On April 11, Gongniu Group Co.Ltd(603195) ( Gongniu Group Co.Ltd(603195) , SH) disclosed the annual report of 2021. The past 2021 was not calm for Gongniu Group Co.Ltd(603195) . Antitrust investigation and punishment once put the company on the cusp of the storm.
According to the data, since the listed company disclosed on May 11, 2021 that it was subject to antitrust investigation by Zhejiang market supervision administration, as of April 12, 2022, Gongniu Group Co.Ltd(603195) share price fell by 32.35%, and the total market value was callback from 100 billion yuan to less than 80 billion yuan.
According to the annual report data of 2021, Gongniu Group Co.Ltd(603195) revenue and net profit attributable to parent company were 12.385 billion yuan and 2.78 billion yuan respectively, maintaining double-digit growth year on year, and both revenue and net profit were higher than the data of 2019 before the epidemic.
Although 603 was fined RMB 295 million for antitrust investigation in September 1952021, it benefited from the high government subsidy of RMB 388 million in 2021, forming a certain degree of hedging on non recurring profit and loss items Gongniu Group Co.Ltd(603195) ‘s basic market is still stable, and new energy related products have been listed successively since June 2021. “Intelligent ecology + new energy strategy” has become the company’s new strategic goal.
“rewards and punishments in non recurring profits and losses”
On May 11, 2021, Gongniu Group Co.Ltd(603195) disclosed that it had received the letter of Zhejiang provincial market supervision and administration on filing Gongniu Group Co.Ltd(603195) suspected of entering into and implementing monopoly agreements with trading counterparties.
Four months later, on September 27, 2021, Gongniu Group Co.Ltd(603195) received the administrative punishment decision issued by the regulatory authority, which determined that Gongniu Group Co.Ltd(603195) had reached and implemented a fixed and limited price monopoly agreement with the trading counterpart (dealer) in the sales channels of power connection and power extension products such as converters, wall switch sockets, LED lighting and digital accessories from 2014 to 2020 (excluding Hong Kong, Macao and Taiwan), It eliminates and limits market competition and damages the interests of consumers.
According to the regulations, Zhejiang market supervision and Administration Bureau imposed a fine of 3% of China’s domestic sales of 9.827 billion yuan in Gongniu Group Co.Ltd(603195) 2020, totaling 294.81 million yuan.
For Gongniu Group Co.Ltd(603195) which has been listed for only one year, this is tantamount to a blow to the head. However, as a local leading enterprise in Cixi City, the revenue of 603, 1952019 and 2020 reached the threshold of 10 billion yuan for two consecutive years, and the local policy was favorable in 2021.
In 2020, Cixi municipal government passed the incentive and cultivation plan for enterprises with more than 100 million yuan in Cixi City, which formulated different cultivation policies and reward standards for enterprises with 100 million yuan, leading enterprises and 10 billion enterprises. In July 2021, Cixi municipal government announced the notice of Cixi City’s 10 billion enterprise cultivation list and agreed that Gongniu Group Co.Ltd(603195) be included in the 10 billion enterprise cultivation list for a period of five years (20202024).
On August 10, 2021, Gongniu Group Co.Ltd(603195) disclosed the announcement of obtaining government subsidies, saying that according to the notice of Cixi Municipal People’s Government Office on printing and distributing the enterprise cultivation plan (Revision) of Cixi City with more than 100 million yuan (cizheng Ban Fa [2021] No. 9), it was awarded 259 million yuan for enterprise cultivation.
One reward and one punishment are also reflected in the non recurring profit and loss items of the company’s 2021 annual report. According to the data of the annual report, in 2021, the amount of government subsidies Gongniu Group Co.Ltd(603195) included in the current profit and loss was 388 million yuan. Compared with 654767 million yuan and 126 million yuan in 2019 and 2020, the government subsidies obtained by Listed Companies in 2021 are particularly considerable.
In addition to some projects, other non operating expenses totaled 328 million yuan, of which 295 million yuan was an antitrust fine. From the above accounting items, the income and expenditure of government subsidies and antitrust fines have formed a certain degree of “hedging” in non recurring profit and loss items.
comprehensive gross profit margin fell year-on-year, powering the new energy market
From the perspective of main business, the main products of Gongniu Group Co.Ltd(603195) include electrical connection products, intelligent electrician lighting products and digital accessories products. Among them, the main business income of electrical connection products was 6.413 billion yuan, a year-on-year increase of 15.58%, which is the core business of listed companies; The main business income of intelligent electrical lighting products was 5.551 billion yuan, with a year-on-year increase of 36.90%, Gongniu Group Co.Ltd(603195) said that during the reporting period, the intelligent electrical lighting business accelerated the development of new business and increased the expansion of decoration channels, and all businesses achieved good growth. The main business income of digital accessories products was 373 million yuan, a year-on-year decrease of 10.79%, which was mainly affected by the listing cycle of new products and the change of Wuxi Online Offline Communication Information Technology Co.Ltd(300959) flow.
It should be noted that from the perspective of gross profit index, the gross profit margin of the two main products of bull electric appliance, electrical connection products and intelligent electrical lighting products, decreased by 6.18 percentage points and 1.13 percentage points respectively over the previous year. The company’s annual comprehensive gross profit margin was 36.85%, a year-on-year decrease of 3.21 percentage points.
China Merchants Securities Co.Ltd(600999) research report analysis shows that the year-on-year decline of the company’s gross profit margin is expected to be affected by two aspects. First, the prices of major raw materials such as copper, plastics and hardware have remained at a high level for a long time, and the company’s hedging has not been fully hedged; Second, the new category is in the early stage of promotion, and the profit margin is relatively low compared with the traditional advantageous category.
In the business plan for 2022, Gongniu Group Co.Ltd(603195) said that it would continue to optimize hedging and other methods to reduce the cost impact caused by the sharp fluctuation of raw materials; Further tap the advantages of electronics, hardware and mold parts companies and continuously empower them through technical cost; Promote digital transformation, build an end-to-end supply chain system, and promote coordinated operation of research, production and marketing; We will continue to implement the cloud warehouse project, gain insight into market changes, optimize production and marketing coordination, and enhance the comprehensive competitiveness of the supply chain.
From the perspective of the development stage of the industry, the electrical connection products with the converter as the core, the electrical lighting products with the wall switch socket and LED lighting as the core have entered the mature period of industrial development, among which the new energy power consumption, home intelligence and ecology have become the new development trend. The consumer electronics industry represented by smart phones is growing rapidly, and the digital accessories industry is still in the stage of rapid growth.
In terms of overall development strategy, Gongniu Group Co.Ltd(603195) 2021 positioned the strategic goal as “intelligent ecology + new energy strategy”.
It is understood that in 2021, listed companies made zero breakthroughs in the field of new energy electrical connection, carried out technological innovation around the pain points of users, and successively launched a variety of portable chargers for new energy vehicles and household AC charging pile products. At the same time, as an extension of the company’s power connection business, the digital accessories business is actively promoting the innovation and upgrading of products to the field of digital fast charging and new energy storage, laying a foundation for sustainable development in the next step.
In terms of intelligent electrician lighting business, Gongniu Group Co.Ltd(603195) said that in 2022, we will build a whole house intelligent solution with no master lamp as the core around the consumption upgrading demand of home decoration. The wall switch socket will further cultivate the decorative product line, establish the switch products matching the non main lamp, quickly layout the intelligent products, and lead the overall consumption upgrading of the wall opening industry.
