Shulou(Shulou.com)11/24 Report--

Highlight:

1. Success is Huawei, defeat is Huawei. From 2017 to 2019, Huawei, the biggest customer, brought a lot of orders and revenue to Jermet, sending it to IPO and becoming the first stock in the mobile phone case. But starting in 2020, Jamet's performance was changed by a sharp drop in Huawei's orders.

2. In order to save the performance, Jermet began to vigorously develop its own-brand business, and its iPhone 14 mobile phone case sold at a very high price. The gross profit margin of Jermet's own-brand business exceeds that of Apple's hardware products, or even Apple.

IPhone 14 has just been released, and manufacturers of mobile phone cases have launched matching mobile phone cases.

Among them is the first unit of the mobile phone case, the iPhone 14 mobile phone case, which claims to be made of military materials, with a price of nearly 600 yuan. According to the data, Jermet's own-brand mobile phone shell margin is as high as 60.93%, even higher than Apple.

In the first half of this year, however, Jermet had a tough time, with its net profit plummeting 205.38% from a year earlier. What happened to the once-glamorous Jermet?

Dependent on Huawei sequelae in the early stage of development, Jermet mainly sells Apple-branded mobile phone cases and other products, benefiting from the global best-selling of Apple products, making the company achieve good results in the early stage of development.

Later, with the rapid rise of Huawei and the strength of Samsung in overseas markets, Jermet gradually formed a product pattern based on the above three brand series, plus some small brand series. Hugging Huawei's thigh also led Jermet to go public in 2020.

According to Jamet's prospectus, Huawei was its number one customer from 2017 to 2019. During the period, Jermet's sales revenue to Huawei was 127 million yuan, 265 million yuan and 377 million yuan respectively, accounting for 23.47%, 40.99% and 45.47% of operating income, respectively.

Huawei's order makes Jemmett live a very good life. From 2017 to 2019, Jermet's revenue was 540 million yuan, 647 million yuan and 829 million yuan respectively, and its net profit also rose year after year, to 39.83 million yuan, 61.29 million yuan and 130 million yuan respectively.

However, as shipments of mobile phones began to decline sharply in 2020, it also greatly affected Jermet's performance.

In 2020, Jermet's revenue increased slightly by 3.06% compared with the same period last year, but the net profit attributed to shareholders of listed companies decreased by 18.90% compared with the same period last year. In 2021, Jermet's revenue fell by 16.35% compared with the same period last year, and the net profit attributed to shareholders of listed companies fell by 75.16%.

During this period, Jermet no longer clearly disclosed the specific names of the top five sales customers. In 2020, the sales contributed by its largest customer was 265 million yuan, accounting for 31% of the total annual sales in 2021, and the sales volume of the largest customer was 103 million yuan, accounting for 14.37%. Judging from the data, its biggest customer should be Huawei.

It is worth noting that under the sharp reduction in Huawei's orders, Jermet did not seize new opportunities.

In May, Digital Technology launched a 5G phone case specifically for Huawei phones, which allows Huawei 4G phones to support 5G features. Subsequently, the company's share price soared, which also worried Jamet's investors.

On the investor interaction platform, some investors said that they saw digital technology cut into the smartphone shell, changing the competitive landscape and improving gross profit. The company as a professional mobile phone case, Huawei is also the largest customer, did not hurry to keep up. Jermet replied: the company is also concerned about the R & D and production of 5G communication cases. the company will continue to pay close attention to the industry trends, actively seize new market opportunities, open up business areas, and strive to improve the company's business performance.

For now, however, Jermet did not get an order for Huawei's 5G mobile phone case.

Self-branded mobile phone shell gross profit margin of more than 60% harvesting users? In the early days, Jermet focused on ODM / OEM business, manufacturing mobile phone cases and other products for mobile phone manufacturers such as Huawei and overseas accessories brands such as Targus. Later, Jermet also began to launch its own-brand business.

At present, the contract manufacturing business is still the main support of Jermet. According to Jermet's first half annual report in 2022, its ODM / OEM business revenue was 270 million yuan, an increase of 50.46% over the same period last year, accounting for 75.11% of total revenue. However, the contract manufacturing business earns hard money and the gross profit margin is very low. The business's gross profit margin was 9.55% in the first half of this year, down 3.62% from a year earlier.

In this context, the private-brand business has become the focus of Jamet's bet. At the 2021 performance meeting in May this year, in the face of the decline in performance, Chen Jianping, chairman of Jamet, said he was full of confidence in the future development of the company, and said that the gross profit margin of the company's own brand business is relatively high, and its own brand building has a certain cycle. the company is full of confidence in the development of its own brand.

Compared with the contract manufacturing business, Jermet's own-brand business does have a very high gross profit margin.

Its own brands include color resolution and xdoria, and Sina Technology saw at its xdoria Tmall flagship store that its mobile phone case for the newly released iPhone 14 series sells for as much as 598 yuan. The product claims to be of 0.01 per cent human taste and uses aramid fiber, a military material used in nuclear-powered aircraft carriers and missile destroyers; another Mate 50 Pro phone case for Huawei also sells for Rmb568.

Jermet's annual report for the first half of 2022 showed that the gross profit margin of its own-brand business was as high as 60.93%, up 3.36% from a year earlier. By contrast, according to Apple's financial results for the third quarter (second quarter) of fiscal 2022, its overall gross profit margin was 43.3%, while that of hardware products was 34.5%. In other words, the gross profit margin of the Apple mobile phone case sold by Jermet is higher than that of Apple.

However, Jermet's contract manufacturing and private-brand two-wheel drive strategy also faces an embarrassment: revenue from contract manufacturing with low gross margins is growing, while private-brand businesses with high gross margins are shrinking. In the first half of this year, revenue from Jamet's own-brand business reached 89.5199 million yuan, down 25.90% from the same period last year.

Consumers with tight budgets may also be spending less on high-priced mobile phone casings amid flagging demand in the mobile phone market.

Profits plummeted by more than 200%. The first stock of mobile phone case doesn't smell good? In the face of declining revenue contributed by Huawei and the limited size of its own-brand business, Jermet had another difficult time in the first half of this year, following a decline in performance in 2021.

According to its semi-annual report released a few days ago, Jermet achieved operating income of 360 million yuan, up 19.75% from the same period last year; the net loss attributable to shareholders of listed companies was 16.382 million yuan, down 205.38% from the same period last year; and the net loss belonging to shareholders of listed companies after deducting non-recurring gains and losses was 36.928 million yuan, down 36925.66% from the same period last year.

For the net profit avalanche, Jermet gives three main factors. First, changes in product shipments in downstream industries and changes in the pattern of downstream industries. During the reporting period, global smartphone market shipments and tablet PC market shipments declined compared with the same period last year, thus affecting the market demand for protective accessories; at the same time, affected by multiple environments, the competitive landscape of the mobile smart terminal industry has changed, affecting the business of some of the company's important customers.

There is no doubt that some of the important customers mentioned by Jermet are Huawei.

The second is the strategic investment of fund-raising projects. With the increase of strategic investment in the "R & D Center Construction Project" and "Brand Building and Marketing Network upgrade Project" raised at the time of listing, the company's R & D expenses, sales expenses and management expenses have increased by a large extent. it has a certain impact on the performance during the reporting period.

According to the 2022 semi-annual report, Jermet's sales and management expenses did show an increase of 50.14% and 31.06% year-on-year, respectively, but R & D expenses decreased by 15.48% year-on-year, which is not in line with Jermet's description.

Third, exchange rate fluctuations have an impact on business performance. In the first half of this year, the operating income of Jermet's export business reached 179 million yuan, accounting for 49.64% of the operating income. The company's exports were mainly settled in US dollars, and RMB exchange rate fluctuations affected the company's operating performance.

Under the performance avalanche, the share price of Jermet, the first share in the mobile phone case, is also in an avalanche.

When it landed on the Shenzhen Stock Exchange in August 2020, Jermet's offering price was 41.26 yuan per share, and its share price reached a peak of 95.60 yuan shortly after listing. By the close of trading on September 14, Jermet's share price was only 17.52 yuan, with a market capitalization of 2.243 billion yuan, which has shrunk by more than 80 per cent since its peak.

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