Ticker: 002242 Stock Abbreviation: Joyoung
Joyoung Co., Ltd. Abstract of the Annual Report 2020Section I Important Statements
This is an abstract of the Annual Report 2020. Investors are kindly reminded to read the complete version of the Annual Report 2020 onthe website, which is designated by the China Securities Regulatory Commission to get complete information about operational results,financial statements, and future plans of the Company.Modified Audit Opinion
□Applicable √ N/A
The preliminary plan for dividend distribution and converting capital reserves into share capital for common shareholders which wereconsidered 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: based on theCompany's total shares of 767,169,000 by the end of December 31, 2020 and deducting the 136, 000 restricted shares to berepurchased and cancelled by the Company, it is proposed that, based on a total of 767,033,000 shares, the Company shoulddistribute a cash dividend of RMB 10.0 (tax inclusive) and 0 stock dividend (tax inclusive) per 10 shares to all the shareholdersand should not convert capital reserves into share capital.
The preliminary plan for dividend distribution for preferred shares in the reporting period was approved by the 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. Business or Product Review in the Reporting Period
In the Reporting Period, the Company continues to focus on the R&D, production, and sales of small householdappliances. The Company mainly operates independent R&D, design, sales, and self-owned brands. Thanks to people'spursuit of a better and quality life and the promotion of consumption upgrade, consumer demands for refined, anduser-friendly products of high quality continue to grow.In the Reporting Period, no significant changes have occurred to the Company's primary business. The Company isin the mature period without visible cyclical features. Major product categories of the Company all rank the top 3 acrossthe industry domestically in China.
3. Core Competence Analysis
(1) Brand Advantage
The Company has always been a leading brand in the industry. Joyoung has been focusing on researching,developing, producing, and selling kitchen appliances facilitating a healthy diet. After the development of 27 years, theCompany has accumulated plenty of excellent suppliers and distributors, a strong R & D team, and superior industryreputation, establishing a good brand image in both the upstream and downstream and the industry. The Company haseventually transformed from a soymilk maker brand to a quality life solution provider in small household appliances, andachieved the transformation and upgrade in both brand and strategy.
At present, the Joyoung brand mainly offers categories including soymilk maker, cell-wall breaking high-speedblender, electric rice cooker, air fryer, oven, water purifier, electric pressure cooker, electric stew pot, kettle, noodle maker,slow juicer, induction cooker, dishwasher, auto-wok and more. Among them, main categories including soymilk maker,cell-wall breaking high-speed blender, noodle maker and juicer rank top 1 in the market and other products also list thetop 3 in the market.
Established in Boston 1998, Shark, a brand that excels in cleaning technology, now ranks top 1 in the sales ofcleaning appliances in the United States. Having entered the Chinese market in 2018, Shark has launched a variety ofhousehold cleaning appliances customized for Chinese families, including multi-flex vacuum, steam mop, electric mop,Wandvac and robotic vacuum.
(2) Channel Advantage
The Company has been deeply involved in the small household appliance industry for many years, mainly adoptingthe distribution system with networks and customer resources nationwide. The Company offers customer-centricexperience and scenarios, that is, to demonstrate products and food preparation to customers no matter via online oroffline platforms.
As a major contributor to the Company's revenue, online business has remained a steady growth with growingcompetitive edge. The Company has deployed online flagship stores with different focuses on categories and swiftlypushed forward live-streaming of higher frequency and more timeslots on multiple platforms, through which it has betterengaged the younger generation, strengthened consumers' awareness of its brands and products and enhanced the
precision, efficiency, and effectiveness of communication between brands and consumers.Upon the existing tens of thousands of POS nationwide, the Company has been relentlessly optimizing its salesnetwork and actively exploring new retailing business, and opened up hundreds of new Shopping Mall brand stores. Inthe meantime, through frequent and diversified online live-streaming and offline retail experience, and digitalizedoperation, the Company was able to realize an integrated quality development of O2O and users. The Company has,therefore, established the omnichannel structure to pinpoint and include diversified consumer groups.
(3) Product Advantage
Thanks to people's pursuit of a better and quality life and the promotion of consumption upgrade, consumerdemands for quality, sleek, integrated and smart products continue to grow. Smart appliances make it more convenientand comfortable to use, with improved user experience. Starting from the needs of different people and scenarios, theCompany has launched good products of high quality and recommended by users with photos of the products posted,too. Through that, the Company has been able to enhance the value of its products and brands and strive to maintain asteady increase in its market share.
In the reporting period, based on consumer insights, the Company continues to focus on core mainstreamcategories and develop products that can tackle pain-point issues with the three-tier R&D system within the Company.The self-cleaning cell-wall-breaking high-speed blender and soymilk maker are taking the lead as category killers. Also,the steam rice cooker with liner-free of inner-coating, has achieved favourable feedback from the market despite thefierce competition. By upgrading technology and supply chain, the aforementioned innovative product series hasexpanded to the mass-market price range to satisfy diversified customer demand.
Shark adheres to the concept of Innovate for User-experience. With its core technologies, the brand ranks TOP 1 inboth electric mop and steam mop categories in China. With customized innovative products for Chinese families andtheir user experience, the Company has actively launched multiple series of localized and light-weighted products withgreat insights.
(4) Operating Advantage
In 2020, the Company strengthened its digital operation capabilities, seized the opportunity of live streaming andshort video, built an interactive scenario business model based on channels, products, brands and users with auser-centric and demand-driven approach, and focused its major resources on mainstream categories to achievehigh-quality growth and enhance brand impact.
The importance of digitalization and big data utilization is more significant than ever. Via platforms like WeChat,Weibo, Tiktok, and Kuaishou, as well as channel networks, including points of sales and points of after era- into theservices, the Company now has over 20 million user-followers. In this era, with extremely fragmented and enormousamount of information, a huge opportunity lies in maintaining existing loyal user-followers and attracting new onesthrough public user traffic.
To digitalize business operations, user networks, and scenarios, the Company is exploring and practicing newretailing and live-streaming. The Company is dedicated to building a one-stop, visible, and interactive shopping scenariofor consumers. It is also more convenient to monitor and share data, interact with fans, direct customer traffic, and
dispatch products from warehouses closest to customers.However, the changes brought about by the Internet are not only on the consumer side, but also in the need topromote intelligence and integration on the product and supply side. The Company has developed a new networkoperation and maintenance support platform through the use of modern information systems such as the ProductTracking System (PTS) and Warehouse Management System (WMS) to achieve software and hardware intelligenceintegration. It has realized equipment management, remote control, information collection, fault diagnosis, informationpush, and other functions and provided real-time expert interactive assistance with image function, pre-sales, andafter-sales services.
4. Key Accounting Data and Financial Indicators
(1) Key Accounting Data and Financial Indicators in Recent Three Years
Whether the Company performed a retroactive adjustment to or restatement of accounting data
□ Yes √ No
Unit: RMB Yuan
| 2020 | 2019 | Flux (%) | 2018 | |
| Operating revenues | 11,223,747,609.01 | 9,351,439,510.07 | 20.02% | 8,168,708,704.23 |
| Net Profit attributable to shareholders of the Company | 940,080,034.27 | 824,105,192.42 | 14.07% | 754,255,160.96 |
| Net profit attributable to shareholders of the Company before non-recurring gains and losses | 680,410,546.02 | 754,001,863.43 | -9.76% | 569,149,447.51 |
| Net cash flows from operating activities | 2,009,298,071.00 | 1,253,024,651.38 | 60.36% | 408,700,191.24 |
| Basic earnings per share (RMB Yuan /share) | 1.23 | 1.07 | 14.95% | 0.99 |
| Diluted earnings per share (RMB Yuan /share) | 1.23 | 1.08 | 13.89% | 0.99 |
| Weighted average return on net assets | 23.83% | 21.22% | 2.61% | 20.70% |
| As of 31 December, 2020 | As of 31 December, 2019 | Flux (%) | As of 31 December, 2018 | |
| Total assets | 9,134,826,691.51 | 7,467,802,731.42 | 22.32% | 6,660,086,381.54 |
| Net assets attributable to shareholders of the Company | 4,283,761,519.10 | 3,753,065,661.20 | 14.14% | 3,810,291,395.62 |
(2) Main Accounting Data by Quarter
Unit: RMB Yuan
| Q1 | Q2 | Q3 | Q4 | |
| Operating revenues | 1,702,037,045.29 | 2,856,492,996.55 | 2,524,414,362.45 | 4,140,803,204.72 |
| Net Profit attributable to shareholders of the Company | 146,873,325.81 | 270,893,759.39 | 226,221,124.84 | 296,091,824.23 |
| Net profit attributable to shareholders of the Company before non-recurring gains and losses | 143,533,461.10 | 249,518,050.54 | 209,038,297.29 | 78,320,737.09 |
| Net cash flows from operating activities | 143,106,492.72 | 383,684,416.51 | 309,734,992.75 | 1,172,772,169.02 |
Whether there are significant differences between the above financial data or the total value previously disclosed quarterly or interimreports.
□ Yes √ No
5. Shareholders and Shares
(1) Total number of common shareholders and shareholdings of the top ten common shareholders at the period-end
Unit: share
| Total number of common shareholders at the end of the Reporting Period | 31,425 | Total number of common shareholders at the end of the previous month of the disclosure date of this report | 30,908 | Total number of preferred shareholders with resumed voting rights at the end of the Reporting Period | 0 | Total number of preferred shareholders with resumed voting rights at the end of the previous month of the disclosure date of this report | 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 | 50.12% | 384,523,746 | Pledged | 307,618,897 | |||||||
| BILTING DEVELOPMENTS LIMITED | Foreign corporation | 16.94% | 129,924,090 | |||||||||
| Hong Kong Securities Clearing Co., Ltd. | Foreign corporation | 6.04% | 46,350,686 | |||||||||
| Central Huijin Investment Ltd. | State-owned corporation | 4.99% | 38,310,500 | |||||||||
| Agricultural Bank of China Co., Ltd. - E Fund Consumer Industry Securities Investment Fund | Others | 1.53% | 11,701,571 | |||||||||
| E Fund Management Co., Ltd. - Social Insurance Fund Portfolio No. 1104 | Others | 1.16% | 8,900,091 | |||||||||
| Yinhua Fund Management Co. Co., Ltd. - Social Insurance Fund Portfolio No. 1105 | Others | 0.63% | 4,819,153 | |||||||||
| Bank of China Co., Ltd. - Dacheng Preferred Hybrid Securities Investment Fund (LOF) | Others | 0.40% | 3,099,890 | |||||||||
| Basic Pension Insurance Fund Portfolio No. 1001 | Others | 0.40% | 3,098,421 | |||||||||
| Industrial and Commercial Bank of China - E Fund Value Growth Hybrid Securities Investment Fund | Others | 0.33% | 2,549,903 | |||||||||
| Related or acting-in-concert parties | In April 2019, the shareholding structure of Builting Developments Limited changed. MR. Xuning | |||||||||||
| among shareholders above | WANG, the controlling shareholder of the Company, became the controlling shareholder of Builting 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 Builting 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, the Company is uncertain about whether there are related or acting-in-concert parties among shareholders above. |
| Explanation on common shareholders participating in securities margin trading (if any) | N/A |
(2) Total Number of Preferred Shareholders and TOP 10 Preferred Shareholders and Their Shareholdings
□ Applicable √ Not applicable
(3) Disclose the property rights and control relationship between the Company and the actual controller in blockdiagram form
5. Relevant Information on Corporate Bonds
Does the Company have any undue or unredeemed matured corporate bonds publicly offered in the Stock Exchange by the date theAnnual Report is submitted
□ Yes √ No
Section III Performance Discussion and Analysis
1. Performance Review of the Reporting Period
Now, generations born after 1995 and even after 2000 have become the main consumers in the new era. The youngergeneration is used to on-line shopping, and more open to new things, new channels, and new lifestyles with higher standards.The Company has actively explored new categories, new channels, new media, etc., and explored the integration of on-lineand offline development to the greatest extent to meet the new demands represented by millennial consumer groups.For the year of 2020, the Company has achieved operating revenue of 11,223.75 million Yuan, an increase of 20.02%
year on year. Among which, western appliances have achieved robust growth. Food processors, nutritious food cooker andother have maintained steady development. The Company's product mix continues to be optimised.For the year of 2020, operating costs were 7,626.33 million Yuan, an increase of 20.86% year on year. Gross profitmargin of the Company was down by 0.47 percentage point year on year.Selling expenses were 1,867.76 million Yuan, up by 26.50% year on year, with sales expenses ratio at 16.64%, up 0.85percentage point year on year. General and administrative expenses were 398.10 million Yuan, up by 2.37% year on year,with its ratio at 3.55%, down 0.61 percentage point; research and development expenses were 345.84 million Yuan, ayear-on-year increase of 4.68%.For the year of 2020, total profit achieved by the Company was 1,062.87 million Yuan, up 13.08% year on year. Net profitattributable to the Company’s shareholders were 940.08 million Yuan, up 14.07% year-on-year.
In 2020, net cash flows from operating activities were 2,009.30 million Yuan, up 60.36% year-on-year, mainly due to thegrowth in operating revenue and better returns during the year.In the Reporting Period, the company continued to focus on the small household appliance industry, actively strive toachieve a comprehensive digital transformation, achieving cross-border operations in different fields such as sociale-commerce, on-line live streaming, and O2O new retailing, allowing the seamless integration of brands, products, and users.Pioneer in R&D and Smart Products, with Focus on Mainstream CategoriesSince established, the Company has always attached great importance to the reserve and output of technology researchand development. In 2020, the Company has explored the forward-looking, innovative technologies, focused on mainstreamdemand categories, improved the R & D system and mechanism, and introduced senior R & D talents to promotetechnological progress and innovation effectively. In the Reporting Period, the Company has obtained 2,227 new patent rights,including 307 patent rights for inventions, 1,710 patent rights for utility models and 210 patent rights for industrial designs. Bythe end of the Reporting Period, the Company owned a total of 8,378 patent rights, including 427 patent rights for inventions,6,846 patent rights for utility models and 1,105 patent rights for designs, which laid a solid foundation for the Company tocontinuously create advantageous core the industrial products with competitive edges.Technology drives product capabilities; design enhances product capabilities; supply guarantees product capabilities.Choosing the "new track" that the market needs is the way to long-term development, which requires the integration andunification of technology, design and craftsmanship. With its three-tier R & D system, the Company can react quickly to marketthe new demand, satisfy consumers' demand for quality lifestyle small household appliances, and keep leading the industry.In 2020, the Company intensively promoted mainstream categories of resilient demand, such as self-cleaningcell-wall-breaking soymilk makers and blenders and rice cookers with liner free of inner-coating. Meanwhile, the Company hasbeen enriching the aforementioned product series and expanding them to the mass-market price range to satisfy diversifiedcustomer demand. Meanwhile, the Company has also collaborated with trendy IPs, e.g., LINE FRIENDS and Coca Cola inmultiple categories, attracting the Z generation and stimulated purchases. Such collaborations with IPs have helped Joyoung,the national brand advocating healthy lifestyle, further penetrate to younger generations.Brand Communication-Channel IntegrationIn recent years, the Company's brand positioning and communication methods have become younger. It proactivelypinpoints the full chain of communication to reach the target group and in doing so strives to increase the conversion ratealong the chain. When live streaming and short videos become "standard", content and creativity are especially important. By
embracing the development trend of 5G mobile internet technology, it has also been using emerging communication channelsto interact with fans, users, and consumers at high frequency, high quality, and high precision. In this way, the Company hasbeen continuously improving the brand influence and brand awareness, loyalty, and willingness to purchase among the mainconsumer groups in the new era.
To adapt to the new economy's development, the Company has been actively and profoundly cooperating with majorlive-streaming platforms. Having seized the opportunity in online live-stream marketing, the Company was able to establish acomprehensive live-streaming host system consisting of celebrities, KOLs (Key Opinion Leader), and KOCs (Key OpinionCustomer) and shopper guides.
In 2020, the Company actively deployed and expanded the offline new retailing channel. It has promoted thedevelopment of high-end brand stores especially those in shopping malls, through which the Company has explored offlinechannel operations with higher cost, more customer traffic and higher added-value. Data-driven operation is in development aswell. The Company proactively adapted to the new trend of online and offline omni-channel development, gradually diminishedthe definition and division of labour of traditional channels and established an omni-channel development strategy. Now, itoffers O2O new retailing experience including content influencing, offline experience, online ordering, quick delivery, andon-site service, which has shortened the distance with consumers, users, and fans. Meanwhile, providing massive volume ofbig data for future in-depth excavation of digital economy.
2. Has any significant change occurred to the primary business in the reporting period
□ Yes √ No
3. Products accounting for above 10% of the Company’s main revenue or profit
Unit: RMB Yuan
| Product | Operating revenues | Operating profits | Gross profit margin | Operating revenues flux (%) | Operating profits flux (%) | Gross profit margin flux (%) |
| Food processor | 4,755,492,864.72 | 1,802,473,474.40 | 37.90% | 16.07% | 11.55% | -1.54% |
| Nutritious food cooker | 3,479,433,424.34 | 811,581,144.20 | 23.33% | 12.06% | 4.45% | -1.69% |
| Western appliance | 1,531,950,088.80 | 504,020,035.59 | 32.90% | 32.86% | 30.18% | -0.68% |
4. Is the operation clearly seasonal or cyclical
□ Yes √ No
5. Statement of significant changes in operating revenue, operating costs, net profit attributable to ordinaryshareholders of the listed company or their composition during the reporting period as compared to the previousreporting period
□ Applicable √ Not applicable
6. Facing de-listing
□ Applicable √ Not applicable
7. Events Related to Financial Statements
(1) Statement of Any Changes in Accounting Policies, Accounting Estimates, and Accounting Methods Compared tothe Financial Report for the Prior Year.On 5 July 2017, the Ministry of Finance revised and issued ASBE No. 14 - Revenue (Accounting (2017) No. 22), which iseffective from 1 January 2018 for corporates listed both domestically and internationally and corporates listed outside of Chinathat adopt IFRS or ASBE in preparing their financial statements, and from 1 January 2020 for other domestically listedcorporates, and from 1 January 2021 for non-listed corporates implementing ASBE; for other domestic listed enterprises, it willbe effective from 1 January 2020; for non-listed enterprises implementing ASBE, it will be effective from 1 January 2021.The Company implemented the new revenue standard from 1 January 2020, details of which are disclosed in the"Announcement on Change in Accounting Policy" (Announcement No. 2020-018) issued by the Company on Cninfo website(http://www.cninfo.com.cn) on 1 April 2020.
(2) Statements about Retrospective Restatement of Major Accounting Errors in the Reporting Period
□ Applicable √ Not applicable
(3) Statements for Changes in Scope of the Consolidated Financial Statements as Compared to the Financial Reportfor the Prior Year
1) On 19 January 2020, Hangzhou Jiuyang Company, a subsidiary of the Company, established Hangzhou Jiuchuang asa wholly-owned subsidiary with 100% shareholding by investing in six pieces of real estate and land located at No. 36, No. 22Street, Baiyang Street, Qiantang New District, Hangzhou City, Zhejiang Province, and Hangzhou Jiuchuang was included inthe scope of consolidation of the Company's consolidated financial statements from its establishment.
2) On 27 September 2020, Hangzhou Jiuyang Company, a subsidiary of the Company, contributed RMB5,000,000 forthe establishment of a new wholly-owned subsidiary, Lishui Jiuchuang Company, with a 100% shareholding. Lishui JiuchuangCompany was included in the scope of the Company's consolidated financial statements from its establishment.Section IV. Outlook for the Company's Future Development
1. Analysis of the External Environment Faced by the Company
The year 2020 was an extremely extraordinary year. In the face of multiple shocks such as the unexpectedoutbreak of COVID and the severe recession in the world economy, under the strong leadership of the Party CentralCommittee with General Secretary Xi at its core, the people of China have worked hard and achieved significantstrategic results in the prevention and control of the epidemic. The country was the only major economy in the world toachieve positive economic growth for the whole year, working together and forging ahead to lay a solid foundation for agood start to the 14th Five-Year Plan.
COVID is still impacting the world. The international situation is characterised by a high level of instability anduncertainty. The world economic situation remains complex and challenging. In the " Dual Circulation" economic trend,
domestic small appliances innovation will continue to lead the global market. Under the influence of the upgrading of thedigital economy, the competitive advantage of enterprises will be shifted from the cost advantage in the past to theindustrial chain advantage, product advantage, efficiency advantage, etc.
Referencing to the history of household appliances consumption in developed economies, it can be concluded that,along with the improvement of income level, household appliances consumption will be shifting from large applianceswith emphasis on functionality to small appliances with emphasis on quality consumption. It is expected that the smallhousehold appliance industry will continue to improve in the future, with much room to grow. As a leading brand in thedomestic small home appliance industry, the Company will continue to innovate, actively seize the growth trend anddevelop more high-quality products to meet market demand.
2. Future Development and Business Operation Plan of the Company
Upon the its commercialization, 5G network will become "the new infrastructure" in the process of social andeconomic development. It is particularly important to fully implement the digital transformation to adapt to mobile internetand explore new retailing model of the future. Products are the carrier of the brand, the basis of the operation and thebridge to connect with users. In order to seize the new opportunities of brand stores, content e-commerce and lower tiermarkets, the Company will continue to hold on to the two main pillars of product and channel, adhere to user needs,grasp the opportunities of new category integration and achieve high quality development.
In the future, the Company will continue to focus on small household appliances and innovate in mainstream andinelastic products and categories by being customer-centric and demand-oriented. The Joyoung brand will be positionedas quality small appliances. The Shark brand will be positioned in the household cleaning sector. Together, the twobrands will continue to lay out the future business opportunities brought by the new economy, live streaming and shortvideos, proactively cater to meet the new habits and requirements of consumers, make every effort to cultivate newusers, attract new fans, establish new channels and improve and strengthen the new retail operation model suitable forthe Company's own development.
In the future, the Company will also continue to explore of extensive development and look for favourableexpansion opportunities to strategically acquire brands, resources, products, channels, talents, etc., to sustain longerterm development.