On August 29, Changfang Group released its semi-annual report showing that the company’s total operating revenue reached 855 million yuan during the reporting period, representing a 17.60% increase compared to 727 million yuan in the same period last year. However, the operating profit dropped to 34.63 million yuan, down 44.56% from 62.46 million yuan in the corresponding period of the previous year. Additionally, the net profit attributable to shareholders of listed companies fell to 12.3 million yuan, a significant 67.2% decrease from the previous year.
The company explained that the primary reasons for the declining performance were due to the relocation of its Pingshan production base, which affected production capacity in the first half of the year. Secondly, the newly completed Huizhou Industrial Park plant was classified as fixed assets, resulting in depreciation costs that impacted profitability. Although the company adjusted and optimized its product structure and developed new customers in the first half of 2017, these efforts have yet to yield noticeable results.
Changfang Group's business primarily revolves around the packaging of white LEDs for lighting applications, extending to downstream lighting solutions. The group focuses on research, design, manufacturing, and selling LED lighting sources and products. Faced with stiff market competition and rapid expansion in the lighting application sector, the company purchased the equity of Kang Mingsheng, an LED lighting application firm, through cash and share issuance. This move aims to strengthen its industrial chain, accelerate resource integration, and enhance its competitive edge in the packaging market while optimizing upstream and downstream operations.
According to recent market data, China's LED packaging market grew from 64.4 billion yuan in 2015 to 73.7 billion yuan in 2016, marking a 14% year-on-year increase. By 2017, driven by the LED application market, particularly the lighting segment and increasing demand in the small-pitch display market, the LED packaging market is projected to reach 87 billion yuan, up 16% from the previous year. Experts predict that the scale of China's LED packaging market could rise to 128.81 billion yuan by 2020. As a technology-driven enterprise, Changfang Group is expected to benefit significantly from this growing market due to its leadership in packaging technology, advanced machinery, and stringent quality standards.
In response to intense market competition and the booming lighting application sector, Changfang Group is also exploring high-quality acquisition targets aligned with its growth strategy, particularly within the education industry. The company envisions a dual-model approach to education, combining physical educational institutions with consulting services. This model aims to leverage educational entities as a foundation for long-term growth while using consulting services as a driver for innovation.
Recently, Changfang Group entered into a Cooperation Framework Agreement with the Beijing Global Arts Alliance. The company plans to invest 50 million yuan in the alliance and transfer another 50 million yuan worth of equity held by Zhang Jun. Following the equity increase and transfer, the company will hold a 20% stake in the Global Arts Alliance. This partnership aligns with the company’s strategic objectives, allowing both parties to optimize and integrate their resources. By doing so, Changfang Group expects to enhance its presence in the education sector, refine its industrial layout, and secure long-term sustainable growth.
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