Perhaps no one, including Trump himself, would have imagined that he could bring immense wealth to a Chinese company. Recently, during Trump's roughly two-hour interview with Musk, a power bank used by Trump quickly gained popularity, and the brand behind it was China's Anker Innovations.

Anker Innovations reacted swiftly, seizing the opportunity to capitalize on the buzz and promptly showcasing the magnetic charging bank on their official TikTok store, specifically labeling it as the "same model as the President's."

In fact, despite Anker Innovations reaching even Trump's hands internationally, it remains relatively unknown among ordinary consumers in China, as its primary sales focus on overseas markets, with a relatively small domestic share. Notably, Anker Innovations is currently China's largest global consumer electronics brand by revenue, offering a range of products including mobile charging accessories, headphones, speakers, vacuum cleaners, projectors, cameras, and more, earning it the title of "the leader in cross-border sales."

Anker Innovations listed on the ChiNext in August 2020, initially reaching a market capitalization of up to 60 billion RMB. However, similar to many other listed companies in the consumer electronics sector, Anker Innovations experienced a "peak upon listing" phenomenon, with its market capitalization halving to around 30 billion RMB by the close on August 28.

Abstracting from the broader impact of the A-share market, there are inherent reasons for Anker Innovations' market capitalization trajectory.

1. Slowing revenue growth: Logical explanation for halved market capitalization?

In fact, the 2023 annual financial report released earlier this year indicated that Anker Innovations' performance last year was decent, with revenue growing by 22.85% year-on-year to 17.507 billion RMB, and net profit attributable to shareholders increasing by 41.22% to 1.615 billion RMB.

However, the subsequent first-quarter financial report for 2024 was somewhat disappointing, with revenue growing by 30.09% year-on-year to 4.378 billion RMB, but net profit attributable to shareholders increasing by only 1.6% to 311 million RMB, indicating a clear trend of "increased revenue without commensurate profit growth."

Although revenue growth appears to continue, the slowdown from its former glory is evident.

Anker Innovations' most rapid growth period was from 2015 to 2017, with total revenue increasing by 74.54%, 93.39%, and 54.5% year-on-year, respectively. This period coincided with the fastest growth stage of the global mobile phone market, and Anker Innovations' flagship product, the power bank, benefited from the booming sales of mobile phones.

However, since 2018, Anker Innovations' revenue growth has decelerated, with the growth rate slipping from 40.54% in 2020 to 22.85% in 2023, and a similar downward trend observed in net profit growth.

Although Anker Innovations showed signs of recovery in 2023, this hope was dampened by the first-quarter financial report of this year. In the view of Node Finance, it is virtually impossible for Anker Innovations to return to the high-speed growth period before 2017, primarily because the golden age of consumer electronics, particularly mobile phones, has passed.

Therefore, when a company transitions from a high-growth phase to a plateau phase, its valuation in the capital market naturally changes accordingly. Initially, Anker Innovations, riding high on momentum, boasted a dynamic P/E ratio exceeding 50 times, but now, exceeding 20 times is considered impressive, reflecting a logical adjustment in valuation.

Anker Innovations has indeed achieved remarkable success in the past, including the establishment of successful brands such as Anker for fast charging, Eufy for smart homes, and Soundcore for smart audio, each generating over 3 billion RMB in annual revenue and operating in over 140 countries and regions worldwide. However, almost all listed companies have experienced their heyday, and investors are not impressed by past glories alone.

Finding ways to break through existing limitations and reach new heights is a must for Anker Innovations.

2. Competition abounds: Where lies the moat?

From Anker Innovations' current product mix, achieving a breakthrough is not an easy feat. According to financial reports, Anker Innovations' products can be categorized into charging and energy storage, smart innovation, and smart audio-visual categories.

Among them, charging and energy storage products serve as the backbone of Anker Innovations' revenue, contributing 8.604 billion RMB or 49.14% of total revenue in 2023. Without significant advancements in this category, Anker Innovations' performance may struggle to scale new heights under the current structure.

In Anker Innovations' roadmap, charging and energy storage products are segmented into small, medium, and large tiers: small charging products for digital peripherals like smartphones; medium-sized products for powering household mobile devices, air conditioners, TVs, etc.; and large products encompassing home energy storage, photovoltaics, and EV charging stations.

However, with the energy storage sector becoming increasingly competitive, Anker Innovations faces a challenging environment. Node Finance observes that one of the primary obstacles Anker Innovations confronts is the low technical barriers and homogenized competition within the portable energy storage industry, resulting in a scenario where there are product categories but no dominant brands. In such circumstances, building a technological moat for Anker Innovations may prove daunting.

Anker Innovations' rapid rise was initially fueled by the low technical barriers in this sector. However, as the company grew, it failed to establish a technological or branding advantage, leaving it in a precarious position.

Currently, the number of players entering this sector is on the rise, with companies like Desay Battery, Topband, Delanminhai, Huabao New Energy, and Camel Group all launching portable energy storage products. Moreover, giants like Huawei, CATL, and Xiaomi have also joined the fray, with Huawei introducing outdoor power solutions like the "Small Power Station," CATL offering the "Pastoral Era" emergency power supply, and Xiaomi launching the Mijia Outdoor Power Bank 1000Pro and solar panels.

The sheer number and caliber of competitors underscore the significant pressure facing Anker Innovations. Additionally, potential channel-related risks cannot be overlooked for its future prospects.

3. Amazon dependence: A risk to be aware of?

Amazon has played a pivotal role in Anker Innovations' growth trajectory.

In October 2011, Anker Innovations' founder and CEO, Yang Meng, registered the Anker brand in the United States, initially operating as a channel brand merchant, selling charging products to overseas consumers through Amazon before venturing into product development. Hence, characterizing Anker Innovations as an "e-commerce" transformation is not unfounded, despite lingering shadows.

Currently, Anker Innovations remains heavily reliant on Amazon. The 2023 annual report reveals that revenue from Amazon amounted to 9.996 billion RMB, accounting for 57.1% of total revenue, representing a year-on-year increase of 1.15%.

Over-reliance on a single channel, especially for a Chinese brand like Anker Innovations on Amazon, a US giant, poses significant risks. Recognizing the perils of excessive Amazon dependence, Anker Innovations has been actively diversifying its channels in recent years. It has expanded offline presence by entering retailers like Walmart, Best Buy, Target, Costco, and 7-Eleven while vigorously developing its independent station.

However, both individuals and enterprises often struggle with path dependence, and Anker Innovations is no exception. It lacks proficiency in offline channel operations, and the incremental revenue generated from offline channels remains limited. According to the 2023 annual report, offline channels contributed 29.70% of Anker Innovations' revenue, a 3.96 percentage point decrease from 2022.

Regarding the independent station, revenue reached 1.244 billion RMB in 2023, up 83.87% year-on-year, but still accounting for a relatively low 7.10% of total revenue. Independent stations face challenges in attracting external traffic, often struggling to promote new products and sell older ones effectively, posing significant conversion challenges.

In summary, Anker Innovations emerged during the boom of consumer electronics, particularly mobile phones, but now faces a slowdown in growth post-peak. Trump's endorsement temporarily boosted Anker Innovations' popularity, but such a fleeting surge in wealth is temporary. Finding breakthroughs in products and channels will likely be a long-term challenge for Anker Innovations, warranting close attention from investors.

Written by Sansheng