"Investor Network" Zhang Wei
Edited by Hu Shan
The old proverb has clouds: "Seven things to open the door, chai rice oil salt sauce vinegar tea". As a traditional seasoning, vinegar has a history of more than 3,000 years in China. In the "Zhou Li" written by Zhou Gong in 1058 BC, there is a record of "vinegar people holding five Qi and seven leaves", indicating that vinegar has an important position in the life of the Western Zhou nobles.
At present, in the A-share market, pure vinegar listed companies include Hengshun Vinegar Industry (600305. SH), other "vinegar-containing" concept listed companies, including Qianhe Flavor Industry (603027. SH), Haitian Flavor Industry (603288. SH) and so on.
Chart 1: List of A-share "vinegar-containing" concept stocks
On June 22, another "vinegar-containing" company, Tiandi No. 1 Beverage Co., Ltd. (hereinafter referred to as "Tiandi No.1"), disclosed its prospectus. However, unlike the vinegar produced by its currently listed peers, which is mostly used as a condiment, the apple cider vinegar of Tiandi No. 1 is actually a beverage and the main product that supports the operating income of Tiandi No. 1.
"What to eat and drink, Tiandi No. 1", "Add a dish to health, the fifth dish", from the advertising slogan of Tiandi No. 1, we can see its determination to promote apple cider vinegar. In the past three years, under the reality that revenue has declined and products are difficult to get out of Guangdong, it remains to be seen whether Tiandi No. 1 can use the listing to let apple cider vinegar enter the people's table like fish, meat, rice, and green vegetables.
Overall performance has declined in the past two years
According to the official website, Tiandi No. 1 was established in September 2002, is one of the earliest enterprises in China to enter the vinegar beverage industry, products include apple cider vinegar drinks, juice drinks, packaged drinking water, etc. Among them, apple cider vinegar drink is the main product of Tiandi No. 1, which also supports the company's main revenue.
According to the prospectus, the main revenue of Tiandi One from 2019 to 2021 (hereinafter referred to as the "Reporting Period") was 2.577 billion yuan, 1.89 billion yuan and 1.81 billion yuan, respectively, and the net profit attributable to the mother was 382 million yuan, 249 million yuan and 254 million yuan, respectively. During the reporting period, the sales revenue of apple cider vinegar beverages accounted for more than 95% of the main revenue, and the revenue of fruit juice drinks, packaged drinking water and other products accounted for less than 5%.
Chart 2: Composition of Tiandi One's main revenue
Overall, the revenue and net profit of Tiandi No. 1 in the past three years have shown a downward trend. In terms of revenue, 2020 decreased by 27% year-on-year compared with 2019, and in 2021, it decreased by 4% year-on-year compared with 2020; In terms of net profit, 2020 decreased by 35% year-on-year compared with 2019, and in 2021, it increased slightly compared with 2020.
As for the reasons for the decline, Tiandi One is due to the epidemic. Tiandi No. 1 said that the company's main product apple cider vinegar beverage is positioned as a condiment, which is greatly affected by changes in the catering consumer market; Especially since 2020, with the spread of the new crown pneumonia epidemic, various control measures have been introduced in various places, restricting the opening hours of catering at individual times and restricting mass dinner activities to varying degrees, resulting in the operating income of apple cider vinegar drinks being affected.
The turnover of employees exceeded 2,000
In order to promote the new beverage of apple cider vinegar, Tiandi One is equipped with a large number of sales staff.
According to the prospectus, the number of employees in the reporting period of Tiandi One was 6446, 4852 and 4137 respectively. Among them, the sales staff is 5090, 3647 and 3152 respectively, accounting for more than 75% of the total number of employees. Tiandi No. 1 said that in order to continue to cultivate the consumption habits of end consumers for vinegar drinks, the company is equipped with more grass-roots sales personnel for market promotion and channel maintenance.
However, judging from the sales model of Tiandi One, it seems that there is no need for so many salespeople. According to the prospectus, the main sales channel of Tiandi No. 1 is mainly distribution, and the revenue from distribution channels accounted for 89%, 92% and 94% of the main revenue during the reporting period, respectively, and as of the end of 2021, the proportion of direct sales revenue was even less than 5%.
There are many salespeople, which also makes the sales expense rate of Tiandi One much higher than that of its peers. In the prospectus, Tiandi No. 1 put Nongfu Mountain Spring (09633. HK), Chengde Lulu (000848. SZ), Dongpeng Beverage (605499. SH) and other listed companies as peer comparable companies. The average sales expense ratio of the above companies in the past three years is only about 17%, and the sales expense rate of Tiandi No. 1 in the same period is as high as about 40%.
Figure 3: Tiandi No.1 sales expense ratio compared to peers
In this regard, Tiandi No. 1 said that the company's sales expense rate is much higher than that of comparable listed companies in the same industry, mainly because there is a difference between the composition of the company's sales staff and the above companies, resulting in the labor expense rate of sales staff being higher than that of comparable companies in the same industry.
On the other hand, the loss of personnel at Tiandi No. 1 in recent years has also been relatively serious.
According to the prospectus, the total number of employees of Tiandi One in 2020 decreased by 1594 compared with 2019, a decrease of 25% year-on-year; In 2021, another 715 people were reduced, a decrease of 15% year-on-year. In terms of sales personnel, 1443 fewer people in 2020 than in 2019, a year-on-year decrease of 28%, and another 495 people in 2021, a year-on-year decrease of 14%.
However, in the prospectus, Tiandi One did not elaborate on the reasons for the sharp reduction in employees. In the case of a decrease in the total number of employees and sales personnel, the fundraising purpose of Tiandi No. 1 IPO is mainly to expand the marketing network and expand production capacity.
More than 1 billion wealth management is still raising funds to "make up for the flow"
According to the purpose of fundraising, Tiandi No. 1 intends to raise 1.5 billion yuan in this IPO, of which 739 million yuan is used for marketing network upgrading and brand construction projects, accounting for 49% of the total fundraising; 430 million yuan was used for the first phase of the Suixi Industrial Project, accounting for 29% of the total fundraising; 278 million yuan was used to supplement working capital and repay bank loans, accounting for 19% of the total fundraising, and 53 million yuan was used for information construction and upgrading projects, accounting for 3% of the total fundraising.
Chart 4: Breakdown of the purposes of the Tiandi One IPO
Is it reasonable for nearly half of the fundraising amount to be used for marketing network upgrades and brand building? Tiandi No. 1 said that in the context of increasingly fierce competition in the industry, the company needs to continuously strengthen brand building, while continuing to deepen the stock market, strengthen the layout in emerging regional markets, continue to expand sales areas, expand consumer groups, and build Tiandi No. 1 into a national brand.
In fact, the current sales area of Tiandi No. 1 is mainly concentrated in Guangdong. According to the financial data, the sales revenue from Guangdong Province during the reporting period was 1.693 billion yuan, 1.54 billion yuan and 1.237 billion yuan respectively, accounting for 66%, 81% and 68% of the main revenue of Tiandi One, respectively. By the end of 2021, only 27% of revenue from outside Guangdong Province, and another 5% from online sales.
It is worth noting that there are still 278 million yuan in the fundraising to supplement working capital and repay bank loans, in fact, Tiandi No. 1 is not bad money. During the Reporting Period, the trading financial assets of Tiandi One were RMB883 million, RMB1.008 billion and RMB1.017 billion, respectively, accounting for more than 60% of the current assets. The details show that trading financial assets are mainly used to purchase bank wealth management products and equity instrument investments.
According to public information, Tiandi No. 1 was listed on the New Third Board in August 2015 and suspended trading on June 16 this year. During the listing period of the New Third Board, Tiandi One raised a total of 961 million yuan through three additional issuances. This time, Tiandi No. 1 will land on the Shenzhen Stock Exchange to raise 1.5 billion yuan. (Produced by Thinking Finance)■