Bawang Group's 2021 performance pre-loss of 13 million yuan The stock price is less than HK$0.1

Reporter Jiao Yue, trainee reporter Liu Zhao

On January 24, Bawang Group, which is listed on the Hong Kong Stock Exchange, announced that it would have a net loss of about 13 million yuan in 2021. This will be the fourth consecutive year of losses for the company since 2018. Bawang Shampoo, a product of Bawang Group, has been popular all over the country, but with the passage of time, today's "Bawang" has no longer been beautiful.

The share price is less than HK$0.1

Performance losses year after year

With the method of "celebrity endorsement + CCTV advertising + terminal marketing", Bawang Shampoo has accurate brand positioning, cut into the market segment from anti-disengagement, and grabbed market share from brands such as Procter & Gamble, Unilever, shulei and so on, and its performance sat on the rocket. From 2005 to 2009, the average growth rate of Bawang exceeded 160%, of which the market share soared from less than 1% in 2005 to 7.6% in 2008, ranking first in the industry. In 2009, it landed on the main board of Hong Kong and was called "the first share of Chinese herbal medicine".

However, the good times did not last long, and the stock price of Bawang Group fell from the highest hk$6.474/share to the lowest hk$0.057/share. As of the close of trading on January 24 this year, the share price of Bawang Group was only HK$0.089 per share.

From the perspective of financial data, from 2014 to 2020, the company's operating income was generally maintained between 200 million and 300 million yuan, and the performance growth was weak. The company's net profit attributable to the mother is even more miserable. Since the company went public in 2009, the company has only lost money in 2009, 2016 and 2017. Since 2018, the company has made continuous losses of 1.196 million yuan, 6.1 million yuan and 4.038 million yuan respectively, and is expected to lose 13 million yuan by 2021.

For the company's performance in 2021, Bawang Group said that the group's turnover in 2021 remained relatively stable compared with 2020. Based on the financial information currently available, various factors contributed to the increase in net loss in 2021, including an increase in the amount of rent payable on the Group's plant and warehouse in 2021, the temporary reduction of corporate social insurance premiums in 2020 no longer applicable to 2021, an increase in social insurance premiums in 2021, and the factors mentioned in the announcement published on November 19, 2021 (Note: November 19, 2021, Bawang Group issued an announcement that the net loss from January to October 2020 still increased due to factors such as domestic labor costs, raw material costs and packaging material costs).

For the decline of Bawang Group for many years, Pan Helin, member of the Information and Communication Economy Expert Committee of the Ministry of Industry and Information Technology and executive dean of the Digital Economy Research Institute of Zhongnan University of Economics and Law, analyzed, "The starting point of Bawang is to prevent detachment, and Bawang should continue to take the technical barrier model, that is, dig deep in the field of medicine, and gradually expand the business boundary to medical beauty and drug research and development." But Bawang has had path dependence for many years, because marketing has benefited, very superstitious about the role of advertising, and ignores that enterprises actually need barriers. When the best time to build barriers is missed, and there is no outstanding marketing method to support it, sluggishness is an inevitable result. ”

Chao Chenglin, an expert in understanding App and business strategy, told the Securities Daily reporter, "The initial success of Bawang Group stems from its precise positioning of the market segment in the field of hair loss, most of which are between 35-45 years old, with mature consumption concepts and consumption capabilities, and at that time, Bawang quickly opened the market through high-end product image, accurate customer positioning and strong marketing strategies, but because of the serious quality (trust) problems in the main fist products, In the later stage, whether from product research and development (quality) improvement, brand value (trust) reshaping, crisis public relations treatment has not solved its core problems, the collapse of consumer market trust, especially the collapse of trust in the high-end consumer market will directly lead to the loss of market share, and rebuilding its consumer trust is extremely difficult, Bawang Group missed the best time to correct and adjust when the crisis occurred, coupled with the problem of internal contradictions, the performance will inevitably decline year by year. ”

The storm continues

Diversified development is difficult to hide the decline

From rumors that shampoos contain carcinogens to founders and couples turning against each other, staging a farce of family ethics. Bawang Group has been listed for twelve years, and although the turmoil has gradually subsided, the stock price of Bawang Group has also been depressed.

In order to revitalize its strength, Bawang Group is also trying to take the young route, not only launching Litao shampoo, shower gel and laundry detergent, but also launching products such as Chinese herbal skin care brand Materia Medica. But these did not get the Overlord Group out of decline.

In 2010, Bawang Group chose cross-border development and launched the first series of Chinese herbal beverage products - Bawang Herbal Tea. Due to the sluggish performance, in 2013, the business operation of Bawang Herbal Tea came to an abrupt end.

Not willing to fail, Bawang Group created a cross-border game circle of Bawang Xiaoyaojing IP in 2018, and carried out cross-border cooperation and joint customization with other IPs such as "Sword Net 3", "Yesterday's Blue Sky", "Meteor Butterfly Sword" and so on. In addition, Overlord also published the novel "The Strange Adventure of the Medicine Essence". In 2021, teacher Chen Zhiyuan, a craftsman of non-heritage bag play, was invited to carefully carve and design the IP image of the bag play of the "Little Medicine Essence Family" of Bawang around the Bawang Xiao Yaojing family, and used the IP image of the cloth bag drama to create the plot.

In addition to creating IP, Bawang Group is going farther and farther on the road of cross-border and joint branding. In December 2021, Bawang launched the RIO × Bawang joint gift box with Rui'ao Cocktail, hoping to seize the young people's consumer market through the joint name of the two brands, generate chemical reactions through cross-border complementarity or contrast, and create topic points, thus forming a topic spread and brand freshness.

Judging from the sales data of Tmall Rio Ruiao flagship store, the price of this gift box has dropped from 99 yuan to 79 yuan after coupons, the first unit price is only 58 yuan, and the monthly sales of this product are 800+, compared with the rest of the products in the store with sales of 20,000+, consumers' willingness to consume is obviously insufficient.

Pan and Lin said, "Diversification and cross-border should take the original resources of the enterprise as the core, and cannot be separated from the basic resources and ability endowments of the enterprise, nor can it be separated from the consumer's perception of the enterprise." If Bawang wants to enter the consumer market and become a daily chemical enterprise, it is clear that the current brand appeal is insufficient among young people, and it can take the form of sub-brands. From the beginning, Bawang's product positioning has been more than middle-aged, so that a large number of channel investment has created a stereotype for consumers. Launching different products for different groups, multiple sub-brands are the current common way of playing daily chemical enterprises. ”

"There is no problem with the concept of diversification and cross-border operation itself, but Bawang Group did not first solve the problems caused by the defects of its own core fist products, but continued to eat the brand value of Bawang in the market, and the overdraft has completely carried the brand image of patients." Its new product line faces a great deviation from the customer group of the original brand (imprint) positioning, resulting in a complete inability to take advantage of the momentum and further weakening the core cohesion of its brand. It is not that the overlord does not work hard, but completely misunderstands the direction, and its rout must be inevitable. Any enterprise to do diversification and cross-border, the premise is that the main business must be excellent, through the core of the main business advantages, in order to gradually expand other aspects of the business. Chao Chenglin said.

(Edited by Bai Baoyu)