About Anker Innovations
Anker Innovations (Stock 300866) was listed on the GEM (Growth Enterprises Market) on August 24. Founded in 2011, headquartered in Changsha, Hunan province, with production based in Shenzhen and oversea customers, being one of the first listed companies after the GEM registration system was set, and its main business is the design and sales of mobile phone accessories and smart hardware.
Anker Innovations mainly focuses on overseas markets, with nearly 90% of its revenue coming from overseas in 2019. Anker Innovation only designs hardware and outsources production.
Anker Innovations in Stock Market
Anker Innovations priced at 66.32 RMB yuan per share when listed and closed at 138.28 RMB yuan/share, up 109%, with a market value of 56.2 billion RMB yuan.
Anker Innovations’ Investment
Anker Innovations had received investment from IDG and CITIC Capital before going public and raised 416 million RMB yuan in the private placement market.
Anker Innovations Founder and History
The founder comes from Google and remains the company’s chief and controlling shareholder until now.
Anker Innovations was founded in December 2011 by Steven Yang, a former Google senior engineer. In a 2017 interview held by the U.S. media The Verge, Steven admitted that she knew little about the production of electronic devices before starting up her business. Zhao Dongping, Google’s responsible person of sales in China, joined Anker Innovations in early 2012 and now serves as the president.
Steven Yang, the current chairman and CEO, owns 49.0 percent of Anker Innovations. Mrs.Yang, He Li, served as the head of the customer service department in the first five years from the establishment of Anker Innovations and now owns 4.1% of the company’s shares. The couple holds 53.1% of the shares in total, which is in the absolute controlling position. One of IDG’s funds held 4.2% of the shares before the IPO, making it the largest institutional shareholder of Anker innovation. Citic Capital is also an investor, with a pre-IPO stake of 0.72 percent. President Zhao Dongping holds 13.3 percent.
Original Products Line
Anker’s original products aim to laptop batteries, and there are three product lines as charging, wireless audio, intelligent innovation.
Anker’s earliest innovative products are laptop batteries and chargers. Anker spent a year developing its first battery. Steven said in an interview in 2017 that the product was positioned to release a cheap and high-quality laptop battery between the expensive original battery and the inferior third-party battery.
Then Mobile Phone Accessories
But laptop batteries soon became built-in, non-removable with the MacBook Air’s popularity. Meanwhile, the explosive growth of smartphones has gradually shifted the focus from laptop accessories to mobile phone accessories. The company’s earliest phone accessory was the third-party battery of the HTC Sensation on Android phones – unlike the iPhone, early Android phones had replacement batteries.
After that, Anker gradually expanded the charging accessories categories and launched charging accessories such as power bank, USB cable, and charger. In China, the more common Anker products to people are USB cables and chargers.
According to former a16z partner Benedict Evans’s statistics, there were 4 billion smartphone users worldwide by March 2019, and the number is expected to grow to 5 billion in the near future. The potential market for mobile phone charging accessories is still huge.
Moving into IoT
In addition to charging accessories, Anker innovation is also expanding into other areas. Since 2014, Anker has launched wireless audio products such as wireless headphones and wireless audio. Since 2016, Anker has launched intelligent innovative products such as intelligent cameras and sweeping robots (such as eufy). Anker is moving to The Internet of Things (IoT).
With the development of new product lines, the share of charging products in Anker’s main business revenue dropped from 72.6 percent in 2017 to 57.3 percent now.
Anker Innovations’ Income Markets
Almost all of Anker Innovations’ income comes from oversea markets
Since its inception, Anker has been overseas market-oriented. As of 2019, this had still been the case, with the Chinese market accounting for only a tiny fraction of its revenues. From 2017 to 2019, revenues in China(mainland) accounted for less than 2.5 percent of total revenues, with the rest all coming from overseas.
Anker Innovations–the umbrella of five labels –Anker, Soundcore, Nebula, Eufy, and Roav–is one of the fastest-growing companies in the world. With up to 200 percent growth from the last year, Anker Innovations is on the course to become one of India’s top five accessories brands by 2021.
a slightly exaggerated description from an India media
Mainly in Developed Countries
And Anker’s overseas market is mainly in developed countries. In 2019, the revenues in North America accounted for 56.5% of Anker’s total revenue, and the statistics were 17.4% in Europe, and 12.9% in Japan. The above accounted for 86.8% of the main business revenue.
How Anker is becoming a giant?
Relying on Amazon to expand overseas, and North America accounts for more than 50% in revenues.
Anker started from Amazon
Anker’s first product was launched on Amazon Marketplace. In addition to self-run products, Amazon provides a platform for third-party sellers to reach users directly, providing one-stop services such as payment and logistics. Sellers pay Amazon but do not have to build their own channels.
In 2019, Anker’s online sales revenue accounted for 71.0% of its main business revenues, down slightly from 76.8% in 2017. Almost all of its online revenue comes from Amazon, which accounted for 94% of its total online revenue in 2019.
Due to the reliable quality of the products and the lower prices compared with those of overseas competitors, The Verge, and Wirecutter, a unit of The New York Times, regularly recommend Anker’s charging related products.
Sell both Online and Offline
Anker is actively expanding offline sales channels. In 2017, Anker’s chief marketing officer told media that expanding sales channels offline is crucial for new product lines, especially wireless audio and smart home products. Expanding offline channels can also reduce Anker’s reliance on Amazon.
The offline expansion of Anker has achieved certain success. The share of offline revenue rose from 23.25 percent in 2017 to 28.98 percent in 2019.
Anker in the Trade War
The trade conflict has yet to have a significant impact.
As the trade war continues to be negotiated, most Chinese exported to the United States, including China-made electronic equipment, are subject to tariffs ranging from 25 percent to 7.5 percent.
So far, the trade war between China and the United States has not significantly affected Anker’s North American sales. North America, Anker’s largest market, saw its revenue share rise from 53.8 percent in 2017 to 56.5 percent in 2019 during the trade war. The company’s prospectus does not explain the specific impact of trade war tariffs on it, nor does it list tariffs on its products. If Anker supplies the US through factories outside China, it could theoretically avoid trade war tariffs.
Competition is fierce and revenues are slowing
The competition is fierce in the industry Anker’s in, and the barriers are not firm. Although Steven said Anker is strong in product quality when answering media and Anker also reiterated their own investment in R&D, yet Anker in the prospectus warns “at present, companies are facing increasing industry competition, market competition risk, and these may cause the company more competitive challenges facing in the process of business expansion, result in shrink earnings growth being slow, the profit space shrinking, which finally affect the company business performance and financial conditions”.
Anker’s revenues growth is slowing. According to its prospectus, Anker’s revenues from 2017 to 2019 was respectively 3.90 billion RMB yuan, 5.23 billion RMB yuan, and 6.66 billion RMB yuan, with year-on-year growth rates of 35.77%, 34.05 percent, and 27.20 percent respectively.
The revenue slowdown has been accompanied by a drop in gross margins, which fell from 52.0% to 50.0% between 2017 and 2019.
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