I had a drink with a friend from a car manufacturer some time ago, and we talked about the commercial vehicle industry that his company operates. When I talked about my situation in the motorcycle company, he smiled bitterly and said, maybe we can still make a profit from one car now. It's not as good as your motorcycle back then. I was so shocked that I was half sober, but I read the financial report of an electric bicycle manufacturing company today, and I almost believed it.
Emma Technology Group Co., Ltd. (stock abbreviation: Emma Technology ) was established in 1999. It entered the electric bicycle industry in 2004 and was listed on the Shanghai Stock Exchange main board in June 2021. Emma Technology is mainly engaged in the research and development, production and sales of electric bicycles, electric mopeds , and electric motorcycles .
In the first half of 2022, Emma Technology's revenue increased by 29.1%, a year-on-year increase of 4.7 percentage points. Although it was not as good as the first half of 2020 before the listing, it finally avoided the embarrassment of a significant decline in revenue growth in the year of listing. The performance of net profit was quite perfect, increasing by 1.2 times. Is it really because of high oil prices and stagnant wages that workers are replacing a large number of cars with battery-powered cars? It seems that it is not all a joke, some friends may actually do this.
Its industry, products and regions are relatively single. More than 98% are in the domestic battery car and accessories market. We will not compare the revenue composition of categories.
gross profit margin increased significantly by 3.3 percentage points, surpassing the level in the first half of 2019, reaching 14.7%; combined with revenue growth, gross profit also reached a half-year high of 1.38 billion yuan since data is available.
Similarly, net profit also hit a record high of 690 million yuan, but the return on net assets of and fell by 2.3 percentage points year-on-year, ending the first two years. In the first half of the year, the "Sunflower Collection" plus "Subdued Dragon" were played The reason for the history of "Eighteen Palms" is of course the dilution effect brought about by the growth of its net assets after listing and financing. But converted into annualized return on net assets, the first half of 2022 also showed its unique skills.
is already much better than many car companies in this regard, not to mention those second-tier car companies that are on the verge of losing money and relying on subsidies to survive. Even SAIC Motor only has a return on net assets of 2.5% in half a year, but it cannot compare with the size of its revenue. , compared with the size of revenue, electric bicycle companies still seem too small.
The increase in gross profit margin has brought about a decrease in the ratio of operating costs to revenue. Driven by the scale effect, expenses during the period withstood the pressure of rising labor costs and even decreased by 0.1 percentage point year-on-year, thus expanding the scope of the main business. Profitability. Its total cost to revenue ratio dropped by 3.4 percentage points, and this is the main reason for the increase in net profit.
However, among the period expenses, the saving of sales expenses and financial expenses is an important reason, while the growth of R&D expenses and administrative expenses is faster than the revenue, especially the growth of "taxes and surcharges" is quite fast.
We checked its cash flow statement. In the first half of 2022, "various taxes and fees paid by " were as high as 270 million yuan, much higher than the 120 million yuan in the same period last year.
Among taxes and surcharges, the bulk of the growth is in urban construction tax , education fees (local education fees) surcharges and stamp taxes. The main growth is related to the growth of the main tax "value-added tax". The gross profit margin is large, so of course you have to pay more Value-added tax and surcharges, you also have to pay more income tax. It’s not bad to have such an electric vehicle company in the local area. It pays 270 million in taxes in half a year. It is much more civilized than installing more cameras to collect vehicle fines.
During the period, the growth of labor costs in expenses was very fierce. The growth of labor costs in the lowest sales expenses exceeded the revenue growth. Whether it was due to the increase in the number of employees or the increase in per capita income, in fact, the overall production of Emma Technology Operating efficiency has declined. In the current economic situation, there are not many companies that can increase operating efficiency. Emma Technology is pretty good, at least the ratio of expenses to revenue has been controlled throughout the period.
The performance of cash flow can be said to be quite excellent. The net cash flow from operating activities has more than doubled year-on-year, and it has been achieved with almost no investment.However, as we will see later, the source of net cash flow from operating activities that is significantly higher than net profit is not sustainable.
Judging from its financial expenses of -160 million yuan, I thought their solvency was exaggerated, but the result was unexpected. The asset-liability ratio was as high as 64.2%, and part of 's long-term assets had to be provided by current liabilities, The long-term solvency of is not strong. Although the current ratio of
0.9 and the quick ratio of 0.83 have improved compared with the beginning of the year and the same period last year, the short-term solvency of is still obvious from the surface of these data. On the weak side, this is an important reason why its annualized return on net assets is higher than its gross profit margin. In other words, they have practiced the skills of "Sunflower Collection". Of course, it is not all "Sunflower Collection" that uses financial leverage. ", they also practiced the highly efficient "Eighteen Dragon Subduing Palms".
Emma Technology's financial strategy is quite radical. In addition to its debt repayment indicators, they have almost no long-term liabilities. Most of them are current liabilities. As a company with tens of billions of liabilities, this is not much. See you.
Fortunately, the quality of its current assets is quite good. cash and cash equivalents occupy the top three positions in current assets, totaling 7.5 billion yuan, accounting for 86.2%. Inventory is the fourth largest current asset, accounting for 7 billion.
Emma Technology's inventory management is quite effective. Compared with at the beginning of the year and the same period last year, has declined, and the ratio to current assets has dropped significantly. This is not easy to do when revenue is growing.
Its current liabilities are even more interesting. There is almost only one item worth mentioning, which is " notes payable and accounts payable" which accounts for 85.7% of the current liabilities ratio and more than 84% of the total liabilities ratio. Except for this item, the others are either prepaid order payments (i.e., contract liabilities) or temporary liabilities that have not yet reached the payment period. They are not important at all. Emma Technology has no substantial interest-bearing liabilities.
I can only say that it is unlucky to be a supplier to Emma Technology, because they are so in debt. With less than 300 million receivables , they can owe 8.3 billion yuan in "notes payable and accounts payable", which is a gap of more than 20 times. In this way, Emma Technology is still not satisfied. At the end of the first half of 2022, it increased by 1.24 billion yuan compared with the beginning of the year, and increased by 2.22 billion yuan compared with the same period last year. This is the main reason why their net cash flow from operating activities in this period is much higher than their net profit.
As Emma Technology, which operates electric bicycles, in addition to being incomparable with automobile companies in terms of revenue scale, it is really ahead of these car companies in all aspects. But its account period is even longer than that of those vehicle companies. On the surface, it is a sign that its supplier is effective in managing . But you can't go too far. You can use billions to manage your finances to earn interest, but owe nearly tens of billions to suppliers. It's easy to lose friends with this kind of gameplay.
Vehicle companies play with the supply chain. When I worked for a listed motorcycle company, the entire supplier file was one of the company's core secrets. The supplier system is extremely important to the vehicle manufacturers. They must not only care about their own interests and follow the law of the jungle where the big fish eats the small fish. If you eat your own meat, you must also share some soup with your partners. Otherwise, when things go smoothly, everyone will They are all obedient, and once business difficulties arise, they all come to collect debts.
statement: The above is a personal analysis and does not constitute investment advice to anyone!
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