Sichuan Changhong, the former leader of black power, spent two decades of time from the 'TV tycoon' to the final table. Today, the company has lost itself and struggled on the road to diversity.
The company’s most star-contingent product is Changhong TV, which has been widely known in the last century. At that time, Sichuan Changhong picked up the banner of the rise of China's local color TV, the top of the 20th century 'color TV king'. Now After asking 80, will Changhong TV be selected after 90? Most people are hesitant.
In 2017, Sichuan Changhong's operating income ushered in long-lost double-digit growth, which is an increase of 15.57% over the same period of last year. Intermediate products (described below in more detail), White Power provides a higher growth contribution with a 50% share of revenue. The performance of Changhong TV, a traditional star product, was very unsatisfactory, achieving a growth of less than 4% year-on-year.
High costs and higher marketing expenses are also eroding the company’s profits. Nearly 80 billion yuan in revenue has only achieved a net profit of 356 million yuan attributable to shareholders of listed companies, which has dropped by more than 35% year-on-year.
From the black industry leader to the company, Changhong has spent two decades. Can the future continue to shine?
The decline of Changhong brand
There were many home appliance companies that were on the same starting line as Changhong more than 20 years ago. Even the starting point of Changhong is still far higher than other companies. Now it has been thrown away by its peers.
Twenty years ago, Everbright's Changhong was the absolute dominant player in the domestic color TV market. In 1997, the market share of Changhong TV reached as high as 35%. 'Whenever you sold three color TV sets, one was Changhong. 'Senior color TV industry people recalled. Until 2009, Changhong TV maintained a 20-year sales championship.
Today, Midea, Gree has no need to say that Qingdao Haier, which had been in line with Changhong, has grown into a first-tier home appliance company with a revenue of nearly 100 billion yuan, a net profit of nearly 6 billion yuan, and a total market value of more than 100 billion yuan.
Changhong TV also gradually faded out of consumer vision.
Interface News did a simple brand survey on a small scale of dozens of people. If you purchased a color TV, which brand would you choose? Changhong’s option was almost ignored in the national product brands. Of course, this survey was for sample reasons. , The conclusion may not be very rigorous, but it still has important reference significance.
Let's take a look at Tmall Data again. The same is the mainstream 55-inch smart LCD TV. Compared with the top-selling Tmall flagship store, the total sales volume of Changhong explosion models is less than 20,000, and Hisense’s explosive products are nearly 80,000. And millet TV exceeded 110,000.
Tmall sales data clearly reveals the company's weakness in product sales and consumer identification.
“The Changhong brand is old and the brand is weak. Young people will choose a more youthful brand when they choose electric appliances. ' Household appliance industry observer Liu Buchen raised a sigh when he mentioned Changhong TV. He said that now Changhong TV is in the domestic market. The status is already number four, fifth, not the leader.
Along the way, in the past, the domestic black-box was overlord. Today, the body color TV label has become increasingly blurred.
Struggling in a diversified situation
In spite of the limited business scale, Sichuan Changhong clearly has a relatively complicated parent-subsidiary company control relationship. The above-mentioned municipal companies are the main bodies, and the controlled subsidiaries, Sun companies, and associated companies are as many as 147 subjects; in 2016, this number was 152. .
With such a large number of these equity entities, the business scope covered covers color TV, white electricity, IT up to packaging and printing, real estate, commercial trade, etc. The business layout is spread all over the world. Including the parent company of the listed company, these participating companies last year It contributed 77.6 billion yuan in revenue to Sichuan Changhong, equivalent to 530 million yuan per company.
About 10 years ago, Sichuan Changhong’s controlling or shareholding entity was only about 40 companies.
The complex parent-subsidiary company control system reflects the fact that this company seeks more profit growth points in the background of black-box business difficulties. Since the black-box business has been in a difficult position, the company’s profitability has always been profitable. At the margin, the profitability indicator measured by the diluted ROE never exceeded 4.4%, and the characteristic of one year high and one year low is very obvious.
The problem is also obvious. From a management point of view, the establishment of a child company is equivalent to the parent company’s greater delegation of authority to subordinate companies. Although this will increase the operating flexibility of subordinate companies, it is undeniable that the mother and child are too complicated. The company's or participating in a controlling relationship is equivalent to an increase in the level of management. This will not only increase the company's management costs, but the bigger problem is to reduce the effectiveness of the strategy implemented by the parent company at the level of the group.
The horizontal comparison data clearly reflects the healthy development and operation of the company. It requires an appropriate parent-subsidiary company control system. Midea Group, which is also engaged in home appliance business, has a revenue of 240 billion yuan, 36 participating companies, and Qingdao Haier, 160 billion revenue. , The company's participation in the holding company 98; Gree 150 billion yuan (annual report is not yet out of the estimated amount), 59 participating companies.
Judging from the actual situation of the company, the 147 companies controlled by Sichuan Changhong Participation, the operating situation is not ideal.
From the perspective of the performance of listed companies, the net profit attributable to shareholders of listed companies fell by 36% during the year, but the minority shareholders' profit and loss decreased by 50%. This boring financial data, the intuitive explanation is that non-listed companies hold non- The total profit of the wholly-owned subsidiary dropped sharply in that year. In other words, many participating companies did not bring substantial benefits.
According to the 2017 Annual Report, 13 companies were newly included in the consolidation scope in the current year, and 8 companies suffered losses. Among them, non-wholly-owned subsidiaries had a total net loss of 8.65 million yuan.
From another perspective, there were at least four of the new establishments (Sun) involved in the trade, but there were 13 Sun companies that were written off during the year, of which 12 were engaged in trading business. Although the new company and the cancellation company are not in the same area, But this is also enough to show that the company is relatively free to establish the company. Based on the normal business logic, these companies that are written off usually mean that they do not manage well. However, the company does not seem to be willing to conduct in-depth analysis and it is hastily set up in other regions. New trading entity.
The company's participation in the holding company over the past few years has also been repeated. This may reflect management's indecisiveness on this issue. In 2013, the highest number of companies participating in the holdings was 166, followed by 2014 and 2015. There have been significant reductions, and the number has decreased to less than 50, but in the past 2016 and 2017, many large participating entities were again established. These all show that the company's management is unable to break away from the anxious state of mindset and eager to seek breakthroughs.
In addition to the unsatisfactory performance, this strategic layout further reflects the unclear strategic positioning of the company's management. In the 2017 financial report, Sichuan Changhong described itself as 'a comprehensive home appliance, IT digital, parts materials, and lean'. Manufacturing services, new energy and other services as one of the global technology companies.
This description also makes this company look like a hybrid of multiple products. Investors have no way of knowing what kind of truly competitive products and services Sichuan Changhong will provide in the future.
From a business structure point of view, the main industry of Sichuan Changhong is very unclear. Until now, it has not been able to pick up a product that can beat the market. In fact, for a company that is not ideal in terms of cost control, seeking product focus or Differentiated competition can only create a perfect moat. In the absence of a prominent background of the main industry, if you want to achieve a diversified layout, you will certainly waste resources and reduce efficiency. The company's weak revenue and low profitability data are sufficient. Explain these issues.
From the point of view of company development, it is understandable to look for more profit growth points. There is no shortage of examples of diversified development in the industry. Midea Group (000333.SZ) is an excellent example. Midea Group maintains traditional consumption Electrical appliances, HVAC business advantages, and new market imagination space in robotics automation.
However, the difference between the balanced and powerful forces of the two groups of the United States and the Group is different. After diluting the traditional advantages of color TV labels, what is the core competitive advantage of Changhong? I am afraid even the management of Sichuan Changhong is also confused.
According to the revenue distribution of Sichuan Changhong in 2017, it can be seen that the company has four products with a revenue of more than RMB 10 billion. Sichuan Changhong, which is a household appliance manufacturer, has the highest percentage of its revenues and is not related to the appliance business.
Among them, the intermediate products accounted for the highest proportion, Sichuan Changhong's intermediate products, mainly related to compressors and compression parts and accessories products. This part of the product achieved operating revenue of 22.704 billion yuan in 2017, accounting for about 30%. Followed by IT distribution business. , Revenue was 18.313 billion yuan, accounting for about 24%.
For the first time last year, White Power surpassed Black Power and became the third-ranked product of Sichuan Changhong. This part of the revenue was RMB 14.904 billion, accounting for approximately 20%. Once the fist business, the color TV, last year's operating income was 14.111 billion yuan. Yuan, accounting for less than 20% of total revenue.
From the data of the financial report, these business segments are not ideally operated and the profit rate is low. The profit margin of intermediate products with compressor and compression fittings as the main direction is less than 3%. White and Black The profit rate is less than 0.5%.
In addition, Sichuan Changhong has also challenged industry rivals in the fields of battery, set-top box, transportation, real estate, communications and systems engineering. However, these industries span a great deal and each industry has its own industry giants. Changhong has always been halfway up , Into it, has not tossed out too much water.
This is not the same as the structure of revenue more than a decade ago. As we all know, Sichuan Changhong started with color TV. At the time when it was more than 20 years ago, the color TV business accounted for more than 90%; ten years ago, color TV business still occupied Half of the country.
The sales volume of mainstream color TV brand TV products last year was between 25 billion and 30 billion yuan. The revenue data of about 14 billion yuan is not ideal, indicating that the color TV's competitiveness is not strong enough. ' Liu Buchen told the interface news, at the same time, color TV revenue The proportion has been declining for many years, which also shows that Changhong’s main industry competitive advantage is not obvious.
How to define today's Sichuan Changhong? With its official expression, the company is a global technology company that integrates home appliances, IT digital, parts materials, lean manufacturing services, and new energy.
But if this is what we said above, the definition itself suggests that the company's strategy is ambiguous. And bad performance data and company actions have shown that Sichuan Changhong seeking to diversify development is in an obscure strategic layout. Under struggling.
Dragging down huge expenses for profit
The high costs are also dragging down the company's performance. Due to lack of high-quality products, Sichuan Changhong, which has fallen into a diversified strategic puzzle, has to spend huge sums each year to purchase the market. Over the past five years, Sichuan Changhong’s marketing costs have been stable on average. More than 5 billion. This seriously damages the company's profitability.
Looking at the company's operating situation in the past 10 years, often when the gross profit margin is high, the proportion of costs during the period will be high. For example, the company's overall gross profit margin in 2017 was 12.79%, and the expense rate during the year was 10.98%; In 2016, the gross margin was 14.28%, which was also 12.26% during the year. Marketing expenses usually occupy nearly 70% of the company's cost.
This has allowed the company to eliminate the profitability of the period expenses in the past ten years never exceeding 3%. On this basis, if the taxation and other factors are taken into consideration, it is extremely difficult for the company to realize healthy profit. The data show that Sichuan Changhong's net profit margin has never exceeded 1.71% in the past 10 years.
From a product perspective, the way to purchase the market through a large amount of marketing expenses, although it may be effective at the time, is difficult to sustain and will not fundamentally increase shareholder value. The stock price continues to be sluggish, which is one of the root causes.
In fact, not only marketing costs remain high, the company’s overall cost control is also ineffective. The financial report shows that in 2017, the average retail price of Sichuan Changhong TV increased by 17.8% year-on-year, ranking first in the industry. However, disclosure of information from the company’s According to the data, the pre-tax profit margin of the company's color TV business segment is only 0.44%. If this data is compared with Hisense Electric, which is engaged in color TV business, it will be found that Sichuan Changhong is significantly inferior. Hisense Electric is the largest color TV business of Sichuan Changhong. One of the competitors, its pre-tax profit rate in 2017 was 3.4%.
This data reflects in depth that although Sichuan Changhong's management claims that its TV business has a gross margin of 20.83%, the seemingly bleak data masks its true profitability.
However, regarding the issue of profitability, stakeholders of Sichuan Changhong told the Interface News Reporter that the company had achieved effective performance management last year. Last year, the company made great adjustments and changes from all sides, and adjustments have been made in the system and mechanism. In terms of manufacturing costs, the direction of smart manufacturing is moving. TV manufacturers are planning better and production costs are being controlled.
The loss of two huge losses
How could a former TV color king die down? As can be seen from the following chart of net profit changes, Sichuan Changhong has experienced two performances of 'big pits', which not only stopped but caused huge losses.
The first huge loss occurred in 2004. Since 2001, Changhong, which was in high spirits at that time, was determined to open the US market and increase overseas sales. When the then chairman Ni Runfeng visited the United States on a number of visits, he decided to cooperate with the APEX company from APEX to Changhong. Acting export color TV. APEX company became Changhong's largest partner.
After Changhong TV of a vehicle was sent to the United States, only paper wealth was used instead of cash. Sichuan Changhong’s accounts receivable increased from RMB 1.82 billion at the beginning of 2001 to RMB 5 billion at the end of 2003, including APEX. The amount was 4.447 billion yuan. Of course, the company's revenue also increased from 9.5 billion yuan in 2001 to 14.1 billion yuan in 2003.
The huge amount of arrears, including APEX, eventually became bad debts. In 2004, Sichuan Changhong was overwhelmed with bad debts. This bad debt led to Changhong’s loss of 3.681 billion yuan in that year. That year, Ni Runfeng stepped down and current chairman Zhao Yong took over. At that time, the board of directors also exchanged blood, hoping that under the new management, Sichuan Changhong could have a new look.
After the trend can be seen, Changhong did not reborn, but instead fell from the appliance 'the throne', lost its strength. At that time, Konka, Hisense, Skyworth and other domestic brands rise.
Sichuan Changhong, which has not yet recovered its vitality, has gone in the wrong direction.
The domestic color TV industry is at the crossroads of the CRT to plasma and LCD TVs. At this time, Changhong chose the plasma.
Sichuan Changhong launched the Hong Europe PDP project in 2007, with a total planned investment of 675 million U.S. dollars and an annual output of 2.16 million pieces of PDP modules. By the end of 2013, Changhong had invested 1.72 billion yuan in Hong Europe.
However, the market chose LCD TVs. The plasma panel production line did not bring benefit to Changhong, but it dragged down the performance. At the end of 2014, Sichuan Changhong sold 61.48% of the shares of Rainbow Europe Co., Ltd., which had been losing money for 62.2 million yuan.
Under the outbreak of various problems, Sichuan Changhong fell into the second loss 'Da Hang'. In 2015, the net profit attributable to shareholders of listed companies was a loss of 1.98 billion yuan.
After two huge losses, the market's transition window and space reserved for Changhong has gradually narrowed.
'In addition to the reasons that are visible, there are still some invisible reasons for Changhong. The invisible reason is the root of Changhong's problem. ' Liu Buchen pointed out to the interface news, 'In the final analysis, it is Changhong's institutional problems.'
Liu Buchen stated that “Haixin and other home appliance companies are more flexible in their operations after the reform of the shareholding system. However, despite Changhong’s reforms, his reforms were not thorough and did not inspire vitality. I believe that Changhong’s reforms are far from complete. meet deadline. '
Does Sichuan Changhong have a future
Changhong, who has repeatedly missed opportunities in the color TV industry, has sought new growth drivers in other areas. It has injected military assets into the real estate sector and entered the IT industry. Changhong, who lost its confidence in the future, has still not achieved any results. The interest rate has been no more than 2% for 17 consecutive years since 2001.
On the road of diversification and development, Sichuan Changhong has not yet seen Shuguang, and it seems that it is necessary to make a name for itself. In 2018, the company still stated that it must 'accelerate the growth of new growth poles'.
These new growth poles include household robots, electric vehicle compressors, and automotive air conditioners, etc.; layout of smart agriculture, smart water meters, smart parking, and equipment positioning; lithium power industry, pay attention to layout opportunities in the field of ternary materials; auto parts business, etc.
On the basis of the existing business expansion is not yet in place, it has added a number of dazzling 'new growth poles'. It is unclear.
Unfortunate news will always come one after another. For the color TV industry, due to saturation of urban and rural areas, it is difficult to boost demand. The cost of core components such as panels and chips has risen sharply. The color TV industry has faced industry difficulties and the overall decline has been noticeable. The year-on-year domestic television retail sales decreased by 8.1% year-on-year, which is the largest decline in the past 15 years.
The decline in sales of television services confirms the ceiling of the industry. This means that much more growth is only an annual fluctuation in performance, and there is not much room for improvement. Moreover, the industry has also entered a lot of non-traditional competitiveness. For example, millet, storms, etc.
In terms of data, Sichuan Changhong’s market share in color TV business slightly increased by 0.5% in 2017, and global sales increased by nearly 4% year-on-year. However, there are too many hidden concerns, investors’ doubts are difficult to eliminate.
Listed companies are also slightly hesitant about the future of color TV services. Sichuan Changhong Securities representative responded to the interface news that the color TV is a traditional product of Changhong, but the company is now undergoing a transformation. 'The future of color TV this product (for Changhong) is more important More importantly, it's hard to say. 'The dailies said that Changhong is now adopting a smart strategy. The future needs to strengthen the interaction and give the TV a lot of features, such as voice control, smart interaction, etc. Refrigerators, air conditioners are all the same. 'This is It is also the direction of our next transformation. '
When asked which business was the specialty of Changhong, the generation had hesitated and then said: 'We just want to diversify. It's not the original one-child policy. One said that Changhong is a color TV.'
In terms of white power, it achieved a 34% growth in performance in 2017. However, this sector is facing an industry background that is roughly equal to that of color TVs. Industry competition has shifted from large-scale growth in the past to erosive growth, and on the other hand, it is the industry’s advanced competition. Opponents stop the road. In domestic terms, Midea, Haier, Gree, and Kelon are all heavy opponents in terms of white power.
The compressor business is currently suffering from overcapacity in the global structure of the industry. Therefore, although Sichuan Changhong's compressor business has ranked first in the world in recent years, its profitability is not always strong. There is no active development of the overall overseas market of China's white-water business. Future profitability of the compressor business is still difficult to effectively improve.
The IT distribution business, which accounts for 24% of the company's revenue, will not be able to become the company's competitiveness in the future due to lack of sufficient moat. Even if the income scale continues to expand several times, given its gross profit margin of less than 4%, it is difficult to contribute more profits to the company. Moreover, IT distributors also face strong competition from e-commerce.
Emerging businesses, such as lithium battery business, although the sales target includes such rivals as BYD and Ningde era, the annual revenue of 1.3 billion can hardly incite the company's revenue and profit structure.
The market is not a lack of opportunities. If you take a long shot and are not good, you may not be able to play too much.
Even if it is focused on the television business, the performance may not be so ugly. Hisense, which accounted for more than 90% of TV revenue, spent 33 billion yuan last year, which was less than half of Sichuan Changhong’s revenue, and achieved a net profit of 942 million yuan. This net profit is also the data after a sharp drop of 46% year-on-year.
Liu Buchen stated that Changhong’s quality has a certain leading nature. The earliest AI smart TVs were introduced. In the past few years, these efforts were visible. “Changhong has done a lot, but it is less prominent. Future Changhong To do subtraction, we must start the main product of the fist product.
The home appliance industry observer Liang Zhenpeng clearly gave three suggestions. First of all, in the process of diversified layout of Changhong, as soon as possible to make their core products the top three in the Chinese market. 'Changhong has no shortage of product lines, but Lack of strong products, Changhong TV, and Meiling refrigerators should strive to be the top 3 in the industry as much as possible, especially focusing on strengthening the color TV business'. Liang Zhenpeng told the interface news that the Changhong process is of good quality and is technically rigorous. Have accumulated, this is the foundation.
Secondly, to solve the problem of brand aging. '90 after the Changhong has no impression. How to make the brand more young, more sense of technology, more entertainment and fashion, how to add new marketing elements, so that after the 85 can be accepted You. ' Liang Zhenpeng pointed out.
Third, as a traditional old state-owned enterprise with military background, Sichuan Changhong should further accelerate the reform of state-owned enterprises. 'How to set up a new subsidiary to start a business, how to motivate existing senior management, key employees, and conduct performance appraisal of employees? Option incentives. In order to achieve competition with private companies. ' Liang Zhenpeng said that this is the most important point.
The current market opportunities for Changhong are not much. Judging from the current operations of Sichuan Changhong, most of the competition in the stock market means that more efforts are only the further separation of cakes. It is extremely difficult to rapidly expand the scale. .
The managerial pressure of Sichuan Changhong's management is not so strong. In terms of representing innovative R&D expenditures, the total annual investment of RMB 1.21 billion in 2017 (of which RMB 414 million will be capitalized to reduce the impact on profits) , Only 20% of the marketing cost of the year. Rather spend money to buy the market, refused to spend more to capture the market commanding heights.
It now appears that Sichuan Changhong’s profit struggling situation will continue.
On the latest trading day, Sichuan Changhong News Co., Ltd. closed at 3.00 yuan, with a total market value of 13.8 billion yuan. This figure has shrunk by more than 70% compared to its peak 20 years ago. By then, the company's total market value was 58 billion yuan.
