Recently, Kang Liyuan, which specializes in the OEM of fitness equipment, updated the prospectus.
80% of the revenue is exported, and 74% of the revenue of domestic e-commerce platforms in 2019 comes from brushing orders
Kang Liyuan is mainly engaged in the research and development, production and sales of fitness equipment, the company's products include comprehensive trainers and other oxygen-free fitness equipment, treadmills and other aerobic fitness equipment such as triple bars and other outdoor national fitness equipment and other small categories of equipment.
However, the domestic fitness equipment industry started late, the lack of well-known equipment brands, so kang liyuan's main business is to provide OSM/ OEM oem business for other well-known fitness equipment brands at home and abroad, and overseas export sales have also become the company's most important source of income.
From 2018 to 2020 and the first half of 2021, Kang Liyuan achieved operating income of 371 million yuan, 382 million yuan, 675 million yuan and 375 million yuan respectively, and the net profit attributable to the mother was 14.7434 million yuan, 35.6307 million yuan, 93.366 million yuan and 47.6202 million yuan respectively in the same period.
Among them, the company's overseas sales revenue accounted for 72.63%, 71.12%, 80.16% and 85.18% of the main business income in the current period, respectively.
In the domestic sales that do not account for a high proportion, Kang Liyuan is also a moth that continues to emerge, and behaviors such as brushing orders and improper competition emerge in an endless stream.
According to the prospectus, during the reporting period, Kang Liyuan had a single brushing behavior on platforms such as Tmall and Jingdong Mall. Employees of the company's e-commerce department place orders to buy products on the platform through friends or teams engaged in brushing orders, and the store sends empty bags or gifts to the buyers, while Kang Liyuan pays the funds and single commissions to the brushing personnel through the employees of the e-commerce department.
From 2018 to 2020, the amount of Kang Liyuan's brush orders in each period was 8.1441 million yuan, 20.9577 million yuan and 6.5909 million yuan, accounting for 2.22%, 5.52% and 0.98% of the main business income in the current period, respectively.
However, Kang Liyuan's domestic online revenue has grown slowly, and during the same period, the company's domestic e-commerce revenue was only 35.1141 million yuan, 28.2821 million yuan and 27.2242 million yuan, respectively, while the amount of brushing orders in each period accounted for 23.19%, 74.1% and 24.21% of the domestic e-commerce revenue in the current period, respectively.
In addition, in 2017, Double 11 Kang Liyuan carried out a prize sales activity in the "Junxia Sports Flagship Store" operated by the Tmall platform, and the content of the activity was to give away a treadmill for the top 20 customers who paid the amount on the day of Double 11.
However, the list of the top 20 award-winning users announced by the store after the event did not match the actual consumption of the top 20 customers, and in the end, the Pizhou Municipal Market Supervision Bureau imposed a fine of 50,000 yuan on Kang Liyuan.
The gross profit margin of independent brands is nearly 30% higher, and more than 60% of the revenue comes from the top five customers
In the "smile curve" of economics, manufacturing links such as foundry have always been the places with the lowest profit margins, and even if they enter the supply chain of many large fitness equipment brands, Kang Liyuan's profit margin is not high.
During the reporting period, the gross profit margin of KangLiyuan's ODM/OEM oem business was 25.16%, 28.08%, 33.75% and 31.09% respectively, although the profit margin has increased year by year, but it is still in a position relative to its own brand, and the gross profit margin of the latter in the reporting period was 32.04%, 39.35%, 53.37% and 59.03% respectively.
By the first half of 2021, the gap between Kang Liyuan's foundry business and the gross profit margin of its own brand sales widened to 27.94%. At the same time, the increase in international logistics export sea freight rates caused by the epidemic is also further compressing Kang Liyuan's profit margins.
According to the China Export Container Freight Index, sea freight rates have continued to rise rapidly since June 2020, with a cumulative increase of 56.24% in the first half of 2021 alone.
On the one hand, the vast majority of Kang Liyuan's overseas sales revenue comes from offline sales of products, and during the reporting period, the proportion of this part of revenue was 71.68%, 66.87%, 69.63% and 72.96% respectively.
In this model, the settlement method of both parties to the transaction is usually based on the FOB price, that is, the export sea freight is mainly borne by the customer, and Kang Liyuan also mentioned in the prospectus that the continuous rise of the sea freight has curbed the customer's order demand to a certain extent.
On the other hand, in recent years, Kang Liyuan has gradually begun to carry out cross-border e-commerce business of its own brands through e-commerce brands such as Amazon, and when selling products from online platforms, Kang Liyuan needs to bear the sea freight, so the growth of the company's performance is also limited to a certain extent by the increase in sea freight.
In addition, the concentration of Kang Liyuan's downstream customers is also very high, and the purchase willingness of major customers will also greatly affect the company's profitability.
During the reporting period, the company's sales revenue from the top five customers accounted for 56.67%, 54.04%, 58.43% and 60.05% of the main business income in the current period, respectively, of which the direct and indirect sales revenue to the first major customer Impex accounted for 38.7%, 35.62%, 40.18% and 40.94% of the main business income in each period, respectively.
It is worth mentioning that Kang Liyuan listed Yingpaisi and Shuhua Sports as comparable listed companies in the same industry in the prospectus, and its customer concentration is about 34%, and Kang Liyuan's increasing dependence on large customers is significantly higher than this.
The actual controller holds more than 98% of the shares and has used Wang Junxia's aura to open business
According to the prospectus, the current controlling shareholder and actual controller of Kang Liyuan are Hengdunjian, which holds 98.07% of the shares of Kang Liyuan to achieve absolute control over the company.
In addition, many relatives of Hengdunjian also hold relevant senior management positions in Kang Liyuan, such as his son Heng Siming as a director and deputy general manager of the company, Hengdunjian's spouse and deputy general manager Wei Wei as a sister-brother relationship, and Hengdunjian's nephew Xu Jia also served as deputy general manager in KangLiyuan.
It is worth mentioning that Kang Liyuan was once named "Xuzhou Junxia Fitness Equipment Co., Ltd." (hereinafter referred to as : Junxia Fitness) when it was founded, borrowing Wang Junxia's Olympic champion aura to start the initial operation. Wang Junxia won the gold medal in the women's 5,000m final at the 1996 Atlanta Olympic Games, becoming China's first Olympic long-distance running champion, known as the "Oriental Sacred Deer", and was inducted into the IAAF Hall of Fame in 2012.
However, Wang Junxia has never appeared in kangliyuan's shareholder list from beginning to end, and in 1998, when Junxia Fitness was established, Hengdunjian made a capital contribution in the name of Wang Junxia, and in November 2001, Wang Junxia signed the "Equity Transfer Agreement" with Hengdunjian, transferring all the company it held by it to Hengdunjian for free of charge, ending the nominee relationship.
At present, Kang Liyuan's independent brands still include "JX", "Junxia" and "Kang Liyuan". (Blue Whale Listed Company Xu Xiaochun [email protected])