Red flag chain, who will hold the flag?
Reporter: Xu Shuai, Wu Zepeng, Fan Qianqian, Editor: Wei Guanhong, Song Sijian, Liang Xiao
"The actual controller is planning a transfer of control" - this sentence will attract the attention of relevant investors if it is placed on any listed company.
Now, this sentence appeared in the announcement issued by Hongqi Chain (SZ002697, share price 5.37 yuan, market value 7.303 billion yuan) on December 13, which not only attracted the attention of many investors, but also attracted the attention of many consumers and fans of "Cao Xiaoxiao".
No matter who gives control, it is an indisputable fact that the Hongqi chain has now grown to nearly 3,600 stores (as of June 30, 2023).
Since joining the work in 1972, Cao Shiru has been working for more than 50 years, and now has nearly 200,000 Weibo fans and more than 290,000 Douyin fans. On the morning of the day after the Hongqi Chain released the above announcement (December 14), Cao Shiru posted another video on Weibo: "Hongqi Chain's exciting event on December 14 is coming!"
However, what the market is most concerned about is the identity of the future helmsman of this leading supermarket in southwest China.
Image source: Photo by reporter Zhang Jian
Who will be the controlling transferee?
Hongqi Chain, a convenience supermarket chain that is a household name in Sichuan, may now have a change of control.
According to the announcement of Hongqi Chain, the company received a notice from the actual controller of the company and persons acting in concert on December 13 that the actual controller was planning the transfer of control. In view of the fact that the matter is under negotiation and there are significant uncertainties at present, trading in the company's shares has been suspended since the market opened on December 14, 2023. The suspension is expected to last for two trading days.
Wang Huaitao, a lawyer at Shanghai Xingu Law Firm, said that according to Article 18 of the Self-Regulatory Guidelines for Listed Companies on the Shenzhen Stock Exchange No. 6 - Suspension and Resumption of Trading, listed companies planning a change of control should, in principle, disclose the progress of the planning in stages. If it is really necessary to apply for suspension of trading, it may apply for suspension of trading for no more than 2 trading days. If necessary, it can be extended to 5 trading days. If the company discloses for the first time the planned change of control, it shall disclose the industry to which the counterparty belongs, the scope of the equity ratio involved, and whether it involves the prior approval of the competent department.
At present, the actual controller of Hongqi Chain is Cao Shiru, who holds 327 million shares of the company, with a shareholding ratio of 24.08%. Cao Shiru's concerted action is her son, Cao Zengjun, who was born in 1979, and is also the current vice chairman and secretary of the board of directors of Hongqi Chain. Cao Zengjun holds 48.28 million shares, with a shareholding ratio of 3.55%.
According to the closing price of 5.37 yuan per share on the latest trading day of Hongqi Chain, the market value of Cao Shiru's shares is about 1.76 billion yuan.
Cao Shiru's plan to transfer control of the Hongqi chain surprised the market. The reporter noted that the performance of Hongqi chain has been on a relatively benign operating track for a long time, and the company's operating income has maintained a year-on-year increase of 13 years since 2010. In the first three quarters of this year, Hongqi chain revenue increased by 0.89% year-on-year to 7.641 billion yuan, and the net profit attributable to the parent company increased by 13.99% year-on-year to 407 million yuan. As of the end of the third quarter, the balance of cash and cash equivalents of Hongqi Chain was 1.495 billion yuan.
Now, an announcement by Hongqi Chain has sparked a heated discussion in the market - if the transfer of control is successful, who will be the new actual controller of Hongqi Chain?
The reporter of "Daily Economic News" combed and found that a speculation in the current market is that control will be transferred to Cao Zengjun. According to a number of media reports, in 2010, Cao Shiru publicly said in an interview with the media: "As a mother, of course I hope that one day my son will take over my career." Cao Shiru said that she spent a lot of effort and time to cultivate Cao Zengjun, and also created a lot of training opportunities for him. Since 2005, Cao Zengjun has joined the Hongqi chain.
"If the controlling stake of Hongqi Chain is changed within the concert party, and the concert party is an immediate family member, it is not necessary to suspend trading. Wang Huaitao gave reporters an example, similar situations such as Shuangliang Energy Conservation (600481. SH, share price of 7.94 yuan, market value of 14.853 billion yuan), there are also cases of transfer between immediate family members of the actual controller, but there is no suspension of trading.
There is also speculation in the market that the transferee may be the second largest shareholder of the Hongqi chain, Yonghui Supermarket, which holds 21% of the shares. At the end of 2017, Yonghui Supermarket signed a strategic cooperation agreement with Hongqi Chain while winning part of the company's equity.
Image source: Photo by reporter Zhang Yun
The reporter noted that as of September 30, Yonghui Supermarket had a balance of 6.661 billion yuan in cash and cash equivalents at the end of the period. In 2022, the company's operating income will reach 90.091 billion yuan. However, Yonghui's current strategic intent seems to be more inclined to shrink spending. In the first three quarters of this year, it continued to eliminate loss-making stores, and the number of stores decreased compared with the same period last year. Recently, Yonghui Supermarket announced that it intends to sell 388 million shares of Wanda Commercial Management for 4.53 billion yuan, and the purpose of the sale is to revitalize the company's assets. It should be noted that Yonghui Supermarket has a relatively high asset-liability ratio of more than 85%.
On the other hand, if Yonghui Supermarket has "ideas", it can also consider increasing its holdings in the secondary market. Wang Huaitao said that the increase in shareholders' holdings has led to a change in the actual controller, and the progress of the plan should be disclosed in stages according to relevant regulations.
The reporter of "Daily Economic News" noticed that since the beginning of this year, Hongqi Chain has also signed strategic cooperation agreements with a number of enterprises.
On June 16, on the occasion of the 23rd anniversary of the establishment of Hongqi Chain, the official Douyin live broadcast room of its "Hongqi Chain" was officially launched, and live broadcast activities were carried out for three consecutive days. At that time, Hongqi Chain signed a strategic cooperation agreement with Orient International Venture Co., Ltd. and Poly Communication Co., Ltd., and the three parties will carry out strategic cooperation in import and export trade, supply chain coordination, digital RMB promotion and other fields with the China International Import Expo and other import product trade and retail business as application scenarios.
As early as May this year, Hongqi Chain also signed a strategic cooperation agreement with Shudao Urban and Rural Group. At that time, it was mentioned that this cooperation will give full play to their respective advantages, achieve comprehensive coordination between upstream and downstream, and further build a large service ecological chain that benefits people's livelihood. In the future, the two sides will further deepen cooperation and promote more substantive cooperation projects to take root and bear fruit. In April this year, Hongqi Chain and Chengdu Tiantou Asset Management Co., Ltd. jointly established Sichuan Tianfu New Area Tiantou Hongqi Commercial Management Co., Ltd.
The reporter also noted that Oriental International Venture Co., Ltd. is an A-share listed company (stock abbreviation: Oriental Venture), and its main business is trade in goods. In the first three quarters of this year, the company's revenue was 28.031 billion yuan, and the net profit attributable to the parent company was 226 million yuan. Poly Communications Limited is 35% owned by Poly International Holdings Limited. Shudao Urban and Rural Group is 100% owned by Shudao Investment Group Co., Ltd. The latter is one of the world's top 500 companies, with total assets of 1.26 trillion yuan as of the end of June 2023. Chengdu Tianfu Asset Management Co., Ltd. is 100% owned by Chengdu Tianfu New Area Investment Group Co., Ltd., which is jointly owned by the Sichuan Tianfu New Area Finance Bureau and the Sichuan Provincial Department of Finance.
Cao Shiru: It is "Cao Daxia" and "Cao Xiaoxia"
Combined with the announcement of Hongqi chain and the introduction of the official website, Hongqi chain was founded on June 22, 2000, with the business philosophy of "convenient, affordable and assured", and has always maintained a steady momentum of development over the years, and the company has developed into a modern technology chain enterprise of "goods + services + finance".
Nowadays, walking on Dikang Avenue in the west area of Chengdu High-tech Zone, you can easily find the headquarters of Hongqi chain company. On one side is the company wall composed of red characters of "Chengdu Hongqi Chain Co., Ltd.", and on the other side is the gate post of the security room, which is the entrance of the company. And next to the gate post there is a Hongqi chain convenience store, red and blue door signboard, is one of the most familiar street scenery in Chengdu.
But that wasn't the case more than 20 years ago. In May 1999, the May 1999 issue of Sichuan local "Business Manager" magazine published an interview with Cao Shiru, when her title was still the manager of Chengdu Hongqi Shopping Mall Wholesale Company...... Rely on the guidance of people all the way to find the prestigious Hongqi shopping mall wholesale company. ”
According to the report, Cao Shiru, manager of Chengdu Hongqi Shopping Mall Wholesale Company, with tenacity, courage and self-confidence, opened more than 20 supermarket chains in less than three years, covering most of the residential areas in the southeast and northwest of Chengdu, and expanded to suburban counties, with sales of nearly 200 million yuan in 1998.
Hongqi Mall Wholesale Company later became an important part of Hongqi Limited, the predecessor of the Hongqi chain. According to the prospectus of Hongqi Chain in 2012, on June 15, 2000, the Chengdu Municipal Commission of Commerce and Trade agreed to establish "Chengdu Hongqi Chain Co., Ltd." in the "Reply on the Establishment of "Chengdu Hongqi Chain Co., Ltd." (Chengdu Shangfa [2000] No. 88), and the "Chengdu Hongqi Chain Co., Ltd." undertook the creditor's rights and debts formed before the restructuring of the wholesale branch confirmed by finance and state-owned assets. In this context, in June 2000, Cao Shiru and Chengdu Vegetable Experimental Field jointly funded the establishment of Hongqi Co., Ltd., and received the assets, creditor's rights and debts of the wholesale branch of Hongqi Shopping Mall.
Interestingly, the aforementioned 1999 report on Cao Shiru described Cao Shiru as a "heroine of the business world". Similar descriptions are also common in later reports about Cao Shiru.
Image source: Photo by reporter Zhang Jian
For example, Cao Shiru is also nicknamed "Cao Daxia", and Business Mulan magazine published a feature about Cao Shiru in 2013. It is mentioned that people close to her said that she had a kind of bold and chivalrous spirit, and once yelled at the thief after seeing the theft at the train station, and as a result, not only scared the thief away, but also scared the stolen person away. At the same time, in the Red Flag Chain, Cao Shiru's majesty can be felt everywhere, "here is like an army ready for battle, and the female general may suddenly give orders."
Later, Chengdu people prefer to affectionately call Cao Shiru "Cao Xiao", and she herself is very happy to accept such a title, the once majestic "female general", now also loves literature and art, singing, more humorous and cordial in public, and mingles with young people. At present, Cao Shiru has nearly 200,000 Weibo fans and more than 290,000 Douyin fans. In her personal video account, she often shares her daily life, singing clips, etc.
On December 2, Hongqi Chain released a live broadcast preview, and Cao Shiru also went into battle in person, "Family, Cao Xiaoxiao has given benefits to everyone again", a very personal style of "Cao Xiaoxiao anchor" Online, in this short video, Cao Shiru also explained by the way that when Hongqi Chain has so many offline stores, it is necessary to explore three reasons for online live broadcast: first, Hongqi Chain is a good neighbor around everyone, and the store must be opened well, second, the live broadcast can bring more high-quality goods to everyone through the online platform, and third, you can use the opportunity of live broadcast to chat with fans to send benefits.
Outside of the business battlefield, Cao Shiru is also a person who is passionate about philanthropy. Hongqi Chain's 2023 semi-annual report disclosed that the company has been committed to the development of social welfare and charity, donating hundreds of millions of yuan to the society, and Cao Shiru personally donated nearly 60 million yuan to the society. In the first half of 2023 alone, Cao Shiru's personal philanthropic acts include donating 100,000 yuan to Chengdu Neusoft University to help students with excellent character and academic performance and family difficulties, donating a total of 2.6 million yuan to the education departments in Mianyang, Leshan and other regions to support outstanding students with family difficulties and caring for teachers in difficulty, and donating a total of 1.4 million yuan to the education system of Dujiangyan City, Pengzhou City and other counties and cities to support the development of education. In addition, she also donated to charities such as Sichuan Charity Federation, Sichuan Women's Children's Foundation, Sichuan Red Cross Foundation, Sichuan Welfare Foundation for the Disabled, and Chengdu Welfare Foundation for the Disabled to help the development of social welfare and charity.
Cao Shiru once said in a public interview that the homonym of the first two words of her name is "supermarket", which is destined to her supermarket complex. Since the early 70s of the last century, the teenage Cao Shiru was assigned to Hongqi Shopping Mall as a ticket administrator after returning to Chengdu as an educated youth, and he has been associated with supermarkets.
In 2012, the Hongqi chain listed in the prospectus disclosed that as of the end of June of that year, the number of stores was 1,211, and in 2023, the Hongqi chain announced that as of the end of June 2023, there were 3,592 stores, a net increase of 31 compared with 3,561 at the end of 2022. In 11 years, the Hongqi chain has added more than 2,300 stores.
Now, half a century has passed since Cao Shiru walked into the Hongqi shopping mall as a ticket administrator, and "the actual controller is planning the transfer of control", what is her next plan? Regardless of the answer to this question, Cao Shiru said in an interview with the Securities Times E Company a few days ago that he believes that the Hongqi chain will develop better, but will not retire.
Is the convenience store industry still a good track?
Behind the planning and transformation of Hongqi Chain, the convenience store industry in which it is located is still an industry with good overall development, and convenience stores are still an important place for offline consumption by the public.
According to the 2023 China Convenience Store Development Report jointly released by the China Chain Store & Franchise Association and KPMG, in 2022, the sales of convenience stores nationwide increased from 255.6 billion yuan in 2019 to 383.4 billion yuan. In terms of the number of stores, the number of convenience stores nationwide will increase from 132,000 in 2019 to 300,000 in 2022.
The relevant report of iiMedia Consulting also mentioned that with the implementation of support policies for the convenience store industry, residents' disposable income, consumption capacity and China's urbanization rate have steadily increased, and the market size of China's convenience store industry will continue to expand, and is expected to reach 503.3 billion yuan in 2025.
However, at the same time, the offline retail industry, including convenience stores and supermarkets, is facing increasingly fierce market competition, especially the impact of online shopping, community group buying, and snack mass stores. For example, Yonghui Supermarket, once the head supermarket chain, has lost money for two consecutive years. Yonghui Supermarket (SH601933, share price 2.96 yuan, market value 26.86 billion yuan) is also the second largest shareholder of Hongqi Chain.
In this year's semi-annual report, Hongqi Chain also mentioned that with the rapid development of the economy and the intensification of market competition, the cost of commercial property leasing, personnel wages and promotions and other expenses are inevitable, and the company is facing the risk of continuous growth in operating costs, which has formed greater pressure on the company's operation.
In order to adapt to today's diverse retail channels and consumption scenarios, traditional convenience stores and supermarkets are constantly seeking innovation and opportunities to break the situation.
For example, Hongqi Chain is exploring the live broadcast business, combining live broadcast promotion with offline stores, and also strengthening cooperation with other online platforms. In addition to exploring online platforms, Hongqi Chain is also experimenting with new business formats. On June 16 this year, Hongqi Chain's first new supermarket "Huangguolan" supermarket opened. It is reported that the supermarket has introduced freshly ground coffee, pre-made dishes, imported goods, bulk snacks and other categories.
In the new business format, today's high-end membership stores and snack stores with rapid development have become a new model developed by many supermarkets or convenience stores this year. For example, Sun Art Retail, the main brand of RT-Mart, officially joined the competition for membership stores this year, and the first store of M member store in China officially opened in April this year, and Jiajiayue (SH603708, stock price of 14.35 yuan, market value of 9.289 billion yuan) of Shandong supermarket chain brand launched the snack chain brand "Yue Ji Snacks" and entered the snack track of mass sales.
National Business Daily