Business, Internet

China's Baofeng Group Predicts Dramatic Net Profit Decline

Chinese online audio and video entertainment service provider Baofeng Group published its performance prediction for 2016, stating that the company's operating revenue was expected to be between CNY1.57 billion and CNY1.73 billion, representing a year-on-year increase of 140% to 165%; however, its net profit would be between CNY17.35 million and CNY69.32 million, a year-on-year decrease of 60% to 89.99%.

Commenting on the expected operating revenue growth, Baofeng Group said that it was mainly contributed by the Internet TV business revenue growth of its subsidiary, Shenzhen Baofeng Tongshuai Technology Company. The company's revenue from Internet video VIP user value-added services saw an increase rate of over 100%.

For the expected net profit decline, Baofeng Group explained that the large price increase of raw materials such as TV panels in the TV industry led to the product cost surge of Baofeng Tongshuai. In addition, the company was going through a market expansion period and its marketing expense was growing continuously.

The group also said that in 2015, they gained investment profit of CNY104 million via equity transfers, but the investment earnings were much lower in 2016 compared with those in 2015. At the same time, to further attract and keep outstanding talents and motivate its management staff and core members, the company launched two phases of equity incentive plans, which led to the large increase of equity incentive costs.

Moreover, Baofeng Group revealed that for the year of 2016, they expected non-recurring gains and losses of about CNY14 million to CNY17 million.

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