The gross profit margin of peach and plum bread now fell to 23.9%, the worst in history The Wu Xueliang family "harvested" 4 billion in 9 rounds and wanted to set another 267 million

Peach and plum bread. Photo by our reporter Wu Wei

News from Changjiang Shangbao -- Liu Fangyi, reporter of Changjiang Shangbao

Because he was a teacher, Wu Zhigang named the company "Taoli". And after his retirement, peach and plum bread (603866. SH) is gradually removing the halo.

On November 7, Taoli Bread announced that Wu Xuedong, the controlling shareholder and actual controller, plans to reduce the total number of shares through block transactions by no more than 21.8 million shares, accounting for 1.64% of the total number of shares of the company. Based on the current stock price, Wu Xuedong can cash out about 267 million yuan.

A reporter from Changjiang Business Daily found that in more than three years, the Wu Xueliang family reduced its holdings in 10 rounds of cash worth about 4.3 billion yuan, and peach and plum bread became an ATM.

On the performance side, 2020 is also a "watershed", and Taoli bread has been tired since 2021 and has fallen into the strange circle of "increasing income without increasing profits". Among them, in the first three quarters of 2022, the company's gross profit margin was only 23.9%, the worst record in history.

Shares are down about 64% in a year.

On the evening of November 7, Taoli Bread issued an announcement on the reduction of shares held by the controlling shareholder and the actual controller and the internal transfer plan between the concerted actors.

As of the disclosure date of this announcement, Wu Xueliang (director), the controlling shareholder and actual controller of Taoli Bread, holds 196 million shares of the company, accounting for about 14.72% of the company's total share capital; Wu Xuedong, the controlling shareholder and actual controller, holds 39.2371 million shares of the company, accounting for about 2.94% of the company's total share capital.

According to the announcement, within 3 months after the 3 trading days from the disclosure date of this announcement, Wu Xuedong plans to reduce the total number of shares through block trading by no more than 21.8 million shares, accounting for 1.64% of the total number of shares of Taoli Bread.

Due to the needs of family asset planning, Wu Xueliang will transfer a total of no more than 4.861 million shares to his spouse Xiao Shuyan through block transactions, accounting for 0.36% of the total number of shares of Taoli Bread, which is an internal transfer between concerted actors and does not involve a reduction of holdings in the market.

As of the close of trading on November 7, the share price of Taoli Bread reached 12.23 yuan per share, which calculated that Wu Xuedong could cash out about 267 million yuan.

In fact, the Wu Xueliang family of Taoli Bread has been cashing out through reducing holdings in recent years.

On July 12, Taoli Bread released an announcement on the early termination of the shareholding reduction plan and the result of the shareholding reduction by the controlling shareholder and actual controller, saying that "based on confidence in the future development of Taoli Bread and combined with its own capital demand plan, the controlling shareholder and actual controller of the company decided to terminate the implementation of this shareholding reduction plan early". According to the announcement, during the implementation period of the shareholding reduction plan, Wu Zhigang, the company's controlling shareholder and actual controller, reduced his holdings of a total of 13.632 million shares, accounting for 1.025% of the total number of shares of the company, through block transactions and centralized bidding transactions, with a total reduction of 203 million yuan.

Statistics show that this is also the ninth round of reduction completed by the Wu Xueliang family in more than three years after the restriction on the sale of restricted shares was lifted, and the cumulative cash out exceeded 4 billion yuan.

If the latest round of reduction plan is added, the Wu Xueliang family can set up cash of about 4.3 billion yuan in 10 rounds of reduction.

In the secondary market, the share price of Taoli Bread has been volatile and declining since October 2021, and has fallen by about 64% in about one year now.

Taoli Bread is a typical family business, founded by Wu Zhigang.

In 2019, the 84-year-old Wu Zhigang "retired" and was taken over by his three sons, of which Wu Xueliang took over as chairman, Wu Xuedong as director, and Wu Xuequn as general manager.

According to the latest announcement, the current largest shareholding is director and general manager Wu Xuequn, with 325 million shares, with a shareholding ratio of 24.34%; followed by Wu Xueliang, chairman and executive general manager, with 196 million shares, with a shareholding ratio of 14.72%; Wu Zhigang, who holds the third shareholding, holds 126 million shares, with a shareholding ratio of 9.47%.

Caught in the cycle of "increasing income without increasing profits"

In 1995, 60-year-old Wu Zhigang led a number of family members to establish Dandong Taoli Food Co., Ltd., the predecessor of Taoli Bread Co., Ltd., in Dandong, a border region in northeast China. Because he had previously worked as a teacher, he named the company "Taoli".

With the continuous expansion of the company's scale, in 2005, Taoli Bread has established a foothold in the northeast region, and since then the company has continued to "go south" to open up more market space.

As the "first bread share" in the A-share market, Taoli Bread was listed on the Shanghai Stock Exchange in 2015, and the company has strong profitability, as well as competitive advantages such as brand and channel.

Since 2012, the operating income of Taoli Bread has always been "running" by double digits, and by 2019, the company's operating income increased by 15.07% to 28.95% year-on-year.

In 2020, Taoli Bread achieved an operating income of 5.963 billion yuan, a year-on-year increase of 5.66%; The net profit was 883 million yuan, a year-on-year increase of 29.19%.

In the six years before listing, the operating income of Taoli Bread increased from 2.563 billion yuan in 2015 to 5.963 billion yuan in 2020, with a compound annual growth rate (CAGR) of 18.40%; Net profit increased from 347 million yuan in 2015 to 883 million yuan in 2020, with a compound annual growth rate of 20.54%.

However, 2020 was also a "watershed", with revenue growth falling back to single digits for the first time in nearly 8 years. Perhaps by coincidence, after Wu Zhigang "retired" in 2019, the performance of peach and plum bread began to decline.

A yearly profit of 883 million yuan also became the highest record of peach and plum bread, and then the company fell into the strange circle of "increasing revenue without increasing profits".

In the first three quarters of 2021 and 2022, the operating income of Taoli Bread was 6.335 billion yuan and 5.028 billion yuan respectively, a year-on-year increase of 6.24% and 7.81% respectively; The net profit was 763 million yuan and 490 million yuan respectively, a year-on-year increase of -13.54% and -13.80% respectively.

Among them, in the first three quarters of 2022, the gross profit margin of Taoli bread was only 23.9%, the worst record in history.

For the decline in net profit in the first three quarters of 2022, Taoli Bread said that mainly due to the impact of the epidemic and the continuous high temperature power curtailment in some areas, the return rate, discount rate and terminal distribution service fees have increased, and the gross profit margin of the current period has decreased year-on-year due to the increase in the price of some raw materials.

One of the reasons for the high growth of Taoli Bread is that the plan to enter the national market is not going well.

In the past five years, Taoli Bread has established many new subsidiaries across the country, but it is still in a state of loss.

As of the first half of 2022, Shanghai Taoli, established in September 2000, had a net loss of 3.18 million yuan; Wuhan Taoli, founded in June 2016, had a net loss of 3.48 million yuan; Hefei Taoli, established in February 2016, had a net loss of 8.25 million yuan.

During the same period, Dongguan Taoli, established in December 2015, had a net loss of 3.77 million yuan; Zhejiang Taoli, established in May 2017, had a net loss of 7.43 million yuan; Founded in 2019, Quanzhou Taoli had a net loss of 5.02 million yuan.