Jinya Technology (300028.CH/ RMB 17.95, no rating) was originally a radio and television equipment supplier and is currently in a period of transformation. In 2013, operating income increased 28% year-on-year to 610 million yuan, and net profit attributable to shareholders of listed companies fell sharply to a loss of 122 million yuan. The reasons include: 1) impairment of accounts receivable of 62.09 million yuan for the Nanchong project; 2) loss from Harvard International, and proposed impairment of goodwill by about 20 million yuan; 3) the gross margin of major products such as set-top boxes declined sharply. In 2013, a group structure was established with a joint stock company as the parent company, focusing on expanding the “smart digital home” consumer electronics market, launching game boxes and other products one after another, and planning to establish a “platform+terminal+content” pan-home Internet ecosystem chain. The company has proposed stock options and restricted stock incentive plans. The exercise conditions include using the 2013 net profit as the basis, the net profit growth rate from 2014 to 2016 is not less than 15%, 34%, and 60%, respectively, the return on net assets of 6-8%, the exercise price of the options is 10.16 yuan/share, and the grant price of the restricted stock is 4.92 yuan/share. We acknowledge the growing market demand for smart home terminals and interactive entertainment terminals. At this stage, we will pay close attention to whether the company is properly prepared for this in terms of market foresight, foreign cooperation, and talent team building. 1. Development history Chengdu Jinya Hi-Tech Co., Ltd. was formally established in 1999. In 2003, the company was approved to enter Jinniu Hi-Tech Industrial Park. In 2006, the company established the “Chengdu Jinya Digital Television Research Institute”, and the product structure was successfully transformed from analog technology to digital technology. In 2007, the company adjusted its corporate share structure and changed its overall structure to “Chengdu Jinya Technology Co., Ltd.”, and Mr. Zhou Xuhui became the chairman of the board. In 2009, it was successfully listed on the Shenzhen Stock Exchange VEM (stock abbreviation: Jinya Technology, stock code 300028). In 2010, Beijing and Shanghai branches and a wholly-owned subsidiary in Shenzhen were established successively. In 2012, a Hong Kong subsidiary was established to successfully acquire Harvard International, an established and well-known British company. In 2013, a strategic cooperation was reached with the online game company Perfect World, a major step forward in the transformation of consumer electronics. In the same year, Shenzhen Resensi Technology Co., Ltd., a holding touch screen company, participated in game channel operator Beijing Mingheming Culture Media Co., Ltd. 2. Existing product system companies currently have four product layouts: smart home multimedia entertainment centers, radio and television DVB terminals, smart home entertainment multimedia centers, and smart home information technology centers; brands include Geeya, Goodmans, Bush, View21, Blife, etc. 3. The main subsidiary, Harvard International, spent 229 million yuan in 2012 to acquire 100% of the shares of an established British listed company, Harvard International, through a wholly-owned subsidiary in Hong Kong, as a “port of entry” for the company to implement its internationalization strategy. This acquisition is the first overseas merger and acquisition of a Chinese GEM listed company. The reasons for Harvard's losses in 2013 include a certain increase in procurement costs due to the European debt crisis and the floods in Thailand; when entering operations, it will be discovered that control over actual costs has been exceeded to a certain extent; and the number of personnel is too large. At present, the company has drastically cut and replaced personnel, and at the same time replaced the person in charge of overseas sales; handled some inventory equipment; controlled travel costs, etc. Rayssens Technology Co., Ltd. (Rayssens Technology Co., Ltd.) Established in early 2011, it is a professional capacitive screen module factory engaged in capacitive touch screen technology research and development, product design, manufacturing and sales, integrating and providing total solutions for customers in all aspects. Currently, Resenz has more than 600 employees and a module production capacity of 750K per month. Meikaku Minghe, whose company has a 35% stake through its subsidiary Jinya Software, is a comprehensive game media company engaged in game video program production, e-sports event hosting, game website platform operation, game star packaging and commercial development, and a wholly-owned operator of GTV e-sports game channels. GTV's profit model: promotion for game manufacturers; broadcasting of e-sports events; game integration, including page games, mobile games, and mobile games. Zhijia Video Tour ZhijiaTV Tour is a new company invested and set up by Jinya Software using its own funds. Jinya Software holds 100% of the shares. In order to further strengthen the in-depth development of the home entertainment industry chain, deepen the production of quality content in the field of video games, create an ecological environment for the orderly development of video games, establish an efficient video game operation platform, and provide users with exquisite, fun, casual, light and moderate video games suitable for home entertainment in China. Furthermore, the successful operation of Home Video Tour will complete Jinya Technology's industrial layout in the pan-home Internet ecosystem. Cloud Media Internet Cloud Media Internet is a new company established by Jinya Technology using its own capital, and accounts for 100% of the shares. The main business is to promote the “GEEYA Watch” business, use existing mature radio and television resources to organically combine live television with mobile Internet, and launch the “GEEYA Watch” service based on cable television networks and the Internet. It uses a model of integrating network elements and Wi-Fi coverage in public places, and using interactive on-demand and Wi-Fi coverage in homes to expand TV terminals from a single television to intelligent mobile end users, and expand the cable television network to the field of wireless space, creating a seamless connection between indoor home space and value-added services such as video in outdoor public places New business with full coverage. 4. The “first stock” company to create family games began developing video games in 2013. The industry as a whole is a blue ocean. The company believes that the future video game market is the current mobile game market. Set up a video tour company to experiment with platforms and content. Currently, the Home Video Tour team has about 40 members, and the company's products target more moderate and light video games. The company strives to create an open platform for video games. In addition to building its own team to develop quality games, it will introduce excellent products in the future. Currently, there are no companies of the same type in climate and scale in the market. The company's platform includes providing interface, user management, payment, login, etc., and ways to interact with mobile phones. The company's products are highly adaptable, combined with mobile game content, and equipped with premium games. The video game monetization model will still be based on downloads, ads, account items, etc. Consider providing physical strength values to customers every day. Or, for example, a karaoke game app that sings a good song to send “flowers.” Puzzle games, on the other hand, make more money with items. According to research, video games should not last longer than 40 minutes. There is much left to be developed for the television operator, and its presentation content and image quality are superior to that of PC and mobile phones. With Perfect Cooperation, a second-generation product will soon be launched and Perfect Cooperation, the two companies are highly compatible. Perfectly seeking to enter video games, they have extensive experience in overseas operations and can use Jinya's platform. Meanwhile, with perfect brands, experience and resources, Jinya focuses on developing family parent-child games and puzzle games. The poor sales of Perfect Box are mainly due to high prices due to mistakes in marketing strategies; the sales team is inexperienced, leading to mistakes in marketing positioning and sales methods. However, the launch of Perfect Box is more significant than substance. Jinya conveyed more information to everyone that “everyone can play games on TV.” In Zhijia II, more somatosensory games with somatosensory peripherals will be added, effectively enhancing users' sense of experience with OTT games. It is expected that the new product will be launched in the first half of this year. Subsequent “Home Rubik's Cube” will mainly rely on two channels in the future: one is cooperation with operators, and the other is through other channels, including e-commerce. The “Rubik's Cube” has different operating modes: including camera, handle, remote control, etc., taking into account the compatibility and operating habits of different boxes. We believe that the core problem of the company's product promotion at present is that the ARPU value of radio and television products is currently not high. Currently, the focus is on further developing the region, taking into account the number and activity of users in a piecemeal manner, and taking more account of the number and activity of users. Jinya's advantages in video games: The company has long been committed to R&D, sales, and production of TV peripheral products. It has a clearer understanding of TVs, and there is a clear difference between TV users and mobile phone users; during the promotion process, the company itself has its own operator customers; Chengdu is originally a fertile ground for games, with more than 700 game companies. A good development environment for game software and many game development companies can grasp the development trend as soon as possible; currently, the Chinese game market can be divided into several types of online games, stand-alone games, web games, mobile terminal games, video games, etc. Among them, web games and mobile terminal games are developing the fastest, yet the video game market is lagging behind in development and has not yet formed an operational pattern; the company's shareholding company Minghe Ming and the platform resources that operate the channel GTV have not yet formed. 5. Jinya enjoys a business model: starting from the family, gradually developing commercial value. Advantages: It has a wide range of application scenarios and is very common. It is suitable for providing wireless video and audio services in public places, so that users can watch live video through smartphones and tablets. The terminals covered include iPhones, Android phones, iPads, Android tablets, laptops, etc. Some provinces and cities have signed pilot agreements to launch pilot applications. Business model: mobile Internet, first the entrance, traffic in exchange for efficiency. Through advertising, the mobile Internet realizes accurate information transmission and statistical segmentation of big data. As 4G attracts mobile video, there is pressure on bandwidth and costs. Companies can cooperate with telecom operators in closed WIFI environments, such as squares, subways, hospitals. Applications such as large screen data distribution in hospitals and small screens. Key features: Covering a certain area of public space; people in specific regions can access the viewing system; people in different regions may watch different programs; ability to transmit differentiated professional content; Internet access. 6. Future development direction and strategy The four major business segments for diversified development: first, developing a series of multimedia smart terminal products that meet the needs of users around the “integration of three networks”; second, targeting a wider and more open target customer with consumer electronics; third, developing IoT projects to actively promote “smart home” demonstration application projects; and fourth, increasing efforts in R&D and sales of special products. Using the Home Video Tour as a carrier, we accelerate the growth of consumer electronics and achieve profit through the promotion of video games. Using Harvard International as the carrier, we will open up international routes and promote Jinya products overseas. The future direction of the company's mergers and acquisitions and investment is still based on the main business related fields: radio, television, new media, video games, smart homes, etc.