Joyoung Co., Ltd.
Abstract of Interim Report 2019
August 2019
Joyoung Co., Ltd.
Abstract of Interim Report 2019
Section I Important StatementsThis is an abstract of Interim Report 2019. Investors are kindly reminded to read the completeversion of Interim Report 2019 on the website which is designated by the China Securities RegulatoryCommission to get complete information about operational results, financial statements and future plansof the Company.
In the event of any discrepancy between the abstract and the full document of annual report,the full document version shall prevail.Different opinions from directors, supervisors and senior management
□Applicable √ N/A
All directors attended the board meeting that reviewed Interim Report 2019Modified audit opinion
□Applicable √ N/A
The preliminary plan for dividend distribution and converting capital reserves into share capital forcommon shareholders which was considered and approved by the Board
√Applicable □N/A
Convert capital reserves into share capital
□ Yes √ No
The Board has considered and approved the following dividend payout plan for the Reporting Period: basedon the Company's total shares of 767,312,000, it is proposed that the Company should distribute a cashdividend of RMB 5 (tax inclusive) and stock dividend of 0 share (tax inclusive) per 10 shares to all theshareholders and should not convert capital reserves into share capital.The preliminary plan for dividend distribution for preferred shares in the reporting period approved bythe Board
□Applicable √ N/A
Section II Company Profile
1. Company Information
| Stock Abbreviation | Joyoung | Stock Code | 002242 | |
| Stock Exchange Where the Shares of the Company are Listed | Shenzhen Stock Exchange | |||
| Contact Us | Board Secretary | Securities Representative | ||
| Name | Xuning WANG (acting) | Minxin MIAO | ||
| Address | No.760 Yinhai Street, Jianggan District, Hangzhou, Zhejiang Province | No.760 Yinhai Street, Jianggan District, Hangzhou, Zhejiang Province | ||
| Tel. | 0571-81639093 | 0571-81639178 | ||
| 002242@joyoung.com | 002242@joyoung.com | |||
2. Key Accounting Data and Financial Indicators
Whether the Company performed a retroactive adjustment to or restatement of accounting data
□ Yes √ No
| H1 2019 | H1 2018 | Flux (%) | |
| Operating revenues (RMB Yuan) | 4,186,970,321.87 | 3,639,589,109.46 | 15.04% |
| Net profits attributable to shareholders of the Company (RMB Yuan) | 406,005,399.22 | 370,040,372.12 | 9.72% |
| Net profits attributable to shareholders of the Company before non-recurring gains and losses (RMB Yuan) | 377,487,058.29 | 292,519,062.00 | 29.05% |
| Net cash flow from operating activities (RMB Yuan) | 176,809,470.46 | 223,587,114.34 | -20.92% |
| Basic earnings per share (RMB Yuan /share) | 0.53 | 0.482 | 9.96% |
| Diluted earnings per share (RMB Yuan /share) | 0.53 | 0.482 | 9.96% |
| Weighted average ROE | 10.34% | 9.84% | 0.50% |
| 30 June 2019 | 31 December 2018 | Flux (%) | |
| Total assets (RMB Yuan) | 6,002,421,727.97 | 6,660,086,381.54 | -9.87% |
| Net assets attributable to shareholders of the Company (RMB Yuan) | 3,685,902,249.44 | 3,810,291,395.62 | -3.26% |
3. Number of Shareholders of the Company and Their Shareholdings
Unit: share
| Total number of common shareholders at the end of the Reporting Period | 25,763 | Total number of preferred shareholders with resumed voting rights at the end of the Reporting Period (if any) | 0 | |||||
| Top 10 common shareholders | ||||||||
| Name of shareholder | Nature of shareholder | Shareholding percentage | Total shares held at the period-end | Number of restricted shares held | Pledged or frozen shares | |||
| Status | Number | |||||||
| Shanghai Lihong Enterprise Management Limited | Domestic non-state-owned corporation | 50.11% | 384,523,746 | Pledged | 339,272,626 | |||
| Bilting Developments Limited | Foreign corporation | 16.93% | 129,924,090 | |||||
| Central Huijin Investment Ltd. | State-owned corporation | 4.99% | 38,310,500 | ||||
| Hong Kong Securities Clearing Co., Ltd. | Foreign corporation | 3.01% | 23,126,724 | ||||
| E Fund Management Co., Ltd. - Social Insurance Fund Portfolio No. 1104 | Others | 0.63% | 4,800,070 | ||||
| AEGON INDUSTRIAL Fund Management Co., Ltd. - Industrial Bank Co., Ltd. - AEGON INDUSTRIAL - Stock Dividend Specific Multi-Client Asset Management Plan | Others | 0.58% | 4,421,642 | ||||
| Basic Pension Insurance Fund Portfolio No. 1206 | Others | 0.51% | 3,929,281 | ||||
| Agricultural Bank of China Co., Ltd. - CSI 500 Exchange Trade Fund | Others | 0.49% | 3,727,981 | ||||
| National Social Security Fund Portfolio No. 406 | Others | 0.47% | 3,569,766 | ||||
| Bank of China - Harvest Growth Open-Ended Security Investment Fund | Others | 0.43% | 3,327,900 | ||||
| Related or acting-in-concert parties among shareholders above | In April 2019, the shareholding structure of Bilting Developments Limited changed. MR. Xuning WANG, the actual controller of the Company, became the controlling shareholder of Bilting Developments Limited (See Report No. 2019-027 of the Company on www.chinainfo.com.cn.). As a result, Shanghai Lihong Enterprise Management Co., Ltd. and Bilting Developments Limited, both controlled by Mr. Xuning WANG, are defined as acting-in-concert parties by the Administrative Measures for the Takeover of Listed Companies. Other than the aforementioned related and acting-in-concert parties above, the Company is uncertain about whether there are related or acting-in-concert parties among shareholders. | ||||||
| Explanation on common shareholders participating in securities margin trading (if any) | N/A | ||||||
4. Change of Controlling Shareholder or Actual Controller in the Reporting PeriodChange of controlling shareholder in the Reporting Period
□Applicable √ N/A
No such cases in the Reporting PeriodChange of Actual Controller in the Reporting Period
□Applicable √ N/A
No such cases in the Reporting Period.
5.Total Number of Preferred Shareholders and TOP 10 Preferred Shareholders and TheirShareholdings
□Applicable √ N/A
None in the Reporting Period.
6. Relevant Information on Corporate Bonds
Does the Company have any undue or unredeemed matured corporate bonds publicly offered in the StockExchange by the date the Interim Report 2019 was submitted
□ Yes √ No
Section III Performance Discussion and Analysis
1. Performance Review of the Reporting Period
Does disclosure requirements of special industries apply
□ Yes √ No
In the first half, the Company has achieved operating revenues of 4,186.97 million Yuan, anincrease of 15.04% year on year. Major categories of the Company have maintained steady growth andproduct average sales price has increased significantly as a result of optimized product mix. Operatingcosts were 2,833.17 million Yuan, an increase of 16.22% year on year. Gross profit margin of theCompany was 32.33%, down by 0.69 percentage point year on year. Sales expenses were 620.18million Yuan, down by 1.92% year on year, with sales expenses ratio at 14.81%. General andadministrative expenses were 159.55 million Yuan, up by 34.92% year on year, with its ratio at 3.81%;research and development expenses were 143.05 million Yuan, a year-on-year increase of 19.38%.Total profits achieved by the Company was 468.24 million Yuan, up by 7.83% year on year. Net profitsattributable to Joyoung’s shareholders were 406.01 million Yuan, up by 9.72% year on year. Netoperating cash flow was 176.81 million Yuan, down by 20.92% year on year.In the Reporting Period, the Company has focused on the small house appliances industry,dedicated to upgrade in strategy and brand and transform from a soymilk maker company to one offeringquality small house appliances. By introducing the Shark brand, the Company has expanded itsbusiness to household cleaning appliances.
1）Better Life Driven by Innovation
As people’s living standards improved, consumer demands for small house appliances haveincreased and upgraded. The pursuit of quality life has taken the place of mere satisfaction offunctionality. Based on the insights into consumer behaviour and consumption trend, Joyoung hascontinued to enhance product quality with the spirit of craftsmanship, using smart hardware and software,the Internet and the Internet of Things.In the first half of 2019, the Company has launched three models in the product line of self-cleaningcell-wall-breaking automated soymilk maker, including K1S, K mini and K solo. The K series are not onlysoymilk makers, but also multi-functional beverage machines to make coffee, brew tea and prepare babyformula. The self-cleaning technology is one of the core technologies which the Company hasdeveloped independently throughout these years. Now it has been inventively applied to Joyoung’scell-wall-breaking high-speed blenders. Joyoung has once again pioneered in this specific category and
led the industry to the self-cleaning era after its previous revolutionary breakthroughs that has achievedcool or heated blending and very low noise level. In the Reporting Period, the Company has launchedthe world’s first self-cleaning cell-wall-breaking high-speed blender, Y88.
In traditional heating appliances, the Company has been exploring new ways of cooking. In the firsthalf, Joyoung has launched S5, the steam rice cooker with liners free of inner-coating, which hasbrought great changes to the way people cook rice. It cooks rice with 120℃ steam and all-round evenheating, making the rice fluffy, fragrant, nutritious yet never overcooked. More than that, S5 is also asteamer equipped with different liners. It can be used to cook chicken soup, fish and crabs or even tosterilize nursing bottles.2）Integrated Development in Omni-channelsIn the Reporting Period, Joyoung has proactively expanded its offline channels with its “customercentric” strategy. The Company has not only renovated its retail stores and developed its channels incommercial complexes such as shopping malls, but also built exclusive channels including flagshipstores, brand experience stores and speciality shops, establishing an omni-channel network coveringdifferent markets.To get close to consumers and understand their needs, the Company has been organizing all sortsof interactive activities in offline brand stores. Such activities have brought Joyoung’s fans and userstogether to experience the latest products and cook food. Repeated purchases are boosted throughconstant communication and interaction like this.As an important contributor of the Company’s revenue, online business has maintained a robustgrowth. The Company has been collaborating with KOLs (Key Opinion Leaders) on new media platformslike WeChat, Weibo, Taobao Live Stream, TikTok and Kuaishou. With the help of a younger and morepopular brand promotion approach, the Company is able to reach out to a wider range of youngconsumers and create new demand.In the Reporting Period, the Company has opened up its self-owned official flagship store on Tmallwith hundreds of thousands of new followers. Through the Joyoung Official Flagship Store, the Companycan have a closer look at its consumers’ shopping behaviour and directly receive their feedback.Additionally, the store can facilitate mutual interaction, connection and traffic directing with offline retailends, that is, integrated development of O2O (Online to Offline).To promote its new retailing business, Joyoung has built a team to look into new retailing, newmedia, big data and wireless applications. A retail system has also been developed to provide service forexclusive stores. Customers can therefore enjoy one-stop shopping experience and scan to pay easily.For the Company, it is also more convenient to monitor and share data, interact with fans, directconsumer traffic and dispatch products from warehouses closest to customers. In this way, the Companystrives to maximize the value of consumer traffic.
3) Enjoy Health & Value Marketing
In recent years, the Company has been firmly promoting brands and assuring product quality.Through value marketing, it has released innovative products of high added value, good design and highquality to meet consumer demand. Via traditional media, vertical media, social media and other newmedia, Joyoung has achieved precise value marketing, which has attracted more attention fromconsumers, familiarized consumers with its brands and products and stimulated purchase demands.
In the Reporting Period, the Company announced its new brand advocate: enjoy health. It marksthat Joyoung has been upgraded to a younger brand. A-lister Lun DENG is now the new brandambassador of Joyoung. Now the Company can provide handy and sleek products, smart andconvenient user-experience and prepared ingredient packages, which enables people to have a brandnew and healthy lifestyle.
Early this year, K1S, the self-cleaning cell-wall-breaking automated soymilk maker that theCompany newly launched, went viral at London Fashion Week. Soymilk made by Joyoung’s soymilkmaker took the place of the once popular champagne. In May, 2019, Joyoung joined the Tmall ChineseFashion Campaign and held the product launch event for S5 in the theme of Steam Revolution inKitchen, presenting this original Chinese invention to the world. S5 drew the attention of internationalnews media including The Guardian, NouvellesD’Europe, London Metro Morning Post, DailyMail andothers.
Such activities can help promote the global influence of Joyoung’s brand and products. They candeliver the message that Joyoung is a healthy, innovative, sleek and young brand and win the favour andtrust of target consumers.
2. Events Related to Financial Statements
(1) Statements of Any Changes in Accounting Policies, Accounting Estimates and AccountingMethods as Compared to the Financial Report for the Prior Year.
On March 31, 2017, the Ministry of Finance issued the Accounting Standards for BusinessEnterprises No. 22 – Recognition and Measurement of Financial Instruments (Accounting [2017] No. 7)and Accounting Standards for Business Enterprises No. 23 – Transfer of Financial Assets (Finance[2017] No. 8), on May 2, 2017, the Accounting Standards for Business Enterprises No. 37 – FinancialInstruments Presentation (Accounting [2017] No. 14) (collectively referred to as the New FinancialInstruments Guidelines) was issued and required that companies only listed in China to have itimplemented starting from January 1, 2019. According to the relevant requirements of the Ministry ofFinance, the Company has changed the accounting policies.
(2) Statements about Retrospective Restatement of Major Accounting Errors in the ReportingPeriod
□Applicable √ N/A
None in the Reporting Period.
(3) Statements for Changes in Scope of the Consolidated Financial Statements as Compared tothe Financial Report for the Prior Year
□Applicable √ N/A
The scope of the consolidated financial statements has not changed as compared to the financial report for the prior year.