Red Star Capital Bureau noticed that recently, Crayon Xiaoxin Snack Food Group Co., Ltd. (01262.HK hereinafter referred to as "Crayon Xiaoxin Food") released its 2022 interim report.
In the first half of this year, Crayon Shin-Food Foods lost RMB 4.9 million. In the same period last year, it was also profitable, with a net profit of RMB 27.5 million.
Crayon Shin-Shin-Food is the main business of jelly and was the second largest company in the jelly industry in 2012. But since 2015, losses have become the norm for Crayon Shin-Tianjin Food. In the past seven years, the company has been losing money every year, and the reasons for the losses explained are different... What has attracted much attention from the outside world is that in recent years, the jelly industry has gradually recovered, but why has Crayon Shin-Tian Food not yet emerged from the quagmire of losses for years?
↑ Data picture Screenshot from Crayon Shin-shi's 2021 financial report
Losses for 7 consecutive years
Reasons for each year are different
According to Crayon Shin-shin Food's 2022 interim report, the company's net loss in the first half of this year was 4.9 million yuan.
Crayon Shin-Tianjin Food explained that the loss was mainly due to the temporary suspension of production and operations of its subsidiary in Jinjiang in March and April 2022, resulting in a decrease in sales and gross profit of approximately RMB 12.8 million and RMB 12.1 million, respectively, and an increase in costs of several major raw materials.
Crayon Shin-Food’s main business is jelly, which was once one of the giants in the industry. According to Crayon Shin-Tsing Food's 2012 financial report, Euromonitor's market survey showed that based on retail sales, Crayon Shin-Tsing Food's market share in the Chinese jelly market rose from 10.3% in 2010 to 12.0% in 2012, further consolidating its position as the second largest company in the industry.
Crayon Xiaoxin Food's net profit in the first half of 2021 was RMB 27.5 million, but it lost 65.2 million yuan for the whole year. It is reported that January to the eve of Mid-Autumn Festival is the peak season for jelly sales. This year, Crayon Shin-Tianjin Food suffered losses in the first half of the year, and its annual performance may be even less optimistic.
It is worth noting that Crayon Shin-hsin has been losing money for 7 consecutive years.
company financial report shows that from 2015 to 2021, Crayon Xiaoxin Food's revenue was 1.047 billion yuan, 893 million yuan, 903 million yuan, 503 million yuan, 467 million yuan, 509 million yuan, and 648 million yuan, respectively; net profits were -338 million yuan, -602 million yuan, -289 million yuan, -180 million yuan, -170 million yuan, -29.4 million yuan, and -65.2 million yuan, respectively. The year before the loss of
(2014), CCTV 315 Gala exposed that upstream suppliers of many companies used toxic collagen raw materials, and crayon Shin-hsin was also implicated in . In the same year, Crayon Shin-Food's revenue and net profit both declined. The chairman report in its financial report said: "2014 is the most challenging year since we started operating in 2000... Negative reports of toxic gelatin have seriously affected our financial performance."
↑ Screenshot from Crayon Shin-Tianjin Food's 2014 financial report
In the first two years of the losses (2015 and 2016), Crayon Shin-Tianjin Food stated in its financial report that the negative impact of the toxic gelatin incident still exists. In order to build consumer confidence, the company will vigorously promote its products.
In the past few years since the jelly industry was affected as a whole, the Jinwa jelly, which was once popular all over the country, has disappeared from the public eye, and the Kiss Jelly is sold by Heng'an . The market's number one Xizhilang was launched in 2015 to cross-border the financial circle and set up Meizhou Keshang Bank .
For losses in 2017, Crayon Shin-Tianjin Food said that Chinese consumer confidence is gradually recovering, but the growth momentum is still sluggish. In 2018 and 2019, Crayon Shin-Tianjin Food also took the weak consumer willingness as its background, and said that the company eliminated most low-gross profit products and changed its advertising strategy, which led to a decline in sales.
2020 and 2021, the epidemic has become the main background for Crayon Shin-Tianjin Food to explain losses.
On September 30, 2022, Crayon Shin-Tianjin Food's share price was HK$0.395 per share, with a total market value of HK$525 million.
jelly industry is recovering
Why is Crayon Shin-shikong still losing money
Since 2017, Crayon Shin-shikong Food has stopped mentioning toxic gelatin incidents. The jelly industry, where its main business is, has also shown signs of recovery in the past two years.
Liuliumei’s parent company "Liuliu Orchard", which focuses on green plum products, launched the jelly brand "Plum Jelly" in 2019, positioning it as a high-end and focusing on health concepts.According to data disclosed at its press conference, the annual sales performance of Meiwan in 2021 exceeded 160 million yuan.
↑Screen shot from the video number "Liuliumei"
, and Crayon Shin-Food's jelly business is also growing. In 2020, its jelly product revenue was 384 million yuan, a year-on-year increase of 10%. In 2021, its jelly product revenue was 517 million yuan, a year-on-year increase of 34.7%.
But the recovery of the jelly business has not stopped Crayon Shin-Tianjin Food’s losses over the years. In 2021, Crayon Shin-Tianjin Food lost 65.204 million yuan, an increase of 121.76% year-on-year. According to its financial report, the expansion of losses was mainly due to the company's failure to sell its subsidiaries this year, and the sale of a subsidiary in 2020 received more than 141 million yuan in revenue.
Crayon Shin-Tianjin Food has been selling its assets in the past few years. In 2017, Crayon Xiaoxin Food sold the property, factory and equipment of the Tetra Pak beverage production line in Anhui production plant. In 2018, they sold a piece of land assets located in the Food Industrial Park of Jinjiang City, Fujian Province, including about 100,000 square meters of land and a building with a total construction area of about 106,000 square meters. In 2019, Crayon Xiaoxin Food also said that it sold a certain land right to Fujian Jinjiang Oudian Supply Chain Management Co., Ltd. for 180 million yuan. In 2020, Crayon Shin-Shin Food sold all the shares of Crayon Shin-Shin Tianjin Company to Tianjin Huakunda and sold two properties in Hong Kong, China.
Overall, Crayon Shin-Tianjin Food has been continuously reducing its scale in recent years.
Beijing International Trade Center Research Base Chief Expert Lai Yang When talking about the issue of Crayon Shin-chief Food, it said that its product system is more inclined to children and is not diverse enough; it is poor in terms of health; its brand image is aging and not modern and fashionable enough.
It is worth noting that Crayon Shin-Tianjin Food has also tried to diversify its products before and has launched new categories such as cakes, breads, dried tofu, egg rolls and beverages.
However, the effect is not ideal. In 2013, its jelly products accounted for about 70% of its total revenue, and in 2021, jelly products accounted for about 80% of its total revenue. According to its 2021 financial report, the revenue of sweets and beverage products is both declining. They also said that the company continues to shift its focus to higher profitable jelly and dried tofu products.
Jelly boss Daxizhilang had deployed seaweed and milk tea businesses before 2010, and successfully launched the Beautiful Times and Youlemei brand. As the second most jelly, Crayon Shin-Tianjin Food is more than one position away from the first.
A deeper investigation can be found that the lack of innovation in Crayon Shin-chan may be the fundamental reason for the hindrance of multi-brand development and continuous shrinking of business.
The casual snack market where baking and tofu is located is competing, and beverage companies are also full of large companies. Crayon Shin-Tianjin Food has no emerging products, it is just chasing, and has no competitiveness. And the innovation of its main business Jelly is not enough. The highest-selling broken fruit ice, suckable jelly, and konjac jelly on its Taobao store can see the shadows of Wangwang , Xizhilang and plum jelly.
"If they want to develop again, they can of course discuss multiple brands and develop emerging products, and can also develop more breakthrough products on the basis of the original, in terms of health, quality and freshness." Lai Yang said.
Red Star News Reporter Yu Yao Zhang Luxi
Editor Tang Huan Editor Guo Yu
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