U.S. Stock IPO Outlook | Performance Slowdown Intensifies Liquidity Risks, Micron is Small and "Not Beautiful"

Participating in the design of shoes and clothing, providing one-stop home decoration services, and offering customized travel products... Nowadays, customized consumption is becoming increasingly popular, with more diverse consumption scenarios and a continuously expanding market scale. This reflects the personalized, diversified, and quality-oriented consumption demands of people under the wave of consumption upgrading, and also mirrors the accelerated digital transformation of production and distribution enterprises, innovating business models to make supply and demand matching more precise.

According to Frost & Sullivan, the growth of China's small-batch customized consumer goods in recent years is mainly attributed to the rise of fashion and designer brands driven by personalized demand, as well as investments from small and medium-sized enterprises. The market size of small-batch customized consumer goods has increased from 6.3 billion yuan in 2017 to 10.2 billion yuan in 2023, with a compound annual growth rate of 8.2%. Furthermore, the demand for personalized consumer goods is expected to accelerate in the future, with China's batch customized consumer goods projected to grow from 10.9 billion yuan in 2024 to 16.1 billion yuan in 2028, with a compound annual growth rate of 10.2%.

With the increasingly active market, naturally, players are entering the field.

On February 18, Shanghai-based customized consumer goods manufacturer MaxsMaking Inc. (hereinafter referred to as "MaxsMaking") submitted an updated prospectus to the U.S. Securities and Exchange Commission (SEC), intending to apply for an IPO on NASDAQ under the stock code "MAMK." The company initially submitted a confidential application to the SEC on February 7, 2024, and received a notice of overseas issuance and listing filing from the International Cooperation Department of the China Securities Regulatory Commission on July 8, 2024.

MaxsMaking plans to issue 2 million Class A shares at a price of $4 to $5 per share, with expected fundraising amounts between $8 million and $10 million.

Significant Decline in Performance and Emerging Liquidity Concerns

According to the prospectus, for the six months ending April 30, 2023, and April 30, 2024, the company achieved revenues of $15.38 million and $9.73 million, respectively, a year-on-year decline of 36.7%; net profits were $980,000 and $1.24 million, respectively, a year-on-year decline of 20.59%. This indicates a certain downward trend in the company's recent revenue and net profit.

With declining growth potential and no scale effect yet formed, MaxsMaking's financial pressure seems to be increasingly tight. According to the prospectus data, as of April 30, 2024, MaxsMaking had approximately $3.64 million in outstanding short-term bank loans, primarily from four banks: Ningbo Bank, Zhejiang MinTai Commercial Bank, and Zhejiang Yiwu Rural Commercial Bank.

Additionally, the company has also obtained approximately $420,000 in outstanding loans from third-party individuals, although these loans carry no interest and have no repayment conditions. Amid high liabilities, the company's cash flow is not abundant—by April 30, 2024, MaxsMaking had approximately $230,000 in cash, mainly sourced from the company's operations, bank loans, related party loans, and third-party loans During the same period, the company's net cash used for operating activities was approximately $1.7 million, primarily due to a decrease in accounts receivable of about $1.7 million resulting from reduced revenue; professional fees related to the IPO and deferred issuance costs decreased by about $650,000; and customer prepayments decreased by about $380,000 due to a decline in sales.

Currently, MikeLiss is mainly improving liquidity and capital sources through operating cash flow, debt financing, and financial support from major shareholders or investors. If additional funds cannot be raised when needed, or if the company cannot expand its business or otherwise capitalize on business opportunities due to insufficient funds, the company's business, operating performance, financial condition, and cash flow will be adversely affected.

Niche Market Riding the Wave: Is the POD Customization Market Seeking Growth by "Leveraging Strengths"?

With the support of three major trends: "e-commerce, environmental protection, and personalization," POD customization has shown significant market appeal and traffic potential among young consumer groups.

From the perspective of specific category demand, clothing and accessories dominate the POD market with a significant share of 39.6%, while home decor is the fastest-growing subcategory. Lightweight products customized based on pet images are in high demand across major platforms. Additionally, personalized jewelry and digital accessories are gradually becoming new choices for young people to showcase their individuality and taste.

The POD (Print on Demand) industry is experiencing a surge in popularity, not only meeting the self-expression needs of young consumers but also leading the innovation direction of various categories. With short development times, low inventory backlog risks, high average order values, and flexible operations, POD demonstrates unique competitive advantages. Coupled with the maturity of digital intelligence and manufacturing technology, customized clothing and home decor have become highly sought after on major platforms.

According to a Frost & Sullivan report, most orders in China's customized consumer goods industry are received from large enterprises. As companies focus on building corporate culture, China's customized consumer goods market has been growing rapidly. From 2017 to 2023, the market size of customized consumer goods in China grew from 138.7 billion yuan to 217.3 billion yuan, with a compound annual growth rate of 7.8%. The industry is expected to maintain a high growth rate, with the market size projected to increase from 236.2 billion yuan to 343 billion yuan between 2024 and 2028, with a compound annual growth rate of 9.8%.

However, the competition in the customized consumer goods sector where MikeLiss operates is also very fierce.

Specifically, the types of participants in the customized products industry are diverse, including large enterprises, medium-sized enterprises, as well as small businesses and studios. MikeLiss belongs to the "small but beautiful" segment of the customization track. Although the company can flexibly meet unique customer needs and provide distinctive products, its smaller scale may lead to shortcomings in production capacity, supply chain management, and brand promotion, while also facing competitive pressure from medium and large enterprises in terms of resources, technology, and funding In view of this, the fundamentally "weak" Microlis will need to enhance the company's competitive strength from multiple dimensions in order to achieve economies of scale