The mother and baby track has ushered in another company listing. More than 1200 days after the delisting of the New Third Board, the child king turned to the A-share listing and finally got his wish.
However, the stock price of Child King after its listing is like riding a roller coaster. On October 14, the first day of the listing of the Child King GEM was reported at 23.30 yuan, an increase of 303.81%, with a total market value of 25.350 billion yuan. However, the opening day of the first day of listing did not continue. On October 15, the child king fell at the opening, as of the close of the day, it was quoted at 20.03 yuan / share, down 14.03%, with a total market value of 21.79 billion yuan, which was nearly 4 billion yuan less than the total market value of the first day. On October 18, the child king opened sharply low, and the opening continued to fall, as low as 19.13 yuan / share. Then it rose rapidly, the highest to 20.94 yuan / share, the highest increase of 4.54%, and then fell back. As of 10:20, it was quoted at 20.39 yuan / share, up 1.80%, with a total market value of 22.18 billion yuan.
According to the prospectus, among the uses of the fundraising of The Child King, it includes the construction of 300 digital direct-operated stores in 3 years. However, the net amount of funds raised this time is about 556 million yuan, which is far from the original planned demand of 2.449 billion yuan. From its own situation, from 2018 to 2020, the child king has declined in ping efficiency, the average revenue of stores has declined, and the growth of revenue and net profit has slowed down, and there is uncertainty about whether 300 stores can "boots land". In its prospectus, Child King also mentioned that the expansion of new stores faces certain risks, which will lead to a diminishing scale effect.
Compared with the baby-friendly retail enterprises such as baby-friendly room, Leyou, baby-friendly island, and Lijia baby, does the child king who has just received capital support mean that it is expected to gain a larger market share? Shen Meng, executive director of Chanson Capital, believes that the competition between mother and baby chains is fierce, the return expectation is not high, and the advantage of alienation is not significant enough, so the future growth is limited. "In addition to the returns of the previous IPO, it is difficult to target long-term investments. The listing of the child king will gain a certain advantage in the short term, but the sustainability of this advantage is not strong. ”
Stock prices ride a roller coaster
On October 14 this year, Child Wang was listed on the Growth Enterprise Market (GEM) with an issue price of 5.77 yuan per share and a total share capital of 1.088 billion shares, of which 74,136,266 shares were listed and traded since the date of listing. On the first day of listing, the opening price of Child King was 21.00 yuan / share, and the highest rose to 25.20 yuan / share within 5 minutes after the opening, the highest increase was 336.74%. As of the close of the day, the child King reported 23.30 yuan, up 303.81%, with a total market value of 25.350 billion yuan.
However, the opening of the first day of listing did not continue. On October 15, the child king fell sharply at the opening, the lowest fell to 20.01 yuan / share, as of the close of the day, it was reported at 20.03 yuan / share, with a total market value of 21.79 billion yuan, which was nearly 4 billion yuan less than the total market value of the first day.
Before the listing of the Child King GEM, there was only one mother and baby chain enterprise in the A-share baby room. As of October 15, the market value of the baby-friendly room was 3.141 billion yuan, and the market value of the child king was about 7 times that of it. According to the data, in 2020, the net profit of The Child King was 391 million yuan and the revenue was 8.355 billion yuan, and the net profit of the baby-friendly room was 117 million yuan and the revenue was 2.256 billion yuan. In terms of revenue and net profit, the child king is about 4 times that of the baby-friendly room.
Behind the gap, does it mean that the capital market recognizes the child king model, or is it a flash in the pan affected by new stocks? On October 15, Shen Meng, executive director of Chanson Capital, told the Beijing News reporter that this situation occurred, "First of all, there is a difference in the valuation of the two plates, and the valuation ratio of the main board where the baby-friendly room is located is lower than that of the ChiNext board of the child king." Secondly, the baby-friendly room also had a highlight moment when the stock price exceeded 50 yuan at the beginning of the listing, so the current gap between the child king and the baby-friendly room is caused by the IPO market of the child king, and then it will gradually fall back to the range that is in line with the performance and market relationship between the two. ”
There is a gap between the actual net proceeds raised and the plan
According to the prospectus previously released by The Child King, the raised funds plan to invest in the "omni-channel retail terminal construction project", "omni-channel digital platform construction project", "omni-channel logistics center construction project" and "supplementary working capital", with a total investment of 2.449 billion yuan in the project and a proposed investment of 2.449 billion yuan using the raised funds. The amount of funds to be invested in the listed projects is 1.532 billion yuan, 206 million yuan, 210 million yuan and 500 million yuan respectively.
Photo/Screenshot of Kid King's prospectus
The issue price of Child King is 5.77 yuan / share, and the number of shares issued is 108906667 shares. Accordingly, the net amount of funds raised was about 556 million yuan, which was different from the above-mentioned fundraising needs of 2.449 billion yuan. Child Wang mentioned in the prospectus that if the actual net amount of funds raised is less than the total demand for funds raised by the above projects, the board of directors can adjust the amount of funds to be invested in the above projects without changing the proposed investment projects, and the insufficient part will be solved by the company's own funds.
As of the end of 2020, Child King has 434 directly operated stores. Among the proposed fundraising purposes of the prospectus, the omni-channel retail terminal construction project is the largest investment amount, about 1.532 billion yuan. According to the plan, in the next three years, the funds raised will be used to build 300 new stores in 22 provinces (cities) such as Jiangsu, Anhui, Sichuan, Guangdong and Chongqing. In terms of store opening speed, in 2018, 2019 and 2020, the number of physical stores increased by 45, 94 and 82, respectively. In the next 3 years, Kid King will expand at an average rate of 100 stores per year, which will be no small challenge.
The Beijing News reporter learned that in general, in addition to the funds raised by listing, enterprises can also obtain the required funds through debt financing. If there is a situation where the funds cannot meet the actual project funding needs, there may be a situation where the plan cannot be fully implemented. "Some of the plans for the use of the raised funds are not necessarily 100% landed, and it is not excluded to adjust the investment plan at the same time." Shen Meng said.
The average revenue and efficiency of the store have declined, and the quality of goods has become a risk point
According to public information, all of The Kid King's stores are opened in shopping malls of 100,000 square meters and above, with an average store area of 3,000 square meters and a maximum store area of more than 7,000 square meters. It is worth noting that from 2018 to 2020, the average revenue of the Child King store was 24.1492 million yuan, 21.5203 million yuan and 17.3281 million yuan, respectively, and the income of ping effect was 7855.05 yuan / square meter, 7838.82 yuan / square meter and 6878.73 yuan / square meter, respectively, and the average income and ping efficiency of the store were declining.
As for the reasons for the decline, The Child King said that it is not only related to the epidemic, but also related to the need for a certain market cultivation period for newly opened stores from opening to achieving profitability. For the risks of expanding stores, Child Wang also said in the prospectus that the expansion of the company's stores will face certain risks due to the difference in the length of the market cultivation period, the investment of funds in the early stage, the uncertainty of the future market and other factors, resulting in a decline in the average revenue and efficiency of stores, and the scale effect of store expansion is decreasing.
Consumers attach great importance to product quality and safety is a prominent feature of maternal and infant consumption. According to the information disclosed in the prospectus of Child King, from 2018 to 2020, Child King and its subsidiary companies were subject to a total of 50 administrative penalties of fines or above, of which 37 were for "selling unqualified goods", including 2 penalties of more than 100,000 yuan.
On March 6, 2018, the Market Supervision Bureau of Yinzhou District of Ningbo City issued a "Decision on Administrative Penalties" to Ningbo Children's Wang Children's Products Co., Ltd., because the "Childhood Time" children's nutrition liquid sold by Ningbo Children's King Children's Products Co., Ltd. is a food imported without inspection and quarantine. On March 21, 2019, the Shanghai Yangpu District Market Supervision and Administration Bureau issued 113864 an "Administrative Punishment Decision Letter" to Shanghai Aile Kids Wang Children's Products Co., Ltd., because the two items of the wooden crib sold by Shanghai Kid King at the Third Floor of Songjiang Wanda Plaza' Child King's Counter and the instructions for use did not meet the testing basis and relevant regulations. He was punished with confiscation of illegal gains of 5617.52 yuan and a fine of 105840.18 yuan.
For the problem of product quality, The child King also mentioned in the latest release of the prospectus that with the continuous expansion of the company's business scale and the completion of the fundraising project, if the company can not continue to effectively implement the relevant quality control systems and measures, resulting in serious quality problems in the products sold by the company or customer complaints caused by it, it will bring unnecessary customer and order loss to the company, which may adversely affect the company's operating performance.
Whether the large-scale expansion of stores can effectively drain is unknown
With the continuous development of the e-commerce model, under the background of increasing risks of industry competition, rising customer acquisition costs, and diversification of maternal and infant consumption channels, Child King is also constantly exploring new ways to play in the mother and baby track, including digitalization and omni-channel as a development strategy, adopting the "commodity + service + social" operating model and the "childcare consultant" model to meet the diversified needs of consumers.
However, it is worth noting that mother and baby products, as the main sales force of the child king, offline sales have gradually declined. From 2018 to 2020, the sales revenue of The Baby King's mother and baby products accounted for more than 80% of the main business income, of which the offline sales amount decreased year by year, from 4.269 billion yuan to 3.017 billion yuan, and the proportion of sales also fell from 69.39% to 40.85%. The sales amount of "out-of-store scan code purchase" (selected stores in the Kid King App, Mini Program or by scanning the bar code of goods outside the store to buy goods, and directly delivered to home from the nearest store) and e-commerce platform sales have increased year by year, from 655 million yuan to 2.275 billion yuan, accounting for 30.79% from 10.65%.
In the case of the gradual reduction of in-store consumption, whether expanding another 300 large stores can better achieve effective drainage, or whether it will eventually drag down its development, it remains to be tested by the market. In the view of Wen Zhihong, a chain business model expert of Hejun Consulting, the omni-channel sales model adopted by Ziwang is conducive to online and offline two-way drainage. However, he also pointed out that the post-listing child king faces many challenges, including how to maintain performance growth and how to better face the complex competitive environment.
Financing is advantageous or not sustainable
China's maternal and infant retail industry has a low entry threshold, a large number of enterprises in the industry and a small scale, and the market concentration is not high. At present, offline channels are mainly based on chain retail stores specializing in mother and baby. The market is relatively scattered, except for a few large-scale enterprises, mainly small and medium-sized chain stores and individual stores. According to cbme's sampling survey of maternal and infant enterprises nationwide in 2019, the proportion of maternal and infant retail enterprises with more than 100 stores is only 4.12%, while the proportion of enterprises below 5 is 49.41%.
It is reported that there are more than 100 stores of maternal and infant retail enterprises such as Child King, Baby-friendly Room, Leyou, Baby-friendly Island, and Lijia Baby. Among them, as of the end of 2020, the number of directly operated stores of Child King and Baby-friendly Room was 434 and 290 respectively. According to other data, the stores of Leyou, Baby Island and Lijia Baby are more than 700 directly operated + franchised stores, more than 9,000 directly operated + franchised stores + partner stores, and 108 directly operated + franchised stores nationwide. However, Leyou, Baby Island, and Lijia Baby have not yet been listed.
According to Tianyan, the above 5 maternal and infant retail enterprises have no new financing records this year. Among them, the financing process of Child King and Baby-friendly Room was 6 rounds and 7 rounds respectively, while the most recent financing record was July 2020 and June 2020, respectively, and the specific financing amount was not disclosed. The most recent financing records of Leyou, Baby Island and Lijia Baby were in November 2018, May 2018 and December 2016, respectively, and the financing process was 2 rounds, 2 rounds and 5 rounds respectively.
In the context of a number of maternal and infant physical retail stores have not recently received more new financing, does the listing of the child king mean that it is expected to gain a larger market share? Shen Meng analysis believes that the mother and baby chain competition is fierce, while the return expectation is not high, the alienation advantage is not significant enough, so the future growth is limited. "In addition to the returns of the previous IPO, it is difficult to target long-term investments. The listing of the child king will gain a certain advantage in the short term, but the sustainability of this advantage is not strong. ”
In fact, the child king is also facing a slowdown in revenue and net profit growth. The data shows that from 2018 to 2020, the operating income of The Boy King increased by 27.42%, 23.56% and 1.37% year-on-year, respectively; the net profit increased by 194.21%, 36.76% and 3.61% respectively. From January to September 2021, the company's operating income is expected to increase by 8.19% to 20.21% from the same period last year; net profit is expected to decline by 15.03% from the same period of the previous year to increase by 4.28%.
Industry insiders believe that although the child king has received capital blessings, there is still a long way to go to get more market share.
Beijing News reporter Qin Shengnan
Edited by Wang Lin Proofreader Li Shihui