Shenzhen Business Daily Reading Client Reporter Ning Kejian
On June 30, according to the website of the Shenzhen Stock Exchange, Higold Group Co., Ltd. (hereinafter referred to as "Higold Group") updated its prospectus, and the company intends to be listed on the main board of the Shenzhen Stock Exchange, and the sponsor brokerage is Guotai Junan Securities.
It is understood that Higold Group submitted its prospectus for the first time in July 2022, which was accepted in early March last year, and showed that it had been inquired at the end of March of the same year. However, more than a year has passed since being questioned, and Higold Group's IPO has not taken a step forward.
Higold Group is mainly engaged in the research and development, design, production and sales of home hardware and outdoor furniture products. According to the prospectus, Higold Group is a "brother and sister store", and the actual controller brother and sister hold more than eighty percent of the shares. While the company expects to maintain steady growth in performance, there are still a variety of risk factors. During the reporting period, the company was also involved in a number of patent disputes.
It is worth mentioning that in recent years, a number of IPOs of companies in the pan-home industry have been withdrawn or failed to pass the meeting. Under such circumstances, can Higold Group successfully land on the main board for listing?
Revenue is inferior to peers
Outdoor furniture products are difficult to stop the decline
From 2021 to 2023, Higold Group's operating income will be 1.474 billion yuan, 1.620 billion yuan and 2.222 billion yuan respectively, with an average annual compound growth rate of 22.77%; The net profit after deducting non-attributable to the parent company was 164 million yuan, 199 million yuan and 329 million yuan respectively, with an average annual compound growth rate of 41.80%.
The company expects to achieve operating income of 1.123 billion yuan to 1.229 billion yuan from January to June this year, a year-on-year increase of 23.96% to 35.64%; The net profit attributable to the parent company is expected to be 186 million yuan to 210 million yuan, a year-on-year increase of 63.38% to 84.26%; It is estimated that the net profit deducted from non-attributable to the parent company will be 178 million yuan to 202 million yuan, which is expected to increase by 59.68% to 80.98% year-on-year.
During the reporting period, the gross profit of the company's hardware products after excluding the impact of freight accounted for a relatively high proportion of 48.67%, 45.23% and 42.94% respectively, which was the main source of the company's gross profit.
Although Higold Group expects its performance to maintain steady growth, there is still a certain gap between Higold Group and other companies in the same industry.
Taking 2023 as an example, Higold Group's revenue for the year will be 2.222 billion yuan, except for the undisclosed Tute shares, which are lower than those of Jianlang Hardware, Seagull Residential, Songlin Technology, and Zhejiang Yongqiang.
In 2022, the company's subdivided product structure has been adjusted, the revenue of products such as three-sided baskets with higher unit prices, high-cabinet linked pull baskets, and manual sinks has grown steadily, and some low-unit price products, including storage hanging rods, bathroom racks, etc., have decreased due to the decrease in downstream demand, and products such as beds and outdoor sofas have been affected by weak overseas market demand, order demand has decreased, and output has also declined, making some production lines not running at full capacity, and the capacity utilization rate of storage hardware, kitchen and bathroom hardware and outdoor furniture has declined.
In 2023, affected by the downturn in overseas markets, the operating rate of the company's outdoor furniture production line is low, and the output has decreased significantly, resulting in a significant decrease in capacity utilization.
It is reported that Higold Group's outdoor furniture products are mainly outdoor sofas, outdoor dining chairs and outdoor beds.
During the reporting period, the sales revenue of the company's outdoor furniture products was 238 million yuan, 219 million yuan and 188 million yuan respectively. In 2022 and 2023, the sales revenue of outdoor furniture products decreased by 8.23% and 14.15% year-on-year, respectively.
Higold Group explained that the company's outdoor furniture products are mainly exported, and the main reason for the decline in outdoor furniture product revenue is due to the slowdown in global economic growth, Sino-US trade game and other factors, the overseas market demand is weak, and the demand for outdoor furniture market has declined.
According to Statista statistics, the global outdoor furniture market size was US$14.2 billion in 2016, and the market size reached US$19.2 billion in 2020, with a compound growth rate of 7.83% from 2016 to 2020, and is expected to reach US$25.4 billion by 2025, with a steady upward trend.
According to the prospectus, there are many domestic outdoor furniture manufacturers, most of which are small, mainly distributed in Guangdong, Jiangsu, Zhejiang, Shanghai and other regions. In 2020, the scale of the mainland outdoor furniture market has reached 3.32 billion yuan, a year-on-year increase of 18.15%, and the growth rate is higher than that of the global outdoor furniture market. With the improvement of income level and the change of life concept, the domestic outdoor furniture market space has been further expanded, and the industry market size is expected to reach 6.31 billion yuan in 2025.
He has been involved in a number of patent infringement cases
The number of R&D personnel is far below the industry average
According to the prospectus, in recent years, Mingjia Home, Jiangsu Kutai, Xiamen Heerda, and Ningbo Bosheng have sued Higold Group for patent infringement.
Among them, on September 21, 2022, Ningbo Bosheng filed a patent infringement lawsuit with Higold Group as the defendant with Guangzhou Intellectual Property Court, alleging that the products manufactured by Higold Group and sold and promised to sell on the "Tmall" platform fell within the protection scope of the patent under the name of Ningbo Bosheng, constituting patent infringement.
On March 12, 2024, the Guangzhou Intellectual Property Court issued a Civil Judgment, rejecting all the claims of the plaintiff, Ningbo Bosheng. On March 27, Ningbo Bosheng appealed to the Supreme People's Court against the above judgment. As of the date of the signing of the latest prospectus, the second instance has not yet been heard.
According to the prospectus, in each period of the reporting period, the sales revenue of the products corresponding to the patents involved in the suit was 18,100 yuan, 29,000 yuan and 28,700 yuan respectively.
On the other hand, the prospectus shows that the number of patents of Higold Group is higher than that of its peers, but its R&D personnel are far lower than the industry average.
According to the data, as of March 14 this year, Higold Group has 303 R&D personnel, and the industry average in 2023 is 934. As of March 14 this year, Higold Group has 1,046 patents, and the industry average in 2023 is 761.
Due to quality reasons and the termination of cooperation by dealers
The amount of returns and exchanges has increased significantly
In addition to patent infringement disputes, Higold Group also has product quality problems. According to public information, in 2020 and 2021, Higold Group has been on the top ten quality black lists of China's home furnishings for two consecutive years.
On December 31, 2019, the State Administration for Market Regulation issued a random inspection notice showing that a "kitchen pull-out faucet (ceramic sealing faucet)" produced by "Foshan Shunde Higold Hardware Products Co., Ltd." was found to be unqualified for the "pipe thread accuracy" item.
ON NOVEMBER 19, 2020, THE SAMPLING RESULTS RELEASED BY THE SHAANXI PROVINCIAL MARKET SUPERVISION AND ADMINISTRATION BUREAU SHOWED THAT A "210MM ROUNDED CORNER TABLE UPPER PLATE/952128/JIANSHUO" PRODUCED BY THE TRADEMARK "HIGOLD IN SHUNDE DISTRICT, FOSHAN" WAS FOUND TO BE UNQUALIFIED FOR THE "PIPE WALL THICKNESS OF DRAINAGE MECHANISM".
Or because of product quality problems, during the reporting period, the amount of returns and exchanges of Higold Group increased.
According to the prospectus, during the reporting period, the return and exchange amounts under the e-commerce model of Higold Group were 9.057 million yuan, 6.6871 million yuan and 8.2941 million yuan respectively, and the return and exchange channels mainly came from online direct sales, and the reason for the return and exchange was mainly due to the return of products by end consumers within the no-reason return period stipulated by the e-commerce platform.
During the reporting period, the amount of returns and exchanges under other modes of the company was 2.8916 million yuan, 3.8442 million yuan and 7.87 million yuan respectively, and the return and exchange channels mainly came from offline distribution, and the reasons for return and exchange were mainly quality reasons and inventory return caused by the termination of cooperation by dealers.
The actual controller's brother and sister hold more than eighty percent of the shares
Repurchase agreement pressing
There are many family businesses in the home furnishing industry, including "mom-and-pop shops", "father-son shops", "brother stores", "brother and sister stores", etc., and Higold Group is a "brother and sister store".
As of the date of the signing of this prospectus, Ou Jinfeng and Ou Jinli, the actual controllers of the Company, directly and indirectly hold 83.74% of the shares of the Company and control 89.76% of the voting rights of the Company.
In addition, Ou Jinfeng serves as the chairman and general manager of the company, and Ou Jinli serves as the director and deputy general manager of the company, and has been responsible for the company's operation and management for a long time.
Higold Group stated that as joint actual controllers, if the two took advantage of their controlling position over the company to exercise improper control over the company's personnel, operation management and financial decision-making through the exercise of voting rights and management functions, it may adversely affect the interests of the company and other shareholders.
According to the prospectus, Higold Group added 5 shareholders of Erming Investment, Shunde Zhizao, Rabbit Baby, Qingdao Huazhen and Shangyi Investment 12 months before the declaration, and signed a VAM agreement with them, including equity repurchase clauses, anti-dilution clauses, and sales rights clauses.
Among them, Rabbit increased its capital by 60 million yuan, and the subscribed registered capital was 2.058 million yuan, and its shareholding ratio was 2.05% at that time.
In February 2023, Higold Group and investment institutions Shunde Zhigu, Shunde Zhizao, Erming Investment, Rabbit Baby, Qingdao Huazhen and Shangyi Investment have signed the Termination Agreement, confirming that the equity repurchase clause, anti-dilution clause, right to sell clause and recovery clause in the capital increase agreement are invalid from the beginning.
In February 2023, Bunny and Higold Management, the controlling shareholder of Higold Group, have signed a supplementary agreement to the capital increase agreement (II), which stipulates that if the company withdraws or is returned to the IPO application for any reason after submitting the IPO application, or the IPO application is rejected by the China Securities Regulatory Commission or the stock exchange, the investor has the right to require the controlling shareholder to purchase the purchase price equal to the sum of the capital increase price paid by the investor to the company in this capital increase and the simple interest annualized income of 6% of the capital increase price. Acquisition of shares in the company held by the investor.