Text | Good Finance
Recently, credit Suisse (hereinafter referred to as Credit Suisse), Macquarie and Lyon and other investment banking institutions released research reports that maintained master kong holdings (00322) rating of "outperforming the market" and gave target prices of 18.5 and 20.3 Hong Kong dollars, far exceeding Master Kong's current maximum share price of 16.5 Hong Kong dollars per share.
Among them, Credit Suisse expects Master Kong's instant noodle revenue to grow in the second half of 2021 to reach medium to high units year-on-year, while beverage revenue growth is double digits. The gross profit margin decline of instant noodles in the second half of 2021 should be significantly narrower than in the first half of the year, but the pressure on beverage gross margins is expected to increase year-on-year, and Master Kong may achieve a year-on-year decline in net profit in 2021.
In fact, from the forecast of investment banking institutions, it is not difficult to see that Master Kong's instant noodle business has reached the ceiling of growth, and although the beverage business is becoming the "top pillar" of Master Kong's revenue growth, it is also facing huge upward pressure, which means that the "bullish" Master Kong may not break the spell of increasing revenue and not increasing profits in 2021.
Where are the growth variables?
In August this year, Master Kong released the first half of 2021 performance report showed that Master Kong achieved operating income of 35.396 billion yuan in the first half of the year; gross profit was about 10.992 billion yuan, down 0.16% year-on-year; net profit attributable to the mother was 2.04 billion yuan, down 14.5% year-on-year.
It is worth noting that after the release of Master Kong's financial report of increasing revenue and not increasing profits, although Macquarie and Daiwa two investment banking institutions gave Different ratings and target stock prices to Master Kong based on different market understandings, the two sides jointly expected Master Kong's expected income to achieve medium to high unit growth in 2021, while net profit was expected to decline in low units.
Judging from the commonality of the predictions of many investment banking institutions, the embarrassing performance of Master Kong's increase in revenue and no profit in the first half of the year will most likely repeat itself in the second half of the year, and the reason for this situation is that Master Kong has not been able to find enough stable growth variables.
In the view of Xiangshan Finance, the new growth variables mainly come from two aspects: one is the change of the external market environment and the direction of consumption winds; the other is the change of the underlying value growth logic of the enterprise itself. But from these two perspectives, whether it is the instant noodle business or the beverage business, Master Kong seems to be trapped in the same place.
First, from the perspective of the market environment and consumption trend, with the rapid development of the domestic economy, the continuous improvement of people's living standards, the upgrading of quality consumption has become the general trend of the new consumption era, and the emergence of a large number of young consumer groups of Generation Z has further accelerated the change of the wind direction of the consumer market, which has spawned two new consumption outlets "healthy life" and "quality life".
In the field of diet, the simplest consumption upgrade is from instant noodles to takeaway, and then to new instant noodle products such as ramen noodles, cannibals, and zihe pots. On the one hand, compared to instant noodles, takeaway and high-end instant noodles that take time to cook are more like a ritualistic, healthy and formal "meal" than a simple hunger-filled food to cope with life. From instant noodles to a formal "meal", from the basic "full of hunger" food and clothing needs to meet the emotional needs of users' exquisite "self-pleasing", this is essentially a quality of life consumption upgrade.
On the other hand, with the changes of the times, instant noodles from the early high-end food to the mass food, and then to today's emergency food, a series of identity changes actually confirm the change in people's healthy life concept in the context of consumption upgrading.
In fact, aside from a series of false rumors such as waxy and carcinogenic instant noodles, the fact that instant noodles are heavy in oil and salt is enough to deter many consumers, and the disconnect between the marketing level of Master Kong's brand and the young consumer groups that pursue personalization has led to Master Kong's brand image being less popular than emerging brands such as the nascent ramen and Airbus pasta. Therefore, instant noodles have gradually become synonymous with "LOW" and "unhealthy" in the eyes of young people, which is also the fundamental reason why Master Kong has been abandoned by young people in the new era.
In terms of Master Kong's bottled beverages, according to the inquiry of the professional version of Tianyancha, there are more than 100,000 companies related to beverages, and the fierce competition in the beverage track can be seen. Driven by the new consumption concept of health and quality, on the one hand, consumers have begun to consider health attributes such as sugar content, and higher requirements have also been put forward for the marketing and packaging of products. For example, the current explosive Yuanqi Forest relies on the label of "0 sugar, 0 fat and 0 calorie" and uses very personalized product packaging, thus gaining the favor of the market and consumers.
On the other hand, just like the dimensionality reduction blow of takeaway on instant noodles, with the large-scale sinking of new tea shops such as Mixue Ice City, Yihetang, Shuyi Xiancao and other new tea shops, consumers have more choices, while the consumption scenario of bottled ready-to-drink tea drinks is constantly being compressed, which may be the main reason why major investment banking institutions believe that there is huge upward pressure on Master Kong's beverage business.
Second, from the perspective of Master Kong's own underlying value logic, under the new consumption upgrade trend of healthy life and quality life, Master Kong's two main sources of revenue, instant noodle business and beverage business, have not internally generated enough value variables to grow into the second growth engine.
On the one hand, from the perspective of the instant noodle business, in fact, putting aside the high-end appearance of ramen noodles and other fast food products, it is not difficult to find that they are essentially a luxurious upgraded version of instant noodles, which is more profound for traditional instant noodle players such as Master Kong, whether it is taste or material, Master Kong is more profound than any Internet celebrity instant noodle brand.
For example, Master Kong has successively launched high-end fast food new products such as "Soup Master", "Express Speed Noodle Restaurant" and "Speed Cooked Noodles". However, although the high-end strategy has indeed brought certain revenue growth to Master Kong's instant noodle business, under the intertwining of many new consumption outlets such as "noodle economy", "one-person food" and "home economy" in 2021, capital has wrapped countless players into the fast-food noodle track. Public data shows that there were a total of 173 financing incidents in the catering industry in 2021.
However, the catering financing fever has also contributed to the serious problem of homogenization of the high-end instant noodle market, so Master Kong has not occupied an advantage in the field of high-end instant noodles, but because of the huge brand recognition premium between the long-term low-price label and the high-end instant noodles that are now tens of yuan or even higher, it has been questioned by consumers.
Therefore, the basic revenue of Master Kong's instant noodle business is still low-priced bag noodles, and high-end instant noodles have not grown into a new growth point for Master Kong.
On the other hand, from the perspective of beverage business, under the guidance of the consumption concept of health and wellness, sugar-free beverages seem to have more market potential than sugary drinks. But at present, several sugar-free drinks launched by Master Kong have not been able to run out of the new market explosion, and what has been playing the world is still iced tea, jasmine honey tea, jasmine clear tea and other classic drinks.
In general, in the context of consumption upgrading, Master Kong himself has not been able to endogenously generate new growth variables, and at the same time has not grasped the changes in the direction of consumption in time, and no variables means that there is no new development possibility, so Master Kang's current dilemma of increasing income and not increasing profits will inevitably continue to repeat.
The crux of the problem and the breaking point: the aging brand and the nascent crowd
It is worth noting that from the user's questioning of Master Kong's high-end instant noodles, it is not difficult to find that Master Kong's problem lies in the soft power problems such as the popularization and aging of the brand image, rather than the hard power problems such as product taste and materials. In other words, the impression of Master Kong's parent brand "LOW" inhibits the development of Master Kong's high-end instant noodles.
From the perspective of brand image, Master Kong's instant noodle business is facing the impact of high-end instant noodles, and the beverage business is also suffering from the impact of relatively high-end new tea drinks such as Mi Xue Bingcheng and XiCha, which means that the external channel of Master Kong's brand is narrowing or even blocked.
Master Kong's years of deep cultivation of supply chain and offline layout, although it further consolidates the basic market disk, but also exacerbates the natural sinking of Master Kong's brand potential, resulting in the difficulty of high-end transformation and upgrading of Master Kong's brand, and it is difficult for users to accept high-premium Master Kong instant noodles.
In fact, in the author's view, the popularization and aging of Master Kong's brand image are fundamentally due to the fact that in the context of consumption upgrading, Master Kong's brand marketing and shaping has not kept up with the changes in users and market trends, resulting in Master Kong's brand lagging behind the times.
In fact, behind the change in the concept of consumption is actually the change of consumer groups, and the Z generation young people are undoubtedly the new group of modern consumption, then the key to brand activation is to determine the target user group, in-depth insight, understanding and grasp of this part of the Z generation young people's psychology, hobbies, with the help of modern marketing means to let users identify with the connotation of the brand and resonate.
But at present, on the one hand, Master Kong does not seem to have a clear target user group, and the marketing method is more through traditional media such as television advertising, so as to spread the net and catch fish.
Since entering the mobile Internet era, traditional TV has been abandoned by the young people of Generation Z, and users and traffic have been distributed to short videos, live streaming, social content platforms, etc. In other words, Master Kong's traditional marketing methods have been difficult to affect the new generation of young consumer groups, and there is no new user traffic in the stock stage, which means that the brand cannot keep up with the times and is bound to naturally age.
On the other hand, in the traffic era, from the rise of the new generation of food and light luxury brands such as Ramen, Yuanqi Forest and Airbus Pasta, it is not difficult to summarize the marketing methodology of a new consumer brand " e-commerce platform + net red with goods + little red book grass + zhihu Q&A = a new brand", and this new consumption logic is actually a traffic gathering place for young people in the Z generation, using the marketing methods that young people like to hear, so that the brand can accurately produce consumption resonance and emotional collision with every young user. So as to quickly imprint a high-end brand impression in the minds of users.
Taking the instant noodle brand "Ramen Theory" as an example, when the content self-media era emerged, Ramen Said quickly attracted a large number of consumers by laying out content self-media such as public accounts, little red books, and Microblogs. Subsequently, the rise of live streaming with goods, Ramen said that in 30 days, it held 1854 live broadcasts with 456 bloggers, and it was repeatedly on Li Jiaqi's live broadcast room. In the past two years, the short video outlet has come, and Ramen said that it has begun to exert its strength on platforms such as Douyin and Station B, through the strong recommendation of KOLs, thus occupying the minds of more young consumers.
It can be said that the reason for the success of the "ramen theory" is more of an accurate grasp of every consumption trend of young people, and what Master Kong's brand lacks is the sensitivity of this new era of consumption trend.
Write at the end:
Nowadays, the new consumer brands in the food and beverage track, Ramen said that it has completed the sixth round of financing; Jinmiantang has also completed tens of millions of yuan of financing; and with the news of the upcoming IPO of Akuan Food, it means that the compression of the living space of Master Kong by Internet celebrity instant noodle food will be further intensified.
However, Chef Kong has not yet stepped out of the comfort zone of braised beef noodles and iced tea, nor has they been able to find new growth variables.
The spell of increasing income and not increasing profits is still continuing, and the glory of Master Kang yesterday seems to be gradually dissipating in the changes of today's new consumption era...