Bull Group will land on the Shanghai Stock Exchange, the socket leader will focus on smart home

On November 21, the initial application of Bull Group Co., Ltd. (hereinafter referred to as “Bull Group”) was approved by the China Securities Regulatory Commission. It has been 14 months since the company submitted its prospectus to the China Securities Regulatory Commission on September 19, 2018. “Brother”‘s Bull Group is about to land on the Shanghai Stock Exchange.

According to the prospectus, Bull Group plans to issue no more than 60 million shares, accounting for no less than 10% of the total share capital after the issuance, and plans to raise funds of 4.886 billion yuan, which will be used for the production base with an annual output of 410 million sets of wall switches and sockets. Six projects, including construction, automatic upgrading of converters with an annual output of 400 million sets, and construction of a production base with an annual output of 180 million sets of LED lights, are sponsored by China National Financial Securities Co., Ltd.

Use of funds raised by Bull Group

Bull Group will land on the Shanghai Stock Exchange, the socket leader will focus on smart home

(Figure 1: Use of funds raised by Bull Group)

Bull Group is a typical family business. The prospectus disclosed that the actual controllers of the company are Ruan Liping and Ruan Xueping. The two brothers hold 96.96% of the voting rights of the company through direct and indirect means, forming joint control of the company. After the completion of this issuance, Ruan Liping and Ruan Xueping directly and indirectly controlled the voting rights of the company to 87.26%. They were still the actual controllers of the company and directly affected the company’s major business decisions.

Bull Group’s shareholding structure

(Figure 2: Bull Group’s shareholding structure)

Enrich product lines and explore diversified development

Bull Group was founded in 1995, focusing on the research and development, production and sales of civil electrical products with converters, wall switches and sockets as the core. Manufacturing base with more than 10,000 employees.

Bull Group’s main products include converters, wall switch sockets, LED lighting, digital accessories and other power connection and power extension products, which are widely used in home, office and other power-consuming occasions.

The composition of the main business income of the Bull Group by product classification

(Figure 3: The composition of the operating income of the Bull Group)

Judging from the composition of the main business income of Bull Group by product classification, converters and wall switches and sockets together constitute the company’s core business. %, 84.51%, maintained above 80%. At the same time, the two new businesses of LED lighting and digital accessories grew rapidly, and the proportion of revenue continued to increase. (Note: “Other” mainly includes circuit breakers, bottom boxes, wireless doorbells, electrical tapes, wire reels and other related civil electrical accessories)

Since its establishment, Bull Group has gradually formed a strong comprehensive competitive advantage through continuous innovation and reform in product research and development, quality control, channel development, marketing promotion and supply chain construction. From 2016 to 2018, the overall performance of Bull Group maintained steady improvement.

Operating income and net profit of Bull Group from 2016 to 2018

(Figure 4: Operating income and net profit of Bull Group from 2016 to 2018)

While consolidating and expanding its original competitive advantages, Bull Group has continuously promoted product innovation iteration and category expansion based on the needs of home power connection. Since 2014, it has successively entered new fields such as LED lighting and digital accessories.

Judging from the investment projects of the Bull Group’s raised funds this time, the company is also accelerating its pursuit of business transformation. Of the nearly 4.9 billion yuan raised, nearly 1 billion yuan will be used for converter automation upgrades, 743 million yuan will be used for the construction of LED lamp production bases, and 708 million yuan will be used for the construction of R&D centers and headquarters bases Wait. On the one hand, the implementation of the project will consolidate the technical and market advantages of Bull Group, improve the level of information management and automation, lean and intelligent manufacturing, on the other hand, it will also promote the development of diversified businesses, further improve the company’s profitability, and enhance the company’s overall competitiveness.

However, it is worth noting that the market benefits brought by the diversified business layout to the Bull Group are not yet clear. From 2016 to 2018, the gross profit margins of Bull Group’s main business were 45.21%, 37.79% and 36.62% respectively, showing a downward trend year by year. The Bull Group said that part of the reason is that the newly deployed products such as LED lighting and digital accessories are products with low gross profit margins.

Plus code layout smart home

In 2016, Bull Group launched digital accessories products. Benefiting from the drive of industry development, the investment of company resources and the low base in the cultivation stage, the revenue and growth rate of digital accessories products stood out among the company’s major products and achieved rapid growth. .

2016-2018 Bull Group’s main business income growth changes of major products

(Figure 5: Changes in the growth of main business income of major products of the Bull Group from 2016 to 2018)

The ability to quickly win the digital accessories business is inseparable from the empowerment of the Bull Group’s original channels and its investment in research and development.

First of all, in the development process of the digital accessories business, the successful channel promotion experience of the original converter and wall switch business of the Bull Group continued to empower it. As of February 2019, the company’s dealers have opened up more than 120,000 nationwide. A digital accessories channel network provides a solid foundation for the growth of digital accessories revenue.

Secondly, the Bull Group has reduced product costs through product research and development and improved production technology, thereby enhancing the market competitiveness of digital accessories products. In 2018, the company greatly reduced the manufacturing cost of data lines for the main product of digital accessories through various measures such as design optimization, promotion of injection molding, and self-assembly, creating space for a sharp reduction in product prices, close to the mainstream consumer price segment in the market, and improved profitability. . The prospectus shows that the unit sales price of data line products in 2018 decreased by 31.32% compared with 2017, driving the overall sales unit price of digital accessories to drop by 20.79%, which further enhanced product competitiveness and brought about a substantial increase in product sales.

The development of the consumer electronics industry represented by smartphones has driven the continuous growth in demand for power connections and digital accessories. However, compared with converters, wall switch sockets and LED lighting industries, the domestic digital accessories industry is still in the early stage of introduction and rapid growth. , the market concentration is relatively low, and the digital accessories business of the Bull Group is still in the early stage of cultivation.

There are many competitors in the digital accessories market. The participants include domestic companies such as Xiaomi, Huawei, and Pinsheng, as well as internationally renowned brands such as Siemens, Schneider, and Panasonic. Bull Group is facing greater competitive pressure. At the same time, affected by factors such as changes in consumer preferences and the relatively low degree of overlap between digital accessory channels, major customer channels and existing advantageous channels, the future market development of Bull Group may not meet expectations, which may affect the company’s overall business development and performance. growth has adverse effects.

The digital accessories business is just a microcosm of the Bull Group’s efforts in smart home. According to the prospectus, Bull Group has now established a smart home business department, which will focus on the demand for “smart electricity consumption”, strengthen the application of intelligent technology, and enrich the electrical product line related to home furnishing and decoration. At the same time, Bull Group will focus on smart switches, smart sockets, smart light control and other systems to establish a smart home ecosystem with “cloud”, “platform” and “end” as the technical direction, based on a systematic ecological chain Build whole-house smart home solutions.

Bull Group said that the comprehensive layout of whole-house smart home products and solutions will be the company’s key strategic direction after its listing. Products such as converters, wall switches and sockets, as important control entrances for future smart homes, will attract more powerful new companies to join the competition. Can the old socket faucets continue to write legends in the blue ocean of smart homes? Yiou Home Furnishing will continue to pay attention.

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