Tobacco label business has lost important customers one after another, Jinshi Technology (002951) has decided to "shut down" important subsidiaries.

  On March 23, Jinshi Technology issued an announcement that it decided to suspend production due to the sharp decrease in orders for the printing business of its wholly-owned subsidiary Jinshi Printing and no new orders recently. It is worth mentioning that Jinshi Printing used to be the "main force" of listed companies' performance contribution. The revenue in the first three quarters of 2022 was 129 million yuan, accounting for about 98% of the total revenue of listed companies.

  Jinshi Technology said that with the suspension of production of Jinshi Printing, the company's operating income in 2023 will drop significantly, but in the long run, this suspension of production can avoid further losses in the future, and will integrate resources to develop new industries in the future. At present, Jinshi Technology has launched new businesses related to optical glass and supercapacitors, and has invested in a number of optical communication, military, and microelectronics industry funds. However, the new industry is in its infancy and has not yet made a profit. Whether it can contribute incremental profits in the future remains to be seen. Time to watch.

  important subsidiaries ceased production

  As the core subsidiary of Goldentime Technology, Goldentime Printing was established in 2008. It is the main carrier for listed companies engaged in the cigarette label business, and has always been the "leader" in terms of performance contribution. Financial data show that the revenue and net profit of Golden Time Printing in the first three quarters of 2022 will be 129 million yuan and 2.3578 million yuan, respectively, accounting for 98% and 70% of the overall revenue and net profit of listed companies.

  Why did Jinshi Technology come to the end of production? The reason is mainly due to the loss of core customers. Back in 2012, Golden Time Printing began to provide cigarette label products for China Tobacco Anhui; in June 2015, China Tobacco Hunan publicly held the annual bidding for cigarette label procurement, and Golden Time Printing participated in the bidding for China Tobacco Hunan Furong King (hard), Baisha (Boutique), Gaibaisha and other cigarette brands' cigarette label procurement projects and won the bid, and since then began to cooperate with China Tobacco Hunan. According to the data, China Tobacco Hunan is the company's largest customer, and China Tobacco Anhui is the company's fourth largest customer. Previously, the business volume accounted for more than 50% of the company's total revenue and gross profit.

  The aforementioned cooperative relationship will change in 2021. In that year, Jinshi Technology issued multiple announcements, saying that Jinshi Printing was not shortlisted for multiple cigarette label projects of Hunan China Tobacco and Anhui China Tobacco, and the relevant historical products were the main source of revenue. In 2022, Jinshi Printing will successively carry out the 2023-2024 Yunnan China Tobacco tobacco materials-box wrapping paper, carton wrapping paper procurement project, Hunan China Tobacco cigarette box carton wrapping paper procurement and service project (April 2022 —June 2024) is unfortunately out.

  In the first half of 2022, only 86.4198 million yuan in revenue was achieved, a year-on-year decrease of nearly 70%, and the net profit was 816,200 yuan, a year-on-year decrease of 96.65%.

  Without the support of new orders, Jinshi Technology decided to stop production of Jinshi Printing, and gradually dispose of assets such as inventory products, raw materials and equipment, and properly arrange relevant personnel. The scope of the report will affect the company's net profit in 2023.