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It’s the season of financial reports again. From the low season at the beginning of the year, to the repeated sales troughs, to the bottoming out and rebound on Prime Day, this ups and downs seems to have become the common situation for many Amazon sellers since 2023.
Now looking back at the performance in the first half of the year, sellers have their ups and downs, even the industry's top sellers. Net profit of the big seller plummeted by nearly 132% I still remember that in September last year, Huabao New Energy was listed on the Shenzhen Stock Exchange's Growth Enterprise Market, becoming the first portable energy storage stock and further consolidating its leading position in the industry. However, in the past year, its stock price and market value have plummeted by more than 50%.
Now, Huabao New Energy has released its latest semi-annual financial report. Judging from the business data, its performance situation is also not optimistic.
Huabao New Energy, founded in 2011, seized the new trend of portable energy storage in 2015, and successively entered the fields of portable energy storage and mobile home energy storage, creating two major brands, "Jackery Electric Shopkeeper" and "Geneverse Electric Shopkeeper" , which are sold in many countries around the world, including the United States, Japan, and Germany. As of the end of the reporting period, the cumulative sales of its main products have exceeded 3 million units.
In terms of sales channels, it adopts a three-legged omni-channel model, namely a combination of an official website, a third-party e-commerce platform and offline retail, covering multiple platforms such as Amazon, Japan's Rakuten, Tmall, and JD.com.
According to the latest semi-annual report, in the first half of 2023, Huabao New Energy achieved revenue of 921 million yuan, a year-on-year decrease of 29.93%; the net profit attributable to shareholders of the listed company was -51.0443 million yuan, a sharp drop of 131.82% from the same period last year.
Breaking down each sales category, the revenue of its core portable energy storage products fell by 23.67%. A major reason for its change from profit to loss was the sharp drop in gross profit margin by 9.91%.
Huabao New Energy explained the reasons for the poor performance from four aspects:
Inflation is high and consumption is sluggish
In the first half of 2023, overseas markets will continue to maintain high inflation levels. The continued interest rate hikes by global central banks will have an increasingly significant suppressive effect on consumption. The core inflation in the United States has been at 5% for 18 consecutive months, and the core inflation in the euro area has been at 5% for 8 consecutive months. As households' spending on necessities has increased significantly, their spending on non-essentials has been squeezed.
Energy crisis boosts fading effect
In the same period last year, due to factors such as the European energy crisis and the outbreak of the Russian-Ukrainian war, overseas consumers had a strong desire to purchase energy storage products, which pushed Huabao New Energy's sales revenue into a rapid growth channel. With the decline in natural gas prices and the normalization of the energy crisis, consumer sentiment has become more rational and market demand has returned to normal levels.
Multiple operating costs increased
During the reporting period, Huabao New Energy incurred a net loss in the first half of the year due to the long-tail effect of raw material price fluctuations, product promotions and increased period expenses .
Inventory pressure is high, and inventory is sold at low prices
Although raw material prices fell in the first half of the year, Huabao New Energy still bore the pressure of high-cost inventory in the third and fourth quarters of last year due to sales that fell short of the company's expectations and the inventory clearance cycle. In addition, as the industry competition intensified, Huabao New Energy had no choice but to increase product promotion efforts in stages to ensure market share, and lowered the prices of some old products through discounts and other means to speed up the digestion of high-cost inventory products.
How will Huabao New Energy break through the performance bottleneck created by multiple challenges?
Brand marketing costs soared 207%
As the outdoor economy in Europe and the United States has become hot again after the normalization of the epidemic, the rising demand for outdoor electricity has 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 the portable energy storage track, Huabao New Energy quickly seized the dividend and entered a period of high growth.
However, the trend came and went quickly. With the influx of more and more powerful competitors, Huabao New Energy's market share was quickly snatched away. At this stage, portable energy storage products are still a new category with low product penetration. In order to maintain competitiveness under the fierce pursuit of multiple strong competitors, continuously improving consumers' product awareness and strengthening brand influence are the key to Huabao New Energy's current breakthrough.
The financial report shows that Huabao New Energy invested 77.3226 million yuan in R&D expenses in the first half of the year, a year-on-year increase of 72.40%, and R&D expenses accounted for 8.39%. Therefore, continued high R&D investment is also conducive to the continuous updating and iteration of products, thereby widening its technological moat.
It is learned that in the first half of the year alone, Huabao New Energy launched a number of new flagship solar-charging outdoor power supply products such as Solar Generator 2000 Plus and SolarGenerator 300 Plus, and plans to launch fixed home energy storage products in the second half of the year.
At the same time, in order to further accelerate the process of brand building, Huabao New Energy continued to increase its investment in marketing and promotion during the past six months, increasing the company's brand exposure through product introductions and recommendations by Internet celebrities on social platforms, print advertising, and global exhibitions. According to the financial report, its brand marketing expenses in the first half of the year surged 207.49% year-on-year.
Of course, building brand influence is a systematic process that requires continuous exposure and high investment to continuously penetrate consumers' minds. This is also a long-term battle, and the specific effect has a certain lag, so Huabao New Energy's performance in the first half of the year was not satisfactory.
Huabao New Energy, which is currently in a loss-making state, is facing multiple difficulties, including fierce market competition, increasing operating costs, and the temporary weakness of the global consumer market. In order to further increase its market share and successfully turn losses into profits, Huabao New Energy will focus its next stage of strategic core on three aspects:
- Cultivate strategic markets and expand global offline channels
- Accelerate the launch of new portable energy storage products and fixed household energy storage products
- Taking cost reduction and efficiency improvement as a long-term key strategy
Huabao New Energy, which has taken advantage of the camping economy, has now bid farewell to its high-growth period and started to explore its second growth curve. Whether it can return to its peak in the end is still unknown. But what is certain is that in this era of rapid development of portable energy storage, the dual barriers of product + brand are the long-term driving force for steady development.
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