playtoearnnftgameslist| Outlook for US stocks and new shares| iPhone is "weak", GALE.US is "injured"

May 13thPlaytoearnnftgameslistGalleinphi Inc, the holding company of Jiale Technology Co., Ltd.Playtoearnnftgameslist. (hereinafter referred to asPlaytoearnnftgameslist(Carol Technology) officially submitted a public version of the prospectus to SEC and applied to be listed on NASDAQ under the symbol "GALE". It is worth noting that the company submitted a secret application to SEC as early as December 21, 2023.

According to the prospectus, Jiale Technology is mainly engaged in the wholesale of consumer electronics products, but its performance fluctuates greatly. In fiscal year 2023 (for the 12 months ended June 30), Jiale's revenue was $104 million, up 35% from a year earlier, and its net profit turned from a loss of $81000 to a profit of $2.21 million. But by the first half of fiscal year 2024 (the second half of 2023), Jiale's revenue fell 25.3 per cent year-on-year to $48.7325 million, and net profit changed from profit to loss, from $739000 to a loss of $902600.

Carol Technology said that the company plans to issue 3 million shares at a price of $4 to $6, raising between $12 million and $18 million for its IPO visit. 40% of the funds raised will be used for market development and business development, 15% for research and development, 15% for recruiting and training personnel, and the remaining 30% for operating funds.

The focus of investors' attention is why the performance of Jiale Technology fluctuates greatly.Playtoearnnftgameslist? Can the company impress Wall Street? Through the prospectus of Carol Technology, we can find out.

The price fluctuation of iPhone series products led to a significant decline in performance.

As an electronic equipment wholesaler, Jiale Technology Wholesale products mainly include mobile devices, televisions, air conditioners and other high-demand electronic products in the market, as well as other products including medical supplies, furniture, non-metallic minerals and so on. It is worth noting that Jiale Technology's wholesale electronic products mainly include Apple mobile devices, Xiaomi TVs, Midea air conditioners and Xiaomi smartphones.

According to the prospectus, Jiale Technology's main revenue still comes from electronic equipment. In fiscal year 2023, its revenue from electronic equipment accounted for 98.49%, which was the absolute majority of Jiale Technology's revenue, while other products accounted for a relatively low share of revenue. It's not the company's core business.

In the wholesaler's business system, the construction of the sales network and the accumulation of customers is a key link. As a B-end wholesaler, Jiale Technology has set up a sales and marketing team composed of 15 full-time employees. In fiscal year 2022, fiscal year 2023 and the first half of fiscal year 2024, the number of customers of Jiale Technology was 18, 25 and 23 respectively.

It is worth noting that while carrying out the wholesale business, Jiale Technology has begun to test the retail model, which has introduced the retail model on a well-known shopping platform in China since July 2023, in order to explore the C-end market. But in the six months ended December 31, 2023, Carol sold just $300000 online. Obviously, in the direction of C-end retail, the fledgling Jiale technology still has a long way to go.

In terms of performance, Jiale's revenue in fiscal 2023 increased by 35% to $104 million year-on-year, mainly due to the expansion of the sales team to open up new customers, the number of customers increased from 18 to 25, and the average income from each customer remained stable, thus driving the growth of the company's overall revenue.

The increase in gross margin is even more eye-catching. In fiscal year 2023, Jiale's overall gross profit margin was 4.2%, up from 0.8% in fiscal 2022, mainly due to the fact that Jiale was able to get more affordable prices from suppliers after increased sales, which is also a scale effect system. The sharp increase in gross profit margin led to a 613% increase in gross profit to $4.312 million in fiscal 2023, which led to a turnaround in fiscal 2023, with a net profit of $2.21 million.

However, in the first half of the 2024 fiscal year, Jiale Technology's performance took a sharp turn, and its revenue fell 25.3% year-on-year to $48.7325 million. This is mainly because iPhone 14 faces fierce competition from existing inventory of Huawei mobile phones and iPhone 13, and the market price of iPhone 14 fluctuates sharply before the release of the new iPhone 15. In order to avoid any potential inventory losses, Jiale Technology has reduced the procurement of iPhone-related electronic equipment. As a result, the company's revenue has fallen sharply.

For this reason, the profitability of Jiale Technology also suffered a significant impact in the first half of the 2024 fiscal year, with its gross profit margin falling from 2.6% to-0.3%, resulting in a direct gross loss, and its net profit changed from profit to loss of US $902600.

It is worth noting that, according to market news, although the price of Apple's official iPhone has not been reduced, the price of the distributor channel has fallen sharply, and the iPhone15Pro has fallen to a new low, with a minimum drop of 2001 yuan. Although Garret has reduced its purchases of iPhone phones, the weak performance of iPhone phones may continue to affect its performance.

Highly dependent on the top five customers

Although the sharp fluctuations in results in the first half of fiscal 2024 are due to Jiale's conservative strategy in the face of uncertainty about the price of iPhone phones, Carole still faces many challenges after an in-depth analysis of the electronic equipment wholesale business.

First of all, the sales of electronic equipment is a highly competitive market, including e-commerce giants, professional wholesalers and retail stores. E-commerce giants have accumulated deep in the field of TO B, with leading advantages in traffic, products and logistics, and professional wholesalers maintain competitiveness by virtue of deep industry knowledge and extensive business network, while some players focus on the sinking market, thus building a strong sales ecosystem. In the face of fierce market competition, Jiale Technology needs a price advantage and a stable supply chain in order to survive in the industry competition.

The key to whether there is a price advantage lies in two aspects: one is scale effect, which reduces costs through large-scale procurement, but this requires wholesalers to reach a certain sales scale; the other is to have a deep understanding of price changes and buy when the price is low. sell at a more advantageous price after rising the price. Due to the fast iterative speed and fierce competition of electronic products, the price fluctuation is also relatively large, which requires wholesalers to have a deep knowledge accumulation and prediction ability to the development of the industry and the price changes of various products.

Secondly, Jiale Technology's current customer concentration is relatively high. According to the prospectus, in fiscal year 2022 and fiscal year 2023, Jiale Technology's revenue from the top five customers accounted for 98.9% and 79.5% respectively. By the first half of fiscal year 2024, revenue from the top five customers accounted for 95.1%, compared with 79.9% for the same period in fiscal year 2023. Obviously, due to the decrease in revenue from Apple, Jiale Technology's customer concentration has increased.

It is precisely because customer concentration is too high that the price change of the iPhone series will have a significant impact on Jiale Technology's performance. If customer concentration cannot be reduced in the future, similar incidents will continue to occur, which is difficult to make Capital markets give high valuations.

In addition, wholesale is essentially a debt-driven growth business model. Since wholesalers need to prepare goods in advance, although customers will pay a certain amount of funds in advance, most of the amount of goods prepared needs to be paid by the wholesaler, and collection can be completed after subsequent delivery. The circulation of funds, so the larger the scale, the higher the funds that the wholesaler needs to advance will increase, which will make the debt ratio of wholesalers at a higher level during the rapid development period. If large amounts of accounts receivable are not recovered in time under the condition of high debt, it will have a certain impact on the cash flow of the wholesaler, so the requirements for the wholesaler's capital operation are higher.

The above logic can also be verified by the development of Jiale Technology's business and changes in its balance sheet. According to the prospectus, in fiscal year 2023, Jiale Technology's total assets were US$88.6458 million, total liabilities were US$85.6789 million, and the asset-liability ratio was close to 100%. As of the first half of fiscal year 2024, Jiale Technology's total assets were US$38.3284 million, total liabilities were US$28.2514 million, and the asset-liability ratio dropped to 73.71%.

There are two main reasons for the decline in asset-liability ratio. One is that Jiale Technology's business contracted during the period, and the other is that the company repaid part of its debt and reduced its debt level. If Jiale Technology wants to accelerate its development in the future, the company's debt level will also return to expansion.

Overall, the large fluctuations in Jiale Technology's results in the first half of fiscal year 2024 are due to the excessive customer concentration and its failure to effectively respond to external risk shocks. If the problem of high customer concentration is not resolved, then Jiale Technology's performance The potential risk of high volatility will always exist. In the future, Jiale Technology can achieve growth by expanding product categories and expanding new customers. However, fierce market competition, slow expansion of online channels, and high capital operation requirements will still be problems that Jiale Technology needs to face directly.