Consumption Daily Network Financial News Recently, the "first share of buns" dog ignored the delisting from the New Third Board, which caused heated discussions, and another of the "Tianjin Three Absolutes" - "Eighteenth Street Twist" is also facing an operational crisis.
On August 19, Gui Faxiang (002820. SZ) released its 2020 semi-annual report, during the reporting period, the company achieved revenue of about 149 million yuan, down 43.45% year-on-year; net profit attributable to shareholders of listed companies was about -4.94 million yuan, down 110.79% year-on-year.
As of the end of the reporting period, the company had 59 directly operated stores and 1 food-themed comprehensive shopping mall in Tianjin, Beijing and other places. Affected by the epidemic, the flow of customers in the company's main sales channels directly operated stores has dropped significantly, and most of the physical operating outlets of the distribution channels have been closed in stages, resulting in a significant decline in operating income.
Since its listing, the turmoil surrounding Gui Faxiang has not stopped. From the perspective of revenue performance, Gui Faxiang, a long-established enterprise in China, ranked last in the leisure snacks sector with a compound growth rate of 3.51% in the past three years; from the perspective of company management, the continuous departure of executives and suspected behaviors have greatly covered up the surprises and admiration brought by the national intangible cultural heritage - the twist making technology of eighteenth street.
On August 6, Tianjin reached a comprehensive strategic cooperation with the new e-commerce platform Pinduoduo, and at the same time launched the "Tianjin Premium Pavilion", and Gui Faxiang was impressively listed. The result of the online sales force is that everyone is happy or short-lived, Gui Faxiang has some "new tricks" to save revenue and net profit, and how long can the "first share of twist flower" last.
Direct store crisis
(Source: Company's 2020 Semi-Annual Report)
During the reporting period, in the retail business, the revenue of the company's own brand products twist, pastry and OEM products accounted for more than 70%, of which twist revenue accounted for more than 50%, and the revenue of direct stores was 8 times that of online self-operated stores.
The company's retail business is mainly divided into two parts: direct stores and online self-operated channels, direct stores are an important part of the company's sales, and online self-operated channels include tmall, Jingdong mall, Youzan and other third-party platform self-operated stores.
During the reporting period, the company's retail business was concentrated in the Tianjin area, opening 58 directly operated stores, achieving revenue of about 110 million yuan, down 41% year-on-year; store efficiency of about 7995 yuan, a year-on-year decrease of 47.47%; store operating profit of about 17.68 million yuan, down 67.60% year-on-year.
During the reporting period, the company opened online self-operated stores on third-party e-commerce platforms such as Tmall, Jingdong Mall, and Youzan, achieving revenue (untaxed) of about 7.71 million yuan, down 15.10% year-on-year; online transaction volume (GMV) was about 9.35 million yuan, down 22.69% year-on-year, and the overall revenue accounted for a relatively low proportion.
Revenue plummeted, and it was important to control costs. During the reporting period, the company's operating costs were about 81.8 million yuan, down 40.74% year-on-year, and the variable expenses of directly operated stores fell by 8.48% year-on-year.
In view of the changes in the market environment and consumer demand, the company's business strategy needs to be flexibly changed. On October 15, 2019, the company held the first extraordinary general meeting of shareholders in 2019 to deliberate and pass the "Proposal on the Adjustment and Extension of Some Fundraising Projects", and resolved to reduce the construction scale of some twist production lines in the construction project of the airport economic zone production base, increase the investment in the construction of the marketing network, and extend the scheduled time for the project to reach the usable state. As of the end of the reporting period, the marketing network construction project invested about 31.77 million yuan.
In addition, Gui Faxiang acquired Tianjin Wang Ji Twist Flower Co., Ltd. with 100% equity, hoping to use the Wang Ji twist flower brand to exert efforts in the halal twist flower and low-end twist flower market, focusing on the layout of tourism channels and seizing the market.
Executive departures are in doubt
On July 8, 2020, Gui Faxiang issued the "Announcement on the Resignation of the Chairman of the Board", from July 7, Wu Hong will no longer serve as the company's legal representative, the chairman and director of the third board of directors, nor will he serve as the chairman of the strategic committee, subsidiaries and any other company positions.
According to data from the Public Opinion Center of Chinese Listed Companies, as early as before Gui Faxiang's listing, the company was liquidated due to the liquidation of 330 internal employee shareholdings and 9 senior executives obtained huge shares at the "cabbage price", which caused public controversy. Today, with the resignation of Chairman Wu Hong, among the 9 executives who originally held the equity, only Li Mingxiang and Zheng Haiqiang are still in the list of incumbent executives who are still publicly disclosed.
According to a 2017 report by the Securities Times, one of the conditions for executives to receive equity incentives at that time was that from 2011 to 2013, Gui Faxiang needed to achieve revenue of 310 million yuan, 370 million yuan and 450 million yuan respectively. After the "standard" is met, the executive's shareholding price is 2 yuan per share, which is a 11% premium to the net asset appraisal value of 1.8 yuan per share.
In the key years, Gui Faxiang's revenue has continued to grow significantly, with the actual revenue in 2013 being 460 million yuan, just "stepping on the line". After the executives meet the conditions of equity incentives, the company's revenue growth rate shows an "inverted U- shape" trend. In addition, Gui Faxiang's large amount of sales revenue without invoice recognition has also caused frequent questions about the authenticity of operating income.
Invoices are not only related to tax issues, but also an important financial reference. In the past, the "Securities Times" reporter found that Gui Faxiang's direct sales store did not issue invoices through field visits, and the company's invoicing was mainly related to the company's financial system behind the scenes. In terms of data, Gui Faxiang's 70% sales have no invoices, and the proportion of cash sales has also climbed by nearly 50%. The revenue of direct stores accounts for the main part of Gui Faxiang's revenue of more than 400 million yuan, but dealers also have an income of about 200 million yuan, which makes the above proportion of no invoices and cash sales more conspicuous.
The road to breaking the game is long
The twist flower on the Eighteenth Street has made Gui Faxiang, but it has been difficult to get out of Tianjin, and the process of national expansion seems to be "foot-to-point".
Of course, Gui Faxiang is also making efforts to break the dilemma. In recent years, the company has increased its investment in research and development, and newly developed multi-flavor rice dumplings, traditional and old-fashioned improved mooncakes, pastries and other leisure products. The company said that during the epidemic and in new stores, the performance contribution of pastries was particularly significant, while the pastry business was far from meeting brand expectations in terms of scale and market share. In view of this situation, pastry should be upgraded to the company's new pillar business, stand firm in the local market in the short term, enhance performance contribution, medium and long-term development, reserve "fist single products" to promote the whole country, become a breakthrough point in endogenous development.
From the perspective of product development, to meet the market demand under the normalization of the epidemic, short-term specialization of several characteristic pastry products, under the premise of ensuring quality, the development of small specifications, vacuum independent packaging and other forms, in the form of self-production, OEM and other ways to quickly deploy; from the perspective of channel expansion, with the help of the tianjin regional commercial downturn window period, quickly open stores, find stores as the norm, explore the "big store direct sales, small shop franchise" management model, hire professionals to be responsible for store management and operation, and form a chain franchise management system suitable for the company To achieve the organic combination of cost control and channel control, it has become the most powerful way for the company to strengthen its main business.
The blueprint is beautiful, but the market speaks in terms of performance. Equity incentives So far, 7 of the 9 shareholding executives have left the company, and investors have strong concerns about the stability and operational efficiency of Gui Faxiang's management team.
During the reporting period, the diversification of the company's main business encountered obstacles, cash flow was in jeopardy, and the net cash flow generated by operating activities was about 17.26 million yuan, a year-on-year decrease of 58.25%. During the reporting period, the company used the temporarily idle raised funds and temporarily idle own funds to purchase bank wealth management products, with the ending balance of wealth management products of 498 million yuan and the ending balance of interest receivables of about 3.49 million yuan. A large amount of money is used to purchase financial management, which is mostly a means of increasing the value of corporate funds and coping with risks, but it should not become the focus of business work.
Twist is China's traditional specialty food, Gui Faxiang is recognized by the people as a traditional time-honored brand, the Chinese people hope that Gui Faxiang and the intangible cultural wealth it represents can be further carried forward, and from the perspective of the capital market, the majority of investors need more is the company's standardized development and solid performance returns. At the same time, with the continuous advancement of the reform of state-owned enterprises, the supervision and protection of state-owned assets has entered the normalization, if the listing of state-owned enterprises has become a shortcut for a small number of people to achieve wealth freedom, do not improve the operational efficiency of state-owned enterprises as an important goal of management, Gui Faxiang's future development will enter an inexplicable "dead end".