Zhao Jiaran
Recently, Jiaoxia Holdings Co., Ltd. (hereinafter referred to as Jiaoxia) submitted a listing application to the Hong Kong Stock Exchange and plans to go to Hong Kong for an IPO.
The prospectus shows that Jiaoxia’s total revenue in 2021 is 2.407 billion yuan, and the company’s equity holders should account for a loss of 5.473 billion yuan during the year.
Selling umbrellas to earn 500 million a year
In recent years, Jiaoxia has been focusing on sunscreen products and has now become an internet celebrity brand.
According to the prospectus, according to CIC, Jiaoxia is the largest sunscreen apparel brand in China in terms of total retail sales and online retail sales in 2021.
Among them, Jiaoxia’s online sales performance is particularly obvious. In 2021, the online retail sales of Jiaoxia’s sunscreen clothing will exceed 5 times that of the second largest brand.
According to the Tianyancha APP, Jiaoxia has experienced A round, B round and equity financing in 2015, 2016 and 2021. Investors include Sequoia China, Cornerstone Capital and Fengqiao Capital.
Judging from the financial performance of Jiaoxia in recent years, although revenue has continued to rise, it has also experienced a net loss, and the loss will become more serious in 2021.
From 2019 to 2021, the total revenue of Jiaoxia was 385 million yuan, 794 million yuan and 2.407 billion yuan respectively, and the losses attributable to the company's equity holders during the year were 23.207 million yuan, 77,000 yuan and 5.473 billion yuan respectively; Net profit was 19.68 million yuan, 39.412 million yuan and 136 million yuan respectively.
The company stated that it defines adjusted net profit for the year as compensation expenses paid by adding back shares, changes in fair value of convertible redeemable preferred shares and adjusted loss for the year.
In 2013, Jiaoxia launched its first sunscreen product, the double-layer black umbrella, and umbrellas also play an important role in the follow-up products of Jiaoxia.
In 2019 and 2020, umbrellas are the categories with the highest revenue under Jiaoxia, accounting for 86.9% and 46.5% of total revenue respectively.
In 2021, the revenue share of clothing, hats and other accessories including sunglasses, masks, sleeves, etc. will increase. Clothing and other accessories will bring in revenue of 711 million yuan and 612 million yuan respectively. However, the revenue of umbrellas will also reach 501 million yuan.
In addition,
the gross profit margin of the products sold under Jiaoxia is also increasing year by year, from 50.0% in 2019 to 59.1% in 2021
.
Among them, the gross profit margin of hats increased from 55.3% to 67.3%, the highest among all categories; followed by other accessories, which increased from 43.8% to 61.0%.
In 2021, the gross profit margin of all categories under Jiaoxia will not be lower than 52%.
It can be found in the Tmall flagship store under Jiaoxia. Most of the brand's hat products are priced between 60-300 yuan, and a sunscreen fisherman hat is priced at 329 yuan; while the price of masks ranges from 44 yuan to 189 yuan. Wait.
From the perspective of sales channels, the revenue from self-operated channels has always accounted for the majority of the total revenue, and the revenue of online stores is higher than that of e-commerce platforms.
In 2021, Jiaoxia's online store revenue will be 1.643 billion yuan, accounting for 68.3% of total revenue, and e-commerce platform revenue will be 303 million yuan.
Although the current market's first impression of Jiaoxia's brand is sunscreen products, Jiaoxia stated in the prospectus that sunscreen is just a starting point, and has now expanded its business to a broader footwear and apparel market, including cooling, warmth, sports products with functions such as protection.
Jiaoxia said that the funds raised by the company will be used to strengthen product development and enhance R&D capabilities, improve brand awareness, strengthen omni-channel sales, improve supply chain management, and provide funds for digital operations.
Advertising costs are more than 8 times the cost of R&D
In the prospectus, Jiaoxia emphasized its own research and development capabilities as one of the brand's competitive advantages: "Our strong research and development capabilities and unique cross-industry technical perspective make it easier for us to propose innovative product development ideas." As of the end of 2021, Jiaoxia's R&D team consists of 197 employees, and the company intends to further invest in R&D work in the future to accumulate core technologies and launch new products.
From 2019 to 2021, Jiaoxia’s R&D expenditures are 19.9 million yuan, 35.9 million yuan and 71.6 million yuan respectively, and the research and development expenditure in 2021 will account for about 3% of the total revenue for the same period.
However, compared with the huge advertising expenditure, Jiaoxia's research and development costs are "insignificant".
Taking 2021 as an example, the company's advertising and marketing expenses will be as high as 586 million yuan, which is more than 8 times the R&D expenditure in the same period.
In recent years, advertising spending under Jiaoxia has continued to rise.
From 2019 to 2021, the company's advertising and marketing expenses were 36.92 million yuan, 119 million yuan and 586 million yuan, accounting for 9.6%, 15.0% and 24.4% of total revenue, respectively.
Among them, this expenditure will increase by 392.28% in 2021. In the same year, Jiaoxia announced that artist Zhao Lusi will become its spokesperson.
The company said the increase was due to enhanced marketing efforts, including increased advertising costs for new product launches and brand promotion.
In 2021, Jiaoxia's total revenue will increase by about 203.15%, which is much lower than the increase in advertising and marketing expenses.
Jiaoxia said the company promotes its brand image through celebrity endorsements, KOL promotions, and other social media-based marketing and promotional activities, and is increasingly relying on social media and online advertising.
For example, in 2021, the company will cooperate with more than 600 KOLs.
If marketing activities are not effective in attracting customers in a cost-effective and efficient manner, the company's business, financial condition, results of operations and prospects may be materially and adversely affected.
(Sino-Singapore Jingwei APP)
(The opinions in this article are for reference only and do not constitute investment advice. Investment is risky, and you need to be cautious when entering the market.)
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