Image source @ Visual China
Wen 丨 新熵, Author 丨 Jiarong, Editor 丨 Yi page
Danyang seems to have become synonymous with glasses.
Taking advantage of the east wind of reform and opening up in the 1980s and the superior geographical location, a "glasses kingdom" has grown on the land of this county-level city in Jiangsu. According to incomplete statistics, three out of every four glasses in China come from Danyang.
When Xie Gong was 18 years old, he was forced to go north from Wenzhou to the northeast due to his family's poverty, selling semi-finished spectacle lenses and frames for a living. At that time, he would not have imagined that 35 years later, he would create a lens empire in Jiangsu Danyang.
This place where merchants and soldiers must compete accommodates more than 1,600 eyewear companies and more than 50,000 employees, and merchants from all over the country flock to it every day. No one knows which of these brands will be the first to go public, and Mingyue Lens has become the "first person to eat crabs".
The so-called "all the soldiers in this world are myopia", the number of myopia in China has exceeded 700 million, that is to say, one in every two people is myopic.
This huge market cake, in the eyes of millions of domestic glasses companies, has undoubtedly become a lamb to be slaughtered. Coupled with the trend of domestic products and the blowing of the wind direction of domestic lens replacement, the successful listing of Mingyue lens at this time has made it the focus of attention as the "first share of domestic lenses".
On December 16, Mingyue Lens officially landed on the ChiNext board of the Shenzhen Stock Exchange, with an issue price of 26.91 yuan / share, the stock price on the day of listing reached a maximum of 78.04 yuan / share, and the closing price of 67.09 yuan / share on the same day, with a total market value of 9.013 billion yuan.
In the process of listing, the disclosure of the financial data of Mingyue Lens also allowed the "huge profits" of the lens industry to officially stand under the sun.
Although Xie Gongwan compared Mingyue lens to "Moutai to liquor, iPhone to smart phones", under careful examination, this once known as the "Whampoa Military Academy of the Glasses Industry" has not really realized the freedom of domestic technology.
01, technology is not free
According to the statistics of the World Health Organization, the domestic eyewear product market size is expected to exceed 100 billion yuan in 2023. But behind the seemingly mature industrial chain, domestic eyewear companies can't get rid of the criticism of relying on overseas technology, even if even Mingyue lens is no exception.
Although Mingyue Lens constantly emphasizes its technical advantages and discloses in the prospectus, the company was identified as a "high-tech enterprise" during the reporting period and enjoyed a preferential income tax rate of 15%. But some of the publicly available data still makes the market suspicious.
According to the prospectus, since 2018, the proportion of R&D investment in Mingyue Lens to revenue has been hovering around 3%. As of June 30, 2021, the company's R&D technicians accounted for only 9.49% of the total number of employees, which was the lowest proportion of the company's employees in the professional division of labor.
The importance of Bright Moon Lenses to technology can also be found in the distribution of employee salaries in its positions.
In terms of the comparison of the salary level of employees in various positions in recent and annual increases, the salaries of sales, management and production personnel in 2018-2019 are rising, of which the salary of sales personnel has increased by 26.09%, while the salary increase of R & D personnel is negative.
From January to June 2021, the salary of sales and management personnel in each position increased by more than 20%, the salary of production personnel increased by 13.88%, while the salary of R & D personnel increased by only 7.05%.
In terms of the number of patents, as of June 30, 2021, Mingyue Lens has 12 invention patents, 54 utility model patents and 21 appearance patents. The comparable enterprises in the same industry, Yishilu, has so far owned more than 9,500 patents (including patents in the application); Jiangsu Vision New Material has 33 patents, including 27 invention patents and 6 utility model patents.
Whether it is comparable to international or domestic comparable enterprises in the same industry, the number of technology patents of Mingyue Lens is inferior to that of competitors.
As far as lenses are concerned, under the premise of the same other parameters, the higher the refractive index of the lens, the lower the thickness of the edges of the lenses, the higher the technical requirements, and the more expensive the price. At present, domestic high refractive index products are almost all imported.
From June 2018 to June 2021, Mingyue Lens purchased specific varieties of refractive index resin monomers of 1.60 and below from KOC Korea and its affiliates, accounting for more than 90% of the same kind of resin monomers purchased in the current period, and purchased 1.67 or more refractive index resin monomers from it, accounting for 100% of the amount of such resin monomers consumed in the current period. In order to strengthen cooperation, Mingyue even directly established a holding subsidiary with South Korea's KOC, Jiangsu Ke'aoxi.
Although Mingyue denied in the prospectus that there is a huge dependence on South Korean KOC, she also admitted that the price fluctuations of the company's main raw materials have a greater impact on the production costs of the company's products. Since 2018, the company's main raw materials have accounted for more than 50% of the main business costs for a long time. From January to June 2021, it once accounted for 57.12%.
In addition to KOC, Mitsui and Mitsubishi of Japan are also the main raw material suppliers of mingyue lens MR series resin monomers. As an important raw material for Mingyue products, the source of raw materials is relatively concentrated, which undoubtedly increases the risk to the products and operations of Mingyue lenses.
As the main product of Mingyue, if even the raw materials in the upstream of the industry cannot achieve self-sufficiency, there is still a long way to achieve technical freedom in the true sense, grasp the initiative in international competition, and become a veritable high-tech enterprise.
02, behind the screen
When it comes to bright moon lenses, it is always inseparable from two words - "hegemonic screen". Whether it is a railway station, an airport, a bus bus or a landmark billboard, Chen Daoming can be seen everywhere holding a promotional photo of a bright moon lens. Even Mingyue used "hegemonic screen" to describe herself in the company's "2020 Brand Memorabilia".
(Source: "Bright Moon Lens 2020 Brand Memorabilia")
Behind the hegemonic screen, it is naturally inseparable from the vigorous investment of money. Between 2018 and 2020, Mingyue's sales expenses soared from 76.82 million to 113 million yuan, an increase of 47.1%, 6-7 times the research and development expenses of the same year. In 2020, sales expenses accounted for more than 20% of total revenue.
Compared with the domestic comparable companies in the same industry, the R&D expense rate of Mingyue Lenses is less than half, but the sales expense rate is more than four times.
In September 2017, Mingyue signed endorsement agreements with Chen Daoming, Holgus Haoyue Culture Media Co., Ltd., Nanjing Jiangpan Film and Television Culture Studio, and Bodestone (Beijing) Culture Media Co., Ltd. Chen Daoming's 2 million image spokesperson fees, plus advertising planning and publicity-related endorsement fees, Mingyue spent 32.88 million yuan on this during the reporting period.
Mingyue's passion for marketing is pervasive.
Offline experience stores, regional field promotion, hiring brand spokespersons, to TV advertising implants, offline advertising placement, e-commerce platform promotion, Mingyue has invested a lot of real money and silver. Among them, Mingyue especially loves TV advertising implantation and e-commerce platform promotion, and only two spend half of Mingyue's marketing costs.
This is also why the figure of Mingyue Lens can be seen in variety shows such as "Do Not Disturb", "The Strongest Brain", and "Zero Distance".
As for why Mingyue Lens is so keen on marketing, it is inseparable from the characteristics of the domestic lens industry. In the case that domestic technology can not yet meet international standards, international manufacturers Essilor and ZEISS head effect is obvious, relevant data show that only the two occupy a third of the domestic lens industry market share.
On the Tao system platform, Essilor and ZEISS lens products are as much as a few thousand yuan and as low as a few hundred yuan, while the price of domestic lenses is uneven, and the lowest can be as low as dozens of yuan.
It is not surprising that there is a price war in the lens industry, the homogenization of its own products is obvious and belongs to low-frequency consumer goods, in order to break through the siege in such a situation, in addition to the low price volume can only be marketing. When the marketing rate increases, the cost of the product rises, which also means that blindly driving down the price at this time is not a long-term solution.
Obviously, Mingyue chose the latter in the two ways of price reduction and marketing.
Asked by an spectacle lens dealer about Mingyue lenses, "New Entropy" said: "Mingyue is mainly selling brand premiums and capital operations. The product can only be said to be so-so, and some product lines are OK. The quality of lenses is considered to be moderate in many factories in China, such as Weixing, Connet and other quality in the domestic are the first line. Comparing the optical giants such as ZEISS and TAG Heuer, it is needless to say that the comparison of the share of R&D and advertising investment in the Listing Report of Mingyue is clear. ”
In 2018, Shanghai Mingyue Danyang Branch violated the Advertising Law of the People's Republic of China by using absolute language in advertising slogans and was fined 205,000 yuan. On the way to expanding brand awareness, Mingyue Lenses may seem too eager.
03. Sustainable profiteering?
The windfall profits of the glasses industry have long been no secret, and the listing of Mingyue has completely opened this "black box". According to the data of the prospectus from January to June 2021, the cost of Mingyue's mirror is only 57.03 yuan / pair, but the highest online sales price can be sold to about 2000 yuan.
(Unit cost of Mingyue lens products, source: Prospectus)
In order to escape the quagmire of the price war, Xie Gongwan announced the price increase at his 2019 strategic press conference and said that he would "permanently withdraw from the price war". From 2018 to June 2021, the price of Mingyue lenses rose from 11.16 yuan / piece to 17.51 yuan / piece, an increase of 56.89%.
While prices continue to rise, revenue growth has not risen with it, but has continued to decline. Revenue from 2018 to 2020 was RMB510 million, RMB552 million and RMB539 million, respectively. Revenue growth rates were 19.51%, 8.46% and -2.32%, respectively. If the revenue in the first half of 2021 is calculated, the revenue in 2021 is expected to be 543 million yuan, an increase of only 6.47% over three years ago.
The prospectus also discloses that Mingyue's gross profit margin can reach about 50%, the distributor's gross profit margin remains around 40%, while the retailer's gross profit margin can be maintained at more than 80% all year round, and the gross profit margin of offline self-operation can even reach 90% in the same period.
For the higher gross profit margin of offline self-operated channel lens products, Mingyue explained: "The issuer's customers under the main offline self-operated channels are mainly mid-range natural person consumers. As a lens manufacturer, the issuer can also obtain the pricing power of the high premium space on the retail side, thereby obtaining a higher margin space. ”
Despite the gross profit margin, Mingyue's net profit margin is far from the same, only about 10%. In addition to the uncontrollable cost of raw materials, coupled with large-scale investment in marketing, it is normal for the net profit margin to fall short of expectations.
In fact, the eyewear industry is mainly composed of three parts. They are upstream raw material suppliers, midstream producers and downstream retailers. After the middlemen earn the difference layer by layer, the price of dozens of costs is already thousands of yuan in the hands of consumers.
Taking the 1.60 anti-blue light aspherical resin sheet as an example, the issuer's shipment price added 18.5 yuan / piece, and the retailer's shipping price continued to add 162.5 yuan / piece. Coupled with the cost and premium space of labor, water and electricity, it is not surprising that the sales price has doubled several times the cost price.
Although the gross profit margin of retailers is so high, many retailers still complain that Mingyue lens is "not rude".
These stores agree that Mingyue Lenses is positioned as high-end while not wanting to give up the low-end market. Therefore, the high price sold in the physical store was greatly discounted on the e-commerce platform, which made the store that sold Mingyue lens miserable under the pressure of rent and labor costs.
According to the prospectus, from 2018 to 2020, the number of Mingyue lens distributors decreased from 95 to 82. Although it is explained to be due to the further optimization of the dealer structure. But more reasons can also be seen in the "bitter water" of retailers.
In 2018, the capacity utilization rate of lenses and lens raw materials of Mingyue Lenses was 99.43% and 99.04%, respectively, while in 2020, both fell to 77.01% and 66.65%. Although the capacity utilization rate continues to decline, it does not block the enthusiasm for the expansion of Mingyue Lenses. For the amount of 567 million yuan raised, Mingyue Lens said that 440 million yuan will be used for lens expansion projects. The market has questioned the rationality of this strategy.
As of December 27, the latest closing price of Mingyue Lens was 44.45 yuan / share, down 33.7% from the first day of listing. It is still unknown where the "return of value" insisted on by Mingyue Lens can lead this glasses empire to. But what is certain is that the story of the empire is not easy to tell after all.