2024-04-26-深交所-巨星科技_2023年年度报告_英文版_266页_2mb

Summary of Hangzhou GreatStar Industrial Co., Ltd. 2023 Annual Report

Core Content

Hangzhou GreatStar Industrial Co., Ltd. (GreatStar) delivered record-setting results in 2023 despite facing severe challenges, including active destocking and declining demand in the European and American markets starting in H2 2022. The company's performance was driven by its commitment to the development philosophy of "remaining devoted to perfection while keeping the grand vision in mind."

Key Financial Highlights

• Total Operating Revenue: RMB 10.929 billion
• Net Profit Attributable to Parent Company: RMB 1.691 billion
• Net Cash Flow from Operating Activities: Exceeded RMB 2.1 billion
• Compound Annual Growth Rates (CAGR):
  • Operating Revenues: 14.49%
  • Net Profit: 15.23%
  • Net Assets: 14.32%
• Operating Income (RMB): 10,929,992,802.32 (down 13.32% from 2022)
• Net Profit After Non-recurring Adjustments (RMB): 1,697,490,987.11 (up 16.67% from 2022)
• Net Cash Flow from Operating Activities (RMB): 2,125,854,925.65 (up 30.27% from 2022)
• Total Assets (RMB): 19,683,797,271.17 (up 5.85% from 2022)
• Net Assets Attributable to Shareholders (RMB): 14,847,980,075.62 (up 10.82% from 2022)
• ROE (Weighted Average): 11.89% (down 0.42% from 2022)

Main Business and Strategic Shifts

GreatStar has undergone significant strategic changes over the past decade. Initially focused on hand tools, the company expanded its product portfolio by acquiring international brands such as ARROW, LISTA, BEA, and SHOPVAC, while also investing in R&D and market development. As a result, non-hand tool categories now account for nearly 40% of its offerings, and GreatStar has become the world's second-largest manufacturer of laser measurement instruments and tool storage cabinets, with over 30,000 SKUs.

The company's original brands now contribute nearly 50% of total revenue, significantly increasing its gross profit margin and providing stability during market fluctuations. This transformation reflects GreatStar's long-term strategy of focusing on consumer goods in Europe and the United States as its core business.

Business Model Evolution

GreatStar has diversified its business model through:

• Direct cross-border e-commerce operations
• Acquisition of European and American distribution channels
• Establishment of Asia-Pacific distribution channels

These efforts have increased the proportion of direct-to-customer (DTC) business, enabling the company to better meet retail customer needs and obtain direct feedback for product R&D.

Industrial and Supply Chain Expansion

To mitigate risks from trade disputes and supply chain disruptions, GreatStar has:

• Built three major manufacturing bases in Vietnam, Cambodia, and Thailand
• Acquired or established 10 production bases in China, 3 in Southeast Asia, 5 in Europe, and 3 in the United States
• Established multiple large logistics distribution centers and sales and after-sales teams in Europe and the United States, achieving localized service

This global expansion has been critical in ensuring supply chain resilience and reducing dependency on China's domestic market.

Challenges and Adaptations

GreatStar faced several challenges during the reporting period, including:

• US-China trade disputes leading to increased tariffs and operational costs
• Global supply chain disruptions in 2020 due to the pandemic, forcing a shift to personal protective equipment (PPE)
• Declining demand in Europe and America in 2022 due to interest rate hikes and overstocking

Despite these challenges, GreatStar managed to achieve a 17% CAGR in operating revenue and 20% in net profit over the past six years, showing strong resilience and adaptability.

Future Outlook

GreatStar continues to adhere to its development philosophy and aims to become the world's largest tool company. The company emphasizes patriotic sentiments, comprehensive strengths, and long-term shareholder returns.

Key Milestones and Achievements

• Founded in 1994 in Hangzhou with a small office and one employee
• Public listing in 2010, marking a significant milestone in its growth
• Strategic refocusing on core business in 2017, which led to improved performance and long-term growth
• Successful diversification into new product categories, enhancing its market position

Corporate Governance and Compliance

• The Board of Directors and Supervisors have confirmed the accuracy and completeness of the annual report
• The accounting firm is Pan-China Certified Public Accountants LLP (Special General Partnership)
• Signatory CPAs: Li Deyong and Hu Fujian
• No material changes in registration information, main business lines, or controlling shareholders since the IPO

Conclusion

GreatStar has demonstrated resilience and adaptability in navigating a complex and evolving global market. Through strategic acquisitions, product diversification, and global supply chain expansion, the company has strengthened its market position and long-term growth prospects. Its commitment to perfection, innovation, and localized service positions it well for continued success in the future.