MY GYM(SZ:002621)2021-04-25 16:00Financial Performance - The company's operating revenue for 2020 was CNY 356,412,836.41, a decrease of 43.41% compared to CNY 629,819,433.65 in 2019[17]. - The net profit attributable to shareholders for 2020 was a loss of CNY 478,125,236.76, representing a decline of 499.41% from a profit of CNY 119,706,651.80 in 2019[17]. - The net cash flow from operating activities was negative at CNY -71,094,323.03, a decrease of 129.70% compared to CNY 239,366,825.14 in 2019[17]. - The total assets at the end of 2020 were CNY 3,574,079,447.59, down 16.21% from CNY 4,265,556,474.31 at the end of 2019[18]. - The net assets attributable to shareholders decreased by 36.53% to CNY 854,125,921.81 from CNY 1,345,802,583.17 in 2019[18]. - The basic earnings per share for 2020 was CNY -0.58, a decline of 514.29% from CNY 0.14 in 2019[17]. - The weighted average return on net assets was -43.39% in 2020, a decrease of 52.87% from 9.48% in 2019[17]. - The company’s net profit for 2020 was -¥571,295,231.65, a significant decrease of 406.62% year-on-year[94]. - The proportion of net cash flow from operating activities to net profit dropped to 12.44%, down from 128.47% in 2019, indicating a major discrepancy[94]. Business Strategy and Focus - The company has shifted its main business focus to education services and consulting since July 2020[15]. - The company plans not to distribute cash dividends or issue bonus shares[6]. - The company has divested its traditional manufacturing business by transferring 100% of the shares of 大连三垒科技有限公司[30]. - The company launched the sub-brand "小吉姆" to target lower-tier markets, maintaining the educational quality and service system of the main brand while optimizing the curriculum and operational systems[64]. - The company is pursuing a global strategy to expand its market presence internationally while strengthening its domestic operations[121]. - The company plans to leverage market recovery opportunities post-pandemic, aiming to increase market share by standardizing brand operations and improving overall governance from suppliers to end-users[124]. Market Trends and Opportunities - The early education market in China has shown a compound annual growth rate (CAGR) of 15.44% from 2010 to 2019, with the market size increasing from RMB 62 billion in 2010 to approximately RMB 250 billion in 2019, and projected to reach RMB 290 billion in 2020[35]. - The urbanization rate in China reached over 60% by the end of 2020, with projections to hit 65.5% by 2025, translating to nearly 14 million people moving from rural to urban areas for education consumption[34]. - The penetration rate for early education among children aged 0-6 is only 10.95%, with a significantly higher rate of 25.21% in first-tier cities, indicating substantial growth potential compared to developed countries where the rate is 80%-90%[36]. - The early education sector has become a crucial part of the national education strategy, with increasing government support and policies aimed at promoting early childhood education[114]. - The demand for high-quality preschool education resources is strong, with parents increasingly willing to invest in early education for their children, particularly among the emerging middle class[116]. Operational Challenges and Risks - The company has identified potential risks in its future development and outlined corresponding countermeasures[5]. - The early education market is experiencing increased regulatory scrutiny, with policies encouraging market-driven development[31]. - The company faces risks from regulatory changes in the early education sector that may increase operational costs, and it is taking measures to improve safety and compliance[132]. - The company acknowledges the competitive risks in the early education sector and is committed to adapting its strategies to maintain its market advantage amid increasing competition[133]. - The company has a goodwill impairment risk due to potential macroeconomic fluctuations, increased market competition, or poor performance of acquired companies, which could lead to a decrease in net profit and an increase in the debt-to-asset ratio[138]. Franchise and Operational Management - The company operates through a franchise model, with a standardized management system that enhances operational efficiency and profitability for franchisees[51]. - The company has established a comprehensive franchise operation management system to support the efficient and coordinated operation of its early education centers[39]. - The company has implemented strict franchise qualification reviews, ensuring that franchisees meet comprehensive criteria including financial strength and management level[54]. - The company established a five-in-one management evaluation mechanism to assess center operations based on teaching quality, customer satisfaction, sales, course progress, and cost control[52]. Financial Management and Investments - The company reported a 28.53% decrease in sales expenses, totaling approximately CNY 32.25 million, primarily due to the sale of a subsidiary[89]. - Research and development expenses decreased by 75.16% to approximately CNY 4.79 million, reflecting a significant reduction in R&D activities following the sale of a subsidiary[91]. - The company’s financial position was positively impacted by the equity sale, with a reported investment income increase of 73.12 million yuan[184]. - The company has various guarantees with different entities, including amounts of 204.49 million RMB and 667.38 million RMB[198]. - The total approved guarantee amount at the end of the reporting period is 12,295.23 million[200]. Corporate Governance and Compliance - The company has ongoing commitments to avoid competition and ensure the independence of the listed company, with performance commitments for net profits of RMB 1.80 billion, 2.38 billion, and 2.90 billion for the years 2018, 2019, and 2020 respectively[148]. - The company is currently undergoing arbitration regarding the repurchase of 100% equity of Beijing Chunfeng Huayu Education Technology Co., Ltd., which was initiated on November 14, 2019, and the hearing was completed on July 17, 2020[149]. - The company has established a commitment to independent financial decision-making, ensuring that it can operate without interference from controlled enterprises[150]. - The company is committed to transparency in its financial dealings, ensuring that all related party transactions are disclosed in accordance with legal and regulatory requirements[150]. Community and Social Responsibility - The company donated ¥2 million to support frontline medical workers' families in Hubei during the pandemic[69]. - The company established a children's early education research fund with Huazhong University of Science and Technology, investing ¥10 million over five years to enhance teacher training and research[68].