“A beautiful young man, a good friend of youth.” Famous minister health, who made this familiar advertisement and invited famous stars such as Liang Jingru and Lin Xinru as spokesmen, is now out of favor in the shampoo industry. Although the performance of Mingchen health will increase greatly in 2020, it does not rely on the old bank of shampoo, but on the cross-border mobile game business.
When the daily chemical business of the old bank encounters a bottleneck, mobile games become a new hope for the health of famous officials. However, under the particularity of high R & D investment and rapid development of the industry, whether Mingchen health can gain a firm foothold in the mobile game market still needs to draw a question mark.
Turn around the declining performance
On the evening of April 14, Mingchen health released the 2020 annual performance express report, saying that the company realized an operating revenue of 680 million yuan, a year-on-year increase of 31.43%; realized a net profit of 107 million yuan, a year-on-year increase of 362.7%.
Nearly four times the net profit growth, Mingchen health attributed it to the previous acquisition of mobile game company. Mingchen health explained in the annual report that since September 2020, two wholly-owned subsidiaries of online game business have been included in the scope of consolidated financial statements, greatly increasing the company’s performance.
In fact, different from the substantial growth of this performance, the performance of Mingchen health was in a continuous decline. According to the financial report data, in 2018, the revenue of Mingchen health was 546 million yuan, and the net profit was 29.66 million yuan, down 12.05% and 14.83% respectively. In 2019, the revenue was 518 million yuan and the net profit was 23.08 million yuan, down 5.27% and 22.2% respectively.
According to Bao Yuezhong, a new retail expert in FMCG industry, with the changes of consumer environment, market and groups, especially after the rise of the “post-90s” and “post-95s” consumer groups as the main force of consumption, many traditional washing and care brands can not adapt to the market changes and gradually go downhill, so does Mingchen health. After the selling points of marketing products can not keep up, they can only be gradually eliminated by the market and replaced by new brands.
In fact, ten years ago, the famous minister health, represented by “Tihua Zhixiu”, was also very popular. At that time, its advertising language was a household name, and there must be a bottle of Tihua on her mother’s dressing table. At the same time, Tian Zhen, Yao Chen, Lin Xinru and other first-line stars speak for him one after another. From 2014 to 2016, “Tihua Zhixiu” sponsored the voice of China. In 2014-2017, the revenue of Mingchen health has exceeded the level of 2019. According to the data, from 2014 to 2017, the revenue of Mingchen health was 559 million yuan, 587 million yuan, 596 million yuan and 642 million yuan respectively.
It is reported that Mingchen health was founded in 1994, and has successively created brands such as “Tihua Zhixiu”, “meiwang” and “Golden Lion”. Its products cover hair and scalp health care, skin health care, oral health care and home care. With the popularity of its Tihua talent, it landed in a shares in 2017.
Focus on the mobile track
Or due to the continuous decline of performance, Mingchen health, who has no way to transform, has changed the track and acquired two mobile game companies at a premium of 18 times.
On August 9, 2020, Mingchen health plans to acquire 100% equity of Hainan huaduo Network Technology Co., Ltd. (hereinafter referred to as “Hainan huaduo”) and Hangzhou Leiyan Network Technology Co., Ltd. (hereinafter referred to as “Hangzhou Leiyan”) for 133 million yuan and 129 million yuan respectively. As of the benchmark date of March 31, 2020, the book net assets of Hainan huaduo and Hangzhou Leiyan are 11.2521 million yuan and -7.4508 million yuan respectively, and the valuation results are 1078.62% and 1827.20% higher than the book net assets.
According to the data, Hainan huaduo, founded in April 2018, is a company with the core business of R & D and operation and maintenance of mobile games and web games. At present, it has two online games, namely, the page game “chaos” and the hand game “Kingdom of kings”. Hangzhou Leiyan, founded in August 2018, is a company with the core business of R & D and operation and maintenance of mobile game products. At present, it has launched the placement game products “dragon overlord” and “heroes of the Three Kingdoms” (H5).
In fact, from the perspective of the healthy development of Mingchen, the transformation game may be the last straw. Before the acquisition of the game company, Mingchen health has been trying to transform. In 2018, in the face of sales bottlenecks, Mingchen health once proposed to comprehensively implement the “258” project in the circulation channels, increase the channel coverage rate by taking dealers as the unit, attach importance to the construction of retail terminal target stores, focus on class a supermarkets in villages and towns, and form a situation in which key retail outlets comprehensively drive urban sales. In 2019, Mingchen health will focus on launching its new product “Yingkou”, and enhance its product popularity with the help of Tencent Guoman IP “fox demon little Hongniang”. In addition, Mingchen health also entered the washing and cleaning market and launched a new product “LiXiao”.
However, under all kinds of measures, little effect has been achieved. Mingchen health also said frankly: “with the development of daily chemical franchise stores, e-commerce retail, online red goods and other emerging formats, coupled with adverse factors such as consumers’ reduced brand stickiness, the competition in the daily chemical industry where the company is located is becoming increasingly fierce, and the company’s business development is facing bottlenecks.”
Cross border pain and happiness
“It can be said that it is blind expansion for the famous minister health who has no experience in the game industry. In the game field, because the head company’s product R & D investment is very high and the development is very fast, small and medium-sized teams may not keep up with the pace of development, resulting in product R & D lagging behind the market development, which also means that there is great uncertainty in the profitability of the small and medium-sized game companies acquired by Mingchen health. ” Economist song Qinghui said.
In fact, there are not a few cross-border daily chemical and clothing enterprises like Mingchen health. In 2019, the old women’s shoes brand bought 88.57% equity of Yaowang network with RMB 1.771 billion on Saturday. When Hangzhou Yaowang Network Technology Co., Ltd. was included in the consolidated financial statements on Saturday, its development began to enter the “fast lane”. In the 2018 interim report, the net profit on Saturday was 29.5 million yuan. By the mid-term report of 2019, the net profit on Saturday increased by 106.24% year on year to 60.84 million yuan. Once known as “Baiyuan pants industry”, it was renamed “cross border communication” in 2015, and its main business has developed from single pants marketing to Internet cross-border e-commerce. Subsequently, the revenue of cross-border communication once increased more than 20 times.
Zanthoxylum nitidum is also a typical cross-border case. Zanthoxylum nitidum, with toothpaste as its main business, has been involved in real estate, papermaking, sucralose and other businesses. However, due to the drag of diversified business, many of its subsidiaries suffered losses. Reluctantly, in November 2019, LMZ announced that it planned to transfer 80% of the equity of the real estate development company, 84.62% of the equity of the paper products company, and the creditor’s rights of the real estate development company, the paper products company and the paper industry company by way of agreement transfer.
In fact, the same is true for the health of famous officials. From 2016 to 2018, the market scale of hair washing and care in China has increased year by year, and the market scale has reached 54.65 billion yuan in 2019. Although the market scale continues to expand, P & G and Unilever almost occupy half of China’s daily chemical market in terms of market share.
Song Qinghui believes that in such an environment, it is very difficult for Mingchen health to break through the daily chemical market, so it has to cross-border transformation, which may also be a blood transfusion for its main business.
However, Wu Daiqi, CEO of Shenzhen siqisheng company, said that for Mingchen health, the cross-border mobile game has deviated from its strategic development. If a company wants to develop for a long time, it is important to have a clear strategic positioning. Obviously, the positioning of Mingchen health is vague now, so it is difficult for it to go for a long time.
Beijing Business Daily reporter interviewed Mingchen about his healthy development and future planning, but no reply has been received as of press release. Beijing Business Daily reporter Qian Yu, Bai Yang, Zhang Junhua
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