I. Overview
At the beginning of 2020, the sudden outbreak of a new type of coronavirus pneumonia epidemic and its rapid spread around the world led to the phased stoppage of work and production, and the slowing down or stagnation of all kinds of business activities, which brought a huge impact on the entire economy and society, and the exhibition and display industry involved in the company also inevitably suffered a huge impact. The exhibition and display industry of the Company was also inevitably greatly affected. During the reporting period, the company grasped the prevention and control of the epidemic with one hand, grasped the recovery and development of production and operation with the other hand, actively expanded the market of three-dimensional digitization (3D), augmented reality (AR), virtual reality (VR), holographic display, artificial intelligence (AI), and other virtual display business, and gave full play to the research and development advantages of the academician workstations, post-doctoral workstations, engineering laboratories, engineering and technological research centers to strengthen the internal operation and management. Efforts to overcome the impact of the new crown epidemic, domestic economic adjustments and changes in the international trade environment, to achieve operating income of 403,205,662.89 yuan, a decrease of 13.81% over the same period of the previous year, to achieve a net profit attributable to shareholders of the listed company of 19,408,232.61 yuan, a decrease of 20.78% over the same period of the previous year. Virtual display business realized revenue of 76,706,476.83 yuan, an increase of 86.32%.
1, terminal display business
In the field of terminal display, affected by the new crown epidemic, the domestic exhibition and display industry appeared in a stage of stagnation, consumer electronics, automobiles, luxury goods and other major consumer goods market demand fell sharply, and export stagnation. During the reporting period, the company adhered to the strategy of "creativity first, quality first, customer-oriented", actively took countermeasures, grasped the epidemic prevention and control with one hand, grasped the recovery of production and operation with the other hand, and continued to serve the high-quality customers such as Huawei and Maotai, while actively exploring new customers, to maintain the stable development of the terminal display business. During the reporting period, the terminal display business realized revenue of RMB122,680,603.04, a year-on-year decrease of 30.66%.
2. Circular exhibition business
In the field of circular exhibition, under the influence of the Xin Guan epidemic, the exhibition industry had a phased stop, and only gradually began to recover in mid-May 2020, and the company's exhibition business was greatly affected. During the reporting period, the circular exhibition business realized revenue of 14,593,318.07 yuan, a year-on-year decline of 62.90%.
3, virtual display business
In the field of virtual display, with the development of 5G and the Internet, three-dimensional digitization (3D), augmented reality (AR), virtual reality (VR), holographic display, artificial intelligence (AI) and other emerging industries are rapidly developing. During the reporting period, the company continued to exert the R&D advantages of academician workstation, postdoctoral workstation, engineering laboratory and engineering technology research center, accelerated product innovation, increased market push, and achieved a revenue of RMB 76,706,476.83, an increase of 86.32% year-on-year.
4, trade services
Since 2018, the international trade situation has continued to deteriorate, while the rapid construction of domestic 5G and the Internet of Things, the demand for chips and other electronic products is strong, in order to explore and cultivate new profit growth point, the company is actively laying out the 5G + 3D business, and strive to 3D | AR | VR technology in the application of communications electronics, Internet of Things industry, supporting the development of the relevant Chips and other electronic products sales business, gradually from trade to product development. During the reporting period, trade services realized revenue of RMB 126,254,861.16.
5, other business
During the reporting period, other business income mainly came from the production base of Huizhou Creative Terminal Display Products, Eshang 3D Industrial Park, Eshang Creative Technology Building, three part of the property leasing and Eshang Creative Technology Building part of the property sales. During the reporting period, other business income amounted to RMB62,970,403.79.
II. Risks faced by the Company and measures to address them I. Risks faced by the Company 1. Impact of the global epidemic of the new coronavirus pneumonia In early 2020, the sudden outbreak of the new coronavirus pneumonia epidemic and its rapid spread around the world led to the stage of stoppage of work and production, and slowdown or stagnation of various business activities, which brought about a huge impact on the entire economy and society, and the conference and exhibition business only began to gradually recover in mid-2020, and the conference and exhibition business only began to gradually recover by mid-2020. The conference and exhibition business only started to recover gradually in the middle of May 2020, and has not fully returned to normal by the reporting period, and the exhibition and display industry involved in the Company was inevitably greatly affected. 2. Influenced by macroeconomic fluctuations Since the reform and opening up, China's economy has been developing rapidly and has made great achievements. However, it is undeniable that China's economic growth still fluctuates between years. At the same time, China has been integrated into the world economic system, economic development is also affected by fluctuations in the world economy, China and even the world economic fluctuations will have a certain impact on the development of the display industry, coupled with the risk of trade disputes between China and the U.S., the company has a portion of the export business, which has an adverse impact on the production and operation of the Company. During the reporting period, the domestic brand terminal display market showed slow growth in demand, structural oversupply, intensified market competition, rising costs of production factors and a decline in industry gross margins. 3, the risk of market competition Although the exhibition display industry market size is huge, the market space is broad. However, there are many participating subjects, the industry market is scattered, the market concentration is low, and the competition is relatively fierce. The Company will likely face the risk of increased market competition, if the Company is not able to effectively adapt to the requirements of market competition, it will have a negative impact on operating results. 4. Risk of seasonal fluctuation The Company's downstream retail industry will generally upgrade or modernize its sales terminals before the National Day, New Year's Day and Chinese New Year, therefore, the Company's peak sales season is generally in the second half of the year. Due to the impact of seasonal factors, within the complete fiscal year, the company's financial position and operating results show certain characteristics of seasonal fluctuations, generally the first half of the revenue and profit is lower than the second half. The company's operating results are subject to seasonal risk. 5、3D\AR\VR\Holography\AI business expansion is not as expected risk The company on 3D\AR\VR\Holography \AI and other emerging technologies has carried out a large R & D and promotion of investment, the relevant technology updates, promotion and application will be sustained investment, but due to the 3D\AR\VR\Holography \AI is an emerging industry, the future whether it can generate higher operating income and profit has a large uncertainty. Risk of relative market concentration 6, the risk of relative market concentration During the reporting period, the company's main business is concentrated in South China, South China business revenue accounted for 60.02% of total revenue during the reporting period, there is a risk of relative market concentration. 7, the risk of higher financial expenses In order to protect the capital demand for the construction of Eshang 3D Industrial Park and Eshang Creative Technology Building, the company has increased bank borrowings in the past few years, and the company is still facing the risk of higher financial expenses. 8, asset depreciation, amortization risk of dilution of profitability With the company's production base in Huizhou, Eshang 3D Industrial Park and Eshang Creative Science and Technology Mansion has been completed and put into use, the company's fixed asset scale growth is large, will lead to the company's fixed asset depreciation, amortization of intangibles is a large increase, which will dilute the level of profitability of the company. 9, the risk of decline in gross profit margin As competitors continue to join the market competition will become more and more intense, the future of the company's consolidated gross profit margin there is a risk of further decline in the company's operations will have an impact. 10、Risk of high amount of accounts receivable At present, the company's main customers are enterprises that have formed a good cooperative relationship with the company, with good financial condition and high degree of commercial credit, with strong payment ability. Nevertheless, if the financial condition of the customers deteriorates, there is an operational crisis or there is a significant change in credit conditions, the possibility of bad debts arising from the company's accounts receivable will increase, which will adversely affect the company's production and operation. 10, management risk With the continuous expansion of the company's business and scale expansion, the company will face greater challenges in the management mode, talent reserves, technology (design) innovation and market development. If the company's management level and talent reserves can not adapt to the needs of the rapid expansion of the company's scale, the organizational model and management system failed to expand with the expansion of the company's scale and timely adjustments and improvements, it will be difficult to ensure that the company's safe and efficient operation, which will weaken the company's market competitiveness. Measures to be taken by the Company to cope with the situation 1. In accordance with the regulations and requirements of the Party, the State and governments at all levels, the Company will, while actively taking precautions against the emerging Coronavirus Pneumonia Epidemic, realize the resumption of work and production as soon as possible, and endeavor to eliminate the impact of the epidemic on sales, production, transportation and construction. 2, adhere to the established strategy, optimization and enrichment of the main business in the field of terminal display business, the company adhere to the "quality development" strategy, and actively take measures to improve production efficiency, reduce operating costs, the use of the company's industry leading advantages and customer resource advantages, consolidate and develop the depth of cooperation with existing major customers; expand and dig deeper into the demand, enhance the rapid development and production of Expanding and digging deeper into the demand, improving the rapid response ability of R&D and production, and enhancing the quality of new products and the proportion of high-end products. In the field of virtual display, the company will continue to focus on in-depth expansion of 3D digitizing technology application fields, while strengthening the research and development of AR, VR, holography and AI technologies, and integrating 3D with AR, VR, AI and other technologies to form a targeted overall solution for industry applications, and to lay out the layout of exhibitions and displays, e-commerce, culture and education, cultural relics and digital museums, medical and health care, artificial intelligence and other fields. In the field of circular exhibition, the company will In the field of circular exhibition, the company will continue to focus on the R&D of circular system and the development of application scenarios, optimize the design information system, and consolidate the competitiveness of the industry. We will actively seize the opportunities arising from the development of the Guangdong-Hong Kong-Macao Greater Bay Area and the official operation of the world's largest convention and exhibition center-Shenzhen International Convention and Exhibition Center, and actively develop the businesses of recycling exhibitions and convention and exhibition services. It also continued to strengthen its cooperation with Octane Group of Germany, the inventor of the global environmental protection exhibition system and the standard-setter of the industry, and vigorously explored overseas sales of recycled exhibitions. Since 2018, the international trade situation has continued to deteriorate, while the rapid construction of domestic 5G and the Internet of Things (IoT) has resulted in strong demand for chips and other electronic products, in order to explore and cultivate new profit growth points, the Company has actively laid out the 5G+3D business, endeavored to land the application of 3D | AR | VR technology in the communications electronics, IoT industry, supporting the relevant chips and other electronic products sales business, and gradually moving from trade to Product R&D. 3, increase research investment, and actively promote the development of 3D, AR, VR, holography, AI and other business With the development of 5G and the Internet, 3D, AR, VR, holography, AI and other industries show great prospects for development. The company is one of the earliest listed companies involved in 3D, AR, VR, holographic technology research and development and commercialization, after nearly a decade of continuous investment in scientific research, the company has established academician workstations, post-doctoral research stations, engineering centers and other scientific research institutions, 3D and related technologies to reach the international leading level, has won the first prize for technological invention in Shenzhen City and the Guangdong Province Science and Technology Second Prize, the relevant technologies and products have been exhibition, display, e-commerce, cultural and educational industries. Relevant technologies and products have been commercialized and applied in the fields of exhibition, e-commerce, culture and education, cultural relics and digital museums, medical and health care, and so on. The company will continue to increase the research and development of 3D, AR, VR, holography and other technologies, especially with AI and other technologies. 4. Enhancement of cultural creative design capability Since its establishment, the company has gradually learned, digested and absorbed terminal display design technology, and applied computer-aided design, multimedia and other high-tech in other industries to the field of terminal display design to form an independent creative advantage. The company will further enhance its independent creative ability through the following plans: to further improve the display design system, to build a high-end display design system in the terminal display industry through the systematization and proceduralization of design, to form a standardized and benign development of the display design platform, to ensure the continuous output of the company's design solutions, and to form the sustainable development ability of display design; to continuously innovate the display concept, to integrate modern information technology into the existing display mode, and to break through the traditional display mode. Continuously innovate display concepts, integrate modern information technology into the existing display mode, break through the traditional static display mode, lead the use of advanced display technology, and maintain a leading position in the market. 5、Strengthen market development and marketing network construction The company will continue to strengthen the development of the national market, the mature terminal display integrated service model copied to the national market, and further increase the company's brand awareness and market share. Through the integrated marketing platform of seven regional marketing service centers covering the whole country, the company will comprehensively enhance its marketing capability and project execution; increase special marketing activities, the company will expand its visibility in the professional customer base and enhance the influence of the company's brand by participating in relevant industry exhibitions, placing professional media, etc. Optimize the construction of the company's existing informatization platform, enhance the company's efficiency of collaborative work and centralized control capabilities, and further enhance the company's management efficiency. Optimize the construction of the company's existing information technology platform, enhance the efficiency of the company's collaborative work and centralized control, and further improve the company's management efficiency and decision-making ability. 6. Strengthening operation and management and optimizing asset structure Continuously strengthened the target plan management, salary and performance management, supply chain management and capital plan management, etc., and continuously improved the efficiency of operation and management. At the present stage, the proportion of self-built properties in the company's assets is relatively large, for this reason, the company accelerates the sale of part of the properties of E-Shang Digital on the one hand, and commercially leases out the properties that are not used temporarily at the present stage on the other hand, so as to improve the utilization rate of the assets and the return and reduce the asset-liability ratio, and at the same time, increases the collection of accounts receivable, and adopts diversified fund-raising methods to satisfy the capital demand of business development in different periods in accordance with the actual needs of the development operation. Optimize the structure of assets and liabilities to ensure the sustainable, rapid and healthy development of the company. 7, improve incentive mechanism, strengthen human resource management The company will adhere to the people-oriented concept, continue to improve the human resource management system, establish a scientific performance management mechanism, continue to improve the incentive mechanism, through housing, equity incentives, employee stock ownership plan and other ways to attract professionals, retain talent, and build a high-level R & D team. 8、Strengthen safety management The company will continue to implement the policy of "safety first, prevention first", continue to strengthen the awareness of safety responsibilities, further improve the safety production system, and further strengthen the protection of its own intellectual property rights and confidentiality. 9, other The company will according to the needs of business development, in order to maximize the interests of shareholders as the principle of the premise, in line with the company bigger and stronger strategic objectives, integration of valuable market resources, to achieve rapid and healthy development of endogenous at the same time, will actively seek opportunities for epitaxial development, to achieve the combination of product management and capital management, industrial capital and financial capital.
Third, the core competitiveness analysis 1, customer resource advantages. After years of operation and accumulation, the company has established good, long-term cooperative relations with many well-known brands and enterprises, covering consumer electronics, communications, home appliances, fast moving consumer goods, pharmaceutical chains, chain stores and other industries, customers include Huawei, Maotai, Ali, Jingdong, Gree, Lenovo, Haier, Samsung and many other well-known enterprises, which have formed a high degree of visibility and reputation in the industry. 2. Advantage of scientific research strength. After more than a decade of continuous research and development, the company's 3D digitizing technology has reached the advanced level of the industry at home and abroad, established academician workstations, post-doctoral research stations, engineering centers, industrial design centers and other research and development system, the relevant products and technologies won the first prize of Shenzhen Technological Invention and the Guangdong Provincial Science and Technology Second Prize, and undertook the development of national scientific instruments and equipment, such as the development of major scientific and technological research tasks. The company actively promotes the industrialization of 3D\AR\VR\Holography\AI technology, and launched a series of products and solutions for exhibition, e-commerce, new retail, industrial testing, intelligent manufacturing, cultural education, cultural relics and digital museums, medical and health care and other industries, with significant commercial applications. 3. Advantage of cultural creative design capability. Over the past ten years, the company has conducted long-term and uninterrupted tracking and research on the exhibition and display needs of major industries, established and perfected the cultural and creative design system, and accumulated complete and rich experience and cases from market research, creative design to manufacturing, system integration and after-sales service. 4、Online and offline joint exhibition advantages. After more than a decade of development, the company has developed into a leading enterprise in the field of domestic exhibition, with leading core technology and high-quality talent team, the company attaches great importance to customer experience, can provide customers with offline physical display and online virtual display combined with the integration of display services. 5、Energy saving and environmental protection advantages. In view of the serious waste of domestic exhibition resources, the company has developed and launched a recycling exhibition system, which can realize the recovery and recycling of the main exhibition materials, effectively solve the current problem of waste of resources in large-scale thematic conferences and exhibitions, and realize the economic and social benefits of energy-saving, low-carbon and environmental protection.