I am really worried that Konka will move toward music wind or the early years of the country's beauty. I hope that even if there is a change, try to become Lenovo's holding company. Perhaps it will calm people.

The latest trends revealed in its recent interim report give the author the potential feeling that it is.

On August 25, Shenzhen Konka A released its mid-2017 report. Data show that the revenue was 11.406 billion yuan, an increase of 32.49% year-on-year; the net profit was 30.87 million yuan, an increase of 140.53% year-on-year; the EPS was 0.01 yuan.

The year-on-year increase was intimidating. The actual figure was not outstanding. We can see that the previous performance was bleak. The home appliance industry, in particular, the overall black plate has been not good, the valuation is also low, but more than 100 billion revenue only 30.87 million net profit is difficult to say exports, and this net profit is not from the main, but non-operating income, mainly asset disposal . Konka's operating cash flow during the same period was negative and the figure was quite high. The entire mid-term actual business is not beautiful.

However, the financial report data itself does not reflect the true trend.

Recently, Liu Fengxi, chairman of the board of directors of Konka Group, told the media that color TV was a high-tech industry 20 years ago, and it was still the sexiest. "However, since 2000, our focus has been on how traditional businesses have changed," and stressed that "Konka is no longer just a color TV company, it will invest in a controlling investment platform, and the color TV business will seek an independent listing."

This basically set a mid-to-long term tone for Konka. However, the hidden information makes people feel unsettled:

First, the color TV industry was indeed sexy, but to say that since 2000, Konka has focused on “how traditional businesses have changed”, and it has obviously given a lot of support. The second is, "is no longer just a color TV company," a transformation investment holding platform. Its semantic focus is behind, indicating that the entire group structure will be driven by investment, followed by color TV business. Third, knowing that the color TV business is sluggish, it also announced its intention to seek independent listing. What is its intention?

The author's premonition is that the color TV business may want to raise funds in the future, such as releasing part of the equity and introducing strategic capital. In this way, both foreign capital assistance and outsourcing pressure can be obtained. As for the search for IPO, short-term may be just a rhetoric, and in particular it may be used to attract strategic capital.

This must be done with the capital of Konka Group. After all, if the existing Konka A loses its color TV main business, then the whole business will be hollowed out. It is difficult for investors to agree that even if they agree, it is very difficult for them to fill the void in their own cycle.

In contrast, both LeTV and Gome have had the typical experience of over-tooling their listed subsidiaries. Konka Group does not rule out relying on its listed companies as a platform to create new financing conditions for investment business. path. In the future, it is likely that there will be a similar instrumentalization. At that time, in essence, the home appliance industry is in the Konka Group, just like LeTV, which is LeTV.com, and Gome, which is Gome.

This seems to be a very common grouping structure, similar to Lenovo Group's form of Legend Holdings, but in the same structure, the role of core business is not the same. The author believes that Liu Fengxi’s logic should be based on the fact that Konka’s home appliance industry has acquired a strong position at least in China to issue such a statement. If it is only for the sake of transition, even if such logic is used, it is nothing more than an empty shelf.

On the other hand, in 2015, Konka experienced a very serious shock that was enough to “remember” the classic textbooks of global business schools, and people have to worry that Konka is seeking a compromise and excessively catering to the changes led by major shareholders.

As a veteran home appliance company in China, Konka has a history of nearly 40 years, and was once one of the Big Three in China's CRT era. Its consciousness should not be said to be backward, but there is no real ability to integrate key resources to quickly guide, and more to stay in the stage of consciousness and philosophy.

This kind of system brings many constraints to Konka, leading to continuous conflicts between it and major shareholders. The main contradiction is concentrated in the competition in the industry. In China, home appliance manufacturing companies are basically real estate companies, and Konka's business model is doomed not to be truly separated from the land economy and real estate patterns. However, due to the fact that the main shareholder's main business is also real estate (mainly commercial real estate), the competition between the two parties has continued for a long time.

For Konka, the real estate business has twofold meanings: First, the shape of natural industrial real estate; Second, there are many supporting projects are easily converted into commercial real estate or even commercial housing, which can balance the pressure of its own home appliance business operations. Over the years, the real estate in its hands has indeed added a lot. Gree, Haier, Hisense, Changhong, TCL, real estate business are not weak, and some are already listed companies. Since Konka is under the control of Overseas Chinese Town, the two sides continue to play games. Later, in order to be a key piece of land, it even became a court of law.

Over the past few years, the sense of crisis in Konka has been deep, and the main business has been hand-pulled. It has a certain reliance on off-farm income. Real estate business can balance some risks. In addition, although OCT is a major shareholder, it is not absolutely controlled, but only occupies more than 20%. However, in the long-term game, it continues to have the upper hand, and interests represent the largest number of seats on the board of Konka A. This situation has also led to a lack of incentives for Konka management and general employees for many years. Compared with other peers, it seems quite passive.

After repeated games, OCT re-dominated the board of directors and Konka regained its stability. Throughout 2016, the strength of the main business was restored. Although there was no real change in profits, many of the businesses were mainly from the disposal of assets, but the intelligent transformation, especially Internet services, achieved good results. Of course, the biggest attraction is the competing candidates for global executives that are implemented at the end of the year. Although some aspects are difficult to change immediately, there is still new blood inflow.

Konka has been basically repositioning since 2017. It first caters to the overall transformation of OCT, and secondly, it is also seeking change. This step has indeed achieved results. The Mid-Range reported at least another profit. Although it was more from non-operating income, the market also stabilized.

However, it is not difficult to see that the immediate reform of the Konka Group is not complete. It still has two risks:

First, the transformation investment holding platform, we do not worry about its capital strength, more is that it needs a wealth of investment experience. Konka's accumulation in this area is not deep. Although there are new people and horses, it is difficult to establish a reputation in the short term. Moreover, it does not invest in those new projects, and it is more in the pursuit of areas that can produce faster investment returns.

Second, the home appliance business has created a lot of revenue for the Konka Group and even the Overseas Chinese Town. In the long run, cash flow also played a role. However, at the moment, Konka Group may have overdrafts for this part of the business. Before the expansion of the investment control business, the appliance business must not be excessively weakened. Otherwise, the entire Konka Group may become hollow.

In 2017, Konka’s revenue target will be 30 billion yuan, and net profit will reach 300 million yuan. This means that the home appliance industry will still rely heavily on core revenues, and profits may still come from outside the industry.

The author said that the transformation of Konka is not calm and does not completely deny the path it chooses. It does have a new flavor, not only can further eliminate the horizontal competition with major shareholders, but also can resolve the dual pressures of real estate policy control and the growth of color TV.

However, Konka's main industry is not stable. It is racing against time. If it fails to form new hematopoietic functions as soon as possible, especially the mining of profit points, it will face emptiness. Although the 2017 mid-term report was superficially profitable, it was based on certain resources overdraft. In my opinion, Konka in 2018 will face a greater challenge.

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