Juewei food’s “cold winter”: weak performance growth and large shareholders cashing in 2.5 billion yuan

“The company will actively promote the marketing strategy of” deep coverage and intensive cultivation of channels “, step by step, and realize the compound saturated store opening.” Juewei Food Co., Ltd. (603517. Sh, hereinafter referred to as “Juewei food”) replied to investors on Shanghai Stock Exchange E-interaction that it will continue to store energy for the company’s future profit growth by means of investment and merger. < / P > < p > in the process of actively carrying out the marketing strategy layout, Juewei food’s controlling shareholders and their concerted actors completed the cash out reduction. Recently, Juewei food announced that its controlling shareholder, Shanghai Jucheng enterprise development partnership (limited partnership) (hereinafter referred to as “Shanghai Jucheng”) and its concerted actors have reduced their holdings by 36.48 million shares, with a total amount of about 2.559 billion yuan. < / P > < p > the reporter of China business daily noticed that in 2020, the stock price of Juewei food will rise from 44 yuan / share at the beginning of the year to 95.80 yuan / share at the highest, more than doubled. And Juewei food’s controlling shareholders and their concerted action announced the reduction plan when the company’s share price was high. This move has also been interpreted by the outside world as high-level cash out. < / P > < p > at the same time, the performance of Juewei food also attracted attention. Since its listing in 2017, Juewei food’s revenue has been growing at a double-digit rate every year, but its net profit attributable to its parent company has been declining continuously. The gross profit rate also hit the ceiling. From 2017 to 2019, the gross profit rate of Juewei food sales hovered around 34%. < p > < p > according to Shen Meng, executive partner of Xiangsong capital, the reduction of Juewei food’s controlling shareholders and their concerted actors is based on the decline of net profit growth rate, and the reduction is the result when the net profit growth rate is high. “The joint effect of the two factors is the reason for the reduction of major shareholders.”. < / P > < p > every move of Juewei food, which is known as “the first share of duck neck”, has attracted the attention of the market. On January 4, 2021, Juewei food announced that its controlling shareholder, Shanghai Jucheng, and its concerted actors had reduced their holdings and realized cash out of 2.559 billion yuan. < / P > < p > behind this, Juewei food has become a leader in similar enterprises. As a leisure marinated product enterprise with duck neck as its main product, Juewei food ranks top among similar enterprises in terms of scale and revenue. According to its 2020 semi annual report, the company has 12058 stores. In the same period, the number of stores in zhouheiya and Huangshanghuang (002695. SZ) were 1367 and 4152 respectively. In the first half of 2020, Juewei food achieved a revenue of 2.413 billion yuan. In the same period, the revenue of Zhou Heiya and Huang Shanghuang were 903 million yuan and 1365 million yuan respectively. < / P > < p > from 2017 to 2019, the growth rate of Juewei food’s net profit decreased significantly, which were 31.93%, 27.69% and 25.06% respectively. In the first three quarters of 2020, Juewei duck neck’s net profit was only 520 million yuan, a year-on-year decrease of 15.33%. < / P > < p > its gross profit rate also hit the ceiling. From 2017 to 2019, Juewei food’s gross profit rate was 35.79%, 34.3% and 33.95% respectively. < p > < p > SHEN Meng believes that the reduction of Juewei food’s controlling shareholders and their concerted actors is based on the decline of net profit growth rate, and the reduction is the result when the net profit growth rate is high. If there is no decline of net profit growth rate, it doesn’t matter that the current stock price is at a high level and there is still room to rise in the future. Therefore, the joint effect of the two factors is the reason for the reduction of major shareholders. < / P > < p > in the view of Zhu danpeng, a commentator of China’s food industry, behind Juewei food’s shareholders’ high cash out is that Juewei food’s development has met the ceiling, that is, the limited growth space of duck neck products in the whole bittern industry has led to its performance ceiling. < / P > < p > “the business circle and community of a city are fixed, and the more offline stores are opened, the more dense they are, the smaller the sales radius of other stores will be, which will affect the sales of single stores.” Zhu danpeng further analyzed that the number of offline stores of Juewei food has reached a relatively saturated state, and it is difficult to have a big growth space in the future, especially for duck neck products. Therefore, in the future, there will be more and more pressure on innovation, upgrading and iteration of the whole duck neck products, as well as on the overall revenue and profit of related companies. < / P > < p > the reporter visited Juewei food’s offline stores randomly and learned that at present, there are two clerks responsible for the sales of Juewei food. The main products are ready to eat duck neck, duck clavicle, duck wings and other duck by-products with different flavors. In addition, there are lotus root slices, kelp knots and other vegetarian products, and other different types of products are rare. By contrast, zhouheiya offline stores give consumers more choices. In addition to duck neck, duck clavicle, kelp, soybeans and other products, there are also other kinds of leisure snacks such as broad beans and dried mango. < / P > < p > in order to create a new growth space, Juewei food began to change its sales strategy, from the mode of running horse and enclosure to deep cultivation and refining different types of channels for precision marketing. On the other hand, through the internal incubation of new projects, external investment and mergers and acquisitions, to create a “food ecosystem”. < p > < p > SHEN Meng pointed out to the reporter: “Juewei food’s main business and main products are single, its performance growth foundation is weak, and it lacks the ability to disperse risks. Therefore, expanding the main business scope as far as possible and establishing more main products that can be relied on are powerful guarantees for the stability of the expected growth. But the success of this strategy also depends on its R & D ability and persistence. New products are not likely to be popular, and they are likely to fail many times. If they lack enough patience, they will not be able to break through the bottleneck smoothly. ” < / P > < p > it is worth noting that while the shareholders reduced their holdings, the management of Juewei food also changed. Liu Quansheng, deputy general manager of the company, and Peng Caigang, chief financial officer, applied for resignation for personal reasons. < / P > < p > according to Tianyan check and public information, Liu Quansheng was mainly responsible for production management center, supply chain management, etc. After leaving his post, he established Hunan Duoxian Enterprise Management Co., Ltd., whose business scope includes catering management, chain enterprise management, etc. < / P > < p > the marketing strategy of deep coverage and intensive channel cultivation may reflect the fact that the online business development of Juewei food is weak. According to Juewei food’s annual report in 2019, during the reporting period, the line was up to 50%. Under the epidemic situation, online business has failed to improve. < / P > < p > compared with similar enterprises, Juewei food’s online business can be said to be poor. Kwai tiktok noted that in the first half of 2020, the weekly black duck had adjusted the consumption strategy, arranged the live broadcasting business platform such as jitter, quick hand, and so on, and realized the line%. In the same period, the online flagship store of Huangshanghuang was worth 100 million yuan, accounting for 50% of the total. < / P > < p > in addition, the reporter noticed that although Juewei food leads Zhou Heiya and Huang Shanghuang in the number of offline stores, the number of fans on the mainstream e-commerce platform is less than the latter two. For example, on the Jingdong platform, Zhou Heiya and Huang Shanghuang have 3.986 million and 1.765 million fans respectively, while Juewei food’s official flagship store has only 12000 fans. In addition, on tmall platform, the number of fans of the three official flagship stores is 3.89 million, 330000 and 658000 respectively. < / P > < p > in terms of online sales, Juewei food also lags behind Zhou Heiya and Huang Shanghuang. Taking tmall platform as an example, among the top three products with weekly black duck’s sales volume, the highest monthly sales volume was 110000, and the lowest was 66000; in the same order of sales volume, the highest monthly sales volume of Huangshanghuang was 35000, while the highest monthly sales volume of Juewei food was 1253. < / P > < p > in terms of Juewei food, its online business income accounts for a relatively low proportion, which is due to the difference between its online business model and other companies. “(company) official account statistics of online revenue in 2019 annual report are only sales revenue for the three party platforms such as Tmall and Jingdong. No online platform revenue such as WeChat public number, US group, starvation, etc. has been counted. Juewei food told China Business Daily that the company has an extensive offline sales network, and consumers can obtain its products through online channels, offline stores or distribution. The revenue from this part of the business is not included in the revenue of the regular report. < / P > < p > a number of industry insiders said in an interview that the integration of online business and offline business is a trend of the development of consumer goods in the future, but the revenue of Juewei food mainly comes from franchise, and its supply chain advantage is mainly reflected in the supply of franchise stores, which has a certain distance from consumers. On the other hand, the huge number of offline stores may be an important factor restricting its development of online business. < / P > < p > “online and offline do not necessarily complement each other. It may also be a competitive relationship. In particular, it involves more stakeholders offline, so it is also a taboo. It is neither willing to give up nor dare to focus on investment.” Talking about the current situation of Juewei food online business, Shen Meng said, “the judgment of enterprises from different perspectives of the market and the amount of resources invested by enterprises in e-commerce closely affect the development of their online business. If the enterprise is not very active in e-commerce and Internet operation, and the input of resources is limited, then the audience’s stickiness will be insufficient. ” < / P > < p > SUN Wei, a fast marketing researcher and top-level design expert at Tsinghua University, also mentioned a similar view in an interview. He said that the business model of Juewei food is mainly chain franchise, and the online business is mainly direct business. If the online marketing is accelerated too much, the revenue will not increase, and the interests and trust of thousands of franchise stores will be hurt. Therefore, the decline in online sales of Juewei food may be a business strategy that does not want to compete with offline channels. < p > < p > ZHU danpeng believes that the integration of online and offline, and the integration of online and offline is a direction for the future development of consumer goods. On the basis of ensuring food safety, Jue Wei food needs to cultivate consumers’ recognition of its prepackaged brand. In addition, Juewei food also needs to find a way, such as relying on franchise stores to carry out online business, enabling franchise stores and expanding online business revenue. < / P > < p > “re deepen the layout of business district through scientific layout and step-by-step compound saturated store opening.” Juewei food said that at the same time, according to the detailed channel classification, the channel model was rebuilt, the marketing strategy was precise, the model stores were built, and the experience of operation quality control standardization was promoted. Based on the promotion of brand vitality, constantly innovate marketing activities, actively embrace new formats, new channels and new media, and comprehensively enhance brand potential. < / P > < p > Disclaimer: the purpose of this article reprinted by CNFC is to convey more information, and it does not represent the opinions and positions of CNFC. 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