| Edited by Huang Yanhua
| Produced by Dan Zong
| Bullet Finance View
Konka, the former "color TV brother" who has been on the market for 30 years, handed over a report card that "surprised" the outside world.
On March 29, Konka released its 2021 annual report. The financial report shows that the company will achieve revenue of 49.107 billion yuan in 2021, a year-on-year decrease of 2.47%; the net profit attributable to shareholders of listed companies after deducting non-recurring gains and losses is -3.251 billion yuan, compared with -2.368 billion yuan in the same period last year. substantially expanded.
"Bullet Caiguan" noticed that as of the close of the day when this annual report was disclosed, Konka's stock price was at 5.14 yuan per share, a drop of 2.10% from the previous trading day. Since then, the stock price has not improved much. As of the close on April 18, Konka’s stock price was 5.04 yuan per share, with a total market value of 12.136 billion yuan.
As a color TV giant with unparalleled glory, what happened behind the double decline in Konka's revenue and profit? Why did 42-year-old Konka fall into the predicament of "middle-aged crisis"? In the increasingly fierce competition in the home appliance market, how much chance does it have?
1, the former "color TV brother"
Looking back on Konka's 42-year development history, it has had a long period of glory.
Konka was established in 1980. It started out as the production of electronic products such as tape recorders and stereos. It is the first Sino-foreign joint venture electronics company in China and the first industrial enterprise in Shenzhen with an output value exceeding 10 billion. It has dominated the domestic color TV list for 5 consecutive years. The sales volume is the first, and it has become the "No. 1 color TV brother" in China.
In 1992, Konka's A and B shares were listed on the Shenzhen Stock Exchange , after 30 years of stock market turmoil.
In these years, with the changes in domestic and foreign consumption trends and the increasingly fierce market competition, Konka is also seeking transformation. Prior to this, Konka adopted diversified operations, operating as many as 20 categories of products, with greater blindness. After that, the company focused on the color TV industry and made great achievements and development. Under the circumstance that the competition pattern of the color TV industry is not optimistic, Konka transformed again and transformed into a diversified operation.
In 2017, Konka said to the outside world: "Konka is not just a color TV company in the future." Today, Konka's business covers smart home, new energy, new materials, big health, AIoT, industrial parks, environmental protection, semiconductors and many other fields.
Objectively speaking, Konka's diversified business strategy has achieved certain results. Take the newly expanded semiconductor business as an example. According to the financial report, Konka’s semiconductor business revenue will reach 322 million yuan in 2021, an increase of 13.78% from 283 million yuan in the same period last year. The proportion of revenue contributed by this business to the company will rise from 0.56% in 2020 to 0.66% in 2021.
In addition to new business results, Konka's marketing expense ratio also continues to be low.
The financial report information disclosed by Konka shows that in the last five years, the company's marketing expense ratio (marketing expense ratio = marketing expense/revenue * 100%) has been maintained at an extremely low level between 2% and 7%.
Moreover, Konka's marketing expense rate is decreasing year by year, respectively 6.86%, 4.95%, 4.18%, 3.63% and 2.91%.
In addition, the net cash flow generated by Konka's operating activities continues to increase.
According to the published financial report, in the past five years, the net cash flow generated by Konka's operating activities has increased from -4.314 billion yuan in 2017 to 809 million yuan in 2021.
The growth rate of net cash flow generated by Konka's operating activities is also accelerating, from -343.79% in 2017 to 352.79% in 2021, with an average annual growth rate of nearly 40%, reaching 39.58%.
Judging from the above data, Konka's overall performance in the past five years is remarkable, but if you look closely at the financial report, it is not difficult to find the growth dilemma it is facing.
2, revenue growth is weak
"Bullet Finance" looked through Konka's financial reports over the years and found that the former home appliance giants could not escape the "middle-aged crisis".
For example, Konka's revenue growth has generally slowed down. According to Konka’s previous financial report, in the last five years, the company’s revenue growth rate has dropped from 53.84% in 2017 to a negative value of -8.65% in 2020, and this negative growth trend will continue in 2021. was -2.47%.
"Bullet Finance" believes that the main reasons for Konka's revenue growth slowdown are as follows:
First, Konka's color TV business revenue has been declining year after year. According to Konka's previous financial reports, in the past eight years, the company's color TV business revenue has dropped from 14.697 billion yuan in 2014 to 7.3 billion yuan in 2021.
Moreover, Konka's color TV business revenue growth has been negative, reaching the highest in 2016 at -0.89%, and the lowest in 2018 at -17.53%.
In addition, the proportion of revenue contributed by Konka's color TV business to the company is decreasing year by year, from 75.67% in 2014 to 14.87% in 2021, a drop of 60.80%.
However, it is not only Konka that has performed poorly in the color TV business, but also other players in the color TV industry. According to data from Aoweiyun.com, in the past six years, the retail sales of China's color TV market reached the highest in 2016, at 50.89 million units, and the lowest occurred in 2021, at 38.35 million units, showing an overall downward trend.
In addition, the growth rate of retail sales in China's color TV market has shown an overall slowdown, from 7.77% in 2016 to -13.82% in 2021.
In fact, the overall decline in the retail sales of China's color TV market has directly affected the trend of its retail sales.
According to the data of Aowei Cloud, in the past six years, the retail sales of China's color TV market have shrunk from 154.9 billion yuan in 2016 to 128.9 billion yuan in 2021.
The overall shrinkage of China's color TV market is due to the fact that China's color TV market is highly saturated, and the sales volume mainly comes from the demand for stock replacement.
Second, the growth rate of Konka's white goods business revenue is decreasing year by year. According to Konka's previously disclosed financial reports, in the last three years, the company's white goods business revenue growth rates were 79.97%, 0.33% and -3.72%.
Third, Konka's industry and trade business revenue growth slowed down overall.
According to the financial report, in the past five years, the growth rate of Konka's industrial and trade business revenue has plummeted from 489.03% in 2017 to -2.63% in 2021, a drop as high as 491.66%.
Fourth, Konka's environmental protection business revenue has been decreasing year by year. The financial report shows that in the last three years, Konka's environmental protection business revenue was 7.079 billion yuan, 4.824 billion yuan and 4.355 billion yuan.
Moreover, Konka's environmental protection business revenue growth rate reached the highest in 2019, at 134.38%, and the following two years were negative, at -31.86% and -9.73% respectively; plus Konka's environmental protection business contributed to it The proportion of revenue has decreased year by year, from 12.84% in 2019 to 8.87% in 2021.
Of course, Konka's weak revenue growth is also related to the cooling of the real estate market.
As we all know, a large part of the demand in the home appliance market comes from the real estate transaction volume. In recent years, the tightening of policies, the adjustment of housing loan interest rates, and strict control of consumer loans to purchase houses in violation of regulations have all led to a certain decline in real estate transaction volume.As a major player in the home appliance industry, Konka's home appliance business revenue will inevitably be affected.
In addition, weak consumer demand for home appliances has also restrained Konka's revenue growth.
Because of the impact of the epidemic, the current domestic home appliance industry still has problems such as serious product homogeneity and insufficient innovation. If there are not enough innovative functions or experiences to give people an eye-catching feeling, consumers' demand for replacement and renewal will obviously be insufficient.
"Bullet Finance" also noticed that Konka's revenue stall is also related to the decline in its word-of-mouth reputation. On the black cat complaint platform, there are a total of 466 complaints involving Konka, and the complaints of netizens against Konka are mainly poor product quality, poor after-sales service, advertising harassment, arbitrary deductions, and difficulty in returning products.
The decline in word-of-mouth reputation will inevitably affect some old Konka users to repurchase, and at the same time, it will also make some Konka intended users give up the idea of buying related products.
More importantly, companies such as Xiaomi and Huawei are also producing and selling home appliances. These new brands are rising rapidly and have considerable advantages in terms of functional design, appearance, price, and brand. It also allows consumers to have more choices, and the competitiveness of established products will be further weakened, and the market competition will become more intense.
3, ten-year loss of more than 10 billion
In addition to the above-mentioned slowdown in revenue growth, Konka's non-net profit is also not optimistic.
We know that deduction of non-net profit is the financial indicator that reflects the real profitability of a company. According to the financial report, in the past 10 years, Konka's non-net profit has been negative, reaching a total of -10.393 billion yuan.
Moreover, in the last five years, Konka's non-net profit deduction has been decreasing, respectively -0.97 billion yuan, -795 million yuan, -1.876 billion yuan, -2.368 billion yuan and -3.251 billion yuan.
The reason behind it, "Bullet Finance View" believes that, first of all, it is related to the overall upward trend of Konka's research and development expenses.
According to Konka's previous financial report, in the past five years, the company's research and development expenses have increased from 330 million yuan in 2017 to 616 million yuan in 2021.
Moreover, except for the negative growth rate of R&D expenses in 2021, Konka's value in other years is positive, with an average growth rate of 29.00%.
Secondly, it is also related to the general upward trend of Konka's management expenses. According to the financial report, in the last five years, Konka's management expenses have risen from 448 million yuan in 2017 to 960 million yuan in 2021.
Moreover, except for the negative growth rate of management expenses in 2021, this value of Konka in other years is all positive, with an average growth rate of 19.54%.
Furthermore, it is also related to the rising prices of raw materials. We know that the main bulk raw materials for home appliance production are steel, copper, aluminum and plastic. Among them, bulk raw materials for air conditioners, refrigerators, and washing machines account for 50%-60% of production costs.
It is understood that on March 23, 2020, the LME3-month copper price was only US$4,601/ton. 98.44%.
In addition to copper prices, the prices of other raw materials for home appliances have increased significantly, and the prices of metal products such as nickel, tin, and aluminum are also rising.
Moreover, the upward trend in raw material prices continues.According to data from Shanghai Nonferrous Networks, as of March 29, copper prices have increased by 6% since 2022, aluminum prices have increased by 14% since 2022, and stainless steel futures prices have increased by 18% since 2022.
In addition, it is also related to the global epidemic. You must know that the global epidemic has fluctuated repeatedly, resulting in insufficient shipping capacity, which in turn has led to a sharp increase in shipping costs, which is reflected in the further increase in costs for Konka, which is deploying a globalization strategy. As a result, Konka's profits will be diluted.
Finally, it has to do with the increasingly fierce competition in the market. Konka's main business field is highly competitive, which will inevitably push up the company's operating costs, thereby reducing its profit margins.
In the financial report, we found that Konka's asset-liability ratio is still high for a long time in addition to the irreversible decline in its performance. The financial report shows that in the past 10 years, Konka's average asset-liability ratio has reached 77.14%, far exceeding the generally recognized appropriate level of asset-liability ratio (40-60%).
It is worth noting that the high asset-liability ratio means that the company's solvency is weak and there is a large financial risk. Therefore, "how to reduce the asset-liability ratio" has become a difficult problem that Konka has to face and solve.
4, Conclusion
It is undeniable that in the face of the 42 years of surging development tide, Konka has occupied a place in the fierce industry competition through diversified layout, but Konka still inevitably entered the "double decline in revenue and profit" dilemma. More importantly, the current growth of Konka's old businesses such as color TVs and white goods is sluggish, and new businesses such as semiconductors are difficult to take the lead.
Konka, who has fallen into a "middle-aged crisis", how can he break through and regain his vitality? Consumers and investors are waiting for its answer.
*The title picture in the article comes from: Shetu.com, based on the VRF protocol.
