WLM(SZ:300591)2023-04-27 16:00Financial Performance - The company reported a significant loss due to insufficient military orders and weak consumer demand, with group purchase sales accounting for over 50% of total sales from 2020 to 2022, specifically 2,616.68 million, 2,036.82 million, and 2,683.56 million CNY, representing 76.53%, 61.54%, and 58.56% of total revenue respectively [3]. - The company's revenue for 2022 was CNY 475,603,170.71, representing a 40.18% increase compared to CNY 339,287,548.81 in 2021 [26]. - The net profit attributable to shareholders for 2022 was a loss of CNY 212,563,457.79, which is a 62.32% increase in loss compared to a loss of CNY 130,952,249.05 in 2021 [26]. - The cash flow from operating activities for 2022 was a negative CNY 150,818,034.30, a decline of 296.31% from a positive CNY 76,826,618.96 in 2021 [26]. - The total assets at the end of 2022 were CNY 950,268,280.15, a 24.29% increase from CNY 764,534,399.45 at the end of 2021 [26]. - The basic earnings per share for 2022 was -CNY 0.5497, a decrease of 38.39% from -CNY 0.3972 in 2021 [26]. - The company reported a total revenue of CNY 121,806,872.85 in Q1 2022, with a net profit of CNY 1,649,975.65 attributable to shareholders [29]. - In Q4 2022, the company experienced a significant loss with a net profit of -CNY 202,707,341.33 attributable to shareholders [29]. - The company’s net assets attributable to shareholders increased by 54.84% to CNY 555,596,989.16 at the end of 2022 from CNY 358,808,701.75 at the end of 2021 [26]. Inventory and Impairment - The company recognized inventory impairment losses of 46.9868 million CNY and bad debt provisions of 39.2730 million CNY due to weak consumer demand and difficulties in recovering accounts receivable [6]. - A goodwill impairment of 14.4403 million CNY was recorded related to the acquisition of Chaoqi Technology, reflecting the challenges faced post-acquisition [7]. - The company recorded an inventory impairment loss of ¥46,986,800 due to weak overall consumer demand and slow inventory turnover [68]. Market and Industry Trends - The footwear and apparel industry is experiencing intensified competition, but it remains a vital sector with growth potential as China continues to develop as a major manufacturing and consumption hub [9]. - The leather and footwear industry in China generated a revenue of 1,133.99 billion yuan in 2022, a year-on-year decrease of 0.4% [47]. - The total profit for the leather and footwear industry in 2022 was 61.44 billion yuan, representing a year-on-year increase of 3.3% [47]. - The consumer price index for clothing decreased by 3.8% in 2022, with per capita clothing expenditure at 1,365 yuan, accounting for 5.6% of total per capita consumption expenditure [51]. - The overall consumer spending on clothing and footwear has been declining, with retail sales in this category dropping by 6.5% in 2022 [51]. - The leather industry is experiencing intensified competition, with many domestic brands and new online brands emerging, leading to price wars becoming the norm [50]. - The consumer sentiment is low, influenced by increased spending on medical protective supplies, which has further impacted consumption in the short term [51]. - The "China Light Leather Prosperity Index" for December 2022 was 83.52, indicating a cooling trend in the industry [48]. Strategic Initiatives - The company plans to enhance its inventory structure and accelerate capital turnover through increased promotional efforts for footwear inventory [6]. - The company is committed to complying with industry disclosure requirements as outlined by the Shenzhen Stock Exchange [9]. - The company is focusing on digital transformation and enhancing operational efficiency to meet personalized consumer demands [65]. - The company anticipates significant growth potential driven by domestic middle-class consumption upgrades and the influence of technology-driven "new retail" trends [52]. - The company is strategically positioned to benefit from the "military-civilian integration" national strategy, with single-soldier protective equipment expected to become a new growth driver [63]. - The company aims to enhance its operational efficiency through an upgraded information system to integrate procurement, production, sales, and finance, addressing the challenges of its current systems [189]. Product Development and R&D - The company is actively pursuing smart manufacturing upgrades to transition from a labor-intensive model to an automated and intelligent production approach [114]. - R&D expenses amounted to ¥33,916,400, accounting for 7.13% of total revenue, highlighting the company's commitment to enhancing its competitive edge through innovation [112]. - The company aims to enhance product quality and functionality through ongoing R&D projects, targeting improved competitiveness in the market [143]. - The company plans to increase investment in R&D, particularly for specialized products for group purchasing clients, to maintain its competitive edge [184]. - The company has established a research center for emergency protective products, focusing on developing specialized military and police equipment [112]. Sales and Distribution - The company has a strong e-commerce presence, leveraging platforms like Taobao, Tmall, and JD.com for sales, and has established an independent e-commerce department [89]. - The company utilizes a diverse sales channel strategy, including group purchasing, direct sales, e-commerce, wholesale agents, and ODM [83]. - The company’s direct sales channels are focused on major urban areas, enhancing customer experience and brand image through physical stores [85]. - The company has expanded its wholesale agent channel rapidly across the country, enhancing market coverage and optimizing the sales network [92]. - The company reported a significant decrease of 74.22% in other business revenue, dropping to 4,686,690.35 CNY from 18,182,180.20 CNY [129]. Financial Management and Fundraising - The company raised a total of RMB 419,999,999.51 through the issuance of 75,949,367 shares at a price of RMB 5.53 per share, with a net amount of RMB 410,398,420.40 after deducting issuance costs [159]. - The company has established special accounts for fundraising management at multiple banks, ensuring compliance with regulatory requirements [164]. - The company has made efforts to improve fundraising efficiency and protect investor interests through strict management protocols [164]. - The company has adhered to the three-party supervision agreement for fundraising, with no significant issues reported during the usage of the funds [160]. - The company has successfully completed the "Smart Manufacturing Upgrade Project" and "R&D Center Upgrade Project," achieving the intended use of the raised funds [163]. Customer Base and Market Position - The company has established stable partnerships with military and police forces, becoming a reliable supplier for various government sectors [102]. - The company focuses on group purchasing products, primarily serving stable customer groups such as military and state-owned enterprises, which constitute a significant portion of its business [75]. - The recognition of domestic brands is increasing, with 70% of post-90s and nearly 80% of post-00s consumers preferring to purchase domestic brands [66]. - The company targets middle-class consumers in first and second-tier cities, with product price ranges from 600 to 3,500 RMB [140]. Challenges and Risks - Future performance projections and strategic plans are subject to risks and uncertainties, and investors are advised to remain cautious [9]. - The company is facing risks from economic fluctuations that could impact consumer demand for leather goods, necessitating a focus on enhancing brand value and core competitiveness [190]. - The company has identified risks related to the decline in sales from direct store channels due to the rise of e-commerce and increasing operational costs [192]. - The company emphasizes the importance of accurately predicting market trends and consumer preferences to mitigate risks associated with product development [197].