Biyi Co., Ltd., a 20-year-old enterprise focusing on heating kitchen appliances, successfully landed in the capital market on February 18. The prospectus disclosed that the number of new shares issued by Biyi shares in this IPO was 46.665 million, accounting for 25% of the total number of shares after this offering, and the issue price was 12.50 yuan / share.
Under the epidemic situation, the market demand of “housing economy” is strong, and small kitchen appliances outside China have ushered in a round of market growth. Air fryer, air oven and other products are very popular with many consumers. From the data, the continuous growth of the revenue of these two products has become the engine of the performance growth of Biyi shares in recent years.
With the success of this IPO, Biyi shares plans to invest 519 million yuan in four major projects, including production expansion and technological transformation projects, R & D center construction projects, information system upgrading construction projects and supplementary working capital. According to Biyi Co., Ltd., the construction of the above projects are carried out around the main business, aiming to improve the competitiveness of products in the main business and expand the scale of product sales. The investment project of the raised funds is compatible with the company’s existing main business and helps to further increase the company’s market share. In addition to improving its competitiveness in the ODM / OEM field, the development strategy of Biyi also mentioned the power to build independent brands through e-commerce channels. IPO provides a broader capital platform for Biyi. Can we accelerate the two wheel drive strategy of Biyi?
20 years of focus on heating kitchen small appliances
Established in 2001, it has lasted more than 20 years. At present, the company’s main business is the design and manufacture of air fryers and fryers, and the sales of home appliances.
The main business mainly includes ODM / OEM business and “Biyi” independent brand OBM business. At present, ODM / OEM business is the main business model of the company, and the independent brand is still in the early stage of development. The company began to export fryers in 2003, successfully developed and sold air fryers in 2015, and successfully developed and sold air ovens in 2018.
The continuous growth of Biyi’s performance in recent years is largely due to the rapid growth of air fryer, air oven and other businesses. According to the data disclosed in the prospectus, in the first half of 2018-2021, the revenue of Biyi shares was 618 million yuan, 740 million yuan, 1163 million yuan and 760 million yuan respectively, and the net profit in the same period was 45.1334 million yuan, 63.1806 million yuan, 106 million yuan and 52.9086 million yuan respectively.
From the perspective of the proportion of main product revenue, air fryer is the core revenue source of main business. From 2018 to 2020, the sales revenue of air fryer accounted for more than 49% of the main business revenue. In the first half of 2021, the proportion of air fryer in the main business income further increased, reaching 60.96%, followed by air oven, which accounted for 15.46% of the main business income, and the proportion of fryer product revenue was adjusted to 15.41%.
Biyi said that the main business income mainly comes from air fryers, air ovens and fryers. Due to the increasing demand for heating kitchen appliances in recent years, the sales amount of various heating kitchen appliances of the company has increased as a whole. Specifically, the sales of air fryers accounted for more than half. After the company launched air ovens at the end of 2019, the proportion of air ovens gradually increased. The proportion of fryers has decreased, mainly due to the limited production capacity of the company, which is used to produce air fryers and air ovens.
In terms of business model, Biyi’s revenue mainly comes from ODM / OEM business. From January to June 2021, ODM business accounted for 86.03% of the main business revenue, and OEM business accounted for 13.50% of the main business revenue. Behind ODM / OEM business, there are many well-known brands at home and abroad.
According to the list of the top five customers disclosed by bye in recent years, the enterprises for which bye does OEM include foreign household appliance brands such as Philips, newway brand, suncorning home, LECHU and so on. At the same time, it also covers Zhejiang Supor Co.Ltd(002032) , Bear Electric Appliance Co.Ltd(002959) and other well-known small household appliance enterprises in China. According to the list of the top five customers in recent three years, Biyi has a stable cooperative relationship with customers, and its products are sold to more than 70 countries / regions such as the United States, Colombia and the United Kingdom.
deep excavation of technical barriers and rapid supply chain response
Enterprises in the small household appliance industry are mainly raw material manufacturers, traders, ODM / OEM manufacturers and brands. How does Biyi share in the fully competitive small household appliance market?
At present, China has formed a complete industrial chain cluster of small household appliances in the Yangtze River Delta, the Pearl River Delta and the Bohai rim, and a large number of manufactured small household appliances are exported to all over the world. In addition to brands such as “meisujiu”, China’s small household appliance export enterprises are still in the business model of OEM / ODM.
According to the data of China Household Appliances Association, China’s small household appliances ODM / OEM are mainly exported, and Europe and the United States are the main export regions. The household appliances manufactured by Chinese manufacturers account for nearly half of the global small household appliances export market, and the export of small household appliances is mainly kitchen. Although affected by the epidemic in 2020, China’s home appliance industry’s exports totaled US $83.7 billion, a year-on-year increase of 18%. The scale of exports reached the best level in the same period in history, and the growth rate was the highest in recent ten years. In terms of global small household appliances imports, the United States, Germany and France are the top three small household appliances importers in the world. About 70% of small household appliances in the United States are made in China.
From the perspective of industrial chain, the ODM / OEM manufacturing industry of small household appliances where Biyi shares is located has sufficient overall competition. In recent years, new downstream demands such as intelligence and personalization have put forward new requirements for the quality and efficiency of small household appliance manufacturing, the industry threshold has been continuously raised, and the industry has accelerated the reshuffle.
On the other hand, during the period of covid-19 epidemic prevention and control, the popularization of housing economy and health concept has brought an opportunity for explosive growth for the main healthy products. Small household appliances with various functions have gradually become an important tool to improve life, and the market scale has been expanding. In addition to rice cookers, hot water kettles, microwave ovens and other small household appliances necessary for life, various small household appliance product clusters with different functions and a large number constitute the long tail market of small household appliances.
In recent years, Biyi has continuously increased its investment in R & D. although the proportion of R & D expenses in revenue has changed little from 2018 to 2020, which are 4.01%, 3.12% and 3.35% respectively, the performance of Biyi has been in a high growth period in recent years. From the perspective of the actual R & D amount, there is still a high improvement in 2020 compared with 2018.
In addition, in terms of technology research and development, Biyi Co., Ltd. has been focusing on the technology research of heating kitchen small appliances for more than 20 years, and has accumulated a stronger technical foundation, which can meet the ODM needs of customers. The company achieved technological breakthroughs in air fryer and air oven in 2014 and 2018 respectively.
As of July 31, 2021, the company has 8 invention patents and 19 utility model patents.
At present, it has 195 R & D and technical personnel, and has established cooperative relations with the information product innovation laboratory of Zhejiang University and more than 10 design companies outside China. The R & D team is stable and carries out the R & D of heating kitchen appliances for a long time. The R & D ability can adapt to market changes and meet the needs of ODM business customers.
In the supply chain, the rapid response of Biyi also improves the supplier advantage of OEM for international well-known brands. It can quickly respond to the needs of customers in terms of design and mass production of ODM / OEM, and introduce its core production lines in the process of design and mass production according to customers’ needs. The company’s product design needs to go through such links as product macro design, demand splitting, micro modeling and calculation, trial production and so on. The company adapts to the changes of ODM / OEM market and meets the needs of downstream customers. The rapid market response ability improves the competitiveness of the company’s ODM / OEM business and customer stickiness.
In addition, in order to deepen the company’s competitive barriers, Biyi Co., Ltd. has continuously increased the construction of automatic production lines in recent years, and the degree of automation has been gradually improved. At present, the company has 6 automatic stamping production lines operated by 51 Siasun Robot&Automation Co.Ltd(300024) ; 6 full-automatic spraying production lines, operated by 8 ABB full-automatic Siasun Robot&Automation Co.Ltd(300024) ; 23 semi-automatic assembly lines, equipped with AI visual temperature detection, automatic palletizing and screw tightening by Siasun Robot&Automation Co.Ltd(300024) ; The injection molding link is also operated by the robot.
two wheel drive strategy and successful IPO boost the company’s development
From the perspective of large-scale development strategy, although Biyi started with OEM and even achieved the current scale, Biyi still emphasizes two aspects in terms of long-term development strategy. On the one hand, by increasing R & D investment, expand product categories, improve product quality and enhance competitiveness in the field of ODM / OEM; On the other hand, broaden the popularity of private brands and improve brand influence through e-commerce channels.
The development goal of the company is to focus on heating kitchen small appliances, based on air fryers, air ovens, fryers and other products, improve product quality and expand product types through the upgrading of technology and equipment, so as to better meet the market demand, and strive to become a world-class manufacturer of heating kitchen products and an excellent self owned brand in China.
Based on this goal, Biyi has formulated the development plan for the next three years, focusing on five aspects: technological innovation and product development plan, capacity expansion and profit improvement plan, automation and informatization improvement plan, customer development and business development plan, human resources and team construction plan.
The implementation of the above plan also faces difficulties and challenges. First, the capital scale is restricted, and there are still weaknesses of small scale and insufficient funds. The second is the restriction of R & D capacity. The heating kitchen small household appliance industry is in the development stage, and the industrial technology changes and product updates are fast. Third, human resource constraints. The expansion of new products and the research and development of new technologies require a large number of high-end talents.
The successful IPO and landing in the capital market will help further promote the development of Biyi Co., Ltd. The construction of the raised investment project also echoes the development plan of Biyi shares in the next three years.
The prospectus disclosed that the funds raised by Biyi shares will be mainly used in the four major equity investment projects. It includes the expansion and technical transformation project, the R & D center construction project of Zhejiang Biyi Electric Appliance Co., Ltd., the information system upgrading construction project of Zhejiang Biyi Electric Appliance Co., Ltd., and the supplementary working capital. It is expected to invest 519 million yuan of raised funds, of which the expansion and technical transformation project includes two sub projects, They are the construction and expansion project of Zhejiang Biyi Electric Appliance Co., Ltd. with an annual output of 10 million kitchen small appliances and the technical transformation project of the production line of 2.5 million air fryers.
Biyi said that the production expansion and technological transformation projects will promote the capacity expansion of the company’s related products and contribute to the development of the company’s main business; The R & D center construction project will be used to improve the company’s R & D capacity and cultivate R & D talents; The information system construction project will be used to establish and improve the information system, realize departmental coordination and improve the management level. The construction of the above projects is carried out around the main business, aiming to improve the product competitiveness of the main business and expand the product sales scale. The investment project of the raised funds is compatible with the company’s existing main business and helps to further increase the company’s market share. Text / Qingchen
