Fun Sleeping Technology IPO: Glory and anxiety brought by Xiaomi

Author | Karong

Edit | Tang Fei

Another Xiaomi ecological chain company is going to be listed.

A few days ago, the CSRC approved the registered IPO registration of GEM IPO of Chengdu Fun sleeping Technology Co., Ltd. (hereinafter referred to as "Fun Sleeping Technology").

In fact, as early as two years ago, on July 7, 2020, the IPO application submitted to the Shenzhen Stock Exchange GEM has been officially accepted.

After two years and three rounds of inquiries, the company that received the Xiaomi Capital Investment and claimed to be a "atypical ecological chain model" finally took a step forward to reach the critical point of listing. However, as a Xiaomi ecological chain company, Fun Sleeping Technology has not got rid of the defects that depend on the "rice chain".

This is evident from the inquiry of the Shenzhen Stock Exchange. The prospectus updated in July 2022 and the recent inquiry letter, Fun Sleeping Technology must focus on the cooperation with Xiaomi to "whether there is a risk of being replaced, removed or other reasons to terminate cooperation".

In fact, the focus of the Shenzhen Stock Exchange just poked the shortcomings of Fun Sleeping Technology. Thanks to Xiaomi's empowerment, at the beginning of development, Fun Sleeping Technology did go smoothly, but with the saturation of related channels, how to further grow fun sleep technology has become a great challenge.

Not becoming a "catfish"

In the prospectus, Fun Sleeping Technology clearly states that "the company belongs to the ecological chain company of Xiaomi Group", but from the results, Fun Sleeping Technology does not seem to have become the "catfish" that stirred the industry.

According to the company's investigation data, Xiaomi's Shunwei Capital in 2015 and Xiaomi Group participated in the Angel Wheel of Fun Sleeping Technology and the Pre-A round of financing. As of the date of signing the prospectus, Xiaomi has a total of 12%of the equity of Fun Sleeping Technology and is the largest shareholder of the latter.

The reason why Xiaomi invested in Fun Sleeping Technology at the beginning of the business was mainly because it saw that the Chinese mattress market was growing rapidly, and there was no absolute leader in the market.

Data show that in 2019, the market share of the Chinese mattress market CR5 was only 16.0%, and the industry concentration was significantly low. In comparison, CR5 Sili, Taber, Xi Mengsi, Shuda, Sleep Number, the nation's national share of 51.40%of the market share.

With the gradual development of my country's consumption upgrade in recent years and the gradual development of domestic mattress products, consumers' awareness of mattress brands and functional awareness has increased, and the market concentration of the mattress market will greatly increase the future. China Business Information Network expects that the size of the Chinese mattress market will reach 92.1 billion yuan in 2022.

There are many dividends, large markets, and relatively scattered enterprises. It is the battlefield that Xiaomi is like "catfish", and Xiaomi has really tasted "sweetness" from it.

For example, Xiaomi invested in stone technology in 2015 and made a lot of money in this field.

At the beginning of Xiaomi and Stone Technology, the domestic sweeping robot market and mattress market were exactly the same. GFK data shows that the size of the Chinese sweeping robot market in 2015 was 5 billion yuan, and it is expected to increase to 12 billion yuan in 2018. Compared with the penetration rate of 16%of the American household sweeping robot, the penetration rate of scanning robots in the inland areas of China is only 0.5%.

And Stone Technology has grown rapidly with the help of Xiaomi's brand and channel resources. According to the data of Aowei Cloud Network, as of April 2022, the market share of Stone Technology online channels reached 33.7%, ranking first in the industry. In the first quarter of this year, Stone Technology achieved revenue of 1.360 billion yuan, a gross profit margin of 47.49%, and a net interest rate of 25.22%.

However, in the home market, Fun Sleeping Technology has not been able to copy the "miracle" of stone technology.

The prospectus shows that from 2019 to 2021, Fun Sleeping Technology revenue is 550 million yuan, 480 million yuan, and 470 million yuan, respectively. In comparison, Mursey, who had just landed in A shares in 2021, revenue of 6.481 billion yuan in that year and net profit reached 686 million yuan.

In addition to the industry's leadership, the market share of Fun Sleeping Technology is not as "flying into the sky" as Stone Technology. According to data from the Huajing Industrial Research Institute, in 2019, the Chinese mattress industry CR5 companies occupy a total of 15.99%of the market share, of which fifth of Dream Lily accounted for about 0.92%, and the fun sleep technology list is unknown. This also means that the market share of fun sleep technology mattress products is less than 1%.

Cheng Ye Xiaomi, "defeat" Xiaomi

Although the name contains "technology", the differentiated advantages of fun sleep technology products are mainly in terms of fabric materials, product packaging, and application scenarios.

For example, Fun Sleeping Technology stated in the prospectus that the 8H latex mattress adopts a pure foam structure. After packaging, it can be compressed by processing, and rolls in a smaller box to solve the problem of difficulty entering the household.

However, with the advent of consumption upgrades, consumers are becoming more discerning, and traditional home companies have also begun to work in product differentiation experience. For example, Mu Si said in the prospectus that in the future, it will "continue to upgrade the product matrix through design, materials and intelligent technology innovation, and truly realize the‘ bed adapting person ’to improve people's sleep quality."

But even so, the research and development investment of Fun Sleeping Technology is not high. The prospectus shows that from 2019 to 2021, the company's R & D expenses were 6.3092 million yuan, 6.1486 million yuan, and 80.44 million yuan, respectively, and the R & D cost rates were 1.14%, 1.28%, and 1.70%, which were lower than the same value.

The reason why Fun Sleeping Technology can still go public is mainly to use Xiaomi's brand and channel advantages to bring greater sales.

The prospectus shows that the sales of fun -sleeping technology online channels for the reporting period accounted for more than 96%. Among them, the contribution of Xiaomi channels is the most significant.

From 2019 to 2021, the revenue from the Xiaomi series online platforms was 418 million yuan, 327 million yuan, and 290 million yuan, respectively, accounting for 7569%, 68.43%, and 61.41%of the total revenue.

During the reporting period, Xiaomi Group is the largest sales customer of Fun Sleeping Technology. In 2020 and 2021, Xiaomi Group is also one of the top five suppliers of Fun Sleeping Technology. The proportion of purchasing the total purchase amount from Xiaomi Group is more than 5%.

In the future, the stability of the Xiaomi series platform's own operation or business model, and the platform management policy has undergone major changes, and fun sleep technology cannot be adjusted in time, and the operating performance of fun sleep technology may be adversely affected.

However, this seems to be the "common problem" of Xiaomi ecological chain enterprises. Taking stone technology as an example, the prospectus shows that in 2017 and 2018, the company's revenue from Xiaomi was 100%and 90.36%, respectively. But by the end of 2021, Stone Technology's revenue from Xiaomi was only 1.3%. It can be said that Stone Technology has basically separated from Xiaomi and grows independently.

From this perspective, how to "remove Xiaomi" after listing may be a major issue that Fun Sleeping Technology is facing.

"Lei Jun" 7 times cash out

Since the investment of angel rounds, Shunwei Capital has been with Fun Sleeping Technology for nearly 7 years, and it has only been available in today's listing.

Seeing that listing is as soon as possible, Shunwei Capital and Xiaomi seem to have no time to wait. According to the prospectus, the first equity transfer occurred on May 5, 2017 (that is, "Fun Sleeping Technology"). The transfer was transferred to Xilinmen, and Lei Jun completed the first cash.

In the following two and a half years, Lei Jun had carried out a total of 7 cash withdrawal, with a total cash of over 190 million yuan. In addition to the cost of nearly 9 million yuan in capital increase, Lei Jun has earned over 180 million yuan.

When submitting the prospectus of Fun Sleeping Technology, Shunwei Investment, as the second largest shareholder, has a total of 12.01%of the shares of sleeping technology with a relationship with its relationship. According to the valuation of the brokerage company, it can be cash out 2.5 after listing. About 100 million.

Before listing, some equity cash was just the "foreplay" of Lei Jun. After the listing, Lei Jun's cashless scale could not be underestimated.

Huami Technology, the first Xiaomi Industrial Chain company invested by Lei Jun, has been listed for more than 4 years, and has been cumulative 1.8 billion yuan. After the stone technology was listed, Shunwei Capital was the first to reduce it from March 16 to April 14, 2021. Holding 500,000 shares, the reduction price is 954.86 yuan/share -1205 yuan/share, and the rough calculation is also close to 500 million yuan.

From this point of view, Boss Lei's investment vision is indeed accurate, and the yield is indeed amazing.

Of course, the battlefield of investment has risen or down, and no one can say the future trend. It is hard to say whether it can be reopened whether it can go to Huamei Technology and Stone Technology for re -marketing.

Among the many doubts of the market, the "technology" content is the highest.

The prospectus shows that as of the end of 2021, Fun Sleeping Technology has obtained 194 patents, all of which are practical new patents and appearance patents. As of the end of February 2022, Fun Sleeping Technology applied for 49 patents, including 11 invention patents, but nine items were still waiting for the real -review proposal stage. Crossing calculations can be found that the invention patents owned by Fun sleeping technology are only individuals.

As of December 31, 2021, there were 43 R & D personnel in Fun Sleeping Technology, and the average annual salary of researchers was only 111,100 yuan. There are 5 core technical personnel of Fun Sleeping Technology, with an average annual salary of 237,600 yuan. The educational background of these R & D personnel is mostly textile engineering, clothing design and engineering, art design and other majors. Of the 43 R & D personnel, one is a master's degree, and 19 people have a degree of education below the undergraduate.

R & D capabilities are undoubtedly important for fun sleep technology. Fun Sleeping Technology said that in recent years, the Chinese furniture home textile market has developed rapidly. The investment of many existing large companies and domestic independent innovation brands in this field has further exacerbated the intense level of industry competition. And keep up with the development trend of the industry, it may face a large market competition risk.

Picture source: prospectus

Fortunately, Fun Sleeping Technology has realized these problems and is ready to make up for shortcomings after listing.

The prospectus shows that Fun Sleeping Technology plans to raise 805 million yuan. Among them, 462 million yuan was used for the entire series of product upgrade and marketing expansion projects; 193 million yuan was used for the construction project of the home R & D center; 53.21 million yuan was used for the digital management system construction project; 97 million yuan was used to supplement mobile fund projects.

It is understood that the "Home R & D Center Construction Project" here refers to fun sleep technology to establish new materials, new processes, and new structural research and development centers, "thereby improving the company's product research and development advantage in the field of furniture home textile products."

Relevant sources said that as traditional consumer products, the technical barriers of furniture home products are relatively low, and ordinary products are relatively easy to be copied and imitated.In the future, with the acceleration of the "de -Xiaomiization" process of Fun Sleeping Technology, it will inevitably enhance its own technical strength to enhance the competitiveness of products in the market.However, at the moment, the problem of fun and sleeping technology wants to gain a good valuation, I am afraid that it will need to show more strength.

*This article is based on public information, which is only used as information exchange, and does not constitute any investment suggestions

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