Change and expansion Konka's first-half revenue growth of 32.49%

After the new executive team of Shenzhen Konka (000016.SZ) took office earlier this year, it delivered its first semi-annual report last week. In the first half of 2017, Konka’s operating revenue increased by 32.49% year-on-year to 11.4 billion yuan.

At the same time, Konka’s net profit attributable to shareholders of the listed company for the first half of the year was RMB 30,783,300, an increase of 140.53% year-on-year; and earnings per share were RMB 0.0128. It actively promoted institutional changes, continuously integrated resources, accelerated transformation, and improved profitability.

Market-oriented reform and steady progress

In the first quarter of this year, Konka completed the open and marketized recruitment of the company’s senior management team and formally hired a new company’s senior management personnel. In addition, the market-oriented restructuring of relevant business units is also steadily advancing.

Breaking the shackles of the state-owned holding mechanism is of great significance to Konka in a competitive industry. Since 2016, Konka has attempted to break through and the major shareholder OCT Group has given great support. At present, the restructuring of the mobile phone business, small household appliances business, and set-top box business has been completed; the white goods business and internet operation business have been approved and reforms are being implemented.

After completing the above restructuring, Konka has quietly carried out an architectural adjustment of its core business, the color TV business segment: Merging the original multimedia business unit, overseas business unit, color TV business unit, and Shenzhen Vision Industry Commercial Display Co., Ltd. The Konka Multimedia Industry Division was established to achieve overall coordination and organic integration of the entire color TV business chain, followed by a series of adjustments in the organizational structure.

“This is just the first step for Konka to further promote the reform of the color TV business. In the restructuring of the color TV business, the first is to change the organizational structure, to allow the conditions including the management structure, equity structure, governance structure, etc. to meet the needs of restructuring "The president of Konka, Zhou Bin, said.

In Zhou Bin's plan, the design of the large color TV business restructuring plan will be completed and adopted in 2017 and will be implemented by the end of 2017 and early 2018. Once the reform of the color TV business is completed, all Konka's businesses will complete the mechanism reform.

Chairman of Konka Liu Fengxi also revealed that “the primary task this year is the corporateization of the color TV business, and we must distinguish the group from the business.” Color TV reform is basically expected to be completed next year. Next, Konka Color TV business will rely on shareholders such as Konka Group to strengthen capital operations.

"Combination of Soft and Hard" Activates TV Business

Color TV business is the mainstay of Konka. Faced with the challenges of increased upstream costs, price competition in the terminal market and contraction of the industry scale, Konka uses the "hardware + software" and "terminal + user" models to activate the color TV business and increase its competitiveness.

In the first half of the year, Konka continued to consolidate resources from all parties and jointly launched Micha Konka TV with China Mobile. It also became the top sponsor of the Jiangsu Suning Football Club; on July 28, 2017, Konka officially signed up to become a Spanish football. League official partner in China, this move will help enhance the brand's vitality of Konka.

During the reporting period, Konka’s revenue from smart TV operations and net profit increased significantly year-on-year. The company independently researched and developed a series of products, including Yiyi, Yigou, KTV, and Game World, which enhanced user stickiness and brand soft power and promoted The company's main business development model has been upgraded from the traditional hardware value-added profit model to the "hardware + software" and "terminal + user" models.

Konka also strives to enhance product competitiveness by focusing on integrating research, production, and supply systems, as well as optimizing product mix. In the first quarter of 2017, Konka TV line sales increased by approximately 40%. Large-size TVs with 55 inches or more accounted for more than 50% of the sales structure. The performance improvement trend has already shown.

“Color TV's business growth mainly comes from product upgrades, overseas markets, and user operations.” said Chang Dong, assistant chairman of the board of directors of Konka Group, and Chang Dong, president of the Multimedia Business Division. First of all, the brand must transform into a younger, higher-end brand. Konka is optimistic about the future of next-generation OLED TVs and will also increase research and development.

In overseas markets, Konka Color TV currently focuses on ODM. In the past, this approach has played an important role in the expansion of Konka Color TV's overseas market. Overseas sales exceeded 4 million units last year. Chang Dong revealed that "in the next three to five years, branding overseas is our strategic choice, first in developing countries and then in developed countries."

User operation is also one of the growth points of Konka's color TV business. "Last year's Internet operating profit was close to 150 million." Publicly available data shows that as of the end of June 2017, Konka accumulated 19.7 million terminal users and 10.88 million monthly active users.

Turning to investment platform to improve smart ecosystem

In the future, Konka Group will not only be a color TV company, but will transform it into an investment holding platform and accelerate the improvement of the smart ecosystem.

Liu Fengxi said that in order to expand its investment business, Konka Group has already established six or seven investment teams to use market-oriented means to operate its investment business.

“A listed company is a capital platform and seeks for capital appreciation. The means for adding value is not necessarily achieved through a single product or industry.” Liu Fengxi said that Konka Group turned to an investment holding platform and the first was to expand the new product line. , find new room for growth, and second, realize expansion through investment and mergers and acquisitions.

He believes that at home and abroad, many companies are growing up through mergers and acquisitions, regardless of foreign giants such as Cisco, Apple, Google, or domestic Tencent, Ali. Konka also needs to use the listed company platform to achieve industrial expansion. For example, Konka has recently planned to invest no more than RMB 1 billion to set up an industrial fund with China Eastern Asset Management (International) Holdings Co., Ltd. to invest in TMT industry, smart manufacturing, new energy, new materials, and health, and help to market. Company development.

Konka hopes to capitalize on its many years of industry advantage in color TV industry, through a number of direct investment business, to form the ecosystem of the Internet of Things. For example, Konka will select some Internet of Things companies for direct investment, which can be either equity or controlling.

In May, Konka took a share of Chu Tianlong smart card and increased the investment in Yu Xu smart company, opened the curtain of the layout of the Internet of Things industry, and launched a new trillion-dollar market.

In the past July, Konka has also established the headquarters of the Science and Technology Industrial Park, which is headed by the president himself. He is committed to becoming the core of industrial development, the development of the park as a carrier, the equity investment as the starting point, and the combination of production and financial resources. The park planning and operation service providers of the target are to create a new development model of “technology + industry + urbanization” to achieve product line diversification and profit diversification. At present, the Konka Smart Appliance Industrial Park and related supporting projects in Zhangzhou have been formally launched. Xi'an, Chengdu and other industrial real estate projects are also in negotiations.

In order to accelerate the layout, Konka has also signed a strategic cooperation agreement with Orient Assets in the near future, and then placed another child in the “investment control + finance” sector. “First of all, we want to realize the integration of Konka's production and finance through Oriental assets, accelerate industrial mergers and acquisitions, and realize industrial upgrading. At the same time, we also hope to build Konka’s own financial business through the financing capabilities of the East’s assets and build a platform for the entire financial business. Zhou Bin said.