Fourthly, UGREEN Technology is highly dependent on e-commerce platforms and external production.

Nearly 80% of UGREEN Technology's product sales rely on online e-commerce platforms, which means the company needs to bear high platform service fees and promotion costs, squeezing its profit margins.

In this regard, UGREEN Technology also mentioned in its prospectus that if the platform service fees and other fee standards charged by online e-commerce platforms increase significantly, it may have an adverse impact on the company's operating performance.

Nearly 80% of GreenLink's products are produced by outsourcing, and its independent production capacity is weak. If the upstream supplier suddenly stops supplying, the company will not be able to provide products in time if it cannot replace the supplier in time, which will directly affect downstream sales.

In general, after the listing of GreenLink Technology, it is a good development opportunity for itself. However, if the company wants to achieve long-term development, it must continue to increase R&D investment and carry out technological innovation, and avoid multiple risk factors.

IPO

Greenlink Technology