Source| Haixishangjie
Author | A Dolphin
Seven years ago, Liang Guoxing "raised his arms and shouted": "The most difficult moment has passed". Unfortunately, 3 years later, Silver Foundation once again fell into the "darkest" moment, and now it is embarking on the road of "falling apart".
On November 16, 2021, Yinji Group issued two consecutive announcements saying that the company had defaulted on a number of bonds and had submitted a winding-up petition to the local court in order to promote financial restructuring. This means that the production and operation of the Yinji Group, the stock trading will be stopped, and all assets will be sold and realized in a short period of time, and the debt can be repaid with funds.
As the largest distributor of Wuliangye in the past and a supplier of high-end liquor such as Moutai in the past, Hong Kong Yinji Group has deteriorated under the background of liquor fever. As of November 22, its share price was only HK$0.067 per share.
Even in 2020, when liquor is hot, the stock price of Yinji Group only hovers around HK$0.1 per share, which is still a drop in the bucket compared with the peak of HK$8.8 that year. At the same time, the highest stock price of "Huazhi Liquor Company", the first share of liquor circulation, is close to 40 yuan per share.
Silver's dilemma has a long history. According to its financial report, since 2017, Yinji has suffered losses, and from 2018 to 2021, Yinji Group has accumulated a loss of about 475 million yuan.
Why does the liquor distribution industry, which has a high gross profit in the public impression, have such performance? Backed by Wuliangye, The silver base of Moutai is deeply in the profit dilemma?
Regarding the origin of Hong Kong Yinji Group and the background of its founder Leung Kwok-hing, it is almost difficult to find on the Internet. What can be found out is only one or two.
At the end of the 1980s, Guangdong, as the forefront of reform and opening up, became a huge alcohol consumption market in China. In 1988, China completely opened up the price of liquor and other famous liquors and implemented market regulation. Liang Guoxing, a native of Zhanjiang, Guangdong Province, saw the opportunity of liquor and entered the liquor trade and sales industry and engaged in the distribution of Wuliangye.
In the 1990s, Leung Kwok-hing, who had been in the field of liquor distribution for many years, began to go to Hong Kong to do business. In 1997, under the preparation of Liang Guoxing, Yinji was officially established. At this time, Yinji has successfully obtained the distribution rights of Wuliangye liquor series in Southeast Asia, including Singapore, Malaysia, Thailand, the Philippines and other places.
As for how Liang Guoxing and Wuliangye negotiated to win the general agent, we don't know, but Wuliangye really gave Silver Foundation wings to take off. In 2000, Yinji Group once again obtained the total distribution right of the entire Wuliangye liquor series for 10 years, and Yinji officially became the largest operator of Wuliangye and won the first place for several consecutive years.
In 2009, liquor production has been growing rapidly for five years, and The silver base backed by Wuliangye has successfully achieved listing in Hong Kong. At this time, more than 95% of the revenue performance of Yinji Group came from Wuliangye, which deserved to be a big businessman of Wuliangye.
As the first liquor circulation enterprise on the main board of Hong Kong, the Hong Kong capital market has shown great confidence in the silver base. According to the prospectus, the silver-based listing successfully raised HK$1.035 billion and achieved a good performance of 44 times oversubscription.
At that time, the silver base, the business raised the standard of cooperation directly to the level of 5 million. The small distributors who want 1 million Wuliangye in one breath can hardly touch the silver-based cooperation threshold. The pursuit of capital and the market also enabled Liang Guoxing to achieve wealth freedom overnight, and his value soared to 3.2 billion.
However, silver is also the same, and the defeat is also this. As the largest distributor of Wuliangye, after the scenery, it is also devastated.
The success of Wuliangye has made Yinji Group overly rely on channels and ignore the development and improvement of terminals. Relying on the exclusive agency right, the products obtained from the manufacturer are sold to the lower agents, and the profit is made at the difference in price, and the operation is no longer carefully studied. At first, the back is against the big tree to cool off, once there is a problem in the upstream and downstream, how can the silver base without core competitiveness resist?
In 2012, the golden decade of domestic liquor ended, and the industry entered a period of in-depth adjustment, of which the impact on high-end liquor was particularly serious. The yinji group's ability to win weak and resist risks is undoubtedly exposed.
The high-end product line is concentrated, and the silver base has been greatly impacted by the industry, not only the situation of exporting Wuliangye is not good, the performance has shrunk significantly, and the domestic sales net profit is also difficult to support. Yinji began to fall into a dangerous situation and was in a state of struggle for a long time.
In 2013, Yinji Group handed over its first loss-making financial report since its listing. According to the financial report, in the first half of the year, Yinji Group lost HK$177 million in the medium term, and the annual loss exceeded 1 billion.
Looking at the double decline in stock prices and performance, Liang Guoxing realized that relying too much on Wuliangye was not a long-term solution. This year, the Yinji Group, which was deeply tied to Wuliangye, turned around and held hands with Moutai and represented Moutai liquor.
At the same time, Yinji has also made operational adjustments, changed the mode of cooperation with traditional dealers, and directly held hands with emerging channels.
Liang Guoxing's self-help has had some effect, but more importantly, the liquor industry has shown signs of recovery. In 2014, in the face of media inquiries, Liang Guoxing generously said that "the most difficult moment has passed."
As he said, the silver base has since achieved a turnaround in revenue. From 2015 to 2016, the silver base changed its decline and got rid of losses. According to Yinji's 2016 annual report, its annual revenue was about HK$1.26 billion, an increase of 200% year-on-year.
After a heavy blow, the slightly recovered silver base hit the iron while it was hot, transformed B2B, built a liquor e-commerce platform, and continued to weaken the characteristics of high dependence on Wuliangye and increase the proportion of non-alcoholic business.
In 2016, Silver Base saw the transformation of B2B as a "life-saving straw", or even a sharp blade to break the deadlock. The high-profile shout will achieve 30 billion sales through the B2B platform within three years. This year, the annual revenue of the silver base was less than 1.3 billion.
The results proved that the transformation effect of Yinji Group was very small, and its performance spring was also very short-lived. In 2017, Silver Foundation once again fell into a "cold winter". This year, Silver Foundation lost money again.
In fact, although the previous performance has improved, there is still a real "recuperation" that immediately increased investment due to transformation, making the company's capital situation still in a weak situation. In addition, before its B2B platform reaches a scale, "burning money" is inevitable.
But at this moment, the silver base did not give up. In 2018, Yinji began to explore the way in the layout of high-margin and diversified products, which is bound to add high-margin product categories. Milk powder, becoming the silver-based choice.
The announcement shows that Yinji intends to acquire the stock price of "Zhuofan International", which has rich channels and experience in the international distribution of advanced formula milk powder industry, to quickly enter the formula milk powder market. Only the final acquisition was terminated, and Yinji's plan failed to achieve what he wanted.
After a variety of attempts, since 2017, the profit dilemma of the silver base has still been irreversible, and some of the low-margin non-alcoholic businesses originally laid out have also dragged down the overall profit data. According to the annual report released from March 2018 to March 2021, the annual net profit of The Silver Base is 136 million, 146 million, 173 million and 0.20 billion, respectively. In addition, the stock price has also fallen below the lowest point for consecutive years and has remained below HK$0.1 for a long time.
After struggling for more than 4 years, in November 2021, silver base announced that it intends to carry out a financial restructuring. From the largest dealer to the current situation, it is a pity for a while.
An industry insider said that most of the former Yinji Group relied on many small dealers, earned the difference in price layers and lived, did not operate the market, had weak control over downstream channels and dealers, and could not guarantee the profit distribution of each layer, and losses were inevitable. Today, the silver base that seeks to restructure and improve the company's debt structure will only await it in a more brutal competitive market.