Small products can also make big business, clothes hangers that are not very conspicuous in daily life, and some companies have achieved the scale that can be listed on the market. On November 10, Bette Group once again submitted its listing prospectus to the main board of the Hong Kong Stock Exchange, with Zhifu as the exclusive sponsor.

Zhitong Financial APP observed that the manufacturer and seller of household goods from Zhejiang Province was established in Linhai, Zhejiang Province in 2005, mainly engaged in the manufacture and sales of laundry products, household cleaning products and kitchen utensils. In 2008, it opened a plant in Huzhou. After the first phase was put into production in 2010, it began to do business with customers in the United States and Germany, and moved all its manufacturing operations to Huzhou in 2011.

Subsequently, the production capacity of the Huzhou plant was gradually expanded and put into production, and its business scope further covered Australia, the United Kingdom and other places. so far, Bette Group's products are export-oriented, mainly sold to Europe, the United States and Australia, accounting for more than 90% of revenue. In the subdivision of clothes dryer manufacturing, the Beit Group ranks second with 6.1 per cent market share in terms of export earnings.

The growth rate of the industry slows down and the competition pattern is scattered.

Although the Bette Group ranks first in terms of market share in the segment, considering its business composition and the current situation of the industry, its imagination in the future is relatively general.

Zhitong Financial APP observed that in the laundry products sector, products include clothes dryers, clothes hangers, ironing boards, laundry baskets, etc., of which clothes dryers are the main products, while Bette Group's products are mainly sold to the United Kingdom, Germany and Australia.

Between 2015 and 2019, the market for clothes dryers in the UK increased from £85.9 million to £91.8 million, with CAGR5 of only 1.7 per cent; in Germany, from 178 million to 186 million euros, with CAGR5 of 1.1 per cent; and in Australia, from A $82.3 million to A $94 million, with CAGR5 of 3.4 per cent.

It can be seen that in the business area of Bette Group, the growth rate of the clothes dryer market is generally not high, while the industry is affected by weather factors, living habits, housing structure and other aspects, the future growth is still expected to be general. In fact, China's clothes dryer market has maintained rapid growth, with CAGR5 reaching 10.5%.

In the household cleaning sector, Bette Group's products are mainly sold to the United States. From 2015 to 2019, the market size of household cleaning appliances in the United States grew at a compound annual rate of 4.7 percent to about 8 billion US dollars, but it should be noted that its growth rate has also slowed significantly in the past three years.

In addition, it should be noted that the market size of the above-mentioned countries is not fully enjoyed by local unexpected enterprises, and their import scale generally accounts for 20% to 25% of the total market share, so the Beit Group needs to face strong competition from local enterprises at the sales end.

In the manufacturing side of China, Bette Group also faces fierce competition in the industry. Zhitong Financial APP observed that by the end of 2019, there were 600 clothes dryer manufacturers in China, of which about 100 were engaged in export business. Although Bette Group ranked second in terms of export earnings, the market share of the top five was 30.6%, with little difference. In the home cleaning appliance manufacturing industry, by the end of 2019, there were 8000 domestic participants and more than 2000 engaged in export business, with a CR5 of only 2.5%, and the Bette Group did not have a market share advantage.

Taking into account, laundry products, household cleaning products industry, there is no obvious moat, Beit Group's business area industry scale growth is not high and has a further slowing trend, and the industry competition pattern is scattered, Beit Group also does not have a market share advantage.

The growth rate of revenue is not high, and it is significantly affected by trade.

Returning to the fundamentals of the Bette Group, Zhitong Financial APP observed that at present, Bette Group manufactures products in its Huzhou plant, and its production capacity of laundry and household cleaning products is about 95%, which is almost full, while the utilization rate of kitchen utensils, which accounts for a relatively small proportion of sales, is less than 70%. According to the prospectus, the main purpose of the listing is to expand plant capacity.

In terms of business, the company is mainly carried out through OEM and ODM models, and downstream customers include wholesalers and retailers. From 2017 to 2019 and the first half of 2020, the five major customers accounted for 78%, 77.9%, 76.9% and 75.2%, respectively, of which the largest customer, Brandshaw, accounted for 39.5%, 42.2%, 41.4% and 29.9%, respectively. In the first half of this year, public health events affected the decline in the proportion of its sales, but in the long run, more than 40% of sales accounted for, increasing the risk of over-concentration of customers.

On the financial side, although the company's revenue has maintained a steady growth in recent years, the growth rate is not optimistic. From 2017 to 2019, the company's revenue increased from 321 million yuan to 336 million yuan, with a compound annual growth rate of only 2.3%. The profit during the period is 29.04 million yuan, 41 million yuan and 34.06 million yuan respectively, even taking into account the impact of non-recurrent expenses such as listing in 2019, its net profit also showed a slight downward trend.

Zhitong Financial APP observed that the company's gross profit margin from 2017 to 2019 was 24.8%, 27.7% and 28.1% respectively, but the net profit rate was 9%, 12.5% and 10.1% respectively. The adjusted net interest rate in 2019 was about 11.9% lower than that in 2018. In fact, the sales expenses and adjusted administrative expenses of Beit Group in 2019 were lower than those in 2018. The first reason for the decline in the net interest rate in 2019 was due to other income effects. On the other hand, it is also affected by taxes.

According to the prospectus, almost all of the products sold by the Beit Group to the United States are listed in list 4A or listing 3 with tariffs of 7.5% to 25%, and only one product (window cleaning kit) is listed in list 4B. From this point of view, the company has to pay an additional tariff of 7.5% or 25% on almost all products sold to the United States, further driving up the company's operating costs.

In the future, the performance fluctuations caused by trade can not be avoided, and the situation of companies increasing income without increasing profits may become the norm. In addition, the company's business is mainly export, which is also obviously affected by exchange rate fluctuations, so the general pattern of the product industry and large performance fluctuations have become the basic characteristics of Bette Group.