21st century business herald reporter Kong Haili and intern Wang Tian report from Beijing.
Company No.9 (689009.SH), which focuses on high-end and young electric two-wheeled vehicles, has stepped out of the independent curve.
According to the semi-annual report, in the first half of 2024, Company No.9 achieved revenue of 6.666 billion yuan, up 52.2% year-on-year. Among them, revenue from electric two-wheeled vehicles more than doubled year-on-year, and its net profit was 596 million yuan, almost the same as last year’s net profit, up 167.82% year-on-year.
It is worth noting that the sales revenue of its own brand increased by 82% year-on-year to 5.86 billion yuan. This is the continuous advancement of No.9 "Independent" since the distribution revenue of Xiaomi customized products fell to 4.3% in FY 2023, and its sales dependence on Xiaomi has been minimal.
By mid-2024, Shunwei Capital, with Lei Jun as the legal person, has withdrawn from the ranks of major shareholders, and among the top ten shareholders of No.9 Company, there is no Shunwei Capital.
After the announcement of the financial report, the share price of Company No.9 rose by more than 13% at the opening, and finally closed at 44.58 yuan with a 7.5% increase, a record high in the past two years.
Electric two-wheeled vehicle "takes the lead"
When the overall electric two-wheeled vehicle market bid farewell to "high growth", the electric vehicle revenue of Company No.9 has been rising steadily.
In recent years, the position of electric vehicle business in No.9 company has become more and more prominent, and the proportion of performance has been increasing. In the first half of this year, the revenue of electric vehicles was 3.383 billion yuan, accounting for more than half of the total revenue, reaching 50.74%. This figure was 1.087%, 1.929% and 35.97% respectively in the semi-annual report from 2021 to 2023, and the corresponding turnover was 513 million yuan, 930 million yuan and 1.575 billion yuan respectively.
In the first half of the year, electric balance cars and electric scooters realized a revenue of 1.59 billion yuan, accounting for 23.8% of the revenue. Service robots, all-terrain vehicles and other products and accessories earned 470 million yuan, 510 million yuan, 110 million yuan and 610 million yuan respectively.
In the first half of the year, Company No.9 sold 1.2 million electric two-wheeled vehicles, about 12,100 all-terrain vehicles and 518,100 self-owned brand retail scooters.
The rapid growth of electric two-wheeled vehicles’ performance is partly due to the expanding number of stores of No.9 Company.
According to the information disclosed by the company, by the end of June, there were over 6,200 franchised stores of electric two-wheeled vehicles in China, covering more than 1,100 counties and cities. In the data disclosed earlier this year, Company No.9 indicated that there were about 5,000 offline stores.
Company No.9, which focuses on the high-end market, has a higher gross profit margin of electric two-wheeled vehicles than its peers. In the first half of the year, the gross profit margin of electric two-wheeled vehicles of Company No.9 was about 22.26%, which was higher than 19.27% at the end of last year.
According to Company No.9, the gross profit margin of the electric two-wheeled vehicle business is 23.73% if the influence of store building subsidy is excluded.
In contrast, the company’s service robots have the highest gross profit margin, reaching 56.23%. The gross profit margin of electric balance car and scooter is about 33.79%.
Different from relying more on foreign markets before, today, the domestic market has become the largest source of income for Company No.9.. In the first half of the year, the domestic market revenue of No.9 Company reached 3.86 billion yuan, far exceeding the foreign revenue of 2.8 billion yuan.
However, on the whole, foreign regions still have higher gross profit margins. In the first half of the year, the gross profit margin of foreign countries was 38.29%, and that of domestic countries was 24.76%.
In order to promote business growth, Company No.9 continued to invest heavily in advertising promotion in the first half of the year. The company’s sales expenses increased from 460 million yuan in the same period last year to 640 million yuan this year. Among them, the publicity and advertising expenses increased from 150 million yuan last year to 250 million yuan this year.
In the first half of the year, the net profit attributable to shareholders of the parent company of Company No.9 was about 600 million yuan, an increase of 167.8% over the same period of last year, reversing the year-on-year decline. The net cash flow from operating activities was about 2.49 billion yuan, the net cash increase was 830 million yuan, and the ending cash balance was 5.28 billion yuan.
The surplus cash in the account also enabled Company No.9 to start fund management. In the first half of this year, Company No.9 used part of its funds to purchase wealth management products, and the transaction scale of wealth management products reached 4.8 billion yuan, a significant increase compared with nearly 700 million yuan in the same period last year. By the end of June, the balance of its trading financial assets had increased from 228 million yuan at the end of last year to 1.47 billion yuan at the end of the first half of this year.
Earlier, the company also said that it is expected to use no more than 1.1 billion yuan to purchase land use rights and carry out headquarters research and development and office building construction. The land area is about 10,000 square meters, and the above-ground construction area is about 34,000 square meters. The construction period is 4 years, and the capital will be invested in batches.
According to the semi-annual report information disclosed by No.9 Company, the budget for R&D and office building construction of Beijing headquarters is 1.05 billion yuan, and the amount invested at present is about 17 million yuan, accounting for 1.62% of the total budget.
"De-millet" is basically completed.
Company No.9 was once a Xiaomi ecological chain enterprise, and was "supported" by Xiaomi in the early days.
In 2015, with the help of Xiaomi and Sequoia, Company No.9 acquired Segway, a well-known American balance car brand, thus opening up the balance car market. At the same time, Company No.9 became a new member of Xiaomi’s ecological chain, producing balance cars and scooters for it.
Backed by Xiaomi’s sales channel, No.9 achieved rapid sales growth, but its gross profit margin was relatively low. In the fiscal year of 2017-2019, the fetters between Company No.9 and Xiaomi were still deep, and the related transactions accounted for more than 50% of the revenue.
After listing in 2020, Company No.9 continuously reduced its business dependence on Xiaomi. In 2021, the distribution revenue of Xiaomi’s customized products accounted for 32.29%, which dropped sharply to 7.23% in 2022, and further dropped to 4.3% in 2023.
Xiaomi’s customized distribution income is declining year by year, and the income of No.9′ s own brand is gradually increasing. In fiscal year 2023, its own brand sales revenue was 8.189 billion yuan, up 31.36% year-on-year. In the first half of this year, this figure was 5.86 billion yuan, up 82% year-on-year.
In the mid-year report in 2024, although Company No.9 did not separately disclose the revenue proportion of Xiaomi distribution, the overall revenue structure of the company, including electric vehicles, all-terrain vehicles, service robots and other income, has reached 84.54%.
21st century business herald reporter learned from insiders of No.9 Company that "this is a better change". The source said that from the initial listing, Xiaomi channel sales accounted for more than half, and now it accounts for less than 5%. The income structure of Company No.9 has undergone great changes, and the proportion of truly profitable and sustainable businesses has increased significantly.
"This is a natural result. The company’s investment in independent brands is increasing, and it is also a process of active change." The person said.
In the first half of 2024, the net profit of Company No.9 was 596 million yuan, a year-on-year increase of 167.82%, which was close to the net profit level of the whole year of 2023 (598 million yuan).
In terms of capital mobility, in this year’s interim report, Shunwei Capital has withdrawn from the ranks of major shareholders of No.9 Company.
The data shows that as of the first quarter of this year, Shunwei TMT lll Limited, a subsidiary of Shunwei Capital, holds 4.01% of the shares and is the sixth largest shareholder. The reference market value of Company No.9 at that time was 859 million yuan. Today, the tenth largest shareholder of Company No.9 is HC Tech LLL.P., with a shareholding ratio of 2.05% and a reference market value of 542 million yuan. Based on this calculation, the amount of capital reduction of Shunwei is at least 300 million yuan.
In addition to Shunwei, Sequoia Capital has also reduced its holdings of Company No.9 for many times. Sequoia Capital was once the largest external institutional investor of No.9. When the latter went public, Sequoia Capital held 15.12% of its shares. As of June 30, 2024, the shareholding ratio of Sequoia’s HSGGF Hold Co III-A, Ltd. was 5.1%, which was further reduced from 5.78% at the end of 2023.
By June 30, 2024, the actual controllers Gao Lufeng and Wang Ye of Company No.9 jointly controlled 60.05% of the voting rights of the Company.
No.9 is not the only company that "goes to Xiaomi".
In the smart home appliance market, Roborock, which specializes in wireless vacuum cleaners and intelligent sweeping robots, has developed from wireless vacuum cleaners to the pursuit technology of sweeping robots, floor washers and hair dryers. After large-scale development, it has gradually reduced the proportion of millet sales channels and continued to "de-millet".
A practitioner in the smart home appliance industry told 21st century business herald that it is a routine business operation for Xiaomi Eco-chain enterprises to seek independence after scale, and they hope to reduce the impact of the main single channel on the company’s operation and seek a healthier revenue structure.