Another hidden champion.

Author: Huatai Shi

On June 22, Hanshow Technology Co., Ltd. (hereinafter referred to as "Hanshow Technology") passed the IPO review and is preparing to list on the ChiNext board of the Shenzhen Stock Exchange, planning to raise 1.18 billion yuan.

Hanshow Technology is a supplier of digital solutions for retail stores, offering products and solutions including electronic price tags, AI shelf monitoring systems, self-checkout equipment, shelf digital marketing screens, etc. Its core product is electronic price tags.

On supermarket shelves, most of the price tags in front of the goods are printed, containing information such as product name, price, place of origin, shelf life, etc. If there is a need to adjust the product information, the staff will reprint it, take away the original one, and replace it with a new one. Hanshow Technology has turned paper price tags into small electronic screens that can be adjusted in real-time. Electronic price tags are most widely used in Europe due to the developed offline retail industry and relatively high labor costs.

Hanshow Technology's founder, Hou Shiguo, saw electronic price tags during a business trip to Europe in his early years and believed that they would gradually replace traditional paper price tags. Hou Shiguo founded Hanshow Technology in 2011, and the company's headquarters is currently located in Jiaxing, Zhejiang.

Born in 1975, Hou Shiguo graduated from Beijing University of Aeronautics and Astronautics with a master's degree. After graduation, he first served as a development representative at Huawei for 7 years, and later held positions as R&D director at Feijiekesi and deputy general manager at Jianyuena Electronics.

Hou Shiguo's department at Huawei focused on researching Hisilicon chips. Feijiekesi's products include PC game physics acceleration processors, while Jianyuena Electronics mainly designs wireless communication and satellite navigation chips. These experiences have accumulated rich experience for Hou Shiguo in the field of chips, laying a foundation for him to found Hanshow Technology, as the core technology of electronic price tags mainly involves wireless communication technology and software system development technology.

Hanshow Technology originally started in Beijing. In 2012, Hou Shiguo brought a team of 16 people to Xiuzhou District, Jiaxing City. Xiuzhou District provided financial support to Hanshow Technology in its early stages: a Class A reward of 3 million yuan for leading talents and a bank credit loan of 8 million yuan.

According to public information, since its establishment, Hanshow Technology has received a total of 8 rounds of financing, with investors including well-known institutions such as Junlian Capital, Matrix Partners China, Tiantang Silicon Valley, CICC Capital, Lightspeed China Partners, Huaye Tiancheng, Hongzhang Investment, Langmafeng Venture Capital, and Shenzhen Venture Capital.

Before the IPO, Hou Shiguo directly or indirectly held a 31.97% stake in Hanshow Technology and is the company's actual controller. Among external shareholders, Junlian Capital holds a 12.98% stake, Hangzhou Chuangqian holds a 12.18% stake, and Tiantang Silicon Valley holds a 7.42% stake. One of the funding sources behind Junlian Capital and Hangzhou Chuangqian is the National Council for Social Security Fund.

The company plans to raise 1.18 billion yuan through this IPO, and based on the calculation that the issued shares account for 10% of the total share capital after issuance, the market value after issuance is 11.8 billion yuan.

From 2021 to 2023, Hanshow Technology achieved revenue of approximately 1.613 billion yuan, 2.862 billion yuan, and 3.775 billion yuan, respectively; net profits attributable to shareholders were approximately -6.603 million yuan, 208 million yuan, and 678 million yuan, respectively. During the reporting period, Hanshow Technology's compound annual growth rate of revenue reached 52.99%, and the compound annual growth rate of net profit after deducting non-recurring gains and losses reached 584.23%.

From 2021 to 2023, the revenue from electronic price tag terminals was 1.427 billion yuan, 2.664 billion yuan, and 3.519 billion yuan, respectively, accounting for 88.48%, 93.07%, and 93.20% of total revenue, respectively.

Hanshow Technology's sales team is very strong, especially in 2022, with 155 sales personnel, each generating an average revenue of 18.4638 million yuan. This was achieved despite a decrease of 3 sales personnel compared to 2021, and the average revenue per person in 2022 was nearly twice that of 2020. Sales staff, especially overseas sales staff, also receive relatively high salaries. From 2020 to 2022, Hanshow Technology's sales expenses for employee compensation were 65.6038 million yuan, 76.5564 million yuan, and 85.5256 million yuan, respectively.

Hanshow Technology's products are mainly sold overseas. In the first half of this year, the proportion of overseas business further increased from 93.04% in 2023 to 96.47%. Among the top five customers, only CR Vanguard is a domestic company, while the others are overseas, such as Aldi, the largest supermarket chain in Germany, Ahold Delhaize, the largest daily retailer in the Netherlands, and Auchan, the second-largest retail group in France. Based on this, Hanshow Technology established a branch in Germany in 2018 and a new European center in the Netherlands in 2019.

This also reveals an awkward reality: the penetration rate of electronic price tags in the domestic market is only 4%. Even if Hanshow Technology becomes the number one in China, it will still be difficult for it to tap into domestic customers in the short term.

Hanshow Technology's main competitors include SES-Imagotag SA from France, Pricer from Sweden, and SoluM from South Korea.

In 2023, in terms of sales volume, SES and Hanshow Technology ranked first and second, respectively. In terms of sales revenue, SES ranked first, while SoluM slightly surpassed Hanshow Technology to rank second.

SES, the world's largest electronic price tag company, was acquired by BOE in March 2018 (BOE has since sold some shares and no longer has control). Currently, its market capitalization is 2.12 billion euros (approximately 16.4 billion yuan). In the first quarter of 2024, SES generated revenue of 178 million euros (approximately 1.383 billion yuan), while Hanshow Technology generated 974 million yuan during the same period.

There have been many patent lawsuits between SES and Hanshow Technology, both in Europe and the United States. With the listing of Hanshow Technology, competition in the electronic price tag market is becoming increasingly fierce.

This article does not constitute any investment advice. This article also refers to reports from Market Value Storm, Jiaxing Daily, Phoenix Finance's "Company Research Institute," and other sources, and thanks them for their contributions. The cover image shows Hanshow electronic price tags used in Jumbo supermarkets in the Netherlands, sourced from the official website.