Another best-selling product has been suspended from the market, it once sold 3.5 billion in one year!

For cross-border enterprises that have developed to a certain level, most will choose to list on the GEM or the main board to accelerate the capitalization process.

However, the IPO road for many companies is very bumpy.

Recently, there was news from the cross-border e-commerce capital market that another cross-border company’s listing was suspended.

Lixuan Sports' IPO suspended

Lixuan Sports, which is striving to be listed on the main board of the Shanghai Stock Exchange, is shown as "suspended" in the project status of the Shanghai Stock Exchange .

It is understood that the financial information recorded in Lixuan Sports' application documents for issuance and listing has expired, and the relevant information needs to be updated before the IPO review process can continue.

On May 9, 2022, Lixuan Sports submitted its Shanghai Stock Exchange Main Board IPO application documents to the Shanghai Stock Exchange.

In July 2022, Lixuan Sports submitted its prospectus to the Shanghai Stock Exchange.

On September 9, 2022, the China Securities Regulatory Commission gave feedback on the application documents for the initial public offering of shares of Lixuan Sports.

On March 2, 2023, the Shanghai Stock Exchange's official website disclosed the prospectus (draft) for the initial public offering of Lixuan Sports, and the company's IPO materials were officially accepted. The sponsor is Huatai United and the auditing agency is Tianjian.

The IPO will issue no more than 30.30 million common shares and raise RMB 2.002 billion, which will be used for six projects: a production base project with an annual output of 1.5 million fitness equipment and 600,000 dumbbells, a technical transformation project with an annual output of 450,000 fitness equipment, a research and development and office center construction project, a marketing network construction project, an information technology upgrade construction project, and the replenishment of operating capital.

On June 12, 2023, Lixuan Sports responded to the first round of inquiry letters.

In August 2023, Lixuan Sports updated its prospectus.

According to public information, Zhejiang Lixuan Sports Technology Co., Ltd. (hereinafter referred to as "Lixuan Sports") was established in 2018 and is headquartered in Cixi City, Zhejiang Province. The company's main business is the design, research and development, production and sales of fitness equipment and related accessories. Its main products include treadmills, exercise bikes, elliptical machines, rowing machines, dumbbells and other series of products.

It is understood that Lixuan sports products mainly adopt ODM and OEM models and are sold to Europe, the United States, Japan, South Korea, Southeast Asia and other countries and regions. The sales network covers more than 20 countries and regions in the world, and overseas sales account for more than 90%.

In terms of production model, Lixuan Sports mainly adopts the "production based on sales" model, formulating production plans and organizing production based on sales orders, production capacity and inventory status.

With a mature supply chain system, long-accumulated production technology and rich industry experience, Lixuan Sports has established long-term cooperative relationships with many world-renowned sports brands. It has now entered the global supply chain systems of multinational companies such as Decathlon, Nautilus and iFIT.

In recent years, Lixuan Sports' revenue and performance have maintained a steady growth trend.

According to the prospectus information released by Lixuan Sports, from 2019 to 2021 and the first half of 2022, Lixuan Sports achieved operating income of 1.544 billion yuan, 2.449 billion yuan, 3.520 billion yuan, and 845 million yuan, respectively, and net profits of 207 million yuan, 310 million yuan, 437 million yuan and 102 million yuan, respectively.

The steady growth in revenue and net profit of Lixuan Sports is inseparable from its long-term investment in research and development.

Lixuan Sports currently owns 26 invention patents and 88 utility model patents.

Moreover, the company attaches great importance to the improvement of production management capabilities and has passed the ISO9001, ISO14001 and ISO45001 three-in-one system certifications for quality, environment and occupational health and safety.

Lixuan Sports actively carries out R&D investment and has rich technical reserves in prototype development and design, mold processing, etc., which can provide strong support for the company's new product development, prototype trial production to final product delivery to meet the diverse needs of customers.

Listing encountered obstacles! Lixuan Sports still faces many risk factors

However, it should be noted that there are still certain risk factors in the operation of Lixuan Sports.

First of all, Lixuan Sports has a relatively high customer concentration.

From 2019 to 2021 and the first half of 2022, the sales revenue generated by Lixuan Sports' top five customers was RMB 1.309 billion, RMB 2.131 billion, RMB 2.985 billion and RMB 711 million, respectively, accounting for 84.77%, 86.99%, 84.78% and 84.18% of the operating income in the current period, respectively.

Among them, Lixuan Sports mainly relies on its top two customers, Nautilus and Decathlon.

Regarding the issue of high customer concentration, Lixuan Sports stated in its prospectus (submission draft) that high customer concentration under the ODM/OEM model is very common in the industry. The company has established a long-term and stable cooperative relationship with its top two customers, and high customer concentration will not have a significant impact on the company's continued profitability.

On the other hand, it should be noted that Lixuan Sports has a strong family-run nature.

Lixuan Sports was jointly established by Ningbo Chiteng, Ningbo Qiangshen and Wu Yinchang with a registered capital of 90.9 million yuan. The actual controller of the company is the Wu Yinchang family (Wu Yinchang, Zhao Wannong and their son Wu Bin), which together control 74.81% of the shares of Lixuan Sports.

At the same time, Wu Yinchang serves as the company's chairman and general manager, and his son Wu Bin serves as the company's director.

Compared with the top sellers in the industry, another weakness of Lixuan Sports is the lack of its own brand.

Lixuan Sports currently still focuses on OEM and OEM, and the revenue from its own brand accounts for a very small proportion.

In recent years, although Lixuan Sports has been promoting the construction and promotion of its own brand and selling its own brand products, it has not achieved the expected results.

According to the prospectus of Lixuan Sports, Lixuan Sports once tried to develop domestic sales channels through Ningbo Zhuyuan, Ningbo Changlong and Ningbo Lijia to sell its own brand fitness equipment. However, the sales revenue of these brands declined and the number of customers also decreased.

At present, Lixuan Sports's own brand business is still in its initial development stage, accounting for less than 2% of the company's main business revenue.

After experiencing the COVID-19 pandemic, consumers' health awareness has significantly increased, and the global fitness equipment industry has also ushered in rapid development.

According to the data of "Fitness Equipment - Global Market Trajectory and Analysis" published by Research and Markets, the global fitness equipment market size is expected to grow to US$19.4 billion by 2027.

Under the influence of multiple factors, domestic fitness equipment manufacturers have rushed to IPO one after another. In addition to Lixuan Sports, the leading sellers in the same industry, Sanboshuo and Kangliyuan, have successfully listed.

On October 19, 2022, Sanboshuo was successfully listed on the main board of the Shenzhen Stock Exchange with an issue price of 11.17 yuan and raised 681 million yuan.

On June 14, 2023, Kangliyuan was listed on the Shenzhen Stock Exchange's Growth Enterprise Market with an issue price of 40.11 yuan and raised 669 million yuan.

For Lixuan Sports, if it wants to achieve long-term development in overseas markets and successfully go public in the future, it must avoid the above-mentioned risk factors. At the same time, it must pay attention to building its own competitiveness in the market and meeting consumers' growing personalized consumption needs.

Suspension of listing

Lixuan Sports