"Yunchuang Finance" Text / Zhang Yan
Ningbo Boling Electric Co., Ltd. (hereinafter referred to as "Boling Electric") mainly engages in the research, development, design, production and sales of kitchen appliances. The main products include food processors and mixers. It has established cooperative relationships with internationally renowned small home appliance companies such as Capital Brands, Philips, SEB, Conair, Princess House, Hamilton Beach, BSH and other internationally renowned small home appliance companies.
"During the reporting period, Boling Electric's gross profit margin has been declining and has fallen below 20%. At the same time, in 2021, Boling Electric's net profit attributable to shareholders after deducting non-operating items also showed a significant decline compared with 2020. Many signs indicate that Boling Electric lacks core competitiveness, and the positioning of GEM is questionable. The dependence on overseas businesses has made its operating sustainability face greater challenges."
From 2019 to January-March 2022, Boling Electric's operating income was 870 million yuan, 1.696 billion yuan, 1.973 billion yuan and 346 million yuan, respectively, and the corresponding net profit attributable to shareholders was 62.2492 million yuan, 111 million yuan, 78.6128 million yuan and 5.7213 million yuan, respectively.
Boling Electric's performance fluctuated significantly. In 2021, although Boling Electric's operating income increased by 16.38% compared with 2020, its net profit attributable to shareholders after deducting non-operating items fell by 21.97% compared with 2020. This review "red line" of performance decline, which is close to 30%. Boling Electric's revenue increase but not increase profits is significant, and this dilemma is closely related to the decline in gross profit margin during the reporting period.
During the reporting period, the gross profit margins of Boling Electric's main business were 22.86%, 21.01%, 16.06%, and 16.65%, respectively, while the average gross profit margins of the main business of comparable companies in the same industry were 27.81%, 28.14%, 23.42%, and 23.05%, respectively. The gross profit margins of Boling Electric's main business were not only significantly lower than the average value of comparable listed companies in the same industry, but also the trend of significant decline during the reporting period was obviously contrary to the trend of peers. In 2021, the gross profit margin of Boling Electric's main business has been as low as 16.65%, with a gross profit margin of less than 20%. This is probably difficult to believe what Boling Electric claims to have high innovation capabilities with technology and R&D capabilities. Boling Electric's identity as a high-tech enterprise is also doubtful. If the gross profit margin of GEM companies is extremely low, they have to make people wonder whether they meet the requirements of "three innovations and four innovations". In the industry, there has been a saying that companies with gross profit margins below 20% try to avoid applying for the GEM.
Boling Electric's gross profit margin continued to decline significantly during the reporting period, which also reflects to a certain extent the lack of competitiveness, low added value of the product, and its bargaining power with large customers is also in a passive position.
During the reporting period, the company's sales revenue from the top five customers was 80.15%, 84.65%, 76.94%, and 80.88%, respectively, with a high customer concentration. Among them, the sales revenue of Capital Brand, the largest customer, accounted for 68.39%, 66.91%, 49.62%, and 51.70%, respectively. Boling Electric Appliances is relatively concentrated downstream, and is basically a well-known overseas small home appliance dragon brand brand enterprise. This makes Boling Electric very passive in both control of the upstream raw material prices and the downstream sales price bargaining power, which will eventually cause the squeezing of profits and . The lack of voice also makes it difficult for its raw material price to transmit to the downstream.
Boling Electric's raw material prices during the reporting period showed an upward trend and have been at a high level, but the decline in the price of its core product mixer is proof of this.
It is worth mentioning that the employees of Boling Electric Appliances are generally not highly educated. The number of employees with bachelor's degree or above is only 211, accounting for 10.79%. The employees of Boling Electric Appliances have 314 R&D technicians. Even if all employees with bachelor's degree or above are R&D personnel, at least 103 R&D technicians are less than bachelor's degree. The GEM has always been known for their innovation and growth, while the employees of Boling Electric Appliances are generally not highly educated, which is likely to limit their innovation ability and development potential. In addition, during the reporting period, Zhong Zhineng and Quan Mingji, the core technical personnel of Boling Electric, resigned one after another. Whether it may have an adverse impact on the company's R&D capabilities remains to be considered.
In addition to the problem of declining gross profit margin, Boling Electric's high reliance on overseas business is also another issue that needs attention.
During the reporting period, Boling Electric's main business revenue was mainly exported, accounting for more than 97%, mainly sold to the United States and Europe. Among them, air fryer , oven, drip coffee machine exported to the United States was levied by the United States in December 2019. Although the tariffs on the company's core products of food processing and mixers were re-exempted on March 23, 2022 Eastern Time, if the Sino-US trade frictions further escalate in the future, food processing and mixers will be included in the US tariff list, which will have an adverse impact on the company's profitability and North American market development.
In fact, Boling Electric's overseas revenue during the reporting period showed a growth trend, and the company's performance growth is mainly driven by the growth of export revenue. However, at present, the international economic situation and regional political situation are still complex. If there are adverse changes in the future, it is likely to have an adverse impact on Boling Electric's continued operating capabilities.
