Nanduwan Finance News Reporter Chen Yingshan On April 8, Banana officially submitted a prospectus to the Hong Kong Stock Exchange to sprint to "China's first urban outdoor stock", and the joint sponsors were CICC and Morgan Stanley.
Recently, Banana filed an IPO application on the Hong Kong Stock Exchange.
As a new consumer brand in the field of sun protection, a number of popular single models such as double-layer small black umbrellas, capsule umbrellas, and sunscreen clothes under the banana frequently appear on social platforms, from celebrities down to popular KOLs who personally bring goods for them.
In the new consumption track that has recently been controversial by bubbles, some investors have summarized the brand play of new consumption: choose a differentiated category with market demand but not bad street, choose a foundry to open up the supply chain, and the key packaging design emphasizes the tone, and quickly encircles the user's mind with online marketing. The logic behind it is still the Internet play: throw money to drain the flow, so that the category brand quickly out of the circle.
Statement of comprehensive income in the prospectus
In the prospectus, bananas with annual income of more than 2.4 billion yuan still can't avoid the dilemma of new consumption: selling the most expensive products, but the profits are still pitiful. Sunscreen umbrellas of often two or three hundred yuan, compared with the price of thirty or forty yuan of the old brand paradise umbrella, the category of light umbrellas in 2021 has a gross profit margin of nearly 60%.
However, after all costs are removed, the net profit margin of Banana in 2021 is only 5.64%. It was almost 2.4 billion goods sold and made 130 million. Some of the small R&D expenses in the prospectus are also used for shape design, not material research and development. In past reports, there has been much controversy about whether bananas can be more sunscreen.
But even so, bananas are already one of the few businesses in the new consumption track that can make money. Nearly half of the revenue is used for marketing, can the IPO under the banana break the dilemma of new consumption?
The margin between net profit and gross profit is 10 times, and a quarter of the total revenue is invested in advertising
When it comes to new consumer goods like bananas, consumers are the most familiar impression: expensive.
According to the prospectus, the gross profit under the banana in 2019, 2020 and 2021 was 192 million yuan, 456 million yuan and 1.422 billion yuan respectively, and the total gross profit margin for the same period was 50.0%, 57.4% and 59.1% respectively. The gross profit margin in 2021 is close to 60%, mainly due to the high pricing under the banana.
In 2013, the first sunscreen product, the small black umbrella, was launched under the banana. At present, the flower umbrella that ranks first in the hot list is priced at 229 yuan. Relying on the flower shape and flower pot umbrella barrel, the cute design and the physical sunscreen known as the high coefficient, it has quickly become popular among young consumers. And such a price of two or three hundred yuan, in the average price of dozens of yuan in the umbrella circle, particularly eye-catching.
The flower umbrella under the banana is priced at more than 200 yuan on a treasure platform.
Compared with high gross profit, after deducting various costs, including marketing, the net profit under bananas has been greatly reduced. According to the prospectus, the adjusted annual profit under the banana in 2019, 2020 and 2021 was 0.197 billion yuan, 0.394 billion yuan and 135.7 million yuan, and the net profit margin was 5.11%, 4.96% and 5.64% respectively.
Taking 2021 as an example, the net profit margin under the banana is less than 6%, but the gross profit margin is nearly 60% higher, a difference of about 10 times. When calculating the cost of net profit, which ones cost a lot of money?
It is worth noting that nearly half of the income under the banana is spent on marketing, of which the investment in advertising is monopolized by a quarter.
In 2019, 2020 and 2021, the marketing expenses under the banana were 125 million yuan, 323 million yuan and 1.104 billion yuan, accounting for 32.39%, 40.69% and 45.86% of the total revenue, respectively, and the year-on-year growth rates in 2020 and 2021 were 159% and 242%, respectively, which were much higher than the revenue growth.
In 2021, advertising expenditure and e-commerce platform service fees were 586 million yuan and 227 million yuan, respectively. Advertising expenses of 586 million yuan accounted for 24.4% of the total revenue, which means that the income from umbrellas sold under the banana in 2021 cannot fully cover advertising expenditure.
In 2021 alone, Banana worked with more than 600 KOLs that generated 4.5 billion views across the brand. In the Little Red Book search for "banana", there are more than 40,000 notes. Banana also often patronizes the live broadcast rooms of big anchors such as Li Jiaqi and Luo Yonghao.
Starting online, bananas are still highly dependent on online channels as of now. In the past three years, revenue from online stores and e-commerce platforms has accounted for about 80% of the total revenue of bananas.
But I have to say that relying on the publicity of new retail and social platforms, bananas have stepped out of the acceleration of new consumption of sunscreen.
Once trapped in the "quality gate", scolded "IQ tax"
Marketing investment is more than 15 times higher than R & D, and R & D investment is mostly in the design
With the first sunscreen product "double-layer small black umbrella", bananas officially entered the public eye. In the promotional materials, the small black umbrella has received attention, thanks to the credit of black technology and special materials - "LRC coating" technology.
The LRC sunscreen material is highlighted in the publicity, and more attention is paid to the design in the research and development of the prospectus.
However, there are also consumers who do not pay for the sunscreen function under the banana, and some consumers complain about the unstable quality of the product and the arbitrary price fluctuation under the banana. A netizen posted the purchase record to complain that the banana umbrella bought was actually several umbrella bone fractures, and the customer service complaint had to finally add money to make up; of course, some consumers said that more new categories, such as sunscreen clothing and sunscreen masks, were not as good as expected.
The price fluctuations under high marketing have also annoyed some consumers. Some netizens complained that in the e-commerce festival, it was difficult to make up all kinds of coupons, and the price of a parasol was also one hundred and fifty yuan; and before long, the price of the live broadcast platform went directly to the downstairs of one hundred yuan. On the shopping platform, the price of imitations or the price of the same factory is only tens of yuan.
This has to mention another common pain point faced by bananas, as a new consumer brand: light research and development and foundry production.
In particular, the prospectus mentions that "our strong R&D capabilities and unique cross-industry technology perspective make it easier for us to propose innovative product development ideas". However, in 2019, 2020 and 2021, R&D expenditure under bananas was 19.85 million yuan, 35.89 million yuan and 7164 million yuan, accounting for only 5.16%, 4.52% and 2.98% of the total revenue, respectively. As revenue continues to rise, the proportion of R&D is getting lower and lower.
In 2021, the marketing expenditure under the banana accounted for 45.86%, while the corresponding research and development expenditure accounted for only 2.98%, a difference of more than 15 times. Behind this, it is inseparable from the OEM model under the banana.
According to the prospectus, in terms of production, banana outsourced all production to contract manufacturers in the next three years, and contract manufacturers set production by sales. As of December 31, 2021, it has cooperated with 166 contract manufacturers. And these contract manufacturers are not exclusive contract manufacturers, which is also very easy to cause hidden dangers in supply chain management.
In fact, consumers spend a lot of money but do not know which factory OEM products, many quality complaints are seen on major platforms, but the above problems appear. However, in the prospectus, "this flexible supply chain model" allows us to manage the supply chain with great flexibility and optimize our operations."
It is worth noting that with the "LRC coating" technology to play a small black umbrella, a lot of the R & D investment is now spent on the design, not the material.
From a single umbrella category to a new category with high gross margins, including clothing and accessories, bananas are getting wider and wider on the sunscreen and outdoor tracks. The addition of new categories also provides a new starting point for increasing revenue under bananas.
Category expansion to create revenue grasp, the wider and wider banana can go farther and farther?
Can the wider and wider go farther and farther, and can the sprint IPO open the dilemma of new consumption? Whether or not the traffic boosts the tide of the country out of the circle can witness a qualitative leap is still where these "new consumers" under the banana need to break the problem.