The projector market is extremely volatile.
“Investor Network” Zhang Wei
On May 1, Jimi Technology Co., Ltd. (hereinafter referred to as “Jimi Technology” or the “Company”, 688696.SH), the “first domestic projector”, issued an announcement stating that the two investment companies under Baidu shareholder Baidu intend to reduce their holdings by no more than 2.66% and 0.34% of the company's total share capital, respectively. After this holdings reduction is completed, Baidu's shareholding ratio in Jimi Technology will be less than 5%. If it continues to reduce its holdings, there is no need to make an announcement or disclosure. It attracted the attention of many parties for a while.
Regarding the impact of Baidu's holdings reduction, Jimi Technology indicated to “Investor Network” that the company mainly has business cooperation with iQiyi. The company's video content service is based on video applications operated by an intelligent projection system. iQiyi is one of the video content platforms, and shareholder Baidu's holdings reduction plan will not affect the current cooperation between the two parties.
In addition to major shareholders drastically reducing their holdings, Jimi Technology's decline in performance has also attracted attention. According to the annual report, Jimi Technology's revenue and net profit in 2023 decreased by 16% and 76%, respectively. In the first quarter of this year, Jimi Technology's revenue and net profit declined by 7% and 73%, respectively. Has Jimi Technology, created by the young talent Zhong Bo, entered a “midlife crisis”? How can the company boost profit levels in the future? It remains to be seen.
Young entrepreneurs who have come out of small counties
Rong County belongs to Zigong City, Sichuan Province. People are outstanding here. In modern times, many famous people have emerged, such as educator Wu Yuzhang, calligrapher Qi Bowen, Academician Qiu Yong of the Chinese Academy of Sciences, and Zhang Jinqiu, an academician of the Academy of Engineering. In recent years, with the rise of innovation and entrepreneurship, Zhong Bo, chairman of Jimi Technology, has become the “new business card” of Rongxian County.
According to public information, in 1980, Zhong Bo was born into an ordinary family in Rongxian County. In 2003, after graduating from the University of Electronic Science and Technology of China, Zhong Bo joined the Hisense Television Research Institute and was responsible for PDP TV research and development. From 2004 to 2012, Zhong Bo worked at Morningstar Software R&D (Shenzhen) Co., Ltd., during which time he was responsible for the company's R&D projects on various LCD TV models such as TCL, Skyworth, Changhong, Konka, Xiamen, and BenQ.
Zhong Bo's nine years of experience in television and video processing laid the foundation for his subsequent establishment of Jimi Technology. In 2013, Zhong Bo founded Jimi Technology in the Chengdu High-tech Zone. The company's main products are screen-free TVs. The so-called screenless television means changing the display method of a traditional television from an LCD screen to projection on the premise of ensuring image quality and sound effects. In the early days, Jimi Technology mainly produced micro-projection products, and began developing and producing laser TVs in 2017.
On the other hand, Jimi Technology received capital attention soon after its establishment.
The financing process shows that in 2014, Jimi Technology received Series A financing of 100 million yuan from Chuangfang; in 2015, Jimi Technology received 300 million yuan of Pre-B investment from Mango Media; in 2016, Jimi Technology received a total of 120 million yuan in Series B investment from Zhongnan Culture and Chuangdang; in 2017, Jimi Technology received Series C financing led by Baidu; in 2018, Jimi Technology completed more than 600 million yuan in financing. Investors include Baidu, Sichuan Cultural Investment, etc.
Statistics show that prior to the IPO, Jimi Technology completed a total of 8 rounds of financing. On March 3, 2021, Jimi Technology was listed on the Science and Technology Innovation Board and became the “first domestic projector stock”.
Starting with the C round, Baidu began to be deeply tied to Jimi Technology. According to the shareholding structure, Baidu mainly invests in Jimi Technology through its two investment companies — Baidu Netcom and Baidu Biwei. Prior to the IPO, Baidu Netcom and Baidu Biwei held a total of 15.48% of Jimi Technology's shares, second only to Zhong Bo (25.02%). They were the largest institutional investors in Jimi Technology.
However, Baidu's “Run with Me” was also short-lived. One year after Jimi Technology went public, Baidu Netcom and Baidu Biwei began reducing their holdings. According to the announcement, Baidu Netcom and Baidu Biwei both reduced their holdings twice in March and June 2022. Among them, Baidu Netcom reduced its holdings by 2.55% and 0.89%; Baidu Biwei reduced its holdings by 0.45% and 0.45%. After two holdings were reduced, Baidu cashed out more than 800 million yuan from Jimi Technology.
On May 1, Jimi Technology announced that Baidu Netcom and Baidu Biwei plan to reduce their holdings by 1.8593 million shares and 247,700 shares respectively, accounting for 2.66% and 0.34% of the company's total share capital. After the reduction in holdings is completed, Baidu Netcom and Baidu Biwei's total holdings of Jimi Technology will drop to 4.27%. If they continue to reduce their holdings in the future, listed companies will no longer announce their holdings reduction plans. Baidu's operation is also thought by the market that “clearance style” holdings may be reduced.
Regarding Baidu's holdings reduction plan, Zhong Bo said at the performance briefing on May 21 that the company's shareholders' holdings reduction was mainly due to their own financial arrangements. At the business level, Jimi Technology mainly has business cooperation with iQiyi, and shareholder Baidu's holdings reduction plan will not affect the current cooperation between the two parties.
It is worth noting that not only is Baidu “retreating”, but the shareholding ratio of investment institutions such as Zhongnan Culture, Sichuan Cultural Investment, and Mango Media, which was introduced before Jimi Technology's IPO, has also declined to varying degrees. It's just that compared to Baidu, other shareholders' actions to reduce their holdings are less remarkable.
According to enterprise research information, as of May 27, Zhong Bo was still the largest shareholder of Jimi Technology, with a shareholding ratio of 18.79%; the second largest shareholder was Baidu Netcom, with a shareholding ratio of 6.44%; Sichuan Cultural Investment, Zhongnan Culture, and Mango Media ranked the fifth, seventh, and ninth shareholders, with shareholding ratios of 2.56%, 2.25%, and 1.57% respectively.
Changes in the industry have led to changes in performance
Statistics show that in 2023, Jimi Technology's shipments topped the Chinese projection equipment market. From 2018 to 2023, Jimi has topped the list for six consecutive years. Also, according to IDC's 2023 domestic projector sales TOP10, Jimi Technology has 6 products on the list. Judging from various statistics, Jimi Technology is already far ahead in the domestic projection industry.
However, Jimi Technology's performance is not as stable as its position in the industry. According to the annual report, Jimi Technology's revenue and net profit in 2023 were 3,557 million yuan and 121 million yuan, down 16% and 76% year-on-year respectively from 4.222 billion yuan and 501 million yuan in 2022. This is also the first time that revenue and net profit have declined since Jimi Technology went public.
The timeline has been lengthened. Jimi Technology's revenue increased from 2,116 billion yuan in 2019 to 4.222 billion yuan in 2022, doubling in four years. Net profit during this period increased from 93 million yuan to 501 million yuan, and quadrupled in four years. In 2023, Jimi Technology's revenue declined slightly, but net profit plummeted.
Jimi Technology's profit decline in 2023 (data source: Baidu Stock Market Connect)
Regarding the reason for the decline in performance, Jimi Technology stated in its annual report that the company's overall performance was affected by the demand side, while gross margin fell to 31% from 36% in the previous two years, and the decline in gross margin put pressure on profitability. Other analysts point out that overall sales in the domestic projector market declined in 2022, but shipments were growing (7.4% growth rate), while volume and price fell sharply in 2023, and the projector industry's growth space may already be close to the “ceiling.”
It is worth mentioning that in a situation where the domestic projector industry is extremely “internal”, Jimi Technology's overseas performance is quite good. According to the annual report, Jimi Technology's overseas revenue in 2023 was 913 million yuan, an increase of 15.6% over the previous year. Currently, overseas revenue accounts for more than 25% of Jimi Technology's total revenue. Jimi Technology said that despite the year-on-year decline in overall revenue in 2023, the increase in overseas revenue shows that the company is more competitive in the international market.
Entering 2024, Jimi Technology's revenue for the first quarter of this year was 825 million yuan, and net profit was 14.32 million yuan, down 7% and 73% respectively from 884 million yuan and 52.19 million yuan in the same period last year. If you look at a single quarter, Jimi Technology's profit has been declining in the past five quarters, and it still lost 7 million yuan in the third quarter of last year.
How to reverse the decline in profits? Jimi Technology said that the company is actively adjusting to respond to market changes. On the one hand, new products have been launched in high-end, mid-range and entry-level products to meet the diverse needs of consumers in different scenarios and price segments; on the other hand, the company has firmly invested in R&D and released a number of innovative technologies such as Dual Light 2.0 eye protection three-color laser, Eagle-Eye Hawkeye computational optics, and fully automatic gimbal to lead industry innovation.
Jimi Technology also believes that regardless of the recovery in revenue or profit, it will eventually return to the product itself. In the future, the company will continue to launch more differentiated and competitive products to bring users a good projection experience. Whether the company can reverse the decline in profitability in 2024 is yet to be tested over time. (Produced by Thinking Finance) ■