On October 19, more than four years after delisting from the Hong Kong Stock Exchange, ceramic tile and sanitary ware company Dongpeng Holdings will officially ring the bell for listing on the Shenzhen Stock Exchange.
This is the third company in the ceramic tile industry to be listed through IPO. The first is Yuexin Health (Smick), and the second is Mona Lisa, which was officially listed on December 19, 2017. There is also a ceramic tile company, Oceano, which achieved a curved listing by being acquired by Emperor Sanitary Ware.
Dongpeng’s return to A-shares this time has been full of twists and turns. A natural stumbling block for ceramic tile companies to go public is the stringent environmental issues, which Mona Lisa has also encountered before. In December 2013, Dongpeng was officially listed on the Hong Kong Stock Exchange; in June 2016, Dongpeng was delisted from the Hong Kong stock market at a cost of approximately 200 million yuan. In September 2017, Dongpeng issued a prospectus for its initial public offering; in April 2018, the China Securities Regulatory Commission disclosed feedback for the first time; on October 24, 2019, Dongpeng Holdings’ listing application was approved by the China Securities Regulatory Commission; in September 2020, waiting for Nearly a year later, Dongpeng finally received the listing approval from the China Securities Regulatory Commission.
In the terminal market of ceramic tiles, Marco Polo, Mona Lisa, Dongpeng, and Nobel are among the first-line brand players. Dongpeng is the only brand that does not have the reputation of a well-known foreign name, which is very valuable; and in the sanitary ware industry, Dongpeng It ranks behind many brands such as Wrigley, Jiumu, Hengjie, Huida and even Faenza, Anhua, etc., but with a revenue of more than 600 million a year (2019 data), it is also a brand that cannot be ignored in the sanitary ware industry. In addition, Dongpeng also has home furnishing business segments such as wood flooring and paint, but its revenue and proportion are not large.
As an important enterprise in the pottery and sanitary ware industry, Dongpeng's revenue in 2017, 2018 and 2019 were 6.632 billion yuan, 6.619 billion yuan and 6.752 billion yuan respectively. In the first half of this year, all home furnishing companies were affected by the epidemic without exception. Dongpeng's revenue was 2.608 billion yuan, a significant year-on-year decline. However, in an announcement released on October 18, Dongpeng stated that its revenue from January to September 2029 will be between 4.558 billion yuan and 4.663 billion yuan, a year-on-year decrease of 3.27% to 5.44%, with obvious growth momentum. For the whole of 2020, Dongpeng predicts its revenue will be 6.795 billion yuan, a year-on-year increase of 0.65%. Therefore, overall, Dongpeng has been affected by the epidemic this year, but it has already made considerable self-repair.
In the four years since 2017, Dongpeng’s revenue has been hovering between 6.6 billion and 6.8 billion, without explosive growth like Oceano. This is related to Dongpeng's consistent stable operation, which focuses on retail channels. Engineering channels are involved but the proportion is not very large. This business model has two impacts. First, cash flow is abundant and the asset-liability ratio remains at a low level, only 45.58% in the first half of this year. Second, revenue growth is slow and there will be no explosive growth.
However, after re-listing, Dongpeng will face tremendous pressure for performance growth. This pressure comes from fierce market competitionCompetition, the ceramic sanitary ware industry is an industry with full market competition. Most of them are private enterprises, which belong to large industries and small businesses. The growth of revenue scale represents the strength and future of the company. Dongpeng's IPO raised 1.48 billion yuan, which was mainly used to expand production capacity, including a new environmentally friendly ecological stone plate transformation project with an annual output of 3.15 million square meters, the expansion of 4 ceramic production lines, the construction of 4 high-end antique tile production lines, and an annual output of 1.6 million pieces. Water-saving sanitary ware production line, annual output of 2.6 million water-saving sanitary ware and 1 million hardware faucet construction projects, etc.
For a company of Dongpeng's magnitude, against the backdrop of industry leader Marco Polo's revenue exceeding 10 billion, constantly catching up and narrowing the gap will become the top priority after listing. With ceramic tiles accounting for the majority, the bathroom category will become another focus of Dongpeng’s future efforts. After all, bathroom and ceramic tiles have a natural connection.
(The article is reproduced from Jianxiang Home)
