As a leader in the domestic projector industry, XGIMI Technology has been attracting market attention since its listing in 2021.
However, the recently released results report for the first half of 2024 shows that the company, once known as the "leader" of the industry, has fallen into an unprofitable embarrassing situation and handed over the worst report card in history.
As of the close of trading on September 25, 2024, XGIMI Technology's market value has fallen by about 90% to 3.92 billion yuan, and the stock price has also fallen from 600 yuan/share at the peak of listing to 56 yuan/share.
Profit ankle chopping, industry leader is no longer beautiful
According to IDC data, at present, XGIMI Technology's shipments have maintained the first place in the domestic projection equipment market for six consecutive years, and in 2023, it has maintained the first place in both domestic shipments and sales for four consecutive years. However, the excellent shipment and sales performance could not hide the fact that the company's non-net profit was becoming increasingly bleak.
Source: Company financial report
According to the recently released semi-annual report, XGIMI Technology achieved operating income of 1.599 billion yuan in the first half of this year, a year-on-year decrease of 1.66%; The net profit was only 4.1 million yuan, compared with 92.7273 million yuan in the same period last year, a year-on-year decrease of 95.58%; After deducting non-profits, the net profit was a loss of 14.8411 million yuan, a year-on-year decrease of 125.36%, and a profit of 58.5182 million yuan in the same period last year. This is also the first time that XGIMI Technology has deducted non-net profit losses since its listing in 2021.
As the "main force" of XGIMI Technology's performance contribution, the projector machine and accessories business has also declined. According to the data, the company's projector machines and accessories achieved revenue of 1.493 billion yuan, a year-on-year decrease of 4.54%.
The reporter found that since the negative growth of 57% year-on-year in the first quarter of 2023 and the negative growth of non-net profit, in the past six quarters, there have been negative growth in revenue and non-net profit for 6 consecutive quarters, and the annual performance in 2023 will decrease by 15.77% year-on-year, and the net profit attributable to the parent company will decrease by 75.97% year-on-year.
XGIMI Technology said in its semi-annual report that due to factors such as the macroeconomic environment, consumer consumption preferences are cautious, and the domestic projection market demand is under pressure. At the same time, the destocking of some old products led to a decline in gross profit margin of sales, which in turn led to a year-on-year decline in net profit and non-net profit.
Profitability continues to decline, and high inventories are a concern
As a consumer electronics product, consumers' preferences for smart projection are changing. AVC consumer survey data shows that in 2020, the factor of buying smart projection products out of early adopter psychology accounted for 27%, but with the passage of time, the proportion of early adopter driven purchases has decreased significantly, and by 2024, this factor will only account for 12%.
In the projector market, consumer demand is sluggish, and under the competitive pressure of homogenization and low price of industry products, XGIMI is also facing the embarrassing dilemma that projectors are difficult to sell. Flush data shows that from 2020 to 2023, XGIMI Technology's inventory level will continue to be high, reaching 717 million yuan, 965 million yuan, 1.184 billion yuan and 1.098 billion yuan respectively, which currently accounts for nearly one-fifth of the company's total assets.
At the same time, its inventory turnover rate is also slowing down, and the turnover days are more than 100 days, gradually climbing from 108.87 days in 2020 to 168.03 days in 2023. Although this indicator has fallen in the first half of 2024, it remains above 160 days.
In the first half of this year, the company's total R&D investment was 193 million yuan, a year-on-year decrease of 6.15%, and the total R&D investment accounted for 12.03% of operating income.
Source: Company financial report
According to the latest semi-annual report, XGIMI Technology still recorded a year-on-year decline of 95.56% in non-net profit in the case of a simultaneous decline in sales, management and R&D expenses, which also means that XGIMI Technology's inventory clearance is not so ideal.
According to the financial report of XGIMI Technology, at the end of the reporting period, the book value of XGIMI's inventory was still as high as 959 million yuan, accounting for 18.06% of the total assets at the end of the period, and the company's inventory accounted for a high proportion of total assets. The long-term backlog of inventory is also putting XGIMI into the risk of asset depreciation, which in turn affects the company's performance and profitability.
The growth of high-end products was sluggish, and shareholder Baidu reduced its holdings by more than 2 million shares
In recent years, the mainland intelligent projection equipment industry is in a stage of rapid development, with many market participants and a high degree of competition. In 2023, the total shipments of China's projection equipment market will reach a total of 4.736 million units, and the top five brands in terms of shipments are XGIMI, nuts, Epson, Fengmi, and dangbei.
XGIMI Technology admitted frankly in the semi-annual report that with the further expansion of the smart projection equipment market and the entry of new participants, market competition is expected to further intensify, which will challenge whether the company can continue to grow at the past speed, and make the company's products possible to reduce prices.
Faced with the dilemma of poor sales, XGIMI Technology adopted the strategy of exchanging price for volume and reduced the sales price of some products, which also led to the decline of the company's sales revenue and gross sales margin. Specifically, in 2023, XGIMI Technology's sales gross profit margin will drop from 35.88% to 31.25%, and the net sales profit margin will decline sharply, from 11.97% to 3.37%. In the first half of 2024, this indicator has fallen further to 0.24%.
The e-commerce platform shows that the price of XGIMI's upgraded projector does not exceed 2549 yuan after the discount
In fact, in response to the trend of the continuous decline in the average market price, XGIMI, which is positioned in the middle and high-end, will begin to change its strategy in the second half of 2023 and quickly launch a series of new products in the price range of less than 2000 yuan and 5000 yuan and above. It is worth noting that although the overall average price has decreased, consumers' focus on experience consumption preferences has not led to a decrease in the market share of high-end products.
According to the data of Lotu Technology, the growth in the sales proportion of low-end products mainly comes from the price below 500 yuan, the sales proportion of products at the price range of 2000-6000 yuan continues to decline, and the sales volume of high-end products above 6000 yuan has continued to grow since 2022.
In other words,Projector brands, including XGIMI,Need to find a balance between market expansion and profitability in the trend of price reduction of low-end products,At the same time, maintain competitiveness in the research and development of high-end product lines,In order to consolidate the scale and influence in the domestic market。
What's more noteworthy is that as one of the important shareholders of XGIMI Technology, Baidu has also recently carried out a large-scale reduction of holdings. According to public information, Baidu Netcom and Baidu Biwei reduced their holdings of more than 2.1 million shares of XGIMI Technology.
As the former major shareholder of XGIMI Technology, Baidu's move to reduce its shareholding also announced its pessimism about the company's future development with practical actions.
(Popular News · Fengkou Financial Reporter Zhao Chong)