Yesterday, Shanghai Phoenix Group released its semi-annual report.
In the first six months of this year, they sold more bicycles than last year, reaching 3 million. More than one-third of them, about 1.3 million were sold to ofo.
This is Phoenix's first disclosure of bicycle sales in quarterly and semi-annual reports. Previously they only disclosed this figure in the annual report.
The new increase in sharing bike orders helped Phoenix achieve a revenue of RMB 800 million in the first half of the year, which is approximately 2.8 times that of the same period of last year.
Intensive launching, pushing a variety of free rides, and sharing bicycles that quickly take up the sidewalks provide users with the use of the car service. Unless someone is interested in branding or bicycle racing, cross-country and other activities, most people are not motivated to buy a bicycle.
But now ofo asked Phoenix to produce bicycles and become Phoenix's largest customer, which in turn helps the latter improve their performance. In April of this year, the China Bicycle Industry Association expects to invest 20 million bicycles during the year, which is equivalent to the increase in domestic bicycle demand last year. After the news was announced, bicycle stocks including the Phoenix Group rose sharply.
With the increase in Phoenix's revenue, profits also rose by approximately 2.5 times to RMB 42.89 million.
Among the companies that contributed the most profit, Jiangsu Huajiu, a company specializing in the production of bicycle accessory spokes, was approximately 22 million yuan. The profits of the subsidiaries responsible for bicycle manufacturing and sales, including Phoenix Shanghai and Phoenix Jiangsu, were 18.2 million yuan.
This was not the case in the same period of last year. The Phoenix Group's business other than spokes was a loss. The main reason is that the entire bicycle manufacturing and sales business is in a deficit state, which drags down the group's profit margin.
In the second half of the year, Phoenix’s income may go up and profits are hard to say.
Three months ago, it signed a "strategic cooperation agreement" with OFO, which is expected to produce and deliver 5 million shared bicycles to the latter during the year. Phoenix at that time estimated that each vehicle earned 8 yuan and brought about an estimated 40 million yuan in revenue.
But this is only the most optimistic estimate. Because the delivery time, quantity, and model number of both parties have not been confirmed, the agreement is more to confirm the intention of cooperation between the two parties. In addition, according to the risk mentioned by Phoenix himself, undertaking a large number of OFO orders may cause it to be in a weak position in the bargaining process and then squeeze the profit margin.
There are also policy risks. Recently, several major cities in China have begun restricting the use of shared bicycles. For example, Shanghai and Shenzhen have indicated that they will suspend the supply of new shared bicycles. If more regions join in this year, ofo may reduce orders in Phoenix.
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