Edit Introduction: The high-end cake is getting smaller and smaller, and the market feedback is dull, which also makes it difficult for marketing to promote its own high-end Shuijingfang , and falls into an increasingly passive dilemma.
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showed the first interim report since its listing in the first half of the year, and its share price decline ranked first in the liquor stocks, which made Shuijingfang's performance development trend attract much attention.
htmlOn October 12, Shuijingfang released its main operating data for the third quarter of 2022. Although profits turned positive, its profitability remained weak and revenue growth slowed to 7%.
In the first quarter of this year, Shuijingfang CEO Zhu Zhenhao faced the decline in performance and made a bold statement, saying, "Shuijingfang is confident that he will continue to maintain double-digit growth in the future and expand his market share year by year." The words are still in his ears, but now he changed his words, "It is challenging to achieve this year's goals, but the company will take flexible measures to deal with market changes."
stock price "lead the decline" and its performance was at the bottom. Under the inventory of , consumers are increasingly not paying. How should Zhu Zhenhao, who is holding the sky-high salary in the industry, change the current situation of Shuijingfang?
has the lowest performance, and marketing accounts for more than 30% of revenue
On the day when the main operating data of this third quarter this year were disclosed, Shuijingfang's stock price reached a new low in the past year, closing at 59.32 yuan per share, and it was an amazing halving this year. It was the liquor listed company with the largest decline in stock prices during the same period. In terms of performance in
, Shuijingfang's experience in the secondary market is not unfair.
According to the operating data after preliminary calculations by Shuijingfang, from January to September this year, Shuijingfang is expected to achieve revenue of about 3.8 billion yuan, with increasing by about 10% year-on-year; and net profit attributable to shareholders is about 1.1 billion yuan, a year-on-year increase of about 5%.
Although it has escaped the phenomenon of "increasing revenue but not increasing profit" in the mid-term performance for the first time since its listing in the semi-annual report, the revenue growth rate in the third quarter also slowed to single digits, while Shuijingfang, which mainly sells high-end liquors, has still had a weak profitability, far lower than other liquor companies.
compares the wine companies that released the third quarter report forecast with Shuijingfang. Kweichow Moutai expects revenue and net profit to increase by 16.5% and 19.1% respectively in the first three quarters, Jinshiyuan to increase by 22.18% and 22.53% respectively, and Laobaigan ’s non-net profit growth rate is as high as 41%.
The semi-annual report data previously disclosed by Shuijingfang has even more pessimistic performance. In addition to the sharp slowdown in revenue growth, a 2% net profit attributable to shareholders also declined. The net cash flow generated by the company's operating activities decreased by 99.48% year-on-year, causing Shuijingfang to fall behind in the " Sichuan Liquor Six Golden Flowers".
It should be noted that Shuijingfang's sales volume and performance growth slowed down, but it still occurred against the background of abnormally high sales expenses for large investment.
In the first half of this year, Shuijingfang's sales expenses reached 696 million yuan, a year-on-year increase of 19.27%, exceeding the revenue growth rate and accounting for as high as 33.55%, setting a record high.
From the past, Shuijingfang has spared no effort in sales. From 2017 to 2021, sales expenses were RMB 551 million, RMB 854 million, RMB 1.064 billion, RMB 841 million and RMB 1.227 billion, respectively, with a total cumulative amount of more than RMB 4.5 billion in five years. In comparison, in 2021, Kweichow Moutai's sales expense rate was only 2.5%; Wuliangye was only 9.82%. The "fat" ills caused by Shuijingfang's emphasis on marketing seem to be gradually being exposed.
has a high inventory and a low market share
From the most expensive liquor in China in the past to now "leading the decline" of 20 liquor stocks. Being trapped in the high-end is the most vivid portrayal of Shuijingfang at the moment.
2000, Quanxing Winery, which had revenue exceeding Kweichow Moutai and firmly ranked first-tier camp in the liquor industry, launched the high-end brand "Shuijingfang" and shouted the slogan of "China's most expensive wine". Its price was as high as 600 yuan at the beginning of its launch, while Moutai was only 300 yuan at that time, Wuliangye was priced at 500 yuan. Luzhou Laojiao 's Guojiao 1573 has not been launched yet.
The confidence in pricing this way comes from the ancient winemaking relics found underground in its winery, and the Shuijing Street winery site , known as the "No. 1 Liquor Floor in China".The historical and cultural heritage under this sign provides Shuijingfang with a certain extent the soil for planting high-end banners.
However, although Shuijingfang has worked very hard in marketing and publicity in recent years and has been spending money wildly, the ever-increasing inventory has exposed the reality that consumers are increasingly not paying for it.
data shows that as of the end of June this year, Shuijingfang's inventory reached 2.321 billion yuan, while as of the end of June last year, the inventory was 1.921 billion yuan. In the past year alone, Shuijingfang's inventory has increased by 20.85%, accounting for nearly 38.96% of the total assets.
At the same time, the inventory turnover days also increased from 1205 days in the second quarter of last year to 1292 days in the same period of this year. The increase in one year by 87 days reflects that Shuijingfang's inventory monetization ability is getting slower and slower.
And in the first half of this year, Shuijingfang's revenue was only 2.074 billion yuan. That is to say, even if production is stopped, Shuijingfang's inventory can still be sold for more than half a year. Shen Meng, chief strategist at Guangke Consulting, said that although the possibility of liquor inventory impairment is not high, long-term inventory will also reduce capital turnover efficiency and increase operational risks.
Public data shows that in 2012, the total market share of "Miao, Wu and Luzhou" among high-end liquors was about 71%; and by 2020, the revenue share of "Miao, Wu and Luzhou" high-end liquors was 57%, 30%, and 7%, respectively, accounting for a total of 94% of the high-end market.
industry concentration is constantly increasing, and high-end tickets are locked by "Miao, Wu and Luzhou". This market competition pattern is difficult to change in the high-end liquor field, and more than 95% of Shuijingfang's revenue comes from high-end liquor.
high-end cake is getting smaller and smaller, and the market feedback is dull, which also makes Shuijingfang, which relies on marketing to promote its own high-end, falls into an increasingly passive dilemma.
Missed the opportunity, executives were overpaid
As the only liquor listed company in China controlled by foreign capital, the reason why Shuijingfang's performance fell behind is not unrelated to foreign executives' poor sales of Chinese liquor and management turmoil.
Since 2006, the world's No. 1 spirit group Diageo began to acquire shares of Quanxing Group, and since then, it has gradually become the actual controller of Shuijingfang.
In the following years, under the leadership of several foreign executives who were not adapting to the local conditions, Shuijingfang cut off most of the original low-end brand products, focused on the high-end market, and turned its strategic focus overseas, but its performance did not rise but retreated significantly, missing the "golden decade" of the upward cycle of the domestic liquor industry and was surpassed by a group of wine companies that came from behind.
Even though Shuijingfang has realized the problem in recent years, rotated the local general manager and actively reformed, it has never seen much improvement. In July last year, Zhu Zhenhao, who had a background in Diageo, officially became the general manager of Shuijingfang, basically continuing the brand's high-end strategy and intensively raising prices for its products.
Looking back at Shuijingfang's development journey, we can find that it seems to have fallen into a vicious circle in which nothing can be done right in recent years. The lack of strong leaders led Shuijingfang to restore its former glory.
When the performance is not as good as most of the peers, the salary of Shuijingfang executives can be several streets higher than that of their peers.
interim report shows that in the first half of this year, the employee salary in Shuijingfang's management expenses was 112 million yuan, compared with 78 million yuan in the same period last year, an increase of 44.07%. It is worth noting that among sales expenses, employee salaries are also 142 million yuan, compared with 89 million yuan in the same period last year, an increase of up to 59.20%. Shuijingfang did not disclose this reason in detail in the semi-annual report.
At the same time, Shuijingfang's per capita salary is 206,800 yuan, ranking first in the liquor industry. Among them, Chairman Fan Xiangfu's salary was 5.237 million yuan, General Manager Zhu Zhenhao's salary was 8.513 million yuan, and both of them ranked first in the liquor sector.
2021 annual report shows that Shuijingfang's operating goal this year is to increase its main business revenue by about 15% and its net profit by about 15%. Judging from the report card as of the third quarter, it is almost impossible to achieve this goal.
At this year's semi-annual performance briefing, Zhu Zhenhao's performance target of "double 15% growth rate" seemed to have been shaken. "It is challenging to achieve this year's goal, but the company will take flexible measures to deal with market changes."
Original author: Wang Yuanshi
Editor: Ma Zhigang
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