A generation of headphone foundry enterprises How to "cook" themselves out of color?

Author: Tachibana Song

For the audio-visual electronic old burners, the "boiled" headphones have a taste.

The newly acquired headphone cable is too new, the run-in is not enough, it takes hundreds of hours to "cook", the high tone has to be clear, and the bass is majestic.

After market screening, the electroacoustic products of Sony, Sennheiser, Soundpo, Harman Group and other enterprises have really won the trust of consumers. In the selection of headphones and other peripherals in the raider post, the products of these brands are often compared.

Recently, Tianjian Electroacoustic Co., Ltd. (hereinafter referred to as "Tianjian Shares"), which supplies well-known enterprises such as Sennheiser, Yinpo and Harman Group, has also submitted a prospectus for listing on the Growth Enterprise Market (GEM).

How about this headphone foundry company?

Tianjian shares rose strongly after encountering the "noble" Harman Group

According to public information, Tianjian co., Ltd. was established in April 2015, and its main business is the research and development, manufacturing and sales of micro electroacoustic components, consumer, industrial and automotive electroacoustic products, and health acoustic products. Its main products are all kinds of headphone products, including headphones (wireless headset, wired headset), TWS headset, in-ear headset (wireless in-ear, wired in-ear), walkie-talkie accessories and car accessories, acoustic parts (horn, microphone) and so on.

Tianjian shares intend to issue no more than 29.06 million new shares this time, and plan to raise 600 million yuan, which will be used for the ganzhou Ouxiang electroacoustic product production expansion construction project, the upgrade construction project of the Tianjian electroacoustic R&D center and the supplementary working capital project.

For Tianjian shares, the year of 2020 is destined to be extraordinary.

In 2019, although the revenue of Tianjian shares increased, the net profit of the year fell from 15.7962 million yuan to 7.8546 million yuan. At this time, harman Group's big orders brought changes to Tianjian shares.

As an enterprise mainly engaged in micro electroacoustic components and electroacoustic products, Tianjian co., Ltd. mainly adopts the ODM model for operation, and HARMAN Group, Sennheiser, Philips and other enterprises are its important customers.

HARMAN Group is a well-known manufacturer of audio products, and in 2017, HARMAN Group began a cooperation with SkyKey. At first, the business scale of the two was not large, but since the fourth quarter of 2019, the business between the two has become more and more close.

In 2020, the sales revenue of Tianjian to HARMAN Group has reached 62.47%, and its sales have increased by more than 500 million yuan compared with 2019.

In fact, the listing criteria selected by Tianjian shares are "the net profit in the last two years is positive, and the cumulative net profit is not less than RMB 50 million". It can be said that if it were not for the cooperation with HARMAN Group, the listing would be a distant dream in terms of the net profit of Tianjian shares in 2019 of less than 8 million yuan.

At the same time, the rapid growth of performance has not only brought the benefit of meeting the listing standards to Tianjian shares, but also indirectly solved the crisis of "five insurances and one gold" payment faced by it.

As can be seen from the prospectus, before 2020, the situation that Tianjian shares did not pay "five insurances and one gold" for employees was very prominent. From 2018 to 2019, the proportion of five insurance contributions of employees of Tianjian Shares did not reach 60%, and the proportion of provident fund contributions was 18.74% and 17.45% respectively.

In 2020, the payment of "five insurances and one gold" for the employees of Tianjian Shares tended to be normal, increasing to more than 90%.

For Tianjian shares, the payment of "five insurances and one gold" in 2019 will cause greater pressure on its performance. According to the data, from 2018 to 2019, the amount of social security and provident fund payable by it was 10.7383 million yuan and 12.3515 million yuan respectively, accounting for 76.64% and 283.99% of its net profit for the current period, respectively. That is to say, the amount of social security and provident fund that should be paid back in 2019 is close to 3 times of net profit.

(Source: Tianjian Shares Prospectus)

Although according to the reply of the relevant departments, Tianjian shares have not been punished for underpayment, and in fact, the controller Feng Yanru also promised that he will unconditionally bear the relevant supplementary payment and penalty in full, but the risk of Tianjian shares being ordered by the regulatory authorities to rectify, make up, fines and other penalties still exists.

Compared with listed companies in the same industry, the debt pressure of Tianjian shares is slightly heavier.

According to the prospectus, as of the end of June 2021, the current ratio of Tianjian shares was 1.38, the quick ratio was 0.97, and the asset-liability ratio was 57.65%.

Although the above data has improved compared with the end of 2020, the debt situation of Tianjian shares is still not optimistic compared with comparable companies in the same industry.

As of the end of June 2021, the average current ratio of comparable companies in the same industry was 2.55, the average of the quick ratio was 1.66, and the average asset-liability ratio was 39.38%. This shows that in terms of short-term and long-term solvency, there is a significant gap between The Key shares and the industry average.

If you want to make up for these gaps, you need to successfully list and raise funds.

In the prospectus, Tianjian shares said that its higher asset-liability ratio is mainly due to the fact that its financing channels and financing capabilities are inferior to those of listed companies. If the funds raised by this offering are 600 million yuan, after the funds are raised, the asset-liability ratio will be reduced to 33.66%, which is similar to the average level of comparable listed companies in the same industry.

TWS headphones suddenly rose up, and Tianjian shares hitched a ride on the "hitchhiker"

As a company that has only "strong" risen in 2020, Tianjian is not a pioneer in the electroacoustic equipment manufacturing industry. Goertek (002241.SZ), Gongda Electroacoustic (002655.SZ), Guoguang Electric Appliance (002045.SZ), Chaoyang Technology (002981.SZ) and Jiahe Intelligent (300793.SZ) and other enterprises have made achievements in the electroacoustic equipment manufacturing industry.

The development of electroacoustic equipment manufacturing industry is closely related to the wide application of various types of audio. With the gradual popularization of smart phones, the electroacoustic industry has ushered in new development opportunities. This opportunity is not limited to the smart phone itself, and the various consumer electronic products born around the smart phone have also broadened the scale of the electroacoustic equipment manufacturing industry.

Since Apple launched the first generation of Airpods in September 2016, the TWS headset market has grown rapidly. Counterpoint data shows that the annual shipment of TWS headphones worldwide increased from 9.18 million units in 2016 to 233 million units in 2020, with a compound annual growth rate of 124.45%.

Such as The "new generation" electroacoustic companies such as Tianjian Shares have also taken advantage of the sudden rise of TWS headphones to successfully "overtake in curves" and catch up with the industry's vanguard.

According to the prospectus, since 2019, Tianjian has begun to get involved in the TWS headset business, and from 2019 to the first half of 2021, its revenue accounted for 10.68%, 47.77% and 30.36% respectively, becoming one of its main products.

More importantly, the market potential of TWS headphones, especially Android TWS headphones, has not yet been fully explored.

The data shows that after years of rapid development, Apple's TWS headphones have basically entered the stock market. In 2020, Apple's TWS headset market share fell to 31%, and it is predicted that the market share may further drop to 27% from 2021.

At the same time, Android-based TWS headphones are eating into the market after Apple's exit.

In terms of market share, even if the share declines, Apple still firmly occupies the first place, followed by Xiaomi, Samsung, and JBL3 brands. The JBL brand is part of the HARMAN Group.

And for now, the TWS headset is still incomplete, and there are still many features to be added. Since 2020, many manufacturers have made efforts to improve the battery life, connection stability and sound quality of TWS headphones. As a wearable device, TWS headphones may also be like electronic bracelets and watches, adding new functions in continuous improvement.

That is to say, even in the stock market, Tianjian shares can still rely on the continuous upgrading of products and expand new performance growth points.

However, for ODM manufacturers such as Tianjian Shares, even if the market continues to develop, its position is still not as stable as Taishan, which depends on the characteristics of the industry.

The production chain of headphone products is long, and it is difficult for a single company to contract the entire industrial chain. Therefore, for ODM manufacturers, it has become a common practice in the industry to find outsourced manufacturers and supplement their own production capacity. With the deepening of the industry's dependence on foreign co-manufacturers, the competitiveness of EACH ODM enterprise is closely related to its own design, management and other capabilities.

Just as HARMAN Group can bring up the tianjian shares within 1 year, the new ODM company will not grow up as time-consuming and laborious as traditional manufacturing.

Tianjian shares also said in the prospectus that if the operation and procurement strategy of HARMAN Group changes significantly in the future, or its cooperative relationship with HARMAN Group is replaced by other suppliers, it may adversely affect the operation.

If you want to maintain today's market position and go to a higher level, Tianjian shares may need to work harder to build a moat and make itself an "irreplaceable" ODM enterprise.

(This article is for reference only and does not constitute investment advice, and you do so at your own risk)