Listed on the same day as Anker, Shenzhen Daimai lost nearly 10 billion in market value

Luo Yonghao, the founder of Smartisan smartphones and the first internet celebrity, once said, "It is better to make money by selling phone cases than by selling phones." Opinions vary as to whether the profitability of phone cases is as he said. However, as one of Amazon's three lucky treasures, many cross-border sellers have used it to get started and make buckets of gold. The big seller Gemtek has even become the "No. 1 stock in phone cases" amid the dividends.

However, after more than three years on the market, Gemtek seems to be in decline.

Listed on the same day as Anker, Gemtek's market value has evaporated by nearly 10 billion

Under the influence of economic frictions among major global trading bodies, the mobile smart terminal product market, like other product markets, has been negatively impacted. Against this backdrop, the performance of 3C giant Gemtek has been in trouble.

Today, Gemtek has still not turned a profit. According to the financial report, in the first half of this year, Gemtek's revenue only reached 244 million yuan, a decrease of 32.22% from the same period last year (360 million yuan). Most importantly, its net profit loss has worsened, with a loss of 27.34 million yuan in the first half of this year, compared with only 16.38 million yuan in the same period last year.

Providing ODM/OEM services to multiple smart terminal manufacturers and internationally renowned smart terminal accessories brands is the most important part of JMET's rapid success in the mobile phone case market. Among them, Huawei has been JMET's financial sponsor for many years.

Data shows that in 2014, the purchase volume from Huawei accounted for 8.2% of JMET's sales volume , and this figure doubled to 20.15% in 2015. Since then, JMET has been tied to Huawei at a deeper level.

Between 2016 and 2019 , Gemtek's sales to Huawei were RMB 95 million, RMB 127 million, RMB 265 million and RMB 377 million, respectively , accounting for 17%, 23.47%, 40.99% and 45.47% of the total revenue, increasing year by year.

In 2020, Gemtek admitted in its prospectus that during the reporting period, the company's supply of Huawei products grew rapidly, which is basically consistent with the trend of Huawei's brand mobile smart terminal shipments in recent years . This also shows its dependence on Huawei for its performance.

With the support of Huawei, Gemtek has the confidence to enter the capital market. In 2015, Gemtek submitted its prospectus for the first time , but it was rejected by the Shenzhen Stock Exchange due to profitability issues. In 2017, Gemtek once again entered the A-share market, but failed again due to doubts about its performance.

It was not until August 24, 2020 that Gemtek finally rang the bell. The stock issue price was 41.26 yuan per share. At that time, the market was extremely optimistic about Gemtek, and the stock price soared all the way, even rising to 95.22 yuan per share at its peak. The market value exceeded 12 billion yuan, truly solidifying the throne of "the first stock of mobile phone cases."

However, a company that is deeply tied to a certain customer is at risk of a "fatal injury" to its development. In the year of its listing, Huawei, the largest financial sponsor of Gemtek, received a ban from the United States . It is conceivable how much of a blow this brought to Gemtek's revenue. The financial report data can prove that since then, Gemtek has begun to decline.

In 2021, Gemtek's revenue began to decline, and the signs of losses were revealed. Although its net profit remained at 28.22 million yuan that year, its non-net profit was -5.7 million yuan. Since then, it has been out of control and lost more than 100 million yuan in 2022. Until the first half of this year, its cumulative losses reached 140 million yuan .

Affected by this, the share price of Gemtek has also been sliding. Yesterday's closing price was only 20.01 yuan per share, a 52% drop from the issue price and a 79% drop from the peak of 95.22 yuan per share. The market value fell from 12.3 billion to 2.561 billion yesterday, a reduction of nearly 9.8 billion yuan .

Going public on the same day as Anker Innovations, another 3C product giant, the two companies now have completely opposite market performances. Anker's revenue and net profit have increased significantly year after year, with a market value of 34.2 billion yuan, while Gemtek is mired in a profit quagmire .

The gross profit margin of private brands is as high as 60%, but the revenue performance is really weak

The above article said that Gemtek's various declines are related to its deep ties with a single customer and focus on a few partners.

In 2020, the total sales of JMET's top five customers reached 562 million yuan, accounting for more than half of the total revenue ( 65.77 % ) . Among them, Huawei, as the largest customer, accounted for 31% of the share, which is twice that of the second-ranked customer.

In 2021, the total sales of Gemtek's top five customers dropped to 316 million yuan, accounting for 44.14%, while Huawei's share shrank sharply, with a share of 14.37%, almost the same as the second-ranked customer.

In 2022, the total sales of Gemtek's top five customers rose to 332 million yuan, accounting for 46.16%. Huawei still ranked first with a share of 12.84%.

It is not difficult to see that Gemtek really insists on implementing the strategy driven by the "key customer strategy" , but this model has been criticized by many people in the industry, saying that " listed companies doing OEM will not go far after all ."

Perhaps the big sellers also think that this risk is not a small threat, so they pay more and more attention to brand development. Building a brand and deepening the user's mind, in this regard, Anker is a relatively good cross-border player.

JMET also has its own brand. Its own brand X-doria, which is positioned as mid-to-high-end accessories, also has a certain market share in overseas markets. Through platforms such as Amazon, mobile phone cases under the X-doria brand are sold to many countries and regions including the United States, Europe and Japan.

However, compared with ODM/OEM, JMET's own brand is indeed "weak".

In the first half of this year, the revenue of Gemtek's own-brand business only reached 46.63 million yuan, accounting for 19% of the total revenue. That is to say, 81% of the revenue was still contributed by its ODM/OEM business , and this revenue performance has existed for a long time.

In 2022, GMT's own-brand revenue was 167 million yuan, accounting for 23.21% of total revenue;

In 2021, GMT's own-brand revenue was 249 million yuan, accounting for 34.77% of total revenue;

In 2020, JMET's own-brand revenue was 293 million yuan, accounting for 34.23% of total revenue.

It can be seen that the development of Gemtek's own brand has been on a downward trend year after year. Not only has its revenue continued to decline, but its share in the business has also become smaller and smaller.

Is GMT really going to go against the grain and give up the branding path? Logically speaking, no, because compared with ODM/OEM business, the gross profit margin of GMT's own brand business is relatively high. In the first half of this year alone, the gross profit margin of GMT's ODM/OEM business was only 8.15%, while the gross profit margin of its own brand reached 60.26% , a huge difference.

At the same time, the current global mobile phone market demand is sluggish. Data shows that the global smartphone market shipments in 2022 will be 1.207 billion units, down 9.9% from the previous year. Some institutions predict that this year's mobile phone shipments may hit a new low in a decade, and Gemtek's ODM/OEM business may also be affected.

Therefore, increasing investment in its own brands and improving the sales capabilities of its branded business will be beneficial to GMT's overall gross profit and long-term development. However, how to continue to follow the branding path is an urgent problem for GMT.

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