It is difficult for black sesame seeds in the south to support cross-border business

After five consecutive years of declining net profit, Southern Black Sesame will usher in a profit turnaround in 2023. However, revenue fell 11.25% year-on-year to 2.677 billion yuan. As a food company, southern black sesame frequently crosses e-commerce and new energy, which has become a burden to performance growth.

Regarding the change in performance, Southern Black Sesame said in the announcement that in 2023, it will continue to deepen the reform with efficiency as the center, further optimize the industry and resources, and adjust the business with low gross profit or large capital occupation.

According to official information, Southern Black Sesame was founded in 1984, is a black sesame industry as the main business, set black sesame food therapy food health products research and development, production, sales as one of the large-scale private enterprise group, is the country's first batch of agricultural industrialization leading enterprises, in April 1997 listed on the Shenzhen Stock Exchange, become "China's black sesame industry first shares". At present, the black sesame industry in the south covers three major industries: health food, e-commerce, and new energy.

Since 2017, southern black sesame has frequently crossed borders. Southern Black Sesame first acquired Shanghai Liduoduo E-commerce Co., Ltd. (hereinafter referred to as "Liduoduo") and entered the e-commerce business. In April 2020, Black Sesame subscribed to the new registered capital of GTI TCM with 65.53 million yuan, and held 36.41% of the equity of GDI TCM after the investment was completed.

In April 2023, Southern Black Sesame transformed the business of Jiangxi Xiaohei Xiaomi Food Co., Ltd., a wholly-owned subsidiary, into the production and operation of energy storage lithium batteries, and invested 3.5 billion yuan to build an energy storage battery production base, so as to cross the border energy storage lithium battery project.

However, after announcing a large-scale investment in energy storage lithium battery projects, Southern Black Sesame has not moved. Recently, an investor asked questions about the energy storage lithium battery project of Southern Black Sesame Company, which has far exceeded the expected completion time, and Black Sesame replied, "In view of the major changes in the new energy battery market situation from the second half of 2023, there are significant differences with the assumptions of the company's project feasibility study, according to which the company closely observes the changes in external conditions and calmly faces major changes in the market, does not rush forward, suspends project construction, waits for the best implementation opportunity, and avoids increasing investment costs and causing related losses."

After frequent cross-border crossovers, the net profit of Southern Black Sesame has declined for five consecutive years. From 2018 to 2022, the attributable net profit of Southern Black Sesame was 59.91 million yuan, 33.85 million yuan, 9.111 million yuan, -109.1 million yuan, and -140.3 million yuan respectively, down 46.06%, 43.51%, 73.08%, 1297.48%, and 28.62% year-on-year.

Among them, the long-term performance of the e-commerce business, which once accounted for "half of the country" in revenue, was unsatisfactory. From 2020 to 2022, Liduoduo's net profit will be 41.5271 million yuan, 31.3285 million yuan and -188 million yuan respectively. In the 2023 financial report, Southern Black Sesame said that according to the development and changes of the e-commerce industry, it will continue to implement the business integration, optimization and upgrading strategy on the basis of 2022, actively optimize and eliminate the operating business with low gross profit margin and large capital occupation, and focus on the operation of the high gross profit margin brand business. At present, the proportion of e-commerce business revenue of Southern Black Sesame has decreased from 57.17% in 2021 to 35.19% by the end of 2023.

Zhan Junhao, a strategic positioning expert and founder of Fujian Great Aim Brand Positioning Consulting, said in an interview with a reporter from Beijing Business Daily that from the perspective of corporate competitive strategy and brand positioning, the phenomenon of "increasing profits without increasing income" presented by Southern Black Sesame in the 2023 financial report is a foreseeable result, which has a significant relationship with the frequent cross-border in recent years.

Wanlian Securities investment consultant Qu Fang has always maintained a cautious attitude towards the cross-border approach of southern black sesame. "Companies often choose the current hot tracks, but there are often short-term overcapacity in these industries, such as photovoltaic and energy storage in recent years. However, "interlaced like a mountain", enterprises cross-border into a new industry, can not grasp the law of industry development, do not understand the future technical route of the industry, do not understand the key points of the industry to reduce costs and increase efficiency, there is no mature research and production, supply and marketing team, if rashly enter the industry can not survive for a long time, even if through mergers and acquisitions to buy a more mature track enterprise, the integration of the original enterprise and the new enterprise is also a long process. These include the strategic thinking, corporate culture, human resources, etc. of the acquired company and the acquired company. At the same time, frequent cross-border will cause shareholders, upstream and downstream enterprises to question the development ideas of the enterprise, and if the cash flow cannot be effectively balanced, it will even affect the development of the original enterprise. Qu Fang further analyzed.

In the face of declining performance, the adjustment of southern black sesame is slightly lagging behind. In August 2023, Southern Black Sesame released the "Upgrade and Change" strategy to refocus on the "healthy food" track. According to reports, on the one hand, "liter" guides the upgrading and iteration of traditional paste products of black sesame, and on the other hand, it is to launch Bama coarse grain breakfast products for the dietary needs of consumer groups such as middle-aged and elderly people for health preservation. "Change" includes three aspects: first, to use the company's investment in medical care and other platforms to develop and operate special food for diabetics, second, to build the Southern Black Sesame User Experience Center into a new format integrating industry, culture, tourism, entertainment, consumption and shopping, and third, to combine the company's advantages to promote China's landmark health products to the international market.

Hong Shibin, an industry observer, suggested, "First of all, we must continue to pay attention to the development of the main business and maintain the leading position and market competitiveness of the black sesame industry in the south." Secondly, we should actively explore new business areas and market opportunities, such as paying attention to the development trend of health food, nutrition and health products, biotechnology and other fields, and looking for suitable investment and cooperation opportunities. In addition, it is necessary to strengthen internal management, improve efficiency and effectiveness, reduce costs and risks, strengthen cooperation and strategic alliances with upstream and downstream enterprises, and improve the stability and efficiency of the supply chain."

For future development planning and other issues, a reporter from Beijing Business Daily contacted and interviewed Southern Black Sesame, but as of press time, the other party did not reply.

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