Liu Qiangdong is going to attack Yonghui Supermarket
JD.com plans to reduce its holdings in Yonghui Supermarket
Last year, it was rumored to acquire Yonghui Supermarket, and this year JD.com began to reduce its holdings.
On March 20, Yonghui Supermarket Co., Ltd. issued an announcement on the shareholding reduction plan of shareholders.
According to the announcement, Suqian Hanbang Investment Management Co., Ltd. intends to reduce its holdings of Yonghui Supermarket shares by no more than 90,750,300 shares, accounting for no more than 1% of the total share capital.
Source: Yonghui Supermarket announcement
It is reported that "Suqian Hanbang" is a subsidiary of JD.com, which currently holds a total of 478,523,104 shares of Yonghui Supermarket, accounting for 5.27% of the total share capital.
The reduction is expected to trade at market prices and will take place within three months after 15 trading days from the date of the announcement. According to the announcement, the reason why Suqian Hanbang intends to reduce its holdings is its own capital needs.
Based on the closing price of 2.55 yuan per share on March 20, JD.com can cash out up to about 230 million yuan after the completion of the reduction.
According to JD.com's previously released financial report, for the whole year of 2023, JD.com Group's cash flow from operating activities will be 59.5 billion yuan, and for the whole year of 2022, it will be 57.8 billion yuan. The Company's cash and cash equivalents, restricted cash and short-term investments totaled $197.7 billion as of December 31, 2023, compared to $226.2 billion as of December 31, 2022.
From this point of view, the funds on JD.com's account have indeed decreased, but it seems that cashing out less than 1% of Yonghui's shares alone does not have much effect.
According to the new rules, major shareholders (controlling shareholders and shareholders holding more than 5% of the shares) shall not reduce their holdings by more than 1% within 3 months. Now that JD.com has begun to reduce its holdings, it may also be a foreshadowing for other subsequent strategic adjustments.
After the announcement, Yonghui Supermarket's share price plunged nearly 5%.
It is worth mentioning that in 2015, JD.com announced that it would invest 9 yuan per share, a total of 4.31 billion yuan in Yonghui Supermarket. After the completion of the transaction, JD.com will hold a 10% stake in Yonghui Supermarket, and the two sides will begin to deepen cooperation in the field of fresh food.
In the following years, JD.com continued to increase its holdings in Yonghui Supermarket, and added Suqian Hanbang as a major shareholder through an agreement transfer, and the two entities acted in concert.
Up to now, Beijing Jingdong Century Trading Co., Ltd. and Suqian Hanbang Investment Management Co., Ltd. hold 8.11% and 5.27% of Yonghui Supermarket's shares respectively, with a total of 13.39% of the shares.
Source: Yonghui Supermarket announcement
However, the share price of Yonghui Supermarket began to decline all the way after the market value exceeded 100 billion yuan in 2020 and the number of stores exceeded 1,000. At the beginning of February this year, Yonghui Supermarket's share price once reached a record low of 2.21 yuan. Since then, although it has rebounded slightly, it is still nearly 80% from its peak.
JD.com's choice to start reducing its holdings at the low point of its stock price inevitably makes people speculate that it has lost confidence in Yonghui, which has been losing money.
Yonghui has lost money for three consecutive years, and there are frequent changes in senior management
At the end of January this year, Yonghui Supermarket issued a performance pre-loss announcement.
According to the announcement, Yonghui expects the net profit attributable to shareholders of listed companies in 2023 to be -1.34 billion yuan, a year-on-year decrease of 1.42 billion yuan, and the net profit attributable to shareholders of listed companies after deducting non-recurring gains and losses will be -1.97 billion yuan, a year-on-year decrease of 600 million yuan.
Source: Yonghui Supermarket announcement
Although the loss was reduced, Yonghui's announcement still caused an uproar. Because earlier, Yonghui's first-half financial report also showed that it successfully turned losses into profits, achieving a net profit of 374 million yuan.
On an annual basis, Yonghui Supermarket will lose 3.944 billion yuan and 2.763 billion yuan in 2021 and 2022 respectively, and counting the estimated 1.34 billion yuan in 2023, Yonghui has lost money for three consecutive years.
As for the reason for the loss in 2023, Yonghui explained in the announcement that it is due to "continue to deepen the strategic positioning of 'fresh-based, customer-centric omni-channel digital retail platform', focus on the improvement of supply chain efficiency and logistics warehousing and distribution efficiency, and improve the company's overall operation and management efficiency in an all-round way through store digitalization, employment digitalization, back-end management digitalization and refined user operation, and the company's annual investment in science and technology is about 670 million yuan." ”
At the same time, due to the continuous decline in the stock price in the secondary market, Yonghui has carried out a test to reduce the long-term assets held at the end of the year, and it is expected to provide for the impairment of long-term equity investment and other long-term assets of about 530 million yuan.
However, even if the 670 million yuan invested in technology and the 530 million yuan of asset impairment are put aside, Yonghui will still not be able to achieve profitability in 2023.
Not only that, but the frequent changes in the directors and senior management of Yonghui Supermarket have also attracted a lot of attention.
In August last year, Yonghui's non-independent director, Mak Yin, from Yonghui's largest shareholder, Dairy Farm Co., Ltd., resigned, and in December last year, supervisor Zhu Wenjun, who also came from Dairy Farm Co., Ltd., was replaced by DFI Retail Group.
This year, Yonghui supermarket executives began to resign intensively.
In January, Huang Mingyue, chief financial officer, resigned and was replaced by Wu Kaizhi, and in February, Peng Huasheng, vice president, resigned, Wu Lefeng, secretary of the board of directors, and Xiong Houfu, supervisor and chairman of the board of supervisors, resigned......
Under a series of personnel changes and equity changes, the future of Yonghui Supermarket is becoming more and more confusing.
As recently as August last year, there were rumors that JD.com planned to buy Yonghui Supermarket.
The reason was that JD.com invited back the veteran Yan Xiaobing at that time, and integrated independent business units such as Jingxi Pinpin, Qixian, and Qiancang to establish an innovative retail department, with Yan Xiaobing as the person in charge. The department mainly lays out intra-city retail, sinking markets and other businesses, aiming to deeply explore the integration and innovation of retail online and offline businesses, and reports directly to Xu Ran, CEO of JD.com.
In other words, the newly established department is at the same level as "JD Retail", and JD seems to have a new interest in fresh food, new retail and other businesses.
In both areas, Yonghui Supermarket has certain advantages, especially in fresh food.
Liu Qiangdong has repeatedly spoken highly of Yonghui's fresh supply chain: "Wal-Mart, Carrefour's geographical location in China stores is better than Yonghui than many retailers, but why can't Yonghui do it, because only Yonghui has created an efficient fresh supply chain, its supply chain can be compared with those stalls selling vegetables, the price is cheaper than theirs, and it can also make money." ”
Zhang Xuansong, the founder of Yonghui, also said with confidence: "Internet companies continue to develop the fresh supply chain, but fresh food needs time to accumulate, and we have thousands of buyers for 18 years to be responsible, and it is difficult to catch up with capital." ”
Zhang Xuansong, founder of Yonghui Supermarket
It is also for this reason that the first thing JD.com did after investing heavily in Yonghui was to try various supply chain level cooperation with Yonghui.
If JD.com tries to increase retail in the same city, the fresh supply chain is also a crucial link. Through the acquisition of Yonghui, JD can directly get this "last piece of the puzzle" - which is why some industry insiders at that time believed in the rumors of JD.com's acquisition of Yonghui.
However, judging from the current situation, Yonghui has not been able to get out of the quagmire of losses for a long time, and its stock price has fallen to a record low; JD.com has not only not increased its holdings, but also announced a plan to reduce its holdings, which is a great intention of retreating.
"Slimming" began, and e-commerce giants focused on their core business
In fact, not only JD.com, but also e-commerce giants have now shaken the traditional retail business that was once laid out.
For example, since the beginning of this year, Alibaba's RT-Mart, Freshippo, and Intime Department Store have all been mired in rumors of sale. The reason is that Tsai Chongxin once answered the question of "selling non-core assets" at Alibaba's financial report meeting, saying that in the nine months since fiscal year 2024, Ali has completed the exit of $1.7 billion in non-core assets, and is also actively looking at how to exit listed stocks, and has set up a special team.
"At present, Alibaba's balance sheet still has some traditional brick-and-mortar retail businesses, they are not core focused businesses, and Alibaba's exit is reasonable, but given the current market conditions, the exit may take time to achieve. ”
Alibaba said that it will focus on core business investment, one is e-commerce business, including domestic and overseas e-commerce, and the second is cloud computing.
Recently, Hou Yi, founder and CEO of Freshippo, announced his retirement and the CFO of Hema will also serve as CEO. The retirement of the soul man, coupled with the takeover of the CFO, has once again heightened the market's suspicion that Hema is looking to sell.
Today's JD.com has begun to reduce its holdings in Yonghui Supermarket, which is very reminiscent of the current situation faced by RT-Mart and Freshippo. But at the same time, it should be noted that unlike Alibaba's gradual withdrawal, some of JD.com's physical retail business is still very important.
For example, just recently, the physical stores of Jingdong Electric Appliances and Jingdong Home Appliances opened new stores in Shenzhen and Guizhou respectively. After all, JD Retail's core digital home appliance category relies on offline experience, and JD has no reason to give up this important channel for offline customer acquisition.
Therefore, the decision to reduce the stake in Yonghui Supermarket is more likely to take into account the impact of its continuous losses, and achieve further strategic focus through the sale of non-core offline heavy assets.
Author | Li Songyue