Author丨Li Huanhuan
Editor丨Tangerine
After the 10 billion goal proposed by the "Baoneng Department" five years ago was aborted, the "Torch Department" controlled by Zhongju High-tech launched a new round of 10 billion goals. Will it be possible this time?
In the next three years, it will exceed 10 billion
After the control returned from the "Baoneng Department" to the "Torch Department", Zhongju High-tech seemed to be ready to do a big job. A few days ago, the company successively released the 2024 restricted stock incentive plan and the three-year strategic plan of the subsidiary of Meiweixian. In these two plans, the "10 billion" goal has been mentioned many times, which to a certain extent demonstrates the determination and enthusiasm of the new management, but due to the huge difference between the company's existing scale and 10 billion, this goal has also been questioned by the industry after it was put forward.
Specifically, the equity incentive assessment is based on 2023, and the revenue of Zhongju High-tech from 2024 to 2026 will not be less than 5.756 billion yuan, 6.784 billion yuan, and 10.021 billion yuan respectively, with a year-on-year increase of 12%, 18%, and 48% respectively, and will nearly double in 2026 compared with 2023; 30%、61%。
At the same time, Zhongju High-tech also released a three-year strategic plan for its subsidiary "Weiweixian", and put forward the strategic goal of "building a new kitchen gang", with the specific business goal of reaching 10 billion yuan in revenue and 1.5 billion yuan in operating profit by 2026. Meiweixian is a company mainly engaged in condiment business under Zhongju High-tech, with two major brands of "Chubang" and "Weiweixian", and its products cover more than 10 categories such as soy sauce, chicken powder (fine), oyster sauce and so on.
It can be seen that the goal of 10 billion yuan of Zhongju High-tech is basically borne by the condiment business. The company's management also said at the recent performance exchange meeting that the company plans to complete the divestiture of the real estate business through the medium-term plan and focus more on the condiment business. How is the highly-anticipated condiment business performing?
According to the financial report, in 2023, Zhongju High-tech will achieve an operating income of 5.139 billion yuan, a year-on-year decrease of 3.78%, and an attributable net profit of 1.697 billion yuan, compared with a loss of 592.2 million yuan in 2022. However, behind the new highs, there is a lot of "moisture". Zhongju High-tech said that the sharp increase in net profit was mainly due to the settlement and withdrawal of the lawsuit between the company and Zhongshan Torch Industrial United Co., Ltd., and the reversal of the estimated liabilities accrued in 2022 in 2023. In addition to this factor, it can better reflect the company's real profitability, deducting non-net profit of only 524 million yuan, a decrease of 5.79% from the previous year.
It is worth mentioning that this is the third consecutive year of continuous decline in the non-net profit of Zhongju High-tech, and the company's non-net profit in 2021 and 2022 will be 718 million yuan and 556 million yuan respectively.
In addition to the decline in profitability, the revenue of Zhongju High-tech's main condiment business is not optimistic. In 2023, its condiment segment will achieve revenue of 4.932 billion yuan, a year-on-year decrease of 0.45%. Among them, the revenue from soy sauce was 3.028 billion yuan, a year-on-year increase of 0.09%, and the sales volume increased a little more, reaching 1.86%. In addition, the revenue of chicken powder increased by 13.44% year-on-year to 676 million yuan, but the edible oil and other condiments including cooking wine and polyphony fell by 10.62% and 6.79% respectively, resulting in a slight decline in the entire condiment business.
However, in view of the internal turmoil of Zhongju High-tech last year, in the eyes of industry insiders, its entire condiment business can remain stable, especially the sales of soy sauce can still rise, which to some extent also reflects the rigid demand of the category and the recognition of the brand. But even so, in order to go from 5 billion to 10 billion in the next three years, it is still difficult for Zhongju High-tech.
In fact, in the current environment of sluggish consumption, it is difficult for any FMCG company to generate 5 billion revenue in three years. What's more, Zhongju High-tech is still in a stock market, with a revenue of 25 billion + Haitian Flavor Industry and a menacing Qianhe Flavor Industry, and the overall development trend between enterprises is in a one-off situation.
The "10 billion goal" is not a slogan
Regarding the specific promotion measures of the three-year strategic plan, Zhongju High-tech did not disclose too much information, but at the recent performance exchange meeting, the company's management revealed several key trends in the future.
First of all, Zhongju High-tech mentioned that in the case of the slowdown in the growth of the macroeconomy and the condiment industry, the realization of the company's revenue target of 10 billion yuan is facing certain risks. In order to achieve the goal, the company will adopt an endogenous + extended growth model. Extended growth is mainly achieved through mergers and acquisitions, and the volume of mergers and acquisitions planned in three years is about 2 billion. Considering that there are not many M&A targets of more than 1 billion in the entire condiment industry, it is difficult for the company's M&A target to be achieved at one time, and it may achieve a growth of 2 billion through multiple target mergers and acquisitions. As for the scope of the M&A target, it is not only limited to basic condiments, but may also extend to the field of compound condiments, and the M&A target is given priority to make up for the shortcomings of the category.
In addition, regarding the decomposition of the 10 billion goal in the family end and the catering side, Zhongju High-tech said that there is no specific proportion plan at present. However, in view of the fact that the company's condiment business currently accounts for 70% of the C-end, the company will focus on channel expansion on the B-end of catering and industry in the future, and increase the proportion of B-end revenue. In addition, for e-commerce channels, Zhongju High-tech has set up an e-commerce and new retail division this year to bid for the competing company Qianhe Flavor Industry.
In the eyes of some industry insiders, there are many uncertainties behind these two measures. For example, mergers and acquisitions, most of the condiment industry is scattered, and how to find high-quality targets that meet the volume standards requires a lot of time and energy; even if the mergers and acquisitions are successful, they will face the problem of management integration in the later stage.
The B-side is actually more challenging. First, the entire catering industry is in a state of weak recovery, and in 2023, except for a few leading enterprises, most small and medium-sized catering enterprises will have a hard time surviving. In 2024, as consumers' expectations for the economy and income continue to decline, the external situation facing restaurant companies will become more severe, which will directly affect the supply of upstream condiments. In addition, most of the existing catering channels are controlled by Haitian and Lee Kum Kee. Taking Haitian as an example, in its 25 billion+ revenue volume, the B-end channel dominated by catering accounts for 60%-70%, and its position is difficult to shake for a while.
It seems that it is difficult to achieve the goal of 10 billion yuan, but after returning to power, the "torch system" is quite optimistic about the new management.
In October last year, after the control of China Torch High-tech returned to the "Torch Department", the company hired a number of "China Resources Department" executives, including the general manager and deputy general manager. After the new management took office, a series of drastic changes were made to the company's people and organization, which were intended to prepare for the next three years of war.
This scene looks somewhat familiar. After Yao Zhenhua's "Baoneng Department" took power in Zhongju High-tech, he also showed high morale, implemented a series of changes, and put forward the "double 10 billion" goal in 2019, that is, to achieve an annual operating income of more than 10 billion yuan and an annual production and sales volume of more than one million tons in the health food industry within five years. The specific way of playing is also a combination of endogenous and extensional, with an endogenous development target of 8 billion yuan and an extension development target of 2 billion yuan.
As for the results, as we all know, due to the long-term "pulling" between shareholders, the "double 10 billion" goal has not been achieved, and the revenue volume of Zhongju High-tech has been floating around 5 billion in the past four years, and the growth has almost stagnated. During the past four years, Haitian has increased from 22 billion to 25 billion, and Qianhe Flavor has increased from 1.7 billion to nearly 3 billion, and the latter's net profit level in 2023 has even surpassed that of Zhongju High-tech.
Compared with the current stock market, the lost four years of Zhongju High-tech have made it easier for leading enterprises to explore the growth path from the market. To some extent, the external environment that the company is facing now is more severe. Of course, after the battle for control subsided, the company's management was further stabilized and could focus on developing the condiment business. But in many cases, it is difficult for both individuals and companies to contend with the general environment. When most people have lowered their expectations for the economy and income, it is difficult for Zhongju High-tech to stage a business legend that will win the day.