大商股份(600694) - 2022 Q2 - 季度财报

Company Profile and Key Financial Indicators Company Information Dashang Co., Ltd. is a Shanghai Stock Exchange-listed company with stock code 600694, headquartered in Dalian, Liaoning Company Information | Item | Information | | :--- | :--- | | Company Chinese Name | 大商股份有限公司 | | Company Chinese Abbreviation | 大商股份 | | Stock Exchange | Shanghai Stock Exchange | | Stock Code | 600694 | | Legal Representative | Niu Gang | | Registered/Office Address | No. 1, Qingsan Street, Zhongshan District, Dalian City, Liaoning Province | Key Accounting Data and Financial Indicators H1 2022 saw revenue and net profit declines, but strong operating cash flow growth Key Accounting Data and Financial Indicators | Key Accounting Data | Current Period (Jan-Jun) (Yuan) | Prior Year Period (Yuan) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 3,820,894,681.03 | 4,375,865,024.27 | -12.68 | | Net Profit Attributable to Shareholders of Listed Company | 425,981,588.22 | 497,669,658.90 | -14.40 | | Net Profit Attributable to Shareholders (Excluding Non-recurring Items) | 322,416,748.54 | 426,875,921.02 | -24.47 | | Net Cash Flow from Operating Activities | 796,685,017.68 | 440,647,865.66 | 80.80 | | Basic Earnings Per Share (Yuan/share) | 1.50 | 1.71 | -12.28 | | Weighted Average Return on Net Assets (%) | 4.81 | 5.51 | Decrease of 0.7 percentage points | - Non-recurring gains and losses totaled $103.56 million during the reporting period, primarily from disposal gains on non-current assets ($89.05 million) and investment income from transactional financial assets ($30.44 million)[18] Management Discussion and Analysis Industry and Main Business The retail industry faced significant challenges in H1 2022, with the company maintaining its multi-format retail strategy - In H1 2022, total retail sales of consumer goods decreased by 0.7% year-on-year, with the physical department store sector experiencing a larger impact, declining by 8.4% year-on-year[20] - The company's main business encompasses three formats: department store chains, supermarket chains, and appliance chains, building a multi-channel commercial development model through physical stores combined with the online "Dashang Tiangou Network"[21] Core Competencies Analysis Core strengths include extensive network, multi-format strategy, online platform, and robust supply chain - The company's core competencies include: - Network and Scale: Extensive store network and leading sales scale in the industry - Multi-format and Omni-channel: Owning multiple brands like Maikel and Xinmart, covering department stores, supermarkets, and home appliances, integrating online and offline development - Online Platform: Possessing an independent "Tiangou Network" online platform, achieving online-offline integration - Supply Chain: Expanding "four-self" operations (self-owned, self-produced, self-operated, self-sold) to control the entire industry chain - Management Team: Possessing an experienced professional management team and a comprehensive management system - Brand Image: As a renowned brand in China's physical retail industry, it enjoys a good social image and consumer recognition[22][23] Operating Performance Discussion and Analysis Despite challenges, company implemented strategies to improve operations and narrow net profit decline - In the first half of the year, the company resolved long-standing horizontal competition issues by acquiring six stores from its controlling shareholder, optimizing management and governance structures, and consolidating its regional leading position[24][27] - The company actively implemented multiple operational strategies to enhance performance, including: - Centralized Procurement: Strengthening cooperation with first-tier brands to reduce procurement costs - Store Structure Optimization: Adjusting operational layouts, enriching product categories, and improving sales per square meter - Deepening "Four-Self Operations": Increasing the introduction of globally geographically indicated scarce commodities to build direct production-to-sales connections - Incentive Policies: Implementing "joint sales contracting and partnership entrepreneurship" to motivate grassroots employees - New Media Marketing: Utilizing live streaming, short videos, and other new media channels to drive traffic and sales - Online-Offline Integration: Launching new shopping formats like supermarket express delivery and super sellers through Tiangou Network[24][25][26] Analysis of Key Operating Conditions Financial performance showed mixed results, with revenue and costs decreasing, but financial expenses significantly reduced Main Business Analysis H1 2022 saw revenue and cost declines, but substantial reduction in financial expenses and strong operating cash flow | Item | Current Period (Yuan) | Prior Year Period (Yuan) | Change (%) | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | Operating Revenue | 3,820,894,681.03 | 4,375,865,024.27 | -12.68 | - | | Operating Cost | 2,300,297,135.64 | 2,564,484,139.73 | -10.30 | - | | Financial Expenses | 61,734,227.73 | 100,905,342.54 | -38.82 | Decrease in interest expense on lease liabilities and increase in exchange gains in current period | | Net Cash Flow from Operating Activities | 796,685,017.68 | 440,647,865.66 | 80.80 | Decrease in cash paid for goods purchased, services received, and other operating activities in current period | | Net Cash Flow from Investing Activities | 308,592,494.33 | 786,539,005.80 | -60.77 | Increase in cash paid for investments in current period | | Net Cash Flow from Financing Activities | -838,073,758.63 | -609,433,955.37 | -37.52 | Increase in cash paid for dividend distribution, profit, or interest repayment in current period | Analysis of Assets and Liabilities Asset and liability structure remained stable, with notable changes in specific accounts due to operational adjustments | Item Name | Period-End Balance (Yuan) | Change from Prior Year-End (%) | Explanation | | :--- | :--- | :--- | :--- | | Construction in Progress | 8,357,210.61 | 51.98 | Increased investment in financial system construction projects in current period | | Long-term Borrowings | 0.00 | -100.00 | Transferred to non-current liabilities due within one year in current period | | Prepayments | 36,364,239.54 | -62.86 | Decrease in prepaid goods in current period | | Other Receivables | 148,272,557.64 | -30.47 | Recovery of Tonghui card receivables and other outstanding payments in current period | | Other Current Assets | 102,958,887.52 | -41.63 | VAT input tax refund processed in current period | | Provisions | 1,342,611.36 | -83.25 | Some lawsuits have final judgments in current period | - As of the end of the reporting period, the company's main restricted assets were cash and cash equivalents of $714.42 million, primarily for prepaid card deposits, letter of guarantee pledges, regulated accounts, and court-frozen funds[34] Investment Status Analysis Significant investments were made to acquire subsidiaries from the controlling shareholder to resolve horizontal competition - To resolve horizontal competition issues, the company's subsidiary acquired 100% equity in four subsidiaries from controlling shareholder Dashang Group and other related parties for $814.12 million, including Zhuanghe Qiansheng, Donggang Qiansheng, Shenyang Qiansheng, and Anshan Commercial Investment[36] Bank Wealth Management Products | Item Name | Period-End Balance (Yuan) | Period-Beginning Balance (Yuan) | Current Period Change (Yuan) | Impact on Current Period Profit (Yuan) | | :--- | :--- | :--- | :--- | :--- | | Bank Wealth Management Products | 1,939,058,000.00 | 2,330,058,157.03 | -391,000,157.03 | 30,441,927.69 | Analysis of Major Holding and Participating Companies Subsidiary performance varied, with some showing profit growth due to asset disposal and others experiencing declines Net Profit of Major Subsidiaries | Subsidiary Full Name | Net Profit (Yuan) | Net Profit in Prior Period (Yuan) | YoY Change | | :--- | :--- | :--- | :--- | | Dalian International Commercial Building | 16,928,528.68 | 20,433,809.72 | -17.15% | | Dashang Daqing Xinmart Shopping Plaza Co., Ltd. | 59,691,542.45 | 65,056,339.98 | -8.25% | | Dashang Fushun Department Store Co., Ltd. | 11,860,587.08 | 18,977,691.44 | -37.50% | | Dashang Daqing Department Store Co., Ltd. | 76,587,979.78 | 41,126,433.50 | 86.23% | | Dashang Co., Ltd. Mudanjiang Department Store Co., Ltd. | 8,158,068.74 | 12,606,180.97 | -35.29% | Risk Analysis Company faces ongoing risks from pandemic, intensified industry competition, and internal operational challenges - The company faces several key risks: - Pandemic Risk: Uncertainty from sporadic local outbreaks is expected to continue impacting the retail industry - Industry Risk: Changes in consumer habits, emergence of new formats and models, and increasing competition intensify transformation pressure for physical retail - Operational Risk: Difficulty in realizing reform benefits in the short term; regional layout needs optimization; some older stores have outdated properties; uncertainty in new business expansion; closing loss-making stores may temporarily reduce revenue and increase non-operating expenses[40][41] Corporate Governance Shareholders' Meeting Overview Three shareholder meetings approved key resolutions including annual reports and board elections - Three shareholder meetings were held during the reporting period, approving significant matters including the "2021 Annual Report," "Proposal on the Election of Non-Independent Directors for the Eleventh Board of Directors," and "Proposal on the Acquisition of Equity in Shenyang Qiansheng, Zhuanghe Qiansheng, Anshan Commercial Investment, and Donggang Qiansheng, and Related Party Transactions"[43][46] Changes in Directors, Supervisors, and Senior Management Company completed re-election of board and supervisory board, appointing new senior management - Due to the expiration of the term of the Tenth Board of Directors and Supervisory Board, the company conducted re-elections, forming a new board with Lu Weishun as Chairman and appointing a new senior management team with Yan Li as General Manager[47] Environmental and Social Responsibility Environmental Information Company actively promotes environmental protection, energy conservation, and green consumption - The company is not classified as a key polluting enterprise but is committed to becoming a physical retail enterprise that integrates energy conservation, emission reduction, green product sales, and environmentally friendly shopping[51] - To reduce carbon emissions, the company has implemented various measures, including: installing escalator photoelectric switches, alternating elevator operations, scientifically setting air conditioning temperatures, replacing energy-saving light bulbs, using induction faucets, promoting online paperless office, and advocating "low-carbon" travel[52][53] Significant Matters Fulfillment of Commitments Controlling shareholder successfully fulfilled commitment to resolve horizontal competition issues - Controlling shareholder Dashang Group fulfilled its commitment to resolve horizontal competition within 24 months, addressing all 14 stores with horizontal competition issues by closing 4, selling 5 to the listed company, entrusting management of 4, and the listed company closing 1[57] Major Litigation and Arbitration Matters Company involved in several significant lawsuits, primarily property lease disputes, with varying resolution stages - The company is involved in multiple housing lease contract disputes, with second-instance judgments upholding the original verdicts for series disputes with Xinda Investment and Jinboda Investment, and a first-instance judgment received for the dispute with Xinxiang Shengshi Tongtai Property[60] Major Litigation and Arbitration Cases | Plaintiff | Defendant | Litigation Type | Amount Involved (Yuan) | Progress | | :--- | :--- | :--- | :--- | :--- | | Chaoyang Yili Shihao Real Estate Development Co., Ltd. | The Company and Subsidiaries | Civil Litigation | 32,774,100.00 | Executed, company filed for retrial on the first lawsuit | | Dashang Jinzhou Department Store Co., Ltd. | Jinzhou Tianxing Real Estate Co., Ltd. | Civil Litigation | 83,937,400.00 | Hearing held, no judgment yet | | Zhengzhou Wild Animal World Culture Tourism Co., Ltd. et al. | Dashang Group Zhengzhou Xinmart et al. | Civil Litigation | 18,000,000.00 | Second instance remanded for retrial, company appealed after retrial first instance judgment | Significant Related Party Transactions Company engaged in routine purchases/sales and a major asset acquisition to resolve competition - Routine related party transactions primarily involve normal purchases and sales of goods and acceptance of services, such as purchasing Maotai and Xinjiang specialties from parent company Dashang Group for $92.76 million, and red wine and Australian beef from Fazhi Aomei for $85.93 million[65] - To resolve horizontal competition, the company acquired 100% equity in four companies from related parties Dashang Group and Investment Management Co., Ltd., and entered into entrusted operation and management agreements for five stores with them; as of July 28, 2022, the industrial and commercial changes for the equity acquisition were completed[69][70] - At period-end, the company's receivables from related parties totaled $147 million, and payables to related parties totaled $445 million, primarily arising from procurement, sales, property leases, and prepaid card Tonghui business, with $308 million in other payables from cash pooling management of acquired target companies[75] Share Changes and Shareholder Information Share Capital Changes Company's total share capital and equity structure remained unchanged during the reporting period - The company's total share capital and equity structure remained unchanged during the reporting period[82] Shareholder Information Company has 27,487 shareholders, with top two major shareholders having significant pledged holdings Top Shareholders | Shareholder Name | Period-End Shareholding (Shares) | Proportion (%) | Share Status | | :--- | :--- | :--- | :--- | | Dashang Group Co., Ltd. | 86,666,671 | 29.51 | Pledged 42,500,000 | | Dalian Guoshang Asset Management Co., Ltd. | 25,013,382 | 8.52 | Pledged 12,500,000 | | Central Huijin Asset Management Co., Ltd. | 8,538,100 | 2.91 | None | | Yang Longhuo | 5,579,637 | 1.90 | None | Financial Report Financial Statements The financial statements provide a comprehensive overview of the company's assets, liabilities, equity, and performance for the period Consolidated Balance Sheet (Period-End) | Consolidated Balance Sheet (Period-End) | Amount (Yuan) | | :--- | :--- | | Total Assets | 19,432,642,582.63 | | Total Liabilities | 10,486,518,619.44 | | Total Equity Attributable to Parent Company Owners | 8,692,446,014.14 | Consolidated Income Statement (Current Period) | Consolidated Income Statement (Current Period) | Amount (Yuan) | | :--- | :--- | | Total Operating Revenue | 3,820,894,681.03 | | Total Profit | 630,048,092.78 | | Net Profit Attributable to Parent Company Shareholders | 425,981,588.22 | Consolidated Cash Flow Statement (Current Period) | Consolidated Cash Flow Statement (Current Period) | Amount (Yuan) | | :--- | :--- | | Net Cash Flow from Operating Activities | 796,685,017.68 | | Net Cash Flow from Investing Activities | 308,592,494.33 | | Net Cash Flow from Financing Activities | -838,073,758.63 | | Net Increase in Cash and Cash Equivalents | 279,059,405.40 | Significant Accounting Policies and Estimates Key accounting policies cover revenue recognition, financial instrument impairment, inventory valuation, and long-term equity investments - Revenue Recognition: Revenue is recognized when the customer obtains control of the related goods or services, at the transaction price allocated to that performance obligation; retail sales revenue is recognized when the significant risks and rewards of ownership of the goods are transferred[239][240] - Financial Instrument Impairment: Impairment accounting is applied to financial assets measured at amortized cost, some financial assets measured at fair value, lease receivables, etc., based on expected credit losses, and loss provisions are recognized[175] - Inventories: Inventories are valued using the first-in, first-out method when issued, and inventory write-downs are provided at the lower of cost and net realizable value at period-end[188] - Long-term Equity Investments: Investments in subsidiaries are accounted for using the cost method, while investments in associates and joint ventures are accounted for using the equity method[197][199] Notes to Consolidated Financial Statement Items Detailed explanations for significant items in consolidated financial statements, including cash, financial assets, and receivables Key Consolidated Financial Statement Items | Item | Period-End Balance (Yuan) | Notes | | :--- | :--- | :--- | | Cash and Bank Balances | 3,520,628,352.78 | Including restricted funds of $714.42 million, used for prepaid card deposits, letter of guarantee pledges, etc. | | Transactional Financial Assets | 1,958,650,656.50 | Primarily bank wealth management products | | Accounts Receivable | 192,720,228.49 | Book balance of $213 million, provision for bad debts of $19.99 million | | Inventories | 4,247,017,640.08 | Primarily development costs and merchandise inventory | | Other Receivables | 148,272,557.64 | Book balance of $409 million, provision for bad debts of $261 million |