Core Tips:
1. The operating income and net profit of Child Care Technology in 2020 have declined to a certain extent, but the income of the distribution channels that the company mainly relies on is still rising, and the contribution of affiliated dealers is larger.
2. The IPO intends to raise funds to expand production capacity by 1.3 times, but the current capacity utilization rate is still declining, and the depreciation and amortization brought about by the expansion may cause greater pressure on net profit.
3. On the eve of the IPO, the actual controller paid a large dividend, with a net profit of 66.01 million yuan in 2020 and a dividend of 41.4 million yuan spent on the cash dividend.
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"Inner volume" and "chicken baby" have been the hottest keywords in society in the past two years. To get a chicken baby, the equipment has to keep up. In the past, wooden tables and dining tables could be used as a place for children to do their homework, but now children have their own learning tables and chairs. Not long ago, ChildCare Technology issued a prospectus to land on A shares. Judging from the prospectus, the unit price of children's learning tables and chairs sold by Child Care Technology is about 1400 yuan, and the gross profit margin is more than 40%.
However, carefully flipping through the prospectus, Phoenix Finance "IPO Observation Whistle" found that child care technology in 2020 was affected by the epidemic, the overall performance declined, but the income contributed by affiliated dealers is still rising, there seems to be doubts; the company intends to raise funds for the annual output of 350,000 sets of green smart furniture production line project, but the current production capacity of the company is only 265,900 sets / year, and the capacity utilization rate continues to decline, if the fundraising expansion is not as expected, Increased depreciation and amortization will weigh heavily on the company's already unbondy net profit.
Distribution revenue bucked the trend and associated dealers contributed a lot
According to financial data, from 2018 to 2020 and the first half of 2021, the operating income of ChildCare Technology was 433 million yuan, 551 million yuan, 547 million yuan and 246 million yuan, and the net profit was 60.0538 million yuan, 87.2751 million yuan, 66.0116 million yuan and 25.9817 million yuan, respectively.
It can be found that in 2020, both operating income and net profit of child care technology have declined to a certain extent, due to the reduction of product prices, and the increase in operating costs, gross profit margins have declined, and the decline in net profit is greater than that of operating income.
While product prices have fallen in 2020, they will pick up again in 2021. Judging from the prospectus, a learning table of Child Care Technology sold for a high price of 1400 yuan, and the gross profit margin reached 41.54%.
Interestingly, although the company's performance declined in 2020, the distribution revenue that Child Care Technology mainly relies on still increased slightly, and the proportion is also increasing. In 2018, 2019, 2020 and the first half of 2021, the distribution revenue of ChildCare Technology was 303 million yuan, 392 million yuan, 398 million yuan and 175 million yuan respectively, accounting for 72.27%, 73.53%, 75.98% and 75.16% of the main business income in the current period, respectively.
The study of the prospectus of the "IPO Observation Whistle" found that in 2017, Xi'an Baby Home Textile Furniture Co., Ltd. was established, but the history of child care technology and its same control cooperation can be traced back to 2015, and the grandfather of Liu Dengke, the actual controller of Xi'an Baby Home Textile Furniture Co., Ltd., was related to the mother of the company's issuer Yang Runqiang, that is, Liu Dengke and Yang Runqiang were related.
In 2018, Xi'an Baby Home Textile Furniture Co., Ltd. is not yet among the major customers, and since 2019, it has become the fourth, first and second largest customers of Child Care Technology.
According to the explanation of Child Care Technology, in 2020, due to the impact of the new crown epidemic, the revenue of Changzhou Kanghuaile Trading Co., Ltd., Chengdu Xinchi Office Supplies Co., Ltd., Qingdao Haina Wenlan Trading Co., Ltd. and Jinhua Shangyitang Furniture Products Co., Ltd. has declined, but Xi'an Baby Home Textile Furniture Co., Ltd., Wuhan Weiai Pinle Household Products Co., Ltd., Linyi Yinzhi Trading Co., Ltd. and Hefei Pengcong Trading Co., Ltd. have increased by 10% to 30% year-on-year because they actively expand sales channels.
In addition to Xi'an Baby Jiafang Furniture Co., Ltd., Wuhan Weiai Pinle Household Products Co., Ltd. is also very interesting. As we all know, at the beginning of 2020, Wuhan was the city hit hard by the new crown epidemic, and from January 23 to April 8, the major shopping malls in Wuhan that were locked down were almost closed, and the performance of many listed companies was affected. So, the company is located in Jiangxia District, Wuhan City, sales mainly through the major shopping malls in Wuhan, Wuhan Weiai Pinle Household Products Co., Ltd., how to buck the trend, in the past 4 months of blank time can still achieve revenue growth of 10% to 30% year-on-year?
Raising funds to expand production or bring a greater burden to net profits The actual controllers before the IPO have a large dividend
In this IPO, Child Care Technology intends to raise 570 million yuan for the annual output of 350,000 sets of green furniture production line projects, R&D experience centers and comprehensive office building projects and supplementary working capital, with the amounts allocated to 450 million yuan, 72.88 million yuan and 50 million yuan respectively.
It is worth mentioning that the necessity of the expansion of child care technology is worth considering.
The first is the annual output of 350,000 sets of green smart home production line project.
By the end of 2020, the production capacity of Child Care Technology is 265,900 sets, and the newly raised production capacity can be 1.32 times the existing capacity. If it can be digested, from the data of recent years, the capacity utilization rate of child care technology continues to decline, and the capacity utilization rate of the learning desk is 103.36%, 98.53%, 83.34%, and 72.46% respectively. In this context, the capacity utilization rate of more than 1 times the new capacity is likely to be digested.
However, if the relevant projects are started, depreciation and amortization are the expenses that child care has to spend. According to its calculations, after the completion and operation of this fundraising project, the total annual depreciation and amortization will be 27.7334 million yuan, which is more than the net profit generated in the first half of 2021 compared with the company's annual performance, and is about 40% of the net profit in 2020. If the new capacity cannot be effectively utilized, I am afraid that it will make the already lucrative profits worse.
In addition, the company intends to spend 50 million yuan to supplement working capital.
From the data point of view, child care technology is not very short of money. As of June 30, 2021, the company had 200 million yuan in cash on its books and nearly 100 million in trading financial assets, and there were basically no interest-bearing liabilities on the books. 50 million yuan is the icing on the cake for child care technology, not a must.
Moreover, mom-and-pop shop child care technology also paid a large dividend on the eve of the IPO. On April 15, 2021, the Company distributed a cash dividend of RMB1.15 per 10 shares to all shareholders, for a total of RMB41.4 million in cash dividends.
epilogue:
Chicken baby is a big buzzword in recent years. At the same time as the chicken baby, parents can not avoid noticing the health problems of the children who are "chickens", and the child care technology is using this psychology to grasp the trend of consumption upgrading, and the children's learning tables and chairs of 1400 yuan are sold.
Can the company's gross profit margin of 40% be extended? Is it really necessary to raise large sums of money to expand production capacity while not losing money and capacity utilization rate continues to decline? Phoenix Finance's "IPO Observation Whistle" will continue to pay attention.