Can't beat Anker? Shenzhen's big seller abandons this category

In October this year, Tesla CEO Musk praised Chinese companies' products at the X-Press Conference, saying that their outdoor solar energy storage batteries can provide all-weather power for the Starlink satellite communication system, fully recognizing their outstanding performance in the outdoor solar charging market.

This product, which is highly recognized by Musk, comes from Shenzhen's new energy giant Huabao New Energy.

Founded in 2011, Huabao New Energy has successfully created two major brands, "Jackery Electric Waiter" and "Geneverse Electric Shopkeeper" , and sells them to many countries around the world, including the United States, Japan, and Germany.

Nowadays, portable energy storage has become the core revenue-generating product of Huabao New Energy. In addition to seizing the new trend of portable energy storage, it is also inseparable from drastic business reforms and shifts in strategic focus.

According to reports, an investor recently asked Huabao New Energy whether it still produces power banks. In response, Huabao New Energy said: " The company is no longer involved in the production and sales of power bank products. Since 2015, the company has created a new category of portable energy storage and successfully created the "Jackery Electric Second" solar charging outdoor power expert brand."

As of the first three quarters of 2024, Huabao New Energy's portable energy storage and photovoltaic products have covered more than 50 countries and regions, with cumulative sales of nearly 5 million units, firmly maintaining its leading position in global sales.

But in fact, the power bank category that is now "abandoned" is the original business of Huabao New Energy. Initially, Huabao New Energy mainly engaged in the power bank OEM business.

However, the 3C consumer electronics market is a fast-growing and fast-dying market. Huabao New Energy faces competitors such as Anker Innovations, a global brand that focuses on the mid-to-high-end market and has roots in overseas markets, UGREEN Technology, which focuses on cost-effectiveness, or Youkeshu and other companies in South China that are selling well.

In the face of increasingly fierce competition, Huabao New Energy chose to change direction in time and set its sights on the portable energy storage track, which was relatively smaller than 3C electronics at the time but had thriving opportunities and broad incremental space. In 2016, it launched the world's first lithium battery portable energy storage product.

At the same time, due to the shift of strategic focus, Huabao New Energy's power bank business has become increasingly sluggish. From the former mainstay of revenue, it has gradually been replaced by categories such as portable energy storage, home energy storage and photovoltaics.

According to the first half report of 2024 disclosed by Huabao New Energy, its portable energy storage products achieved operating revenue of 911 million yuan, accounting for nearly 80% of total revenue; photovoltaic solar panels achieved operating revenue of 223 million yuan, accounting for nearly 20% of total revenue. The two together contributed the bulk of Huabao New Energy's revenue.

The power bank business, which was once the trump card, has long been excluded from the scope of revenue contribution.

Facts have proved that Huabao New Energy's transformation has a very unique strategic vision. After the epidemic became normalized, the outdoor economy in Europe and the United States returned to its hot state. The rising demand for outdoor electricity also stimulated the portable energy storage category to become a new outlet. In addition, the demand for household emergency power reserves during the European energy crisis is also a major driving force.

As the pioneer of portable energy storage, Huabao New Energy quickly seized the dividend and entered a period of high growth. By avoiding the fierce competition in the 3C red ocean and expanding into the emerging blue ocean track of portable energy storage, it successfully ushered in the second growth curve.

With the release of the new energy consumption trend, more and more overseas brands are actively embracing the portable energy storage market, and this track is becoming increasingly crowded with the entry of more competitors.

Among them is Anker Innovations, Huabao New Energy's former rival in the power bank market. It entered the household storage product market in 2022. With its brand reputation in the field of charging energy storage, Anker was able to quickly open up the market, and the sales share of portable energy storage products has increased significantly year by year.

In addition to the increasing number of competitors, the industry's own factors are also hindering Huabao New Energy's development. In 2022, Huabao New Energy was listed on the Shenzhen Stock Exchange's Growth Enterprise Market, becoming a new A-share upstart that year, with a market value of 20.2 billion on the first day of listing.

However, as the industry's stock competition intensified, coupled with factors such as its own rapid expansion and high inventory pressure, the barriers built by its channels and brand first-mover advantages gradually lost their advantages. The financial report shows that in the first quarter of the year after its listing, Huabao New Energy's revenue fell by 26.77% year-on-year, and its net profit plummeted by 140.45%, with a loss of nearly 30 million.

The Waterloo of losses as soon as it went public also caused the value of this former No. 1 portable energy storage stock to shrink significantly. However, facing the performance challenges from both inside and outside, Huabao New Energy also gave its own solution: first, focus on deepening product categories, second, deepen the global product category strategy, and third, stick to the strategy of reducing costs and increasing efficiency.

According to incomplete statistics, there are more than 30 mainstream outdoor power supply manufacturers, and they have launched hundreds of portable energy storage products. For example, Huawei has launched the outdoor power supply product mobile "small power station", CATL has released the "Pastoral Era" emergency power supply, and Xiaomi has also released Mijia outdoor power supply 1000Pro and solar panels and other products.

Faced with the increasing involution of the track, Huabao New Energy chose to focus on the energy storage industry, while at the same time actively looking for industries that can generate synergy with it, and further tap the growth curve through the injection of fresh blood.

In order to improve the competitive barriers of its core business of portable energy storage, Huabao New Energy attaches great importance to product R&D and innovation. In the first half of 2024, its R&D expenditure reached 78.3786 million yuan, accounting for 6.86%.

Efficient R&D transformation drives continuous product innovation. During the reporting period, the company launched new flagship products such as the new generation of safe and fast-charging outdoor power supply 1000Pro 2, and also launched a groundbreaking full-scenario home green power solution.

In terms of global layout, Huabao New Energy continues to deepen its global brand strategy. In the first half of 2024, its revenue in the US market increased by 38.17% year-on-year, and its revenue in the Japanese market increased by 51.13% year-on-year. In addition, in terms of channel layout, it has achieved multi-line development. At present, it has established 21 independent stations around the world, and its business covers more than 50 countries and regions around the world.

At the same time, with the enrichment of product matrix, the improvement of product strength and the expansion of brand awareness, Huabao New Energy also attaches great importance to the implementation of cost reduction and efficiency improvement strategies to further optimize profitability. Therefore, by improving the labor cost structure, improving the precision of advertising promotion and the reuse of materials, the cost rate is controlled within a reasonable range.

In the first half of this year, Huabao New Energy's sales expense ratio dropped by 7.30 percentage points year-on-year, and its management expense ratio dropped by 4.68 percentage points year-on-year. As a result, its profitability and market competitiveness have been further improved.

Judging from the actual performance data, Huabao New Energy's series of rectification measures have been very effective. The report shows that its revenue in the first half of the year was 1.142 billion yuan, a year-on-year increase of 24.02%, and its net profit attributable to the parent company was 72.8383 million yuan, a year-on-year increase of 242.70%. In addition, the gross profit margin increased significantly by 8.13 percentage points year-on-year, successfully achieving a turnaround from loss to profit.

From following the trend of new energy and taking advantage of the first-mover advantage to seize the market dividend and become the darling of capital, to making losses as soon as it went public and experiencing consecutive quarterly performance setbacks, to now turning losses into profits and returning as a king, Huabao New Energy has had many twists and turns along the way.

Fortunately, Huabao New Energy was able to adjust its strategy in time to adapt to market changes. Whether it was cutting off the power bank category or deepening its presence in the portable energy storage market, it helped it successfully seize growth opportunities and achieve a successful turnaround.