Written by: Planets
Source: Bedo Finance
Shede Liquor, known as one of the "Six Golden Flowers of Sichuan Wine", is not very good.
Recently, Shede Liquor Co., Ltd. (SH: 600702, hereinafter referred to as "Shede Liquor") disclosed its 2023 annual report. In the context of the overall weakening of the activity of the liquor industry, Shede Liquor has achieved double growth in revenue and profit. On closer inspection, the company's performance growth has slowed down significantly.
Not only that, the downgrading of the product revenue structure has put a lot of pressure on Shede Liquor, which has been anchoring the "old liquor" track and launching an impact on high-end, and the investment confidence in the secondary market also needs to be repaired and reshaped by the company's future "report card".
Under heavy pressure, there is not much time and space left for trial and error in Shede Liquor.
First, the performance growth rate declined again, and the cost of customer acquisition continued to rise
According to Bedo Finance, the development history of Shede Liquor can be traced back to the Tai'an Distillery established in 1940. After undergoing the transformation of the modern enterprise system, the company landed on the Shanghai Stock Exchange in 1996 and became the third listed company in the liquor industry, and its reputation was greatly enhanced for a while.
2019 is the "first year of the old liquor strategy" of Shede Liquor, after shouting the brand slogan of "Shede Liquor, every bottle is old liquor", the brand continues to promote the implementation of the strategy, and has now built two core brands of "Shede" and "Tuopai", and the brand matrix of multiple nurturing brands of "Tianzi Hu", "Swallow Zhihu", "Intoxicated" and "Yelanggu".
It is also since this year that Shede Liquor has embarked on the "road of take-off". The company's revenue has soared from 2.650 billion yuan in 2019 to 6.056 billion yuan in 2022, with a compound growth rate of about 22.95%. Among them, the revenue growth rate in 2021 is the most significant, with an increase of 83.80%.
At the same time, the profitability of Shede Liquor is also consistent with the revenue caliber. From 2019 to 2022, the company achieved net profits of 508 million yuan, 581 million yuan, 1.246 billion yuan and 1.686 billion yuan respectively, and the corresponding profit growth rates were 48.61%, 14.42%, 114.35% and 35.31%, respectively, all of which achieved double-digit growth.
However, in 2022, the performance growth rate of Shede Liquor has declined significantly, of which revenue and net profit increased by 21.86% and 35.31% year-on-year respectively. In comparison, its revenue growth rate in 2021 was about 83.8%, and the net profit growth rate was about 114.4%.
After entering 2023, the performance growth rate of Shede Liquor will further retreat. According to the data, Shede Liquor will achieve operating income of 7.081 billion yuan in 2023, a year-on-year increase of 16.93%, and the growth rate will slow down again, and the net profit will be 1.771 billion yuan, a year-on-year increase of 5.09%, a new low since 2016.
It is worth noting that Shede Liquor has made great efforts in terms of expenditure in the past year, and its operating costs increased by 33.84% compared with 2022 to 1.805 billion yuan. Among them, the company's sales expenses were 1.290 billion yuan, a year-on-year increase of 26.87%, and the expenses invested in advertising and market development alone were as high as 602 million yuan.
In contrast, although Shede Liquor has invested a lot of money in the development of new product projects in 2023, and its R&D expenses have increased by 42.19% from 762.458 billion yuan in 2022 to 108 million yuan, the overall scale is still less than one-fifth of the advertising expenses.
Even so, Shede Liquor still emphasized its leading edge in production technology in its financial report. In the case of a large increase in operating costs, the revenue growth rate of Shede Liquor is not as high as the former, which is enough to see that the company's customer acquisition costs are becoming more and more expensive, and the effect of operation conversion is not significant.
Second, take the initiative to adjust prices, and "high-end" is faltering
According to Shede Liquor, the change in the company's operating costs is caused by the increase in production costs such as raw materials and sales revenue, which affects its profitability. However, Bedo Finance found that this phenomenon is also closely related to the change in the revenue structure of its products.
In terms of product grade, Shede Liquor's mid-to-high-end liquor category includes Shede brand, Tuopai Tianqu, etc., which will achieve sales of 19.0998 million liters in 2023, a year-on-year increase of 27.92%. However, when the production and sales rate reached 100.86%, the sales revenue of this core category only increased by 15.96% year-on-year to 5.655 billion yuan.
The main reason for the sales to be less than the sales volume is the price adjustment strategy released by Shede Liquor. According to a research report by Ping An Securities, in order to cooperate with the rapid increase in product volume, the tonnage price of medium and high-end liquor in Shede Liquor in 2023 will drop from 326,600 yuan in 2022 to 296,100 yuan, a decrease of 9.34%, and the operating cost will increase by 38.84% to 948 million yuan.
Affected by this, the gross profit margin of Shede Liquor's mid-to-high-end liquor was 83.24%, although it was still at a high level, it was 2.76 percentage points lower than that in 2022, and the profit margin narrowed. Looking at the ordinary liquor category of Shede Liquor, this category achieved a revenue growth of 16.11%, but the revenue scale accounted for only 13.80%, which was not enough to support the revenue fundamentals.
In addition, according to the information disclosed in the research report of Soochow Securities, in 2023, Shede Liquor's Tuopai boxed liquor will achieve significant growth through investment expansion, and Shezhidao will achieve a year-on-year increase of more than 50%. However, the growth rate of taste is slower than that of the whole, and the collection and above products have declined more.
According to the price range of liquor and the discounted price of Shede Liquor in Jingdong, Tuopai boxed liquor at 63 yuan/bottle (480ml) and Shezhidao at 189 yuan/bottle (500ml) are entry-level products, while Shede at 428 yuan/bottle (500ml) and Shede at 1299 yuan/bottle (500ml) are medium-to-high-end liquors.
As of the end of 2023, the inventory scale of Shede Liquor is 4.424 billion yuan, accounting for about 40% of total assets. It is not difficult to see that in 2023, when the overall inventory pressure of the liquor industry is large and the prices of offline dealer channels are inverted, Shede Liquor Industry will inevitably suffer the fate of downgrading its product structure, and will face the challenge of "destocking" in the future.
However, at the 2024 annual work conference held recently, Shede Liquor put forward the goal of building a product matrix in 2024 - to promote the high-end product structure, as well as the process of brand nationalization and internationalization. In this dimension, the brand will continue to insist on exploring development space in the high-end market.
Third, executive compensation is up, and the stock price in the secondary market is down
Shede Liquor launched a stock incentive plan in October 2022 and set a three-year assessment target.
The content stipulates that the revenue of Shede Liquor in 2023 should not be less than 7.41 billion yuan, or the net profit should not be less than 1.57 billion yuan. With this reference, it can be seen that the actual revenue of Shede Liquor in 2023 does not meet the requirements, and the net profit only exceeds the target by 200 million yuan.
On April 17 this year, Shede Liquor issued a letter of thanks to all shareholders and formulated a shareholder feedback plan. The content shows that Shede Liquor will provide 500ml 54% volx4 Shede Dragon Year Zodiac Wine, limited to 100,000 bottles, within the quota according to the actual transaction price of Jingdong Tmall 598 yuan / bottle, 1 bottle is sold, buy one get one free.
However, the shareholders of Shede Liquor have mixed reviews of this move, and question the fact that it has adopted this kind of disguised promotion to shareholders to boost sales due to the "unsalable Zodiac wine". Beduo Finance understands that at present, Shede Liquor has deleted the relevant information, and it is unknown whether it will give back to shareholders in this form.
Compared with the slightly "embarrassing" report card and feedback method, the salary of the management of Shede Liquor has been greatly improved.
According to the financial report, the pre-tax remuneration of Pu Jizhou, chairman of Shede Liquor, in 2023 will be 3.5206 million yuan, a year-on-year increase of 21.56%, and the pre-tax remuneration of Zou Qingli, vice president and chief financial officer, will be 2.538 million yuan, a year-on-year increase of 55.43%, far exceeding the performance growth rate of Shede Liquor.
Prior to this, the salary of the core management of Shede Liquor Industry was among the best in the wine company. Among the 19 liquor listed companies, Pu Jizhou, who is the president of Shede Liquor, will have a personal salary of 2.8961 million yuan in 2022, second only to Xu Jin, chairman of Kouzijiao, and Zhu Zhenhao, former chairman of Shuijingfang.
It is worth mentioning that the senior management personnel adjustment of Shede Liquor is also very frequent, and two "heads" have been replaced within a year. After Zhang Shuping resigned as chairman and director of Shede Liquor in December 2022, the company ushered in a new chairman, Ni Qiang, in January 2023.
However, less than a year after Ni Qiang took over Shede Liquor, the company underwent another personnel change. Shede Liquor announced in December 2023 that Pu Jizhou, a "veteran" of the company's former co-chairman and president, will serve as chairman, and Ni Qiang will continue to serve as a director after his resignation.
The unstable performance and the "earthquake" factor of senior executives have made it impossible for Shede Liquor, which is in the downward cycle of the industry, to win the trust of shareholders in the secondary market. According to Jiemian News, the company hit the fall limit at 10:42 a.m. on June 5, 2023, and finally closed at 139.8 yuan per share, down 10.00%.
Three months ago, Shede Liquor had already had a drop limit. Due to more than 2,700 sell orders, the company's share price fell to 177.3 yuan / share on March 9, but after the transaction was withdrawn, the decline of Shede Liquor rebounded to the normal range, closing at 188.5 yuan / share on the same day, down 4.3%.
Entering 2024, the share price of Shede Liquor is still gloomy. As of the close of trading on April 19, Shede Liquor closed at 70.07 yuan/share, which was close to the highest point of 197.48 yuan/share in April 2023, with a total market value of only 23.345 billion yuan.
It is not difficult to see that Shede Liquor wants to continue to break through at all levels, and the road is long and difficult.