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

The mobile phone market continues to be in the doldrums, and domestic mobile phone manufacturers such as Huawei, Xiaomi, OPPO and vivo have all had a hard time. But their contract factory Huaqin ushered in the joy of coming on the market.

However, Huaqin also made hard money-in 2022, its mobile phone sales exceeded 100 million yuan, but the average unit price was only 335.41 yuan; sales of PC, tablet and other businesses were also good, but the average unit price was also worrying.

On the whole, Huaqin OEM is mostly low-end products, and the lack of science and technology content, has previously failed to impact Kechuang board.

After listing, Huaqin also faces many challenges. At present, the global consumer electronics industry has not yet come out of the downturn, Huaqin 2022 of mobile phones, PC sales have also declined, to maintain good performance, it is really difficult.

OEM hundred yuan machine, profits as thin as paper mention Huaqin, most netizens may feel strange, but mention its customers, it is well known.

Huaqin is mainly engaged in smart hardware ODM industry, the product line covers smart phones, laptops, tablets, smart wear, AIoT products and so on. According to Huaqin, the companies it serves include Samsung, OPPO, Xiaomi, vivo, Lenovo and so on.

The so-called ODM is to provide R & D, design and production products according to the needs of intelligent hardware brand manufacturers, and the products are sold in the end market under the customer's brand. In other words, Huaqin's products are not directly for consumers, but for smart hardware brands.

If only from the sales point of view, Huaqin's data is not bad.

According to Counterpoint data and company sales data, based on the shipments of "three major pieces of smart hardware" (including smartphones, laptops and tablets), Huaqin shipped more than 200 million units in 2021, ranking first in the global smart hardware ODM industry.

But if you look at the unit price, it is not so ideal.

In terms of smartphone business, the average selling prices of each product of Huaqin from 2020 to 2022 were 252.29 yuan, 291.47 yuan and 335.41 yuan respectively; in terms of notebook computer business, the average selling prices of each product of Huaqin from 2020 to 2022 were 1641.10 yuan, 1955.94 yuan and 2372.11 yuan respectively; in terms of tablet business, the average selling prices of each product of Huaqin from 2020 to 2022 were 470.44 yuan, 545.93 yuan and 555.47 yuan respectively.

It can be seen that the intelligent hardware products of Huaqin OEM are mainly low-end. For example, on mobile phones, its products include Samsung Galaxy A03s, OPPO A32, Hongmi 9, vivo Y15S and so on, which all belong to the low-end series of mobile phone manufacturers.

As a result, Huaqin's gross profit margin has been lower than that of comparable companies. From 2020 to 2022, Huaqin's gross profit margin was 9.90%, 7.75% and 9.85% respectively, which was on a downward trend and far below the average level of comparable companies.

This is especially true in terms of profit margins.

From 2020 to 2022, the operating income of Huaqin was 59.866 billion yuan, 83.759 billion yuan and 92.646 billion yuan respectively, and the net profit belonging to the shareholders of the parent company was 2.191 billion yuan, 1.893 billion yuan and 2.564 billion yuan respectively. The net profit margin is only around 2%, which is as thin as paper.

Due to the lack of science and technology, it is worth noting that Huaqin applied for listing on Science and Technology Innovation Board as early as June 2021, but in April 2022, Huaqin withdrew Science and Technology Innovation Board's listing application until July 2022, when it re-submitted the prospectus and moved to the main board of the Shanghai Stock Exchange.

The main reason for the failure of Huaqin impact Division is that it is questioned that the technology is not advanced enough.

At that time, the Shanghai Stock Exchange conducted three rounds of inquiries with Huaqin, mainly focusing on fewer high-end models, low gross profit margin, and whether the core competitiveness was technology-driven or price-driven. Question whether Huaqin is in line with Science and Technology Innovation Board's positioning and whether the core technology is advanced.

After the pressure of three rounds of inquiries, Huaqin voluntarily withdrew Science and Technology Innovation Board's listing application. With the listing on the main board of the Shanghai Stock Exchange, Huaqin's planned projects have not changed, but the actual funds raised have dropped from 7.5 billion yuan to 5.5 billion yuan, a decrease of 2 billion yuan.

From the perspective of R & D investment, the R & D expenditure rate of Huaqin is not high. From 2020 to 2022, R & D investment accounted for 4.06%, 4.32% and 5.45% of revenue respectively. Specifically, the R & D investment is not enough. From 2020 to 2022, employees' salaries accounted for 63.10%, 66.66% and 66.10% of R & D investment, respectively, that is, 2/3 of R & D expenses were used to pay R & D personnel.

According to the disclosure of Huaqin, the company has five major R & D centers in the country and currently has a R & D team of more than 10,000 people. As of January 31, 2023, the company has nearly 2500 authorized patents. However, from the perspective of patent structure, the proportion of utility model patents is much higher than that of invention patents.

Huaqin is also embroiled in a number of patent lawsuits.

For example, in history, there have been eight patent lawsuits between Huaqin and Nokia, which lasted for many years; in August 2022, Bell Northern Research,LLC sued Huaqin and 15 other companies for infringing 13 patents, and the case has not yet been settled.

The industry is in the doldrums, how to maintain performance growth? Although the Huaqin IPO has passed, it will still face many challenges after listing.

The first is the downturn in the consumer electronics industry.

According to the data, the total sales of Huaqin's smartphone business was about 109 million units in 2022, down 11.88% from 124 million units in 2021; the total sales of notebook computers was about 9.6956 million units, down 5.6% from 1027.04 units in 2021. Total sales of smart wearable services (smartwatches, TWS headphones, smart bracelets, etc.) were 15.6461 million, down 8.2% from 17.0436 million in 2021, and the average unit price was 9.07%. Total sales of smart AIoT services (smart POS machines, automotive electronics, smart speakers, etc.) were 2.3343 million, down 37.32% from 3.724 million in 2021.

Judging from the data of third-party agencies, the consumer electronics industry is still not optimistic in the future.

The global mobile phone market experienced a sharp decline in 2022 and has yet to see a recovery; for notebook products, Counterpoint expects demand growth to slow gradually in the next few years; and for tablets, Counterpoint expects shipments to decline slightly from 2022 to 2025.

Secondly, the decline of ODM market scale and the risk of market competition. Smart hardware belongs to consumer electronics products, which is greatly affected by the cycle of consumer electronics industry. If the future macroeconomic environment or the consumer electronics industry environment fluctuates, consumer demand for consumer electronic products decreases, or as customers adjust product strategies, such as self-R & D, design or manufacturing, reduce or stop outsourcing R & D or manufacturing, Huaqin may face the risk of a decline in market size.

In fact, this risk has already occurred before. For example, Huawei decreased its top five customers in 2021, mainly because the customer's demand for smartphones such as ODM decreased due to the change of business strategy, and the top five customers reduced OPPO in 2022, mainly due to a decline in purchasing demand for ODM smartphones from OPPO.

Finally, the company is at risk of irregularities in employment.

In the staff structure of Huaqin, production personnel account for a large proportion. During the reporting period, the company used labor dispatch employment, and the proportion of labor dispatch employment to the total employment in some periods exceeded the upper limit stipulated in the interim provisions on Labor Dispatch, and may face the risk of being punished by the authority of labor and employment; in addition, the company fails to pay social insurance and housing provident fund for some employees in time. As a result, the company may be required to make up or be punished by the relevant competent authorities, which in turn affects the company's operating performance.

Welcome to subscribe "Shulou Technology Information " to get latest news, interesting things and hot topics in the IT industry, and controls the hottest and latest Internet news, technology news and IT industry trends.