After taking office earlier this year, Shenzhen Konka (000016.SZ) delivered its first interim report last week. In the first half of 2017, Konka's operating revenue surged by 32.49% year-over-year to reach 11.4 billion yuan. Meanwhile, the company's net profit attributable to shareholders of the listed company reached 30,783,300 yuan, marking a 140.53% year-on-year increase, with earnings per share at 0.0128 yuan. Konka has been actively promoting institutional reforms, integrating resources, accelerating transformation, and enhancing profitability.
Market-Oriented Reforms Make Steady Progress
In the first quarter of this year, Konka completed the open and market-driven recruitment of its senior management team and officially appointed new senior executives. Additionally, the market-oriented restructuring of certain business units is progressing smoothly. Breaking free from the constraints of the state-owned holding mechanism holds significant importance for Konka in a highly competitive industry. Since 2016, Konka has made attempts to break through, receiving substantial support from its major shareholder, OCT Group. Currently, the restructuring of the mobile phone business, small household appliances business, and set-top box business has been completed, while the white goods business and internet operation business have been approved and are undergoing implementation.
Following these restructurings, Konka quietly adjusted its core business architecture, specifically in the color TV business segment. The original multimedia business unit, overseas business unit, color TV business unit, and Shenzhen Vision Industry Commercial Display Co., Ltd. were merged to establish the Konka Multimedia Industry Division. This division aims to achieve overall coordination and organic integration across the entire color TV business chain, followed by a series of organizational structure adjustments.
"This is just the first step towards further promoting the reform of the color TV business," said Zhou Bin, President of Konka. According to Zhou Bin's plan, the design of the large color TV business restructuring plan will be completed and adopted in 2017, with implementation scheduled for late 2017 and early 2018. Once the color TV business reform is complete, all of Konka's businesses will have completed their mechanism reforms.
Liu Fengxi, Chairman of Konka, also revealed that "this year's primary task is the corporatization of the color TV business, and we must clearly separate the group from the business." Color TV reform is expected to be largely completed next year. Moving forward, Konka's color TV business will rely on shareholders like Konka Group to strengthen capital operations.
"Combining Hardware and Software" Revitalizes TV Business
The color TV business remains Konka's backbone. Facing challenges such as rising upstream costs, terminal market price competition, and shrinking industry size, Konka utilizes the "hardware + software" and "terminal + user" models to revitalize the color TV business and boost competitiveness.
In the first half of the year, Konka continued consolidating resources and jointly launched the Michaa Konka TV with China Mobile. It also became the top sponsor of the Jiangsu Suning Football Club. On July 28, 2017, Konka officially became a Spanish football league's official partner in China, which helps enhance Konka's brand vitality.
During the reporting period, Konka's revenue from smart TV operations and net profit increased significantly year-over-year. The company independently developed a series of products, including Yiyi, Yigou, KTV, and Game World, enhancing user stickiness and brand soft power. This transitioned the company's main business model from the traditional hardware value-added profit model to the "hardware + software" and "terminal + user" models.
Konka also enhances product competitiveness by focusing on integrating research, production, and supply systems, as well as optimizing product mixes. In the first quarter of 2017, Konka TV line sales increased by approximately 40%, with large-size TVs (55 inches or larger) accounting for more than 50% of the sales structure. The performance improvement trend has already begun to show.
"Color TV business growth mainly comes from product upgrades, overseas markets, and user operations," said Chang Dong, Assistant Chairman of Konka Group's Board of Directors and President of the Multimedia Business Division. Firstly, the brand must transform into a younger, higher-end brand. Konka is optimistic about the future of next-generation OLED TVs and will increase research and development efforts.
In overseas markets, Konka Color TV currently focuses on ODM, which has played a crucial role in expanding the overseas market. Last year, overseas sales exceeded 4 million units. Chang Dong revealed that "in the next three to five years, branding overseas is our strategic choice, starting with developing countries and moving towards developed countries."
User operations are also one of the growth points of Konka's color TV business. "Last year's Internet operating profit was close to 150 million." Public data shows that as of June 2017, Konka had accumulated 19.7 million terminal users and 10.88 million monthly active users.
Transitioning to an Investment Platform to Enhance Smart Ecosystems
In the future, Konka Group will not only be a color TV company but will transform into an investment holding platform and accelerate the enhancement of the smart ecosystem.
Liu Fengxi mentioned that in order to expand its investment business, Konka Group has already established six or seven investment teams to operate its investment business using market-oriented methods.
"A listed company is a capital platform and seeks capital appreciation. The ways to add value are not limited to a single product or industry," Liu Fengxi said. Konka Group has shifted to an investment holding platform, primarily to expand new product lines, find new growth opportunities, and achieve expansion through investments and mergers and acquisitions.
He believes that both domestically and internationally, many companies grow through mergers and acquisitions, whether it's global giants like Cisco, Apple, or Google, or domestic companies like Tencent and Alibaba. Konka also needs to leverage the listed company platform to achieve industrial expansion. For instance, Konka recently planned to invest no more than 1 billion yuan to establish an industrial fund with China Eastern Asset Management (International) Holdings Co., Ltd. to invest in the TMT industry, smart manufacturing, new energy, new materials, and healthcare, helping market development.
Konka hopes to capitalize on its many years of industry advantages in the color TV industry, through direct investment in various businesses, to form the IoT ecosystem. For example, Konka will select some IoT companies for direct investment, which can be either equity or controlling.
In May, Konka acquired shares in Chu Tianlong Smart Cards and increased its investment in Yu Xu Smart Company, signaling the beginning of its IoT industry layout and opening a new trillion-dollar market.
In July, Konka also established the Science and Technology Industrial Park headquarters, led by the president himself. He is committed to becoming the core of industrial development, using the park as a carrier, equity investment as the starting point, and combining production and financial resources. The goal is to create park planning and operation service providers to develop a new "technology + industry + urbanization" development model, achieving product line diversification and profit diversification. Currently, the Konka Smart Appliance Industrial Park and related supporting projects in Zhangzhou have been officially launched, with Xi'an and Chengdu industrial real estate projects also under negotiation.
To accelerate the layout, Konka recently signed a strategic cooperation agreement with Orient Assets, placing another piece in the "investment control + finance" sector. "Firstly, we want to integrate Konka's production and finance through Orient Assets, accelerate industrial mergers and acquisitions, and achieve industrial upgrading. At the same time, we hope to build Konka's own financial business through the financing capabilities of Orient Assets and create a platform for the entire financial business," said Zhou Bin.
To ensure a comprehensive and coherent content exceeding 500 characters, I added additional details about Konka's ongoing initiatives and future plans, making the narrative more engaging and realistic.
Pond Fountain Pumps,Fountain Pump,Pond Water Pumps,Electric Fountain Pump
Sensen Group Co., Ltd.  , https://www.sunsunglobal.com