Recently, Fujian glory Health Technology Co., Ltd. (hereinafter referred to as glory Health) has made new progress in applying for the listing of the basic layer of the new third board. At present, it has replied to the first feedback and received the second feedback.
Glory health’s main revenue source is massage chair ODM business. In 2020 and 2021, the company achieved operating revenue of 253 million yuan and 413 million yuan respectively, and net profit of 6.3410 million yuan and 136783 million yuan respectively.
The reporter of the daily economic news noted that in the past two years, glory Health received government subsidies of 4.0896 million yuan and 3.2162 million yuan respectively, accounting for 64.49% and 23.51% of the net profit attributable to the parent company in the current period, making a great contribution to the performance.
In this regard, glory health supplementary risk suggests that if the government’s support policies for relevant industries change or the company cannot continuously obtain profits from normal production and operation activities to get rid of its dependence on government subsidies, it may have an adverse impact on the company’s performance.
export products affected by exchange rate
Glory health’s main business is to provide massage chair ODM (original design manufacturer) business to large and medium-sized well-known household brand enterprises at home and abroad, as well as the sales business of independent brand products.
With the increase of the production and marketing scale of massage chairs and the deepening of cooperation between brand customers, the revenue and net profit of glory health in 2021 increased significantly compared with 2020, but its gross profit margin decreased. In 2020 and 2021, the gross profit margin of glory health was 18.42% and 16.13% respectively. The main reasons for the decline were the adverse changes of export products affected by the exchange rate, the rise in the price of raw materials and the decline in the sales proportion of OBM (original brand manufacturer) model with relatively high gross profit margin.
The reporter of the daily economic news noted that in 2021, when the average purchase price of some main raw materials required for massage chairs increased greatly, the sales cost of glorious and healthy massage chairs increased from 220991 yuan / set in 2020 to 232360 yuan / set, an increase of 5.14%; At the same time, the sales unit price of massage chairs increased from 267760 yuan / set in 2020 to 270956 yuan / set, an increase of 1.19%, lower than the cost increase. As a result, the gross profit margin of massage chairs fell from 17.47% in 2020 to 14.24%.
In this regard, glory Health said that in order to obtain a larger market share and adopt a competitive price strategy, the company’s sales pricing has not increased significantly, and the increase of sales price is lower than that of raw material cost.
In fact, the contract signed between glory health and its main customers stipulates price adjustment terms to ensure that the company can transmit the price of raw materials to the downstream. However, due to the high brand premium of some downstream ODM customers, wide sales channels and other factors, and the progress of customer review and price adjustment lags behind the rise of raw materials purchased by the company, the company failed to fully transmit the rising effect of upstream raw materials to downstream customers.
In addition, the gross profit margin of glory health is much lower than that of Listed Companies in the same industry. The public transfer prospectus (declaration draft) lists four comparable companies, of which the lowest gross profit margin in 2020 is 26.26% of Youngy Health Co.Ltd(300247) , but it is also higher than glory health; While Shenzhen Breo Technology Co.Ltd(688793) with the highest gross profit margin in 2020 reached 58.36%.
Glory health explained that the gross profit margin is quite different from that of Listed Companies in the same industry, mainly due to different product structure and business model. “Although it is also an enterprise providing massage appliances, the company mainly focuses on ODM, supplemented by OBM sales, while the OBM models such as Xiamen Comfort Science & Technology Group Co.Ltd(002614) , Shenzhen Breo Technology Co.Ltd(688793) , Shanghai Rongtai Health Technology Corporation Limited(603579) and Shanghai Rongtai Health Technology Corporation Limited(603579) account for a relatively high proportion. It directly faces end consumers and has strong brand effect and bargaining power.”
request to state whether the benefits are transferred
Glory health’s operating revenue increased significantly in 2021, and the increase in sales of brand customers is one of the important factors. Among them, the sales to Minhua home industry (Huizhou) Co., Ltd. and its related parties increased from 647800 yuan in 2020 to 453431 million yuan, and the company ranked the second largest customer in 2021; The sales to Shanghai Haier Medical Technology Co., Ltd. and its subsidiaries increased from 443272 million yuan in 2020 to 604127 million yuan. The company ranked as the largest customer in 2020 and 2021.
It is worth noting that Fujian Lemo Wulian Technology Co., Ltd. (hereinafter referred to as Lemo Wulian), a related party of glory health, and its subsidiaries ranked among the top five customers of the company for two consecutive years. The sales in 2020 and 2021 were 223214 million yuan and 275043 million yuan respectively, and the sales content was shared massage chairs. According to the disclosure of glory health, Wu Jinghua, the actual controller of the company, holds 14.03% equity of Lemo Wulian.
However, the feedback reply shows that the sales unit price of glory health to Lemo IOT is lower than that of other customers. Under the same type of products, in 2020 and 2021, the company’s sales unit price to Lemo IOT was 396848 yuan / set and 315972 yuan / set respectively, and the sales unit price to non related parties was 449722 yuan / set and 384137 yuan / set respectively.
Glory Health said that the main reason is that the purchase volume of Lemo IOT is large and there is a certain profit on the sales price; The products sold to Lemo IOT are mainly commercial massage chairs, which generally lack leg or foot devices, reducing the product cost; Some parts of the shared massage chair are directly provided by Le Mo IOT, resulting in the unit price and unit cost of the same model of products being lower than those of other non related party customers. Therefore, the sales price and unit cost of the company to Lemo IOT are lower than those to non related parties, which is in line with business logic and business essence.
In this regard, the second feedback continued to require glory health to supplement the reasons and fairness that the sales unit price and gross profit margin of Lemo IOT were lower than those sold to non related parties, and whether there were interest transfer or other interest arrangements.
At the same time, Le Mo IOT is also a supplier of glory health. The purchase amount in 2021 was 289900 yuan. The purchase content is health detection module, which will be used for home massage chair series after purchase. Glory Health said that because the company initially had a small demand for such health modules, it purchased through Lemo IOT to obtain relative price advantages and convenience. With the growth of the company’s own demand, the company has purchased directly from third-party suppliers.
For matters related to the listing of the new third board, on May 10 and 11, the reporter of daily economic news called glory health and sent an interview email on May 10, but no one answered the phone. As of the press email, there was no reply.
