Blue Moon’s semi-annual results pre-announced a loss of HK$44 million, and its market value plummeted by HK$80 billion. Behind the change of face, it may be inseparable from the company's single product structure, obstacles to entering the high-end market and channel difficulties.
Blue Moon Group Holdings Co., Ltd. (hereinafter referred to as: Blue Moon, 6993.HK) reported a large pre-loss in its first half-year financial report after its listing, triggering heated discussions in the market. While its performance changed, Blue Moon's stock price also continued to plummet. As of August 17, Blue Moon’s market value was HK$29.072 billion, a decrease of more than HK$80 billion from its previous high.
won a lot of applause when it was first launched. Why did Blue Moon, known as the "No. 1 laundry detergent brother" and "Chinese version of P&G ", change its face like this? Industry insiders told Discovery.com that this may be inseparable from the company's single product structure, obstacles to entering the high-end market and channel difficulties. In this regard, Discovery.com sent an interview letter to Blue Moon asking for clarification on the above issues, but as of press time, Blue Moon had not given a reasonable explanation.
The first half-year financial report predicts losses, and the market value plummets
html On July 20, Blue Moon issued a profit warning announcement, which immediately caused an uproar. The announcement shows that compared with a profit of approximately HK$302 million in the first half of 2020, the company recorded a comprehensive loss attributable to shareholders of approximately HK$44 million in the first half of 2021.
From: Flush iFinD Company Announcement (Blue Moon)
This huge loss, Blue Moon gave four main reasons in the report: First, there is a surplus of low-priced products in the market. In order to unify the pricing of products in the market, Blue Moon Moon provides several discounts to customers, which had a negative impact on gross profit margin of approximately 9% in the first half of 2021; second, the cost of raw materials has increased compared with the cost in the first half of 2020; third, the " "Supreme" brand products are bundled with other products and sold at discounted prices, which had a negative impact of 1% on gross profit margin in the first half of 2021; fourth, the laundry business that Blue Moon has been developing since the fourth quarter of 2020 The loss was approximately HK$67 million.
In fact, as early as when Blue Moon released its 2020 annual report on April 30, it was criticized for the slowdown in performance growth. The annual report shows that Blue Moon achieved revenue of HK$6.996 billion in 2020, a year-on-year decrease of 0.8%; net profit was HK$1.309 billion, a year-on-year increase of approximately 21.28%. Looking further, it is true that Blue Moon's revenue and net profit growth have both declined in recent years. Wind data shows that from 2018 to 2020, Blue Moon's revenue growth rates were 20.2%, 4.2%, and -0.8% respectively; its net profit growth rates were 542.98%, 94.88%, and 21.28% respectively.
From: Wind (Blue Moon)
Despite this, at the end of 2020, Blue Moon announced that it would be officially listed on the main board of the Hong Kong Stock Exchange, and still won a lot of applause. On the first day of listing, Blue Moon's stock price opened 16.41% higher, with a market value approaching HK$90 billion. Names such as "The No. 1 Laundry Detergent Brother" and "Chinese Version of Procter & Gamble " followed. For a time, Blue Moon's scenery was endless. In less than a month, on January 13, 2021, Blue Moon’s stock price climbed to a maximum of HK$19.16 per share, and its total market value hit HK$112.258 billion.
's good times did not last long. Blue Moon's stock price plummeted in an instant, falling by more than 50% in half a year. As of August 17, Blue Moon's stock price once again fell to a new intraday low of HK$5.93, and finally closed at HK$5.96. The company's market value was HK$29.072 billion, which has shrunk by more than HK$80 billion from the above-mentioned highest market value.
From: Wind (Blue Moon)
Single product, difficult channel problems
The falling stock price and undisclosed loss performance all reveal the difficult situation of Blue Moon. The single product structure, obstacles to entering the high-end market and channel difficulties are all important reasons for the current situation.
First of all, Blue Moon relies heavily on laundry detergent and other clothing cleaning and care products. The 2020 annual report shows that Blue Moon's clothing cleaning and care products achieved revenue of 5.596 billion yuan, accounting for 80.0% of the revenue structure, compared with 87.6% in the same period last year; personal cleaning and care products achieved revenue of 836 million yuan, accounting for 80.0% of the revenue structure. The proportion was 11.9%, compared with 5.9% in the same period last year; household cleaning and care products achieved revenue of 565 million yuan, accounting for 8.1% of the revenue structure, compared with 6.5% in the same period last year.
In this regard, Blue Moon also stated in the report, “The change was mainly due to the decrease in sales of clothing cleaning and care products, which was generally offset by the increase in sales of personal cleaning and care products and household cleaning and care products, both of which Attributable to the impact of the novel coronavirus epidemic, which has weakened consumer demand for clothing cleaning and care products, as consumers have temporarily reduced outdoor activities due to the need to maintain social distance during the novel coronavirus epidemic. It has increased consumers' awareness of personal hygiene, which has led to a substantial increase in revenue from the sale of personal cleaning and care products and household cleaning and care products."
analysts pointed out that the explanation given by Blue Moon proves that personal cleaning and care products and household cleaning products have increased significantly. While the revenue from care products has grown, it has also exposed the company's overall reliance on laundry detergent-based clothing products.
From: 2020 Annual Report (Blue Moon)
Secondly, Blue Moon failed to deploy the high-end market. It is reported that Blue Moon has invested a lot of resources in developing concentrated laundry detergent products. In 2015, the company launched the "Supreme" brand, which is positioned as high-end, concentrated, and priced higher than ordinary laundry detergents. Because the brand style is too unrelatable, product sales rely heavily on marketing activities. From 2018 to 2019, the company has sold a large number of Sales staff are stationed in offline stores to promote; in 2020, due to the epidemic, offline activities were restricted, sales of "Supreme" laundry detergent continued to decline, and products worth approximately 125 million yuan were returned. The promotion of concentrated laundry detergent has not been successful, and the popularity of laundry beads has lagged behind. This is undoubtedly making things worse for Blue Moon, which has a single product.
Finally, the fact that the channel advantage has not yet been established is always a problem for Blue Moon. In 2015, Blue Moon withdrew from large-scale chain terminals composed of stores and supermarkets such as Carrefour, RT-Mart, and Auchan. While building its own offline experience store "Moon House", it also deployed online channels. However, due to the high operating costs of physical stores and the high proportion of daily chemical products consumed through offline channels, Blue Moon had to return to the supermarket track. The 2020 annual report shows that Blue Moon’s online sales channels achieved revenue of HK$3.774 billion, with a structural proportion of 53.9%, compared with 47.2% in the same period last year; offline distributor channels achieved revenue of HK$2.228 billion, with a structural proportion of 31.9%, compared with 47.2% in the same period last year. Then it is 38.7%. It is worth noting that the main reason for the growth of Blue Moon's online channels in 2020 is the impact of the epidemic. Online shopping has increased, and the company's channel construction still needs to be further strengthened.
From: 2020 Annual Report (Blue Moon)
’s stock price turned downward just a month after its listing. The half-year results were significantly pre-lossed, and the market value plummeted by HK$80 billion. Can Blue Moon still win the favor of capital? Discovery Network will continue to pay attention to this.
(Discover.com reporter Luo Xuefeng and intern reporter Chen Kangli)
