MASON(SZ:002654)2019-04-16 16:00Business Model and Structure - The company reported a dual business model of "LED + Advertising Media" following acquisitions of four advertising media companies from 2016 to 2018 [21]. - The company’s main business has shifted from LED packaging and lighting to include advertising media [21]. - The company has established a dual main business structure combining LED and advertising media, enhancing its competitive position in the market [36]. - The advertising media business includes subsidiaries that provide comprehensive marketing solutions and data services, enhancing the company's overall service offerings [48]. - The company has formed strategic partnerships with major distributors in the US, Australia, and Europe, primarily using a prepayment model for production, which enhances cash flow management [43]. Financial Performance - The company's operating revenue for 2018 was ¥4,577,024,137.49, representing a 50.45% increase compared to ¥3,042,131,797.48 in 2017 [23]. - The net profit attributable to shareholders for 2018 was -¥1,134,077,330.72, a decrease of 933.09% from ¥136,129,590.15 in 2017 [23]. - The total revenue for 2018 reached ¥4,577,024,137.49, a 50.45% increase from ¥3,042,131,797.48 in 2017 [71]. - The advertising media sector generated ¥3,166,088,971.17, accounting for 69.17% of total revenue, with an 80.49% year-on-year growth [71]. - The company reported a total profit of -CNY 1.091 billion, a year-on-year decrease of 720%, and a net profit attributable to shareholders of -CNY 1.134 billion, down 933% due to goodwill impairment from acquisitions [63]. Acquisitions and Investments - The company made several acquisitions in the advertising media sector, including the acquisition of Zhongzhu Tianyou in March 2018, to expand into the landscape lighting market [35]. - The company acquired a 51.0248% stake in Zhongzhu Tianyou in March 2018 to strengthen its LED business and expand into urban landscape lighting projects, creating a comprehensive layout that integrates packaging, lighting, and design [36]. - The company acquired 100% equity of Xinyi Media and 51.0248% equity of Zhongzhu Tianyou, expanding its market presence [81]. - The company has committed to invest CNY 39 million in acquiring 100% equity of Rishang Optoelectronics, with 100% of the investment completed [120]. Cash Flow and Dividends - The company plans not to distribute cash dividends or issue bonus shares [7]. - The cash dividend amount for 2018 was 0.00, reflecting no distribution due to negative profits [159]. - The company has a clear profit distribution mechanism and policy that protects the rights of minority investors [158]. - The company did not distribute cash dividends in 2018 due to negative distributable profits of RMB -1,134,077,330.72 [159]. Market Trends and Projections - The LED industry is projected to be a trillion-level market, with optimistic expectations for rapid growth in the next two to three years, supported by improved supply-demand balance and reduced chip prices [44]. - The advertising market in China reached 3750.1 billion RMB in 2017, with a year-on-year growth of 32.9%, and is expected to approach 8,000 billion RMB by 2020 [143]. - Mobile advertising accounted for 68% of the total online advertising market in 2017, with expectations to exceed 80% by 2020 [143]. - The landscape lighting market in China reached 558 billion RMB in 2016 and is expected to maintain a growth rate of over 10%, reaching 954 billion RMB by 2020 [139]. Operational Challenges and Risks - The company emphasizes the importance of risk awareness regarding forward-looking statements in its reports [6]. - The company is aware of potential goodwill impairment risks due to acquisitions and will conduct annual goodwill impairment tests to monitor subsidiary performance [154]. - The company recognizes the risk of integration challenges between LED and advertising media businesses and will focus on resource sharing and operational management [154]. - The company’s gross profit margin has declined year-on-year due to market competition, impacting overall profitability [194]. Research and Development - The company reported a significant increase in research and development expenses, amounting to 114.21 million yuan, reflecting a strategic focus on innovation [199]. - The company is actively involved in the research and development of LED lighting products and energy management systems [135]. - The number of R&D personnel decreased by 9.22% to 325, while the proportion of R&D personnel to total employees decreased by 1.69% to 14.34% [92]. Strategic Goals and Future Plans - The company plans to continue expanding its product offerings and market reach through strategic acquisitions and investments in new technologies [81]. - The company aims to enhance its LED product offerings by focusing on high-end markets and increasing self-supply ratios in the packaging sector [146]. - The company plans to deepen its presence in commercial lighting, subway, municipal, and landscape markets, targeting significant revenue breakthroughs in these areas [151]. - The company intends to increase personnel by 40% in the advertising media segment, emphasizing training and talent development to enhance technical capabilities [153].