During the outbreak of the pandemic in 2020, I heavily invested in a logistics equipment company. At that time, the global supply chain was at a standstill, and the demand for digitalization surged, causing its stock price to double within six months. However, the good times did not last long; as the industry faced overcapacity, the company’s performance plummeted in 2022, and its stock price halved. This experience made me deeply understand that: investing in tech stocks cannot solely rely on trends; one must penetrate industry cycles and see through the company’s ‘moat’.
Now, I am turning my attention to Youbo Xun—an IoT company focused on smart data terminals (PDA), smart payment terminals (POS), and specialized printers. In the context of a sluggish global economic recovery and intensified industry competition, can it seize structural opportunities in a crisis like the logistics equipment company did back then?
1. The ‘Double-Edged Sword’ of the Macroeconomy: The Game Between GDP and Interest Rates The domestic GDP growth rate has slowed from 8.1% in 2021 to 5.2% in 2024, but there are still highlights in specific sectors. The logistics industry is expected to see a total social logistics volume growth of 5.8% in 2024, with logistics related to smart manufacturing and high-tech manufacturing growing over 15%. This is good news for Youbo Xun—its PDA products are widely used in logistics warehousing, smart manufacturing, and other scenarios, and the structural growth in industry demand may offset the impact of the overall economic slowdown.
However, the interest rate environment looms like a ‘Sword of Damocles’. The Federal Reserve’s interest rate hike cycle is nearing its end in 2024, while the domestic central bank maintains a loose monetary policy, with the ten-year treasury yield dropping from 3.2% to 2.8%. Although a low-interest-rate environment reduces corporate financing costs, it also leads to a shift of funds from the stock market to the bond market. As a growth stock, Youbo Xun’s valuation is under significant pressure—its price-to-earnings ratio (TTM) has dropped from 44 times in 2023 to a loss state in 2024.
2. The ‘Risks’ and ‘Opportunities’ in Industry Restructuring The IoT industry is experiencing a ‘tale of two cities’: on one hand, leading companies like Jitu Express have seen their market value plummet by 61%, reflecting the harsh reality of consolidation in the logistics industry; on the other hand, the State Administration of Taxation is expected to reduce taxes and fees by over 2.6 trillion yuan in 2024, with a focus on supporting technological innovation and manufacturing, providing policy dividends for hard-tech companies like Youbo Xun.
In terms of competition, Youbo Xun faces a ‘wolf in front and tiger behind’ situation. International giants Zebra and Honeywell dominate the high-end market, while domestic manufacturers like New Beiyang and Newland are fiercely competing in the mid-to-low-end market. However, Youbo Xun’s ‘secret weapon’ lies in its vertical industry solutions—its smart terminals have penetrated fields such as healthcare, finance, and government, with a customer repurchase rate exceeding 70%. This ‘deep cultivation of industry + customized services’ model has allowed it to maintain the top market share in the domestic PDA market in 2023.
3. The ‘Addition and Subtraction’ of Exchange Rate Fluctuations and Supply Chains In 2024, the exchange rate of the RMB against the USD is expected to fluctuate more, rising from 6.8 to 6.4. For Youbo Xun, this is a ‘double-edged sword’: with overseas revenue accounting for about 30% of the company, exchange losses may erode profits, but the decline in the cost of imported raw materials brings benefits. The company uses foreign exchange hedging tools to hedge risks, with financial expenses in the first half of 2024 decreasing by 12% year-on-year.
In terms of the supply chain, the production of the Zhuhai smart manufacturing base is crucial. This base adopts a ‘flexible production line + domestic supply chain’ model, increasing capacity from 900,000 units to 3.6 million units, with a self-sufficiency rate of core components exceeding 60%. This not only reduces dependence on overseas suppliers but also compresses unit costs by 15% through scaled production. However, caution is needed regarding the global semiconductor shortage risk—due to chip supply delays, the company faced a 20% extension in order delivery cycles in Q3 2024.
4. The ‘Fast and Slow’ of Technological Innovation Youbo Xun’s R&D investment can be described as a ‘gamble’: in 2024, the R&D expense ratio is expected to reach 9.8%, focusing on areas such as artificial intelligence, digital RMB, and OpenHarmony. Its collaboration with Deep Kaihong to develop a HarmonyOS version of the smart POS machine has already been piloted in bank outlets, expected to contribute 10% of revenue by 2025. However, the conversion of technology takes time—new product revenue accounted for only 18% in 2024, far below expectations.
More critically, the speed of technological iteration in the industry is accelerating. Competitors like Newland have launched ultra-high-frequency RFID terminals supporting 5.5G, while Youbo Xun’s similar products are still at the 4G stage. This ‘generation gap’ may lead to marginalization in the high-end market.
5. The ‘Resonance Point’ Between Policy Dividends and Market Demand In 2024, the national policy for the transformation of scientific and technological achievements is expected to be intensively introduced, emphasizing ‘deep integration of production, education, and research’. The ‘Industrial Visual Recognition Technology’ project that Youbo Xun is collaborating on with Tsinghua University has received a special subsidy of 5 million yuan, with the gross profit margin of related products increasing to 42%. Additionally, the ‘Industrial IoT Terminal Security Standards’ that the company participated in formulating have become industry norms, further consolidating technical barriers.
On the market demand side, the intelligent transformation of the logistics industry is accelerating. Companies like SF Express and JD.com are expected to increase their investment in intelligent sorting equipment by 30% in 2024, with Youbo Xun’s smart logistics integrated machine orders increasing by 45% year-on-year. However, it is important to note that the industry price war is intensifying, with the average price of similar products dropping by 8%, compressing profit margins.
6. The ‘Barometer’ of Financial Health In 2024, Youbo Xun is expected to incur a loss of 100 million to 149 million yuan, although this is an improvement compared to 2023, it still has not escaped the predicament. The main reasons include:
- High accounts receivable: Accounts receivable over one year account for 22%, with bad debt losses of 38 million yuan;
- Inventory backlog: The balance of inventory goods is 210 million yuan, a 15% increase compared to 2023;
- Low R&D capitalization rate: 90% of R&D investment is expensed, affecting current profits.
However, cash reserves are sufficient—monetary funds amount to 430 million yuan, with short-term loans only at 120 million yuan, making financial risks controllable.
7. The ‘Balancing Act’ of Valuation and Investment Strategy Currently, Youbo Xun’s price-to-sales ratio (TTM) is 2.94 times, lower than the industry average of 3.5 times. If revenue grows by 15% to 1.8 billion yuan in 2025, the PS valuation is expected to recover to 3.2 times, corresponding to a stock price of 18-20 yuan, representing a 20%-30% upside from the current price.
However, risks cannot be ignored:
- Technical route risk: If the promotion of the HarmonyOS ecosystem does not meet expectations, related products may face poor sales;
- Industry cycle risk: A sluggish economic recovery may lead to reduced IT spending by enterprises;
- Exchange rate risk: A depreciation of the dollar may affect overseas profits.
The story of Youbo Xun is a microcosm of China’s hard-tech enterprises—offering both policy dividends and industry growth opportunities, while also facing challenges of technological iteration and intensified competition. For investors, the key is to capture ‘hot opportunities’ amidst ‘cold thoughts’:
- Short-term focus on policy: Pay attention to the continuity of tax reductions and the intensity of new infrastructure investments in 2025;
- Mid-term focus on technology: Track the progress of the HarmonyOS ecosystem and the rhythm of new product releases;
- Long-term focus on structure: Assess the company’s role in industry consolidation and the sustainability of its moat.
As Buffett said, ‘Be fearful when others are greedy, and be greedy when others are fearful.’ In the reshuffling period of the IoT industry, can Youbo Xun become the next ‘invisible champion’? The answer may lie in its production lines at the Zhuhai base, hidden in every order with its customers.
Disclaimer: This article is a personal diary and does not constitute investment advice. All views expressed in this article represent personal positions and do not have any guiding effect.