Bubble Mart: Operating turnover data has declined significantly, and optional consumption will continue to be under pressure in the future?
Recently, Bubble Mart, my country's largest trendy toy company, announced its first quarter results for 2021 and 2022.
According to the financial report, in 2021, Bubble Mart achieved revenue of 4.49 billion yuan, a year-on-year increase of 78.7%; adjusted net profit was 1.002 billion yuan, a year-on-year increase of 69.6%.Behind the rapid growth of revenue and profits, Bubble Mart registered members reached 19.58 million, and the number of newly registered members reached 12.18 million. When Bubble Mart was listed, the company only had about 3.6 million registered members.
In terms of first-quarter performance, the company's performance forecast shows that the overall revenue in the first quarter of 2022 (unaudited) will record a positive growth of 65%-70% compared with the same period in 2021.
Although the company's revenue in the first quarter still maintained a relatively high growth rate, the company's revenue growth rate has significantly "lowered" compared with previous years.The company's revenue increased from RMB 158 million in 2017 to RMB 514 million in 2018, a year-on-year increase of 225.4%, and further increased by 227.2% to RMB 1.683 billion in 2019; in 2020, the rate of decline was significantly reduced, and revenue increased in that year. The speed was 49.31%, increasing to 2.513 billion.In 2021, the revenue will increase to 4.491 billion with a growth rate of 78.66%, and the growth rate will pick up slightly, but it can be seen that since 2020, the company's revenue growth rate has slowed down significantly compared with the previous "explosive" growth.
In terms of repurchase rate, in 2021, members will contribute 92.2% of sales, and the repurchase rate of members will be as high as 56.5%.Bubble Mart has maintained a high stickiness to the user group.
In terms of profit margins, the company's gross profit margin dropped slightly from 64.8% in 2019 to 61.4% in 2021, and the company's net profit margin also fell from 26.6% in 2019 to 18.83% in 2021.Although the company's profitability has declined slightly in recent years, it is still a high-profitability company in general.
In terms of asset-liability ratio, as of the end of 2021, Bubble Mart’s asset-liability ratio was only 18.1%, while the asset-liability ratio as of the end of 2020 was 12.1%.The company's debt ratio increased slightly, but it was mainly operating debt, and the overall debt ratio was at a very low level.
Overall, it can be seen that the company's business model is excellent.In the case of no leverage, it can still maintain high profitability and user stickiness. The growth of the company's performance does not depend on large-scale capital expenditures, and the ROIC is at a high level.Under the condition that the company maintains a certain operating leverage, the company's ROE in 2018 and 2019 even reached as high as 66.87% and 111.17%, respectively.
From a long-term perspective, most companies cannot achieve high returns, high growth and high cash flow.However, during the explosive growth period of Bubble Mart, the company's ROE, FCFF (free cash flow) and G (growth rate) were all good.The company's net-to-now ratio in 2018-2020 is greater than 1, showing an excellent level of cash flow. Only in 2021, the net-to-now ratio will drop slightly to 0.91.
However, since 2020, the company's ROE has declined significantly.In 2020 and 2021, the company's ROE will be 15.58% and 13.2%, respectively.The decline is very obvious.Doing DuPont analysis of the company, in addition to the net profit margin of sales falling from 26.6% in 2019 to 18.83% in 2021, the company's equity multiplier has fallen significantly, from 1.81 in 2019 to 1.18 in 2021, and the asset turnover rate ( times) fell from 2.3 in 2019 to 0.59 in 2021.
Among them, in addition to the impact of the 600 million US dollars raised by the listing on the balance sheet, the decline in operating turnover data is also very obvious.
The company's accounts receivable increased from 78.3 million yuan at the end of 2020 to 171 million yuan at the end of 2021, a growth rate of 119%, much higher than the revenue growth rate.The company stated that the increase was mainly due to the increase in payments from third parties, including shopping malls, wholesale customers and e-commerce platforms.At the same time, the company's trade receivables turnover days also increased from 9 days in 2020 to 10 days in 2021.
The company's inventory has increased from 225 million yuan at the end of 2020 to 788 million yuan at the end of 2021, a growth rate of 250%, which is also significantly higher than the revenue growth rate. The company said that the increase in product inventory is to meet the growing product demand.At the same time, the company's inventory turnover days increased from 78 days in 2020 to 128 days in 2021. The company said it was mainly due to the expansion of business and channels, the increase in the number of IPs and new products, and the advance of stocking for the Spring Festival and the first quarter of 2022.
In other words, the company believes that the surge in accounts receivable and inventory is caused by operating expansion.This also shows that if a company has high ROE and rapid growth, it is bound to invest heavily in expansion, and free cash flow will definitely be affected.However, it remains to be seen whether the decision of Bubble Mart's business expansion is correct. Taking Haidilao as an example, the expansion against the trend in the early stage of the epidemic was eventually proved wrong. In the end, Haidilao could only "survive with broken arms" to avoid greater losses. Shrink business.With the impact of the epidemic, the current social consumption continues to decline. If optional consumption continues to decline in the future, the current business expansion strategy of Bubble Mart may also cause a great backlash to the company.
IP is the core competitiveness, but "record companies" are not lucky enough to meet "Jay Chou" every time
Wang Ning, the founder of Bubble Mart, has an "abcd" theory: if you want to make a and suddenly make b, it may be successful at c, and then it may become great at d.In fact, Bubble Mart's entrepreneurial process also has the color of "mistakes".
Wang Ning once said: "In the beginning a, about in 2008, Bubble Mart was a plaid store, and then came to b, started to do such a collection store of this trendy department store, and then c, that's us The category of trendy games suddenly became successful, of course, we have always said that we hope to become a warm and beautiful brand."
In the early days of Bubble Mart's business as a fashion department store, as a channel business, the profit was very low and subject to others, so the company has been trying to transform from a channel business, but to no avail.
The turning point was in 2015, when Bubble Mart noticed the amazing sales of the Sonny Angel series of trendy toy products.Sonny Angel is from Japan and has a large fan base. After Bubble Mart introduced it to China, Sonny Angel brought explosive growth to Bubble Mart, which once accounted for 30% of the company's total sales.
Bubble Mart found that artist toys such as Sonny Angel have their own trendy and artistic attributes, which are more attractive to young consumers.In addition, Sonny Angel's series of products meet the psychological needs of a new generation of consumers to "collect", and consumers have a very high repurchase rate while meeting their own needs.Moreover, the purchase method of blind boxes further amplifies the demand. Users do not know which one is in the box. Therefore, for the sake of rare varieties, some users buy in large quantities and trade at high prices with each other, which further increases the popularity and sales of the series of products.
After realizing that artist toys are a commercial bonanza, Bubble Mart made full use of its "first mover bonus" on the Chaowan track and began to cooperate with artists to sign IP in large numbers.A large number of artist toys have not been commercialized before, so Bubble Mart can sign a large number of high-quality IP at a cheap price.
Among them, the most successful IP signed by Bubble Mart was Molly. At that time, Kenny Wong had been working as Molly for ten years, and he spent a lot of effort and gained a lot of fans.And Molly's early works are all collectible artworks, generally only 150 pieces are made, limited and expensive, so they have not fully released their commercial value.
Wang Ning even admitted that when he found Molly designer Kenny Wong, the feeling was like finding Jay Chou singing in a restaurant.
Since then, what Bubble Mart has done is to make CDs of the works that Kenny Wong sang only in the opera house before.In the past, Molly only released 1-2 collection-level series a year. After Bubble Mart intervened, it quickly made it into a low-cost popular product. Now Molly produces nearly 10 series a year, creating hundreds of new styles with a unit price. It has also dropped significantly to meet more consumer groups.
At the same time, artists only need to draw design sketches, and all subsequent 3D design, supply chain management, production, packaging and sales are completed by Bubble Mart.So far, Bubble Mart’s fashion business flywheel has been completely opened, that is, to discover excellent artist IP, and provide supply chain support and channels to complete the commercial closed loop.
It is worth noting that if Chaowan's supply chain and channels are willing to spend money, there are no special barriers.The current success of Bubble Mart is more like a lucky "record company" just met "Jay Chou", but "record companies" often have, "Jay Chou" is not something you can encounter from time to time.
Wang Ning once said that culture and brand are empty, and we need to use some methods to make everyone think that it is something of value and something that people yearn for from a spiritual level.It is like some luxury goods, it helps you create a dream, but also helps you protect this dream.
In essence, the dream-makers of Chaowan can only be artists such as Kenny Wong. It is the hard work he spent in the ten-year process of Molly that impresses consumers. This kind of payment is often impossible for commercial companies in the form of "assembly lines" in batches. did it.
As a new track, trendy toys, people did not understand its commercial value before, so Bubble Mart can sign a large number of high-quality and cheap trendy toy artists in advance through the first-mover advantage. However, with the trend of playing track Its value is fully recognized, and the competition for artists may become increasingly fierce in the future.
In order to deeply bind with artists and designers, Bubble Mart also granted Kenny Wong a 1.49% stake in the company, which was once worth nearly 1.9 billion yuan when Bubble Mart’s market value was at its peak.As the artist's value is fully recognized, the premium of future artists may increase day by day, but companies such as Bubble Mart may be like the current record companies, and have no special bargaining power for artists such as "Jay Chou", and finally their profits are gradually reduced. , returns to the average return on social capital.
Take Top Toy, one of Bubble Mart's competitors, as an example. Top Toy currently continues to introduce well-known IPs, such as FarmerBob, Naruto, Conan, etc. Its increase in IP prices will inevitably affect Bubble Mart's appreciation of artists in the medium term. Signing and licensing fees.
According to Bubble Mart’s financial report, the company’s licensing fees have also increased significantly. In 2017, 2018, 2019, 2020 and 2021, Bubble Mart’s licensing fees were 700,000 yuan, 2.9 million yuan, and 12.1 million yuan respectively. , 62.7 million yuan and 105 million yuan.The rapid increase in IP licensing fees for Bubble Mart may also suggest that the company will face more intense competition in the artist IP market in the future.
Therefore, at present, Bubble Mart is also trying to continue to cultivate in IP, channels and supply chain, trying to build a moat.
In terms of IP, the company continues to develop its own IP, and gradually tries to get rid of its dependence on Molly's major items.
At the initial stage of listing, sales of Bubble Mart’s branded products based on Molly’s image accounted for the company’s revenue from Bubble Mart branded products in 2017, 2018 and 2019 and the six months ended June 30, 2019 and 2020, respectively approximately 89.4%, 62.9%, 32.9%, 44.5% and 16.3% of the total revenue.
In 2021, the company's head IP revenue will be more evenly proportioned, and the company will pay more attention to building its own IP.
The company's own IP mainly includes Molly, SKULLPANDA, Dimoo, Bunny, etc.The proportion of revenue from self-owned IP will increase from 39.0% in 2020 to 57.6% in 2021.Revenue from self-owned IP increased from RMB 980 million in 2020 to RMB 2.587 billion in 2021, an increase of 164.0%.Mainly due to higher sales contribution from Molly, SKULLPANDA and Dimoo.
2021 is the 15th anniversary of Molly's birth. Molly's revenue is RMB 705 million, a year-on-year increase of 97.6%.Through a series of operations such as continuous launch of new works, cross-border joint cooperation, and theme exhibitions, Bubble Mart has made Molly's IP life cycle and commercial value a good continuation.
Dimoo and SKULLPANDA will achieve revenue of RMB 567 million and RMB 595 million in 2021, a year-on-year increase of 79.8% and 1423.8%, respectively.
At the same time, PDC (Pop Design Center), the designer team within Bubble Mart, has launched many IPs. Among them, Xiaotiandou will achieve a revenue of RMB 162 million in 2021, a year-on-year increase of 458.1%; the new IP of PDC will be listed in October 2021. Ono achieved an income of RMB 52.2 million.
Unlike the company's reliance on Molly in the early days of its listing, the company currently has 7 IPs with revenue of over 100 million.But it is worth noting that this may be the result of the company's "first dividend" and signing a large number of trendy artists in advance, and it may continue to weaken in the future.
Data source: Bubble Mart Annual Report
In addition, in 2021, Bubble Mart will also focus on the high-end trendy play product line MEGA collection series, launching a total of 9 1000% SPACE MOLLY series products, with a total revenue of RMB 178 million.The creation of its high-end product categories can help Bubble to further cover the high-end market and enhance its commercial monetization capabilities.
In terms of channels, Bubble Mart continues to explore more efficient channel forms.
Data source: Bubble Mart Annual Report
The company's sales and distribution network includes: offline retail stores, online channels, robotic stores and wholesale channels.
Retail Stores: The company's retail store sales revenue increased from RMB 1,002 million in 2020 to RMB 1,673 million in 2021, a year-on-year increase of 67.0%.In 2021, there will be 108 net new stores, and a total of 295 retail stores will be opened by the end of 2021.
Online Channels: The company's online revenue increased from RMB 952 million in 2020 to RMB 1.879 billion in 2021, a year-on-year increase of 97.4%.Bubble Mart's online revenue comes from Bubble Mart's box extractor, Tmall flagship store, Jingdong flagship store and other online channels.
Robot stores: The company's robot store sales revenue increased from RMB 329 million in 2020 to RMB 470 million in 2021, a year-on-year increase of 42.9%, with an increase of 519 robot stores in 2021, and a total of 1,870 robot stores by the end of 2021.
Wholesale and others: The company's wholesale and other revenue increased by 102.8% from RMB 231 million in 2020 to RMB 468 million in 2021.
Affected by the epidemic, the company's online sales channel has surpassed offline retail stores to become the largest sales channel. Overall, the company's channels have maintained a good growth rate, but the growth rate of robot stores is relatively average. The growth rate further declines to around single digits, and the company's exploration of channels such as robot stores may fail.
At the same time, the company has established a multi-channel membership program to build a fan community, strengthen its stickiness and increase repeat purchases.By the end of 2021, the total number of registered members of the company increased from 7.400 million at the end of 2020 to 19.58 million, of which 12.18 million were newly registered members.In 2021, members will contribute 92.2% of sales, and the repurchase rate of members will be 56.5%.
In general, the company's channel and membership system construction are relatively successful, but it cannot be ruled out that competitors will burn money and compete fiercely with the company in terms of channels in the future.
There are possible risks such as strategic focus and blind-box regulation
It is worth noting that last year, Bubble Mart continued to increase its organizational management radius, adding new business sections such as Resonance Studio, POPMART LAND Theme Park, and INNER FLOW Art Institute.
Previously, some shareholders asked Wang Ning what matters most at present at the Bubble Mart shareholders meeting in mid-2021.
Wang Ning said: I have been involved a lot recently. One is the business of our paradise. I think we have the ability to make a very interesting thing. We have many IPs that young people like, and we also have a good team and system.Paradise may be a very small, experimental thing at first, but it will be very interesting.
The second is overseas business. Our overseas business still exceeded our expectations.If you look over the wall, you will find that many people on Facebook and Youtube are sharing videos about Bubble Mart.We feel that we are still making good progress in cultural export.We were unhappy before because the internationalization of the entire product system takes time to accumulate, and I believe it will become faster and faster in the future.
At present, the company's park business has not yet been formed, and its overseas business is mainly wholesale business, with a revenue scale of 137 million and a small scale.However, these two businesses may involve more management energy of the company, and the company has the risk of ignoring its main business.
Reviewing the development history of LEGO, LEGO faced problems such as the decline in growth rate at the beginning of the 21st century. In order to cope with the downside risk, the board of directors appointed Braggman as the CEO of LEGO Company. After that, LEGO started the LEGO theme park plan.Around 2002, LEGO established four large theme parks in Billund, London, California, and Munich.
However, commercial distractions caused Lego sales to plummet in early 2003, and Lego was on the verge of bankruptcy.After that, Braggman was fired, and the new head of the company chose to sell off Legoland and other assets, and cut expenses and product lines across the company, focusing on the main business to finally help Lego out of the predicament.
With the increasingly prominent commercial value of Chaowan, Bubble Mart has signed a large number of high-quality and cheap trend toy artists in advance through the first-mover advantage. It may be increasing day by day. If Bubble Mart cannot continue to focus on its main business, the company may face certain risks.
Finally, the way of buying blind boxes does not conform to mainstream values, and is often criticized for exploiting human weaknesses, and the company may also face certain regulatory risks.
Previously, after Bubble Mart and KFC jointly launched a blind box package, consumers panicked and caused widespread concern in the society.He was named and criticized by the China Consumers Association for using limited-edition blind box sales methods and condoning consumers to buy food packages irrationally and excessively, which is contrary to public order, good customs and the spirit of the law.
