2020-08-15

Into the game, the parent company Mingchen, the parent company of Di Hua Xiu, has a healthy and young breakthrough strategy in doubt

By yqqlm yqqlm

Economic Observer reporter Ye Xinran August 9th, the parent company Famous minister Health (002919.SZ) announced that it plans to acquire two game companies at one time by cash payment, thereby cutting into the mobile online game industry and creating new growth points for performance. Prior to this, Mingchen Health has been focusing on daily chemical industry for 26 years.

According to the announcement, the two companies that were 100%acquired were:Hainan Huaduo Network Technology Co., Ltd. (hereinafter referred to as”Hainan Huaduo”), Hangzhou Leiyan Network Technology Co., Ltd. (hereinafter referred to as”Hangzhou Thunder Flame”). It is reported that the revenue of Hainan Huaduo and Hangzhou Leiyan rely on the mobile games”Kingdom of the Kings” and”Hundred Dragons” respectively, and the two companies’ revenue from popular games accounted for more than 90%.

Mingchen Health announcement will be released on August 10, Mingchen Health one-word daily limit, as of the close of noon on August 14, Mingchen Health reported 29.61 yuan per share, an increase of more than 40%compared with the closing price on Friday.

In an interview with the Economic Observer, Liao Xuhua, an analyst in the interactive entertainment industry of Analysys, pointed out that the main reason is that the overall valuation of the game sector has been repairing and increasing since last year. After Mingchen Health acquires two game companies, the market connects them with the stocks of the game sector, so they will get one in the short term A relatively high increase. At the same time, Liao Xuhua mentioned that in the long run, the market value of Mingchen Health will be able to be realized through performance in the later period. There are certain risks. In the second half of the year, we need to focus on the performance of these two game companies, the progress of new product development and whether the original products have declined.

For issues such as how to form synergy between the acquired game company and the main business of daily chemicals, the Economic Observer called Mingchen Health span> During the interview, the other party said that it is currently in the interim report window and it is inconvenient to reply.

M&A Target

According to the announcement, as of March 3, 2020, the net assets of Hainan Huaduo and Hangzhou Leiyan were RMB 11.2521 million, -7.4508 million yuan, and the acquisition price of Mingchen Health is 133 million yuan and 129 million yuan respectively, and the valuation is net book value The asset appreciation rate was 1078.62%and 1827.20%respectively.

Mingchen Health stated in the announcement that the valuation increase is relatively large, mainly because the target company belongs to For light-asset enterprises, their business capabilities, management capabilities, technical advantages and market resources are not directly reflected in the accounting statements. Mingchen Health also pointed out that the company will confirm greater goodwill after the completion of the acquisition. If the underlying assets cannot be compared in future operations To achieve a good return, the goodwill formed by the acquisition of the underlying asset will have a higher risk of impairment.

According to the disclosure, Hainan Huaduo’s net profit in the first quarter of 2020 and 2019 was 52 million yuan and 64 million yuan, respectively, and the balance of accounts receivable was 121 million yuan, 93 million yuan, and Hangzhou Lei In the first quarter of 2020 and 2019, Flame’s net profit was 26 million yuan and -22 million yuan, and the balance of accounts receivable was 45 million yuan and 04 million yuan.

One day after the above announcement, the SME Board Management Department of the Shenzhen Stock Exchange issued a letter of concern, requesting a name minister Health added that when the acquisition agreement has not yet taken effect, the reasons for the advance payment of 76 million yuan and 74 million yuan for the transfer to shareholders of the target company, the reasons for the substantial increase in the balance of the target company’s accounts receivable and the transaction The amount of goodwill formed and the calculation process.

According to the announcement, Hainan Huaduo currently has two online games in operation, namely, a page game”Chaos of the Universe” and a mobile game”The Kingdom of Kings”, of which the mobile game product”The Kingdom of Kings” Monthly turnover lasts for several months to exceed 100 million yuan. Hangzhou Leiyan has currently launched and operated idle game products”Hundred Dragons” and”Biography of Heroes” and”Heroes of the Three Kingdoms” (H5). Since”Hundred Dragons” was launched at the end of 2019, the monthly peak turnover has exceeded 100 million yuan.

For the purpose of this transaction, Mingchen Health pointed out that as daily chemical specialty stores, e-commerce With the development of emerging business formats such as retail and online celebrity products, coupled with the unfavorable factors such as consumers’ reduced brand stickiness, the company’s daily chemical industry has become increasingly competitive, and the company’s business development is facing bottlenecks. During the epidemic, people’s offline entertainment has decreased, and the popularity of online consumption has rapidly increased. Online games have become one of the first choices for home entertainment, and the businesses of major game companies have seen significant growth.

Mingchen Health also cited the”China Mobile Game Market Annual Comprehensive Analysis 2020″ released by Analysys”. The report shows that the market size of mobile games in China in 2019 was RMB 185.02 billion, with a growth rate of 15.5%. Affected by the epidemic, in January 2020, China’s mobile game market grew by 49.5%compared to the same period last year and by 37.5%month-on-month.

The main business has encountered a bottleneck, can the game business clear the cloud? The current dual situation of fierce competition in the game field and the Matthew effect cannot be ignored. The aforementioned Analysys report pointed out that the market share of mainstream game manufacturers continues to expand and market competition remains fierce. In the competitive landscape of mobile game publishing in China in 2019, Tencent games accounted for 51.86%of the market, Netease games 15.81%, and Sanqi Mutual Entertainment 10.44%, 2.53%of Chinese mobile games, the top five have divided up 80%of the industry. Liao Xuhua pointed out that from the products and performance of Hainan Huaduo and Hangzhou Leiyan, they are both at the midstream level in the game industry.”There are many companies of this type, and they are not particularly prominent in this market, and there is no strong differentiation. Competitiveness.”

As for the above two game companies’ monthly turnover of over 100 million, Liao Xuhua said that this level belongs to the upper midstream, but we need to pay attention to continuity,”because if game products are to hit a single month Many companies can achieve the super-high income, the key is to look at its long-term stability.”

risk points

Mingchen Health stated in the announcement that through this transaction, with the help of mobile Internet platforms and game users, use scenarios or product placement to attract Young consumers will explore the rejuvenation and upgrade of the original brand, and use this transaction to further expand business opportunities, cultivate new growth points and enhance profitability.

Behind the exploration of rejuvenation and upgrading is the brand aging and consumption that Mingchen Health has to face On the other hand, it is the continued decline in revenue and net profit. In 2018 and 2019, the revenue of Mingchen Health was 546 million yuan and 517 million yuan, a year-on-year decrease of 14.86%, 5.27%; net profits were 30 million yuan and 23 million yuan, down 38.86%and 22.20%year-on-year, respectively.

According to the data, Mingchen Health was established in 1994. Its main products include shampoo, conditioner, shower gel, gel water and skin care products. The company mainly includes more than ten brands such as”Beauty Show”,”Meiwang”,”Chucui”, and”Yingkou”, among which”Beauty Show” and”Meiwang” are the main brands.

In recent years, the rising trend of domestic products has always been the focus of the consumer market. Senior retail expert and senior director of Amway Enterprise Consulting Co., Ltd. in China, Gao Huan pointed out in an interview with the Economic Observer that the reasons for the accelerated breakthrough of domestic products This is because first is to seize the prevalence of Guochao and Sinopharm; the second is to use emerging marketing methods and sales channels; and the third is that compared with foreign brands, it can catch changes in consumer demand faster and accelerate product updates.

The above three points, in fact, from the trend of Mingchen Health in the past two years, it is also There is exploration, but the effect is mediocre. At the beginning of 2019, Mingchen Health launched a new series of”Dress Flower Show”-“Flower Times”. The concept of”Time”,”Big Health”,”Environmental Protection”, and”Flower as Beauty” redefines the brand of”Dried Flower Show”.

In 2019, Mingchen Health will focus on building Yingkou, which is positioned as a”leading brand of high-end care and care”. And hope to use TV advertisements, new media advertisements and joint promotion with Tencent animation top IP”Fox Fairy Little Matchmaker” to harvest the younger generation consumer. At present, the number of fans of Yingkou flagship store on the Tmall platform is 1,600, and the top-selling product has 1,112 monthly sales.

In terms of channels, as of the end of 2019, Mingchen Health has formed more than 35,000 retail outlets nationwide , Compared to nearly 30,000 in 2018. However, compared with Shanghai Jahwa, which is also a daily chemical brand, as of the end of 2019, its products have covered 200,000 supermarket stores and rural areas. There are nearly 90,000 outlets, about 13,000 cosmetics franchise stores, etc. On the other hand, in terms of channels, in 2019 Shanghai Jahwa< /span>‘s online sales achieved revenue of 2.582 billion yuan, a year-on-year increase of 30%, accounting for 34%of total revenue. The Mingchen Health distribution model revenue accounts for more than 95%of the total revenue.

Present in front of Mingchen Health, the feasibility of high-end and youthfulness has not yet come out path. Linna Zhao, head of the China Insight Department of Weimai, once pointed out to the Economic Observer that local brands lack the determination and cultural soil for transformation in terms of high-end; on the other hand, form is greater than meaning, and they generally like to follow suit, whether it is products or marketing methods. same.

This time, Mingchen Health once again used the game track to sound the horn of rejuvenation, but there are risks involved Need attention. Liao Xuhua pointed out that Mingchen Health acquires a wholly-owned subsidiary and maintains its independent operation. There will be no major business risks. But for Mingchen Health itself, as a daily chemical company, does it have the ability to invest in the game industry? That is to truly identify game companies, evaluate game products and R&D capabilities.

In terms of attracting young people, judging from the audience of the above two game companies, whether this vision can be realized also needs to be questioned. Liao Xuhua pointed out that Hainan Huaduo is dominated by legendary games, and Hangzhou Leiyan is dominated by the Three Kingdoms. The overall age of users is relatively high, most of them are over 25 or 30 years old.”Therefore, through these two companies, the layout of younger generation will be difficult. Relatively large.”