On April 25, the "first share of intelligent massage equipment" Bei Easy announced its 2023 annual report and first quarter 2024 results.
Photo by Cai Shumin
In the past year, Beisu achieved revenue of 1.275 billion yuan, a year-on-year increase of 42.3%, but the net profit was still negative, and the net profit attributable to shareholders of the parent company after deducting non-recurring gains and losses was -55.9934 million yuan. In comparison, the net profit in 2020 was -124 million yuan, and in 2021, it was 91.8619 million yuan.
From the perspective of revenue, thanks to the launch of new products, especially the sales growth of shoulder and scalp explosive products, as well as the volume-driven growth of new channels such as Douyin, the performance of Bei Easy has reversed significantly. However, the company's long-standing "heavy marketing, light R&D" has not changed, and sales expenses not only remain high, but also exceed the year-on-year increase in revenue.
In the first quarter of 2024, Bei easily achieved a turnaround. However, the company said in the annual report that if the market economy continues to decline in the future, the operation of directly operated stores cannot be continuously repaired, the product launch effect is not good, the revenue growth of new channels is not as expected, the sales expense ratio continues to increase, and the higher gross profit margin cannot be sustained, and the company still has the risk of performance loss.
As of today's close, Bei easily reported 32.25 yuan / share, down 2.57%.
Selling expenses increased again
For a long time, Bei Easy has been known for surpassing Apple's gross profit margin. In 2023, the gross profit margin of sales of Beisu will be 59.32%, which will increase to 62.78% in the first quarter of this year. Among them, the gross profit margin in the domestic region was 59.98%, an increase of 9.85 percentage points over the previous year, and the gross profit margin in foreign regions was 47.61%, and the main products sold to foreign customers were ODM products.
Judging from the products sold in the official online flagship store, the product layout and price segments are relatively comprehensive, massager products include eyes, neck, scalp + head, shoulders, waist and back, etc., the price covers dozens of yuan of product accessories, hundreds of yuan to thousands of yuan of various massagers, as well as two or three thousand yuan of shoulder and neck and head massager.
Judging from the financial report, the revenue growth of Bei Easy in 2023 is mainly due to the sales of a variety of explosive products, with a year-on-year increase of 438.85% in the revenue of shoulder products, a year-on-year increase of 49.30% in the revenue of scalp + head products, and a year-on-year increase of 30.95% in the revenue of new products for the waist and back, and at the same time, due to the growth in sales of explosive products, the market share of neck and other products has been affected to a certain extent, with the revenue of neck products falling by 26.88% year-on-year and the revenue of other categories falling by 17% year-on-year.
However, massage equipment products have long been questioned as "IQ tax", and some products are not low at a low price, but "eat ashes after buying", and have repeatedly appeared on the "useless commodity list" of second-hand platforms, and it is difficult to say how much technology content and effect there really is.
In the annual report, the company and its subsidiaries applied for 29 new invention patents, obtained 5 new invention patents, 80 new utility model patents, 18 new utility model authorized patents, 23 new design patents, and 9 new design patents.
However, judging from the actual cost and expenditure, the hat of "heavy marketing and light R&D" cannot be taken off for the time being. In 2023, the R&D investment of Beisu will be 58.5063 million yuan, an increase of 2.06% from 57.3282 million yuan in the previous year, the proportion of total R&D investment in operating income will be 4.59%, a decrease of 1.81 percentage points compared with 2022, and the number of R&D personnel will be 114, which is little changed compared with the previous year.
Compared with the R&D investment of only more than 1 million yuan, in 2023, the sales expenses of Bei Easy will be as high as 688 million yuan, an increase of more than 200 million yuan compared with 482 million yuan in 2022, an increase of 42.56% year-on-year, and the proportion of sales expenses in operating income will be as high as nearly 54%. Bei easily explained that it was mainly due to the increase in promotion expenses, promotion expenses, and employee salaries.
Specifically, in 2023, 123 million of the sales expenses will be spent on employee salaries, an increase of about 20 million over the previous year, while the salary of R&D personnel in the same year will be 34.8696 million yuan, a decrease from 3614.81 in the previous year. In addition, the promotion fee was about 286 million yuan, double the previous year's 142 million yuan. In September last year, Bei Easy announced that traffic star Yi Yang Qianxi served as its global brand spokesperson, and the last spokesperson was also traffic star Xiao Zhan. According to the financial report, in 2023, the advertising and publicity expenses of Beifu will be 38.4453 million yuan, an increase of about 8.3 million yuan.
Judging from the consolidated income statement, in 2023, the total operating cost of Bei Easy will be 1.329 billion yuan, nearly 3 billion more than the previous year's 1.038 billion yuan.
Make efforts to transform channels
For a long time, in terms of distribution model, Bei Easy is mainly based on direct sales, and its stores are located in airports, high-speed rail stations and mid-to-high-end shopping malls in important cities in the first and second tiers, which is also regarded by the outside world as one of the main reasons for the loss of Bei Easy.
In its 2023 annual report, Beisu mentioned that the revenue growth was also due to the explosive growth of sales in new channels. Among them, Douyin is the company's key online channel in 2023. Judging from the financial report, the online direct sales revenue in 2023 will be 591 million yuan, a year-on-year increase of 67.50%, and the main reason for this is the sales growth of the Douyin platform.
As a world-renowned short video platform, Douyin has a huge user base and activity, making Douyin e-commerce a sales channel that more and more brands pay attention to. In an interview with investors, the company said that the company began to explore the Douyin channel in 2021, continued to study the operation model of the Douyin channel, and increased the resource investment in the Douyin channel in 2023 to deepen the layout of the Douyin channel. Focusing on the strategy of "single explosive products", the company launched products that meet the usage habits and price segments of Douyin customers, and boosted the popularity through traffic delivery, short videos, live broadcasts, etc., to maintain and increase the popularity of products, and continue to provide revenue increments for the company.
In addition, the opening of distribution and franchise is also a breakthrough in the past two years. According to the financial report data, as of December 31, 2023, Bei Easy has a total of 143 offline direct stores, and a total of 44 distribution stores. At the end of 2022, the number of offline direct stores and the number of offline distribution stores were 30, according to which the number of direct stores decreased by 20 in the past year.
It is worth noting that one of the main uses of the funds raised by the listing of Bei Easy is related to the development of offline stores, which has said in the prospectus, "in the next three years, it is planned to build 248 directly operated stores in airports, high-speed rail stations and high-end shopping malls in 19 key provinces and cities across the country." At present, under the channel transformation, Bei Yi is gradually moving away from the goal of 248 directly operated stores.
It is also obvious from the financial report that the revenue of offline distribution in the past year increased by 68.74% year-on-year, which is the largest year-on-year increase among all channels.
Liang Zhenpeng, an analyst in the home appliance industry, once told reporters that opening up to join is conducive to the development of blind spots in the market, especially the penetration and development of the second and third levels and even the sinking market, so as to improve the domestic brand recognition rate and reduce operating costs. However, the disadvantages are also obvious, the lack of team spirit in the franchise store is not convenient for unified operation and management, and the product price system is also prone to chaos.
According to the financial report data, in 2023, the gross profit margin of online distribution will be 42.16%, and the gross profit margin of offline distribution will be 39.15%, which is a significant gap compared with the gross profit margin of more than 60% of the direct sales channel.