On March 28, Chenguang (603899.SH) released its 2021 annual report. In 2021, the company achieved operating income of 17.6 billion yuan, a year-on-year increase of 34%; realized a net profit attributable to the parent of 1.52 billion yuan, a year-on-year increase of 21%.
The “Daily Economic News” reporter noticed that in terms of the contribution to the marginal growth of operating income, the office business of Kelip has contributed the most to the increase in operating income of Chenguang. In contrast, although the revenue of the retail store business (including Jiumu Sundries Club) has also shown high growth, the net profit of this business is still at a loss.
Image source: Photo by reporter Yu Yaofeng (data map)
In addition, Chenguang shares disclosed that it plans to achieve operating income of 20.9 billion yuan in 2022, a year-on-year increase of 19%.
Kelip’s office business contributed the largest revenue increment
From the perspective of business model, in 2021, Chenguang’s traditional core business will achieve operating income of about 8.88 billion yuan, an increase of about 1.3 billion yuan year-on-year; Kelip’s office business will achieve operating income of about 7.77 billion yuan, an increase of about 2.77 billion yuan year-on-year. ; The retail store business achieved an operating income of about 1.05 billion yuan, an increase of about 400 million yuan year-on-year.
Image source: Screenshot of Chenguang’s 2021 annual report
Chenguang shares said that in 2021, the company will deeply cultivate traditional channels and focus on improving the quality of single stores. As of the end of 2021, Chenguang has 36 first-tier partners, second- and third-tier partners and major customers covering 1,200 cities across the country, and more than 80,000 retail terminals using the “Menguang Stationery” store sign.
In 2021, Kelip’s office business achieved a net profit of 240 million yuan, a year-on-year increase of 68%. Regarding Kelip, Chenguang said that after nearly ten years of development in the office direct sales business, it has a competitive advantage as an industry-leading office service provider.
Image source: Screenshot of Chenguang’s 2021 annual report
“In terms of central enterprise customers, it was shortlisted for projects such as National Energy Group and China General Technology Group; in terms of government customers, it was shortlisted for projects such as Jiangsu Provincial Government Procurement Online Mall; in terms of financial customers, it was shortlisted for projects such as Agricultural Bank and China Development Bank; in terms of MRO, China won the bid. Power Construction Group, China National Nuclear Corporation and other projects.” Chenguang shares said.
It is worth noting that although operating income has increased, the gross profit margin of Chenguang Co., Ltd. in 2021 has declined. The gross profit margin of cultural and educational office supplies manufacturing and sales is 32.84%, a decrease of 0.47 percentage points compared with the previous year; the gross profit margin of the retail industry was 12.74%, a decrease of 1.08 percentage points compared with the previous year.
“The cost rises synchronously with the increase in sales. The increase in the cost of other products and office direct sales is mainly due to the rapid development of the business of Jiumu Sundries and Chenguang Kelip, and the increase in sales volume.” Chenguang shares said.
In addition, the year-on-year increase in other income and the year-on-year decrease in credit impairment losses and asset impairment losses also contributed to the growth of Chenguang’s net profit.
Retail store business remains a drag on performance
In 2021, Chenguang Life Museum (including Jiumu Sundries Club) will achieve an operating income of 1.05 billion yuan and a net profit of about -21 million yuan. Among them, Jiumu Sundries Club achieved an operating income of 950 million yuan and a net profit of about -0.23 billion yuan.
As of the end of the reporting period, Chenguang had 523 major retail stores nationwide, including 60 Chenguang Life Stores and 463 Jiumu Sundries (319 directly operated and 144 franchised).
Image source: Screenshot of Chenguang’s 2021 annual report
Regarding the retail store business in 2021, Chenguang Co., Ltd. said that in the face of repeated disruptions from the epidemic, the revenue of the retail store business has increased, and the loss has been significantly reduced.
In 2015, Chenguang Co., Ltd. began to explore new businesses, mainly including Chenguang Living Hall and Chenguang Kelip. According to Chenguang Co., Ltd., Chenguang Life Museum is a flagship store directly operated by Chenguang Co., Ltd.
In 2016, Chenguang Co., Ltd. established a new subsidiary, Jiumu Zawushe Enterprise Management Co., Ltd. Jiumu Sundries Co., Ltd. is positioned as a boutique department store model based on Shopping Mall, covering retail products such as practical home furnishing, beautiful life, fine stationery, educational entertainment, happy travel, comfortable home textiles, sundries storage, fashion digital and imported food. .
When answering a question from an institutional investor, Chenguang Co., Ltd. once said that Chenguang Living Museum and Jiumu Sundry Club are both bridgeheads carrying product upgrades and channel upgrades, but their respective missions and positioning are different. Living Museum is positioned as a Channel upgrades are mainly for stock channels; Sundries Club is a new retail model storefront.
However, compared with the vigorous development of Kelip, Chenguang’s retail store exploration has not yet made a profit. In 2017 and 2018, Chenguang Life Museum Enterprise Management Co., Ltd. lost 41.1499 million yuan and 30.3004 million yuan respectively. From 2019 to 2021, Chenguang Life Museum (including Jiumu Sundries Club) lost 8.0467 million yuan, 50.2293 million yuan and 21.0865 million yuan respectively.
Chenguang Co., Ltd. stated that in 2021, through store display, marketing promotion and store staff training to improve store operation efficiency, and to analyze and follow up on the implementation of key retail indicators and operating standards, Jiumu Sundries Club will continue to increase member activity, and has accumulated more than million registered members.
Looking forward to the future, Chenguang Co., Ltd. said that it will continue to develop the retail store business, and Jiumu Sundries will work with the company to increase the sales ratio of high-end products in this channel. In terms of Chenguang Living Center, we will increase the sales proportion of the Chenguang brand, improve store operation capabilities, improve human efficiency, and improve the quality of individual stores in existing stores.
