In 2022, mattress companies set off a craze for listing. Musi Co., Ltd. and Qushui Technology successfully landed on A shares in 2022. Against this background, Zhejiang Huajian Intelligent Equipment Co., Ltd. (hereinafter referred to as "Huajian Intelligent"), whose main business is the production and sales of smart mattresses, updated its prospectus on September 6, 2022 and plans to be listed on the Shanghai Stock Exchange main board.
As early as July 2020, Huajian Intelligent submitted a prospectus to the Shenzhen Stock Exchange, planning to list on the GEM. However, after two rounds of inquiries and updating the three-page prospectus, the company voluntarily withdrew its listing application in February 2021. Then in April 2022, the prospectus was submitted again, but the listing destination was changed to the Shanghai Stock Exchange Main Board.
public information shows that Huajian Intelligent was founded in 2004. The main business is the production and sales of smart mattress equipment. The so-called smart mattress is mainly used to manufacture spring cores and is a key production equipment for manufacturing spring mattresses. Well-known mattress companies such as Musi Co., Ltd., Qushui Technology, Xilinmen , etc. are all customers of Huajian Intelligent.
Huajian Intelligent did not publicly respond to the last withdrawal of the IPO application. However, judging from the inquiry letter disclosed by the Shenzhen Stock Exchange, whether the company meets the positioning of the ChiNext , the GEM, and the has always been the focus of the Shenzhen Stock Exchange.
From the perspective of the Shenzhen Stock Exchange's plan for the GEM, the GEM mainly serves growth and innovative enterprises, and should highlight the three innovations (innovation, creation, and creativity) and the four new ones (new technologies, new industries, new business forms, and new models). To this end, the Shenzhen Stock Exchange also listed a negative list of 12 industries and required that the 12 industries be deeply integrated with new technologies such as big data and the Internet before they can be listed.
In the inquiry letter, the Shenzhen Stock Exchange asked Huajian Intelligent to explain whether the company complies with the relevant regulations on the positioning of the GEM, and analyze the relevant situation of the "three creations and four innovations". In the reply letter of
, Huajian Intelligent clearly stated that the company's industry is "C35 special equipment manufacturing industry" and does not belong to the negative list formulated by the Shenzhen Stock Exchange, so it conforms to the positioning of the GEM.
However, judging from the results, the Shenzhen Stock Exchange did not accept Huajian Intelligent's statement, and Huajian Intelligent finally withdrew its application for the GEM IPO.
data shows that from 2019 to 2021, the company's operating income was RMB 209 million, RMB 220 million and RMB 240 million, respectively, with revenue increasing by 19.40% within three years. During the same period, the company's net profit was RMB 90.1159 million, RMB 89.4077 million and RMB 91.4668 million, respectively, with a net profit increase of only 1.5% in three years. In 2021, the overall revenue growth rate of the ChiNext was as high as 23.62%, and the net profit growth rate was 25.08%, far exceeding the profit growth rate of Huajian Intelligent in the past three years.
Huajian Intelligent's poor growth is also related to its industry growth rate and company's product competitiveness. From the industry perspective, Huajian Intelligent's downstream customers are mattress companies, and the prosperity of the mattress industry is affected by the prosperity of the real estate industry.
From the perspective of revenue distribution, Huajian Intelligent's customers are mainly overseas customers. From 2019 to 2021, Huajian Intelligent's overseas sales were 175 million yuan, 179 million yuan and 197 million yuan respectively, accounting for 83.97%, 81.78% and 82.21% of the company's main business revenue, respectively.
Huajian Intelligent overseas customers are mainly developed countries such as Europe and the United States. Data shows that real estate sales in the United States, Europe and other countries are relatively stable, with an annual growth rate of around 7%. Therefore, Huajian Intelligent's revenue growth is relatively slow.
In order to seek performance growth, Huajian Intelligent has turned its attention to the country. From 2019 to the first half of 2022, Huajian Intelligent's domestic sales were RMB 33.4479 million, RMB 40 million, RMB 42.6797 million and RMB 40.4679 million, respectively. The proportion of domestic sales also increased from 16.03% in 2019 to 26.66% in the first half of 2022.
However, unlike in previous years, my country's real estate sales have entered an era of negative growth. According to data disclosed by Kerrie, the sales of the top 100 real estate companies in my country fell by 46.2% year-on-year from January to August 2022. Since my country's real estate sales adopt a pre-sale system, there will be a delay of about two years from sales to home delivery and home purchases, the impact of a sharp decline in real estate sales on the domestic mattress industry will begin to appear in one to two years.
Judging from the performance of mattress companies Mooss Co., Ltd. and Qushui Technology in the first half of 2022, the recession in the real estate industry has begun to feedback to the mattress company. In the first half of 2022, Musi Co., Ltd.'s net profit fell by 5.95%, and Qushui Technology's net profit in the first three quarters of 2022 decreased by 40.69%. From the perspective of downstream markets, with relatively stable real estate sales in Europe and the United States, it is not realistic for Huajian Intelligent to improve its performance through domestic markets.
In addition to the industry prospects are not optimistic, Huajian Intelligent's continuous decline in gross profit margin is one of the difficulties that the company needs to face. According to the first edition prospectus submitted by Huajian Intelligent, from 2017 to the first half of 2022, the gross profit margins of Huajian Intelligent's main business were 70.1%, 65.98%, 61.62%, 59.37%, 55.79% and 54.26%, respectively. The company's gross profit margin has declined for five consecutive years, with a decline ratio of 15.84%.
's explanation for the decline in gross profit margin Huajian Intelligent's explanation is that the company's gross profit margin has declined due to the rise in raw material prices and intensified industry competition. The prospectus shows that Huajian Intelligent's main raw materials are steel, copper, aluminum and other metal products. After the unprecedented loosening of , the Federal Reserve in 2020, metal products such as steel, copper, aluminum and other metal products entered a bull market, and the company's procurement costs also increased.
Compared with foreign countries, my country's mattress spring equipment started late, and compared with foreign manufacturers, it has shortcomings such as weak financial strength, poor technical level and mainly engaged in the production of mid- and low-end mattresses. In addition, due to the low entry threshold, the industry competition is very fierce.
Therefore, lacks independent pricing power in product pricing. Taking Huajian Intelligent as an example, while the procurement cost is increasing, the company's product price is gradually falling. Taking the company's main product, SX-100T, as an example, the product price was 726,000 yuan per unit in 2019, and fell to 574,700 yuan per unit in 2021.
For Huajian Intelligent, there are two major difficulties ahead: one is the rapid shrinking of the domestic downstream market, and the other is the fierce competition in the industry and backward product technology, resulting in the company's gross profit margin falling. For Huajian Intelligent, only by innovating technology and seizing the high-end market can we go against the trend in the downward industry.
(Author: Duan Nannan)
