On April 11, Xiamen Kingdomway Group Company(002626) ( Xiamen Kingdomway Group Company(002626) , SZ) disclosed the 2021 annual report. In 2021, Xiamen Kingdomway Group Company(002626) achieved an operating revenue of about 3.62 billion yuan, a year-on-year increase of 3.19%; The net profit attributable to the shareholders of the listed company was about 790 million yuan, a year-on-year decrease of 17.76%.
The reporter of the daily economic news noted that the decline of gross profit margin and asset impairment are the main reasons for the decline of Xiamen Kingdomway Group Company(002626) net profit. For the year-on-year decline in net profit, Xiamen Kingdomway Group Company(002626) explained: “the rise of raw materials and the year-on-year decline of vitamin a sales price.”
In addition, for the NMN widely concerned by the market（ β- Nicotinamide mononucleotide) products, Xiamen Kingdomway Group Company(002626) said that its brand doctor’s best has established the first brand image of NMN and coenzyme Q10 health products in the whole market. In 2021, doctor’s best achieved an operating revenue of $1392476 million, a year-on-year increase of 12.08%, and a net profit of $171676 million, a year-on-year increase of 4.94%.
gross profit margin decline
According to Xiamen Kingdomway Group Company(002626) annual report, the operating revenue of Xiamen Kingdomway Group Company(002626) vitamin a series in 2021 was about 650 million yuan, a year-on-year decrease of 12.66%; Coenzyme Q10 series achieved an operating revenue of about 890 million yuan, a year-on-year increase of 20.54%; The operating revenue of nutritional and health products was about 1.82 billion yuan, a year-on-year decrease of 1.26%.
In 2021, the growth rate of Xiamen Kingdomway Group Company(002626) operating cost was higher than that of operating revenue. From the perspective of the contribution of changes in operating profit, the total operating income of Xiamen Kingdomway Group Company(002626) in 2021 increased by about 112 million yuan year-on-year, but the total operating cost increased by about 214 million yuan. In addition, the year-on-year decrease of investment income and the year-on-year increase of asset impairment loss led to the year-on-year decrease of Xiamen Kingdomway Group Company(002626) operating profit of about 194 million yuan in 2021.
In 2021, Xiamen Kingdomway Group Company(002626) ‘s total operating costs accounted for a relatively large proportion of operating costs. In 2021, the operating cost of Xiamen Kingdomway Group Company(002626) was about 1.83 billion yuan, a year-on-year increase of about 9.4%, exceeding the growth rate of operating revenue, which also led to the decline of Xiamen Kingdomway Group Company(002626) gross profit margin.
According to the data, the gross profit margin of Xiamen Kingdomway Group Company(002626) 2021 was 49.38%, compared with 52.25% in 2020. In terms of products, the gross profit margins of vitamin a series, coenzyme Q10 series and nutritional health products in Xiamen Kingdomway Group Company(002626) of 2021 were 66.16%, 75.75% and 31.96% respectively, down from 2020.
In terms of expenses, the management expenses of Xiamen Kingdomway Group Company(002626) in 2021 were about 362 million yuan, with a year-on-year increase of about 47 million yuan. As for the change of management expenses, Xiamen Kingdomway Group Company(002626) said: “it is mainly due to the increase of environmental protection expenses, the decrease of social security return received and the comprehensive impact of the change in the scope of consolidated statements.”
“With the transformation of the national economic growth model and the full implementation of the sustainable development strategy, the people’s awareness of environmental protection is gradually strengthened, the national environmental protection policies are increasingly improved, and the environmental pollution control standards are becoming more and more strict, which may lead to the increasing cost of environmental protection treatment of enterprises, thus affecting the profitability of the company.” Xiamen Kingdomway Group Company(002626) indicates.
In 2021, Xiamen Xiamen Kingdomway Group Company(002626) vitamin Co., Ltd., a subsidiary of Xiamen Kingdomway Group Company(002626) invested 5.1526 million yuan in environmental protection, Inner Mongolia Xiamen Kingdomway Group Company(002626) Pharmaceutical Co., Ltd. invested 17.17 million yuan in environmental protection, and Jiangsu Chengxin Pharmaceutical Co., Ltd. (hereinafter referred to as Chengxin pharmaceutical) invested 7.215 million yuan in environmental protection.
Impairment loss of assets about RMB 2346
In 2021, Xiamen Kingdomway Group Company(002626) had an asset impairment loss of about 100 million yuan, including an inventory depreciation loss and contract performance cost impairment loss of about – 66.62 million yuan and a goodwill impairment loss of about – 40.37 million yuan.
In December 2020, Xiamen Kingdomway Group Company(002626) paid about 300 million yuan as the transaction consideration to acquire 86% equity of Chengxin pharmaceutical, and the difference between the fair value of identifiable assets and liabilities obtained by Chengxin pharmaceutical in proportion is about 140 million yuan, which is recognized as goodwill.
“The main reason for the impairment is that in 2021, Chengxin pharmaceutical redesigned its structure, standardized production and internal processes, and rectified the production restriction or shutdown of some products according to the requirements of local environmental protection policies, resulting in the lower than expected operating performance of this year. The Company re formulated its development plan and adjusted its performance expectations for future years according to the actual performance of Chengxin pharmaceutical in 2021. After testing, there was goodwill impairment.” Xiamen Kingdomway Group Company(002626) said in the announcement.
According to the annual report of Xiamen Kingdomway Group Company(002626) 2021, Chengxin pharmaceutical has been subject to three administrative penalties for environmental problems. The violations involved are “the environmental protection facilities that need accessories for production projects are put into production without acceptance”, “the production of volatile organic compounds waste gas is not carried out in confined space or equipment and the pollution prevention and control facilities are not used in accordance with the regulations” and “the industrial waste gas discharged is not monitored in accordance with the regulations”.
As for the provision for inventory impairment, Xiamen Kingdomway Group Company(002626) said in the announcement: “it is mainly because the price of some raw materials and products of Vit best company fluctuated violently during the epidemic period. After analyzing the year-end inventory according to the market price and demand, the company accrued the provision for inventory impairment according to the difference between the estimated recoverable amount and the book value.”
Vit best, fully known as Vita best nutrition, Inc., is a wholly-owned subsidiary of Xiamen Kingdomway Group Company(002626) in the United States. In 2021, Vit best achieved a net profit of about -75.096 million yuan.
In addition, regarding the future business outlook, Xiamen Kingdomway Group Company(002626) said that in 2022, doctors best will continue to maintain its business growth momentum by protecting its core business and developing its supply chain. Zipfizz (a company under zipfizz Corporation Xiamen Kingdomway Group Company(002626) name) will also increase its promotion and is expected to continue the recovery trend in the second half of 2021.
For domestic sales, Xiamen Kingdomway Group Company(002626) said that the company will expand the NMN product line to meet the needs of different channels and different groups. At the same time, it will lay out a large single product strategy with “coenzyme Q10” and “NMN” as the core.
