Investor Website Xie Yingjie
With the halo of "the first share of high-end snacks", Liangpin Store Co., Ltd. (hereinafter referred to as "Liangpin Store", 603719. SH) has continued to expand its stores in recent years by virtue of its perfect product supply chain and rich industry experience. However, under the influence of fierce competition in the industry, the company fell into a vicious circle of stagflation of performance.
Despite the efforts to reduce costs and increase efficiency, the company still achieved a new historical low of net profit for nearly six years in 2023. At the same time, it is facing the dilemma of shareholders' reduction in turn and market capitalization evaporation. On the evening of May 17, the company issued two successive announcements of share reduction, and two major shareholders planned to reduce their shares by no more than 24.06 million shares in total, accounting for about 6% of the company's total share capital.
The industry is fierce
In just a few years, the mass snack store model, which focuses on cost performance, has risen rapidly. Emerging brands such as "Zhao Yiming Snack" and "Snack Busy" have won the favor of capital, reshaping the market pattern of China's leisure snack industry. According to the enterprise survey data, from 2021 to 2023, the number of snack food stores nationwide will increase from 2500 to 25000, an increase of 1000%.
As the industry entered the red sea of competition, Liangpin stores continued to expand through the full range of SKUs to boost revenue, and participated in the competition of snack discount track in person.
All of these have aggravated the operating pressure, and the performance has stagnated.
From 2020 to 2022, the operating revenue of Liangpin Store is 7.894 billion yuan, 9.324 billion yuan and 9.440 billion yuan respectively, with growth rates of 2.32%, 18.11% and 1.24%, and the net profit attributable to parent company is 344 million yuan, 282 million yuan and 335 million yuan, with growth rates of 0.95%, -18.06% and 19.16% respectively.
In November 2023, Yang Yinfen, the chairman of the board of directors, was appointed at a critical moment and said frankly in an open letter: "At present, what is before us is not only the problem of how to live, but also the problem of whether to live.".
According to public data, Yang Yinfen is a pioneer of Liangpin Store, who led the company to achieve revenue growth and online channel layout. In response to the decline in revenue, Yang Yinfen led the company to significantly adjust the price: the average price of more than 300 products on sale in the store was reduced by 22%, with a maximum reduction of 45%.
As reflected in the financial report, the operating cost of Liangpin Store in 2023 will decrease by 14.97% year-on-year to 5.813 billion yuan, the sales expense will decrease by 10.45% year-on-year to 1.573 billion yuan, the administrative expense will decrease by 6.9% year-on-year to 447 million yuan, and the research and development expense will decrease by 13.50% year-on-year to 43.73 million yuan.
The performance also declined. In 2023, the company's revenue declined by 15% to 8.046 billion yuan, and its net profit declined by 14.76% to 180.3 million yuan. In the first quarter of this year, the revenue increased by 2.79% year on year to 2.451 billion yuan, and the net profit attributable to the parent company decreased by 57.98% year on year to 62.4828 million yuan.
Behind performance pressure
Liangpin Store is the representative of the last round of snack chain business. It enters the market with high-end snacks, develops offline channels and actively embraces e-commerce to land in the capital market.
In order to break out of the tight encirclement of low-end snacks, Liangpin stores began marketing "high-end personnel" in 2018. The company upgraded its logo and replaced its brand image with a simple "good" character mark. The offline stores also began to take the "Apple style" of sparseness and atmosphere. In marketing, the company highlighted internationalization, youth and high-end.
Among domestic leisure snack listed companies, only online and offline channels of Liangpin stores account for an even proportion of revenue, and the two channels basically account for half of the revenue. In 2023, the company's revenue from e-commerce business will be 3.167 billion yuan, down 32.58% year on year; It accounted for 39.83% of the main business income, down 10.58 percentage points year on year.
Among peer companies, three squirrels (300783. SZ) and I miss you (002582. SZ) are mainly online revenue, accounting for about 80% of online sales revenue; Lai Yifen (603777. SH) and Qiha Food (002557. SZ) are mainly offline stores, accounting for 90% of the total.
Online or offline performance growth problems will bring pressure on the overall profitability of the company. The financial report shows that the gross profit rate of Liangpin Store dropped to about 27% from more than 30% in previous years, which is at a low level among similar enterprises. The gross profit rate in the first quarter of 2024 was 26.43%, down 6.3 percentage points from 2015, which was the lowest since the financial disclosure data.
In the secondary market, in 2021, 2022 and 2023, the stock price of Liangpin Store fell for three consecutive years (the annual line), with a total decline of more than 60% in three years, and a cumulative decline of about 30% year to date.
The stock price downturn is the result of multiple factors: limited product competitiveness, lagging management decision-making, and the more profound background is that the snack industry is changing rapidly - from consumption upgrading and brand upgrading to consumption degradation and prevalence of discounts, but only three years ago.
Reduction of significant shareholders
At the beginning of taking office, Yang Yinfen once said: "17 year old good products are facing the most difficult challenge since their entrepreneurship". At present, this challenge is still intensifying.
As an old brand, Liangpin Store is obviously worried about losing its voice in the game with new channels and eventually becoming a OEM role.
According to the data of China Commercial Industry Research Institute, offline channels still account for more than 85% of the circulation share of leisure food, modern channels such as snack stores and convenience stores continue to occupy the market share of traditional small stores, and the growth of e-commerce platforms has gradually slowed down.
In the view of some organizations, the good shops are still actively transforming and have achieved some results. In the latest research report, SDIC Securities pointed out that the current snack consumption trend is changing, product innovation is emerging in endlessly, and channels are more diversified. The company continues to explore new category models, pilot fresh short-term guaranteed snacks, launch new season limited products, improve quality and efficiency internally around the supply chain and operation management, optimize the store model, and achieve more refined operation. In the current environment of more rational consumption, companies that actively respond to market changes and adapt to the adjustment of price levels and operating modes have more long-term growth potential. In addition, good products stores are positioned as "high-end snacks", creating high-end quality from the raw material side, with a wider overall price band and wider customer coverage. The overall competitiveness of some products is expected to further improve after price reduction.
Some investors are also worried that under the OEM mode, the cost and difficulty of quality control of good stores will increase, which will lead to product quality problems. The root lies in the fact that the brand is highly dependent on the OEM, lacks product research and development capabilities, and reduces prices "to cure the symptoms rather than the root causes". In the first quarter of 2024, the R&D expenses of good stores will be less than 5 million yuan, down 62% year on year.
It is worth noting that some shareholders are "voting with their feet". On the evening of May 17, the company issued two consecutive announcements on reducing its holdings.
The announcement shows that Ningbo Hanyi Venture Capital Partnership, the controlling shareholder, and Dayong Co., Ltd., the shareholder holding more than 5% of shares, plan to reduce their shares in the company through centralized bidding or block trading. Ningbo Hanyi and Dayong Co., Ltd. plan to reduce their respective shares by no more than 12.03 million shares, and the total reduction ratio shall not exceed 6% of the company's total share capital. The reduction period of auction trading is from June 11 to September 10.
Prior to this announcement, Dayong Co., Ltd. has reduced its holdings twice. From May to the end of November last year, it reduced 17.04 million shares accumulatively, with a total amount of 404 million yuan; From January to February this year, we reduced our holdings of 12.03 million shares again, with a total amount of more than 199 million yuan. After two reductions, the shareholding ratio of Dayong Limited decreased from 30.3% to 23.05%. (produced by Think Finance) ■
