Source of this article: Times Finance Author: Wang Yan
Only half a year after completing the acquisition of Jingzhi Liquor, China Resources Group issued a third shot at the merger and acquisition in the liquor industry.
On the evening of February 16, Golden Seed Wine (600199. SH) announced that Fuyang Investment, the sole shareholder of the controlling shareholder Golden Seed Group, intends to transfer 49% of the equity held by Golden Seed Group to China Resources ZhanTou, a wholly-owned subsidiary of China Resources (Group) Co., Ltd., by way of a non-public agreement transfer.
Golden Seed Wine said that the equity transfer is a strategic reorganization between the subsidiaries of central enterprises and local state-owned enterprises, and it is proposed to adopt a non-public agreement transfer method, which will not lead to changes in the controlling shareholders and actual controllers of the company.
Affected by the above news, on February 17, Golden Seed Wine opened with a limit of 17.33 yuan / share, with a total market value of 11.400 billion yuan.
In fact, before the announcement was disclosed, there was a change in the market. At the opening of the market in the afternoon of February 16, Golden Seed Wine quickly rose and fell, which made many investors question whether there was insider trading. On platforms such as Snowball and Stock Bar, more investors posted that they knew the news in January. Some shareholders even asked in the stock bar as early as September last year, "Is it true that China Resources acquired Golden Seed?" ”
Regarding the specific circumstances of the equity transfer and how the two sides will cooperate in the future, Times Finance called the Golden Seed Wine Securities Department, and relevant people said that the specific situation would be disclosed in the follow-up announcement. As for whether the company's stock price is involved in insider trading and other issues, the above-mentioned relevant people directly denied it.
"Considering the current strategy of China Resources Group in Shanxi Fenjiu, Jingzhi Liquor and Golden Seed Liquor, it is not excluded that it will further expand the liquor track, improve the layout of the plate, and even enter the subdivision categories such as sauce wine." Cai Xuefei, an analyst in the wine industry, told Times Finance.
Crs' liquor bureau is getting bigger and bigger
China Resources Group is not a "layman" in the liquor industry.
In February 2018, China Resources Group participated in Shanxi Fenjiu (600809. SH) mixed reform, its subsidiary Huachuang Xinrui (Hong Kong) Co., Ltd. for a total amount of 5.16 billion yuan to transfer 99.15 million shares of Shanxi Fenjiu unlimited sale and circulation shares, becoming the second largest shareholder of Shanxi Fenjiu, with a shareholding ratio of 11.38%.
The performance of Shanxi Fenjiu after the mixed reform did not disappoint China Resources. According to the financial report data, from 2018 to 2020, Shanxi Fenjiu achieved revenue of 9.382 billion yuan, 11.880 billion yuan and 13.996 billion yuan respectively, and the net profit increased by 54.01%, 28.63% and 57.75% year-on-year. During this period, Shanxi Fenjiu officially entered the camp of tens of billions of revenue in the liquor industry in 2019.
Shanxi Fenjiu's 2021 performance forecast shows that it is expected that the company will achieve a net profit of 5.234 billion to 5.542 billion yuan in 2021, an increase of 70% to 80% over 2020.
Image source: Visual China
This has also brought great returns to China Resources Group. In 2018, when China Resources Group acquired shares in Shanxi Fenjiu, the cost per share was only 52.04 yuan, and as of today's close, the stock price of Shanxi Fenjiu has reached 297.17 yuan per share, with a total market value of 362.581 billion yuan, an increase of 470% compared with the previous cost price of share transfer. In addition to the dividends of the past few years, in the past four years, the floating profit of this investment of China Resources Group has exceeded 36 billion yuan.
The investment in Shanxi Fenjiu is only the first step in The layout of China Resources Group's liquor territory, and since then, its expansion has not been interrupted.
In December 2020, China Resources Group participated in shede liquor industry (600702. SH) equity bidding, but in the end the control of the liquor industry was spent on Guo Guangchang's Fosun Group for 4.53 billion yuan; in August 2021, China Resources Group invested in The Shandong regional liquor company Jingzhi Liquor through its subsidiary China Resources Beer (00291.HK).
In Cai Xuefei's view, from Shanxi Fenjiu to Jingzhi Liquor to today's Golden Seed Liquor, China Resources Group's investment in the liquor industry is related to its intention to diversify its business and seek new growth points in performance.
"China Resources Group itself needs to develop new businesses, and baijiu is undoubtedly the more active track in recent years, performing far better in the capital market than beer, with higher yields." In addition, the low and high season of liquor and beer coincides with the alternating complement of the channel market, and China Resources can also integrate its own huge channel resources with the liquor business. Cai Xuefei said to Times Finance.
Xiao Zhuqing, a consumer goods marketing expert, told Times Finance that China Resources Group currently ranks first in production capacity in the beer industry, but still lags behind Budweiser in terms of profits per ton of wine. Therefore, China Resources Group hopes to make up for this shortcoming through continuous layout in the field of liquor, and the high added value of liquor will further enhance the output of China Resources Group's sales system.
Why Golden Seed Wine?
Compared with the national famous wine Shanxi Fenjiu, Jingzhi Liquor and Golden Seed Liquor are relatively weak regional liquor brands. China Resources Group "held hands" with it, which surprised the market.
According to the Jiangsu liquor company That once intended to invest in Jingzhi Liquor Industry, 603369. SH) disclosed at the end of 2019 that Jingzhi Liquor's total audited assets in 2018 were 3.493 billion yuan, revenue was 1.248 billion yuan, and net profit was 6.275 million yuan; in the first 11 months of 2019, Jingzhi Liquor's revenue was 1.236 billion yuan and net profit was 37.15 million yuan. According to this data, the revenue volume of Jingzhi Liquor Industry can only rank at the tail end of the 19 listed liquor companies.
As one of the four masters of Huijiu, Golden Seed Wine has long been associated with Gujing Tribute Wine (000596. SZ), Greeting Tribute (603198. SH), Kouzi Cellar (603589. SH) alternately competes for the position of "Emblem Boss". However, in recent years, subject to many factors such as internal governance and price strategy, Golden Seed has gradually declined, not only withdrawing from the industry of the first echelon of Huijiu, but also gradually shrinking its influence, which can only radiate to the local market in Anhui.
According to the financial report data, in the first three quarters of 2021, Golden Seed Wine achieved revenue of 807 million yuan, an increase of 21.58% year-on-year, ranking second from the bottom of the 19 liquor listed companies; net profit loss of 144 million yuan, down 37.36% year-on-year, becoming one of the few loss-making enterprises among the 19 liquor listed companies.
On January 28, Golden Seed Wine issued a pre-loss announcement saying that it expects the net profit attributable to shareholders of listed companies in 2021 to be a loss of 155 million yuan to 185 million yuan.
Cai Xuefei believes that under the trend of consumption upgrading and sinking first- and second-tier brand channels, the brand value of Golden Seed Wine is not high, the product structure is low-end, and the channel stickiness is insufficient. At the same time, the sub-high-end products represented by Fuhexiang are in the cultivation period and cannot contribute to sales for the time being, and Golden Seed Wine is undergoing a difficult transformation of product structure upgrading.
Times Finance noted that since 2020, Golden Seed Wine has launched a high-end product, Drunken Three Autumn 1507 series, and some products are priced in the thousand yuan file, but on Tmall, Jingdong and other platforms, the transaction volume of products at this price is 0.
Nevertheless, for China Resources Group, golden seed wine still has a lot of value.
Xiao Zhuqing pointed out to Times Finance that Golden Seed Wine belongs to small-cap stocks and is a very good shell resource, with high asset quality and a lot of land. In addition, as a listed company, Golden Seed has a good financing platform and a good brand foundation in Anhui.
Cai Xuefei said that compared with Fenjiu, Golden Seed Wine, as a listed company, the equity structure is not complicated, the financial situation is relatively simple, the current cost of intervention is relatively low, and China Resources Group can more easily grasp the initiative.
"At present, the shrinkage of the golden seed wine market is more serious, resulting in golden seeds being more difficult at both the management level and the business operation level, and after China Resources Group enters, it can first solve the problem of funds." At the same time, with the rich resources of China Resources Group and the endorsement of the national channel system, Golden Seed Wine has the opportunity to accelerate the realization of high-end and solve problems such as channel shrinkage. Cai Xuefei said to Times Finance.
Make liquor by playing with beer?
If you are familiar with the development history of China Resources Group in the field of consumer goods such as beer, you should not be unfamiliar with its continuous "buying, buying and buying" model in the liquor sector.
In 1991, China Resources Group acquired Snowflake Brewery and established China Resources Beer. Since then, the wealthy China Resources Group has embarked on large-scale mergers and acquisitions, successively including local beer brands such as Shenzhen Jinwei Beer, Blue Sword Beer, Leshan Leshan Le cordon Bleu Beer, Heilongjiang Samsung Beer, and Dalian Beer. In 2006, China Resources Snowflake Beer surpassed Tsingtao Beer (600600. SH) became China's "beer brother", surpassing Budweiser in 2008 to become the world's largest single beer brand.
After successively investing in three liquor companies distributed in different regions, can CR's M&A operation experience in the beer industry be successfully copied to the liquor industry to achieve resource integration?
Xiao Zhuqing believes that liquor and beer have a high degree of overlap in channels, consumer groups, and brand levels. With the experience of integrating China's beer industry through capital, China Resources Group also has the opportunity to realize the integration of resources of liquor companies through mergers and acquisitions.
"China Resources Group is likely to acquire more liquor companies in the future and sell related products through its own intensive distribution network and huge sales team across the country." Xiao Zhuqing told Times Finance.
Cai Xuefei told Times Finance that continuous mergers and acquisitions have always been an important strategy for China Resources Group to make a large volume. "For China Resources, whether it is to carry out new business layout or find new performance growth points, from the perspective of the business growth of large consumption, big entertainment, and capital performance, baijiu belongs to a very good track." Cai Xuefei further emphasized.