Mengtian home becomes a difficult problem by reducing the publicity fee and 100percent control and supervision of family members

category:Finance
 Mengtian home becomes a difficult problem by reducing the publicity fee and 100percent control and supervision of family members


Reduced advertising expenses

Mengtian home mainly produces and sells wooden doors, wallboards, cabinets and other products, and its main competitors are Tata wooden doors, Jiangshan oupai (603208. SH), etc. By the end of 2019, the category income of Jiangshan Europe Group has been close to 2 billion yuan, which is nearly 600 million yuan more than the total revenue of 1.348 billion yuan of Mengtian household in 2019. In terms of cabinet products, Sofia (002572. SZ) and Europa (603833. SH) are undoubtedly the industry leaders, and the income of related products of Mengtian household is less than the small part of their total revenue. In such a fully competitive home market, exposure and brand promotion are crucial.

In 2019, OPECs advertising and publicity costs reached 406 million yuan, and Sofias advertising and publicity costs also reached 267 million yuan. However, from 2017 to 2019, the advertising and publicity expenses of dreamtime home have decreased year by year, from 90.6553 million yuan in 2017 to 48.6097 million yuan in 2019, a decrease of nearly 50%.

Under the double influence of reducing the investment in advertising and raising the price of products, in 2017-2019, when the revenue of Mengtian household decreased, the net profit increased year by year. From 2017 to 2019, the net profits of DREAMDAY home were 69 million yuan, 94 million yuan and 188 million yuan respectively.

Investor.com noted that nearly 10 million yuan of the net profit of 25 million yuan in 2018 was provided by the reduction of advertising expenses, with a contribution of nearly 40% in the current profit growth part; more than 30 million yuan of the 94 million yuan net profit in 2019 was provided by the reduction of advertising expenses, with a contribution of more than 30% in the current profit growth part.

If we say that it is the companys strategy to cut the advertising expenses, but the contradiction is that while dreamland household reduces the advertising expenses year by year and pushes up the profits, it plans to raise a huge amount of funds for the brand channel construction in the IPO fund-raising project. In the IPO fund-raising project, Mengtian household plans to invest 350 million yuan in brand channel construction, of which 250 million yuan will be raised through IPO. The total investment of the brand channel construction of Mengtian household accounts for more than 30% of the total investment of IPO, and the financing of the brand channel construction accounts for 25.51% of the total financing. The brand channel construction is the second largest investment project of Mengtian household.

In the brand channel construction project planning of Mengtian home furnishing, only 9 million yuan of the planned brand construction cost is used to build smart stores, and the rest is used in advertising cooperation, brand publicity and flow building. According to the data, from 2017 to 2019, the total amount of advertising and publicity expenses of Mengtian household was only 221 million yuan.

It is obvious that Mengtian household has the intention of regulating the companys profit before listing by reducing the normal advertising investment. Investor net has consulted the Secretary Office of Mengtian household about the reduction of advertising expenses and the raising of funds for brand promotion, but the other party has not replied.

The sales volume of wooden door products declines, and the cabinet products survive through cracks

Mengtian household mainly produces and sells wooden doors, wallboards, cabinets and other products. From 2017 to 2019, more than 70% of its revenue is provided by wooden doors. However, investor.com noted that from 2017 to 2019, the sales volume of wooden doors of Mengtian household decreased year by year. In 2017, Mengtian household sold 646000 door leaves, but by 2019, the sales volume of the door leaves has dropped to 456100, and the sales volume has decreased by nearly 200000, with a decline rate of nearly 30%.

Jiangshan oupai, the main competitor of Mengtian household in the category of products, sold 625700 solid wood composite doors in 2019, a year-on-year increase of 61.67%, and 1586000 plywood molded doors, a year-on-year increase of 28.13%. In 2018, the sales growth rate of Jiangshan oupai solid wood composite doors and plywood molded doors remained above 18%. However, the sales volume of wooden doors of Mengtian household fell in 2017-2019, and the gap between Mengtian household and its main competitor Jiangshan Europe Group has become larger and larger.

In addition, affected by the decline of wooden door sales, the capacity utilization rate of Mengtian household wooden door products is also decreasing year by year. By 2019, the capacity utilization rate of its wooden door products is only 63.00%. In the case of the decline in the utilization rate of wood door products, Mengtian home intends to raise funds to build a new production capacity of 370000 sets of flat doors per year. How to effectively utilize 700000 sets of existing capacity plus 370000 sets of new capacity will be the main problem after the successful IPO.

In 2019, Sofia sold more than 40 million square meters of customized wardrobe, accessories and furniture, and more than 90000 sets of kitchen cabinets. Compared with Sofia, the sales volume of cupboard products of dreamtime home is obviously not in an order of magnitude. In terms of sales volume, the sales volume of Europa furniture, which produces the whole cabinet furniture, is nearly 70% higher than that of Sofia. Under the rule of European style home furnishings, Sofia and other industry giants, it is undoubtedly very difficult for Mengtian home furnishings to excel in cabinet products. This may be an important reason that Mengtian home still raises funds for wooden doors with low capacity utilization rate in the fund-raising investment projects, instead of using all the funds to improve cabinet products.

The supervision of the board of directors becomes a problem

Mengtian furniture was founded in 2003. Its predecessor is Huayue wood industry. Yu Jingyuan, the actual controller, controls Huayue wood industry through Huayue group, a company registered in Hong Kong. In 2004, Huayue group was renamed as Hong Kong Mengtian group, which is the origin of the existing company name of Mengtian home furnishing. As of August 2016, only one shareholder of DREAMDAY home is Hong Kong DREAMDAY. In August 2016, Hong Kong Mengtian transferred its 100% equity of Mengtian home to Mengtian holding, Mengjia investment, fan Xiaozhen, MengYue investment, Yu Jingbin and other shareholders. Mengtian home successfully converted from foreign holding to domestic holding.

Investor net has learned that Hong Kong allows the existence of shell companies. By using Hong Kong companies to control mainland companies, Hong Kong companies can enjoy certain preferential policies in foreign exchange control, tax and other aspects. This may be the reason why dreamtime households shareholders have not converted from foreign capital to domestic capital in more than ten years.

In December 2018, shortly after the completion of the equity transfer, Mengtian household carried out the shareholding system reform, but its shareholders are still Mengtian holding, Mengjia investment, fan Xiaozhen, MengYue investment and Yu Jingbin. According to the data, Mengtian holding is jointly controlled by the actual controller Yu Jingyuan, fan Xiaozhen and his wife; Mengjia investment controller is Yu Jingyuan and fan Xiaozhen; MengYue investment is an employee stock holding platform, and its voting rights are still controlled by Yu Jingyuan, and Yu Jingyuan and fan Xiaozhen jointly control 98% of the voting rights of Mengtian before listing.

Yu Jingbin, a small and medium-sized shareholder, controls 2% of the equity of Mengtian household, but Yu Jingbin is the brother of Yu Jingyuan, the actual controller, and also the director and Secretary of Mengtian household. Although, in the determination of the actual controller, dreamtime home did not identify Yu Jingbin as the concerted actor of the actual controller Yu Jingyuan and fan Xiaozhen, in fact, dreamtime home before the release was 100% controlled by Yu Jingyuan family. If 25% shares are issued according to the issuance plan, Yu Jingyuan and fan Xiaozhen still control 78.40% of the voting rights of Mengtian household. In the current board of directors, Yu Jingyuan, fan Xiaozhen and Yu Jingbin occupy three of the six directors seats, and the other three are employees of the company. Under such ownership structure and the composition of the board of directors, there may be hidden dangers in the corporate governance of Mengtian home furnishing after the issuance. Under the guiding ideology of registration system and marketization, the reform of domestic capital market is advancing orderly. How to improve the quality of profits and strengthen the supervision of the board of directors will be the key to win the favor of the market. (produced by thinking finance and Economics) source of this article: Investor net Author: Wu Wei editor in charge: Wang Xiaowu_ NF

Yu Jingbin, a small and medium-sized shareholder, controls 2% of the equity of Mengtian household, but Yu Jingbin is the brother of Yu Jingyuan, the actual controller, and also the director and Secretary of Mengtian household. Although, in the determination of the actual controller, dreamtime home did not identify Yu Jingbin as the concerted actor of the actual controller Yu Jingyuan and fan Xiaozhen, in fact, dreamtime home before the release was 100% controlled by Yu Jingyuan family.

If 25% shares are issued according to the issuance plan, Yu Jingyuan and fan Xiaozhen still control 78.40% of the voting rights of Mengtian household. In the current board of directors, Yu Jingyuan, fan Xiaozhen and Yu Jingbin occupy three of the six directors seats, and the other three are employees of the company. Under such ownership structure and the composition of the board of directors, there may be hidden dangers in the corporate governance of Mengtian home furnishing after the issuance.