Text: Si Fanxing
Source: Bowang Finance
On October 15, 2020, Arowana was successfully listed under the halo of "sustainable management", and the fundraising of 13.9 billion yuan also became the largest IPO company in the history of the GEM.
At that time, its revenue was as high as more than 170 billion equivalent to two Kweichow Moutai, 3 years have passed, Kweichow Moutai's market value has exceeded 2 trillion, and the former capital of the popular "oil grass", the performance is sluggish, the net profit of revenue has declined, and the stock price has fallen endlessly, repeatedly hitting new lows.
Arowana is swimming more and more weakly.
01
The market value has evaporated by 600 billion in 3 years, and the performance has continued to deteriorate
In 2022, three months after Arowana landed on A-shares, the stock price soared to 145.36 yuan, with a peak market value of more than 780 billion. However, after January, Arowana's share price turned downward and started a deep correction.
As of the close of noon on April 9, the market value of Arowana was 167.2 billion, and the stock price fell to 30.84 yuan per share, and Arowana has fallen by nearly 80% from the highest point.
It is worth mentioning that even with such a decline, Arowana still has a valuation of nearly 60 times, while the price-earnings ratio of Yili, Mengniu, and Midea, the leading Chinese consumer stocks, is only more than ten times, and the valuation of Kweichow Moutai is only more than 30 times.
At the shareholders' meeting held in December 2023, some investors asked, "Will the company introduce measures to boost the stock price due to the deep adjustment of the company's stock?"
Arowana said, "At present, the stock prices of many companies are not performing well, so we are not too worried about the stock price, and we are most concerned about whether the company's business is progressing and whether the company's management team is getting better and better." As soon as the remarks came out, 15w shareholders wanted to cry without tears.
In addition to the decline in stock prices, Arowana is stuck in the quagmire of business operation and cannot extricate itself.
In terms of performance, in 2021, Arowana's revenue will be 226.225 billion yuan, a year-on-year increase of 16.1%, and its net profit will be 4.132 billion yuan, a year-on-year decrease of 31.1%. In 2022, the company achieved operating income of 257.485 billion yuan, a year-on-year increase of 13.82%, and net profit attributable to shareholders of listed companies of 3,011,143 thousand yuan, a year-on-year decrease of 27.12%.
And in 2023, "Yau Mao" will deliver the worst performance in history. The Company's operating income was RMB251.5 billion, down 2.3% year-on-year; net profit attributable to shareholders of listed companies was 2.85 billion yuan, down 5.4% year-on-year; The net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses was 1.32 billion yuan, a year-on-year decrease of 58.5%.
On the whole, the listing is the peak of its performance, and then it fell into the dilemma of increasing revenue but not increasing profits in the next 2 years, and it will continue to deteriorate in 2023, with both revenue and net profit declining without stopping the decline.
02
Gross profit and net profit are at a new low, and the debt ratio remains high
Regarding the decline in performance in 2023, Arowana explained: "It is mainly because the impact of the decline in product prices exceeds the revenue contribution from the increase in sales. The increase in retail channel product profit did not fully offset the impact of the decline in product profit in the catering and food industry channels, resulting in a year-on-year decline in kitchen food profit. ”
It is understood that the spot prices of corn, soybeans and wheat will fall in 2023. Among them, the spot price of wheat fluctuated violently, from 3,200 yuan/ton at the end of 2022 to 2,700 yuan/ton in the first half of 2023, and then fell back again after a slight rebound, and is currently maintained at about 2,800 yuan/ton.
From the perspective of Chinese investors, there are four sacred waters in China – Haitian Soy Sauce, Nongfu Spring, Kweichow Moutai and Arowana. These four sacred waters can be called "perfect consumer goods", with the sexiest logic from a business perspective: super rigid demand attributes, almost infinite life cycle, and unlimited reuse of channel scenarios, which has also become the underlying logic of many investors favoring Arowana.
However, the other side of the coin is that Arowana has no pricing power, and has been trapped by the fluctuation of raw material prices for a long time, which is completely insulated from high profit margins, which has become an unsolvable problem for Arowana. In the absence of high profit margins, there will be no high return on equity, which is not suitable for long-term targeting.
Arowana's main products include kitchen food, feed ingredients and oil technology products. Over the years, Arowana has established a huge production chain, and made the best use of raw materials, established more than 70 production bases in the country, not only to reach upstream, engaged in the processing of agricultural and sideline products, but also soybean meal, rice bran and other by-products into feed, and even through the oil technology to produce related products.
Although Arowana has grown into a giant in the field of grain and oil by virtue of the scale effect, there are not many problems to be solved by Arowana. On the one hand, there is a lack of large single products that can "guard the country", so it faces challenges from various subdivisions such as rice and flour and even oil.
Zhu Danpeng, an analyst in the food industry, said, "With the gradual consolidation of opponents' large single products and the strengthening of support for core categories, it will play a cannibalizing role in Arowana, thereby further weakening its influence." ”
On the other hand, the strategic adoption of "large volume and thin profit" has led to extremely low gross profit margin and fragile profitability.
From 2020 to 2023, the gross profit margin of Arowana will be 11.01%, 8.18%, 5.68% and 4.83% respectively, while the net profit margin of Arowana will be 3.37%, 1.98%, 1.21% and 1.11% respectively in the same period.
At the same time, the operation of the behemoth machine of Arowana requires a lot of capital to maintain, and the ability to resist risks is not high.
According to the financial report data, in the third quarter of 2023, Arowana's monetary funds, trading financial assets, and other current assets totaled 90 billion yuan, but its short-term liabilities were as high as 96.9 billion yuan, plus non-current liabilities and other current liabilities, Arowana's liabilities were as high as hundreds of billions of yuan.
In 2023, the scale of its contract liabilities will increase by 32.76% month-on-month, and the company's debt repayment pressure will increase.
The low threshold of grain and oil and low gross profit are the moats that Arowana has always built, but it also makes it more and more difficult for Arowana to make money, the hematopoietic capacity continues to decline, and the short-term financial pressure is under pressure.
03
Diversifying and seeking a new growth curve?
Under the predicament, in recent years, Arowana has continued to broaden its own boundaries, and high-speed cross-border expansion has become its new solution idea.
At present, Arowana is gradually expanding its product line to condiments, yeast, daily chemicals, plant-based meat and central kitchens.
Since 2015, Arowana has introduced the soy sauce brand Maruzhuang to cut into the condiment track with higher profit margins, and the production of soy sauce with black beans as raw materials is mainly high-end, with a price of 10-15 yuan, and is mainly distributed in first- and second-tier cities. Obviously, Arowana wants to get a piece of the cake from the head brands represented by Haitian, Qianhe and Chubang, although the gross profit margin of soy sauce and vinegar is also higher than that of rice and noodle products, but the competition for condiments has already entered the white-hot era, and it is more difficult to break the situation.
In the roadshow activities carried out in 2023, Arowana said that it has gradually produced and promoted different types of condiments to meet the differentiated needs of various places, and its condiment business has covered soy sauce, vinegar, seasoning oil, sauce and other products.
The experiment does not stop, but there are not many successful cases in the field of condiments so far, and even some professionals in the field of condiments brought in from outside eventually parted ways.
In addition to the field of condiments, Arowana actively deploys the central kitchen.
Arowana's central kitchen project mainly has four major sections, namely pre-made dishes, sauces, hot pot bases and meals. At present, the central kitchens in Hangzhou, Xingping, Zhoukou and Chongqing have been put into production, and the central kitchens in Langfang, Shenyang and Guangzhou are under construction, and it is expected that more than 20 central kitchens will be built in the next four years.
It is certain that the development of the central kitchen and the creation of a closed loop of the whole chain from the source to the table will provide new sales channels for Arowana kitchen food, and is expected to improve the profit margin of the kitchen food sector.
But at present, the central kitchen business is only a small piece of Arowana's business, with traditional business revenue accounting for more than 99%, and the central kitchen business is not yet a sign of a real outbreak. In December 2023, in communication with investors, Arowana also admitted that at present, its central kitchen project is still in the early stage of business.
Arowana, which frequently crosses borders, still has a tortuous road to seek new increments.