Debt far exceeds that of its peers! Furniture Dama terminates IPO

As early as June 2020, Botai Furniture planned to raise 610 million yuan and submit a prospectus to the China Securities Regulatory Commission, hoping to be listed on the main board of the Shanghai Stock Exchange. Now, Botai Furniture has withdrawn its IPO application, and the specific reasons for the termination of the listing are still unknown.

Overseas revenue accounts for as much as 91.5%

As the supplier behind many Amazon furniture brands , Botai Furniture was founded in Anji, Zhejiang in 2003. It mainly develops, produces and sells office chairs, sofas, leisure chairs and other furniture products. Its products are mainly exported to North America, Europe and other markets.

The prospectus shows that Botai Furniture's products are mainly produced by OEM factories and enter the market through brand-name sales. Its partners include Amazon furniture brands such as Furniture LLC and IKEA. It is not difficult to see how much Botai Furniture relies on its customers and its ability to charge a lower premium.

Data shows that Botai Furniture's revenue is mainly derived from overseas markets. From 2017 to 2019, the company's overseas revenue was 403 million, 600 million, and 757 million yuan, accounting for 84.26%, 85.29%, and 91.53% respectively.

Judging from the data, the proportion of overseas revenue is too large, which means that as long as there is a slight disturbance in the overseas market, the performance of Botai Furniture will be greatly affected. Take the 2020 epidemic as an example. The overseas epidemic caused Botai Furniture's overseas market to shrink, and orders were either postponed or cancelled , which had a great impact on its revenue.

With a debt ratio of 50%, Botai Furniture is in a bit of a pickle

According to the revenue data of Botai Furniture from 2017 to 2019, it was 484 million, 706 million, and 829 million respectively, and the net profit attributable to the parent company was 25.89 million, 47.41 million, and 84.93 million respectively. Although the revenue scale is not high compared with Yongyi Co., Ltd. and Henglin Co., Ltd., it at least looks relatively normal.

However, the debt ratio data is a bit ugly. The prospectus shows that the debt ratios of Botai Furniture from 2017 to 2019 were 55.77%, 57.52% and 50.94% respectively. Compared with the average debt ratios of comparable companies in the industry of 39.48%, 29.14% and 35.19%, Botai Furniture's debt ratio is much higher than its peers .

In addition, Botai Furniture's accounts receivable has also been rising year by year , from 77 million yuan in 2017 to 171 million yuan in 2019, which means that its accounts receivable have been on an upward trend. Some industry insiders said that perhaps there were problems with its capital operation ability, which affected the listing process, but the specific situation has yet to be verified.

So far, Botai Furniture has not publicly stated the specific reasons for the termination of the IPO. It is still unknown about the specific situation of the company and whether it will continue to choose to sprint for an IPO in the future. However, the known data shows that Botai Furniture still needs to work hard to develop rapidly!

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