New Stock Outlook | "Transferring from A-shares to Hong Kong", what exactly did Hong Kong Electric Appliances almost miss on the road to breakthrough?

70.3%68.8%80.6%77.0% 202199.47% The book shows that in 2023, the company is one of the top ten enterprises in China's kitchen small appliance industry, with a market share of 0.6% in terms of export volume. As for garden hoses, despite the highly fragmented global market with many participants, Hong Kong Electric Appliances still maintains a leading position in the industry. In 2023, the company's export volume of garden hose series products to the United States accounted for 9.13% of China's total exports to the United States, ranking high.However, it is observed that although Hong Kong Electric Appliances has a certain level of brand awareness in the market, the company still has two major competitive "shortcomings" lingering. Firstly, the company's independent design capabilities are weak, and its production model is mainly based on the ODM/OEM model. In the past three years, the revenue from this model has accounted for over 90% of the total revenue. In this model, the company mainly relies on OEM/ODM for other brands, with a lower component of independent research and development and design. This high dependence on external customers lacks initiative in the market competition, leading to a weak influence of the company's independent brand and a noticeable gap in gross profit margin compared to companies in the same industry that mainly sell under their own brand names. Secondly, the company's investment in research and development is low. From 2021 to 2023, the R&D expenses were 36.1 million, 32 million, and 34.4 million, with the R&D expenses accounting for less than 3% of revenue in the past three years. This limited investment in independent research and development may result in the company lagging behind competitors in product innovation, feature upgrades, and difficulty in establishing its own technological advantages and product differentiation, which is not conducive to the company's long-term development and establishing competitive barriers in the industry. Clearly, Hong Kong Electric Appliances is aware of the aforementioned development limitations. In its prospectus, it states that the raised funds will be used for the following purposes: establishing a plant in Thailand to enhance global distribution; and for automation and digital upgrading to achieve sustainable growth. Considering all the above factors, it is not difficult to see that Hong Kong Electric Appliances has failed to go public through IPO several times, partly due to its own performance fluctuations and lack of strong core competitiveness. In light of the industry's development trend, although the small home appliance industry is currently experiencing strong growth, which can bring significant growth momentum to the company, enhancing the influence of its independent brand and increasing R&D investment to build core competitive advantages remain key factors for increasing the company's investment value.