China News Service, October 31. On October 29, Sichuan Shuijingfang Co., Ltd. (SH 600779, hereinafter referred to as "Shuijingfang") released its performance report for the first three quarters of 2020. The report showed that Shuijingfang's revenue in the first three quarters was 1.946 billion yuan, a year-on-year decrease of 26.58%; net profit was 502 million yuan, a year-on-year decrease of 21.49%. According to the data released by the report, from July to September 2020, Shuijingfang's main business revenue was 1.141 billion yuan, an increase of 18.86% over the same period in 2019; the net profit in a single quarter was 399 million yuan, an increase of 33.09% over the same period in 2019.
In addition, due to the merger of prepayments into the "contract liabilities", the total contract liabilities of Shuijingfang as of September 30 were 713 million yuan, an increase of 209 million yuan compared with the contract liabilities of 504 million yuan at the end of June 30. This increase is due to the increase in prepayments of dealers, which shows that the enthusiasm of dealers to make payments and purchases has increased significantly in the third quarter, laying an excellent foundation for the good performance in the fourth quarter. From this we can also see that Shuijingfang is gradually getting rid of the adverse effects of the epidemic and returning to normal, and the fourth quarter performance is very likely to "speed up" again.
Five driving forces ensure rapid growth in the third quarter
Affected by Shuijingfang's active cargo control in the second quarter, from January to September, Shuijingfang's performance continued to decline overall compared with the same period in 2019, but the net cash flow generated by its operating activities reached 755 million yuan, a year-on-year increase of 5.01%. Based on the data from January to June 2020, Shuijingfang's shipments accelerated significantly from July to September, and it is expected to achieve faster growth in the fourth quarter, striving to recover the performance lost due to the epidemic in the first half of the year.
Regarding the reasons for the rapid growth in the third quarter, Shuijingfang stated at a media communication meeting held on the afternoon of October 30 that since the outbreak of the epidemic, Shuijingfang has strengthened it from five aspects, which has become the driving force for the rapid growth in the third quarter:
is first to effectively reduce social inventory and sort out the value chain. The company controlled the delivery rhythm throughout the second quarter to effectively reduce channel operation pressure. From the current perspective, Shuijingfang's social inventory has returned to a healthy level in the third quarter, and the transaction prices of its main products, Zhenjiu No. 8 and Jingtai Installation, rose slightly in some regions compared with the same period in 2019, indicating that Shuijingfang's effectiveness in reducing social inventory and sorting out the value chain.
The second is to continue to promote the core store 5.0 plan, strengthen the execution of core stores, and select celebrity stores to drive store product sales through differentiated marketing tools and regional resource allocation. In the third quarter, both the number of core stores and the amount of contract signed, there were double-digit growth compared with the same period in 2019.
The third is to continue to strengthen the operation of the banquet market. The banquet consumption scenarios that were suppressed due to the epidemic in the first half of the year were quickly recovered in the third quarter. Shuijingfang also took advantage of the momentum to actively carry out thematic banquet activities. The frequency, number of events and scope of the exhibition exceeded the set goals in the third quarter, and the shipment also increased significantly compared with the same period last year. What is particularly gratifying is that the sales share of Jingtai and above products in key market banquets increased from single digits to double digits.
The fourth is the efforts of multiple channels. Starting from the second quarter, Shuijingfang established a full-time group buying team, optimizing the group buying mechanisms such as famous wines entering famous enterprises, and using the banquet platform to continue to explore the possibility of cooperation in other industries, and these aspects have also achieved quite good results.
The fifth is that the product structure has been significantly improved. In the core market, the growth potential of Zhenjiu No. 8 and Jingtai series products in segmented scenarios has been further released, and the transaction prices in some regional markets have increased significantly.
, the five core driving forces, will promote Shuijingfang's continued stable and healthy growth in the fourth quarter. From the current perspective, Shuijingfang has accelerated comprehensively during the peak season of National Day and Mid-Autumn Festival in October, and its terminal sales are very benign. It has resumed profitable growth and is cautiously optimistic about its performance expectations in the fourth quarter.
The five core developments under the new normal
is based on the rapid growth in the third quarter. Under the new industry situation, Shuijingfang has further clarified its core strategies for its own development.
According to Zhu Zhenhao, acting general manager of Shuijingfang, Shuijingfang has been observing and thinking about changes in the industry since this year. Overall, the epidemic has accelerated the industry reshuffle, and dealers and terminals have further concentrated in the country's first-tier and regional leading brands.Against this backdrop, Tobacco Hotels are still the most important sales channels for sub-high-end liquor, but the change in the channel structure may accelerate. At the same time, Shuijingfang noticed that the epidemic has repeated in local areas, and the recovery and activity of low-tier cities is significantly higher than that of first- and second-tier cities, which puts forward higher requirements for enterprises' adaptability and efficiency in customer service, market deepening, and resource allocation.
Shuijingfang Acting General Manager Zhu Zhenhao
Zhu Zhenhao calls the new changes currently presented in the industry the "new normal". Under the new normal, Shuijingfang will further strengthen the five core development cores:
. One is to accelerate the optimization and improvement of core stores. Regarding the layout of core stores, Shuijingfang said, "The future development direction is to improve quality rather than quantity." We must rely on core stores to further empower the local area, enhance the market competitiveness within the region, and enhance the competitiveness of the banquet market through the combination and process reshaping of marketing tools.
The second is to develop multi-channel business. Tobacco hotels, group buying channels, e-commerce business, and self-operated platforms will all be the main working directions of Shuijingfang in the future.
The third is to pay attention to sales. Shuijingfang's marketing expenses will still focus on consumer sales. According to the regional price band distribution, star stores are selected to promote the sales of well platforms and above products with differentiated means. Of course, the improvement of marketing expense investment efficiency is also the part that Shuijingfang will pay more attention to in the future.
The fourth is to improve the execution and reaction ability of the entire team. Zhu Zhenhao particularly emphasized that "execution is the key to high-quality and sustainable development", so simplified and refined work in the future is the key to improving the execution ability of all employees. Regionalization and digitalization can allow the Shuijingfang team to have more agile response capabilities when facing the ever-changing market trends.
The fifth is to establish influential brand communication. Focus on the sub-high-end sector, and continue to invest in the high-end sector, and continue to build and enhance Shuijingfang's brand influence through various direct communication methods and channels. In June this year, Shuijingfang launched the "The Most Important People, Treat Me" and scanning the QR code to draw gold bars in tens of thousands of stores in the core market. Among them, the Scan QR code to draw gold bars activity attracted more than 200,000 people to participate in the third quarter, directly driving the store's shipment. Such activities will also be the direction that Shuijingfang will continue to carry out in the future.
"Shuijingfang's vision is to become the most trusted and best-performing high-end liquor brand in China. Under such a vision, we do not blindly pursue expanding the market and distribution rate, but should deepen the market with the most potential and allow the brand share to continue to steadily increase in the core market. So we have chosen 8 major markets to deepen the brand and channels to gain a more stable, healthier and more sustainable market share." Zhu Zhenhao said at the media communication meeting, "From the current perspective, Shuijingfang has many opportunities in the future. What we need to do is to learn from consumers, competitors, and the industry with a humble attitude, and do the most basic work. I believe that in the next few months, everyone will also see more market measures in Shuijingfang."
Source: China News Network
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