Weilong Co., Ltd. (603779.SH) released its 2023 annual report on the evening of April 22. During the reporting period, the company achieved revenue of 385 million yuan, down 22.85% year-on-year, net profit attributable to the parent company of -155 million yuan, compared with 11.79 million yuan in the same period of last year, and net cash flow from operating activities of 11.25 million yuan, down 78.95% year-on-year.
On the same day, the company also released the first quarter report, in the first quarter of 2024, the company achieved revenue of 136 million yuan, an increase of 114.89% year-on-year, and the net profit attributable to shareholders of listed companies was about 18.47 million yuan. Although the company's revenue growth in the first quarter was larger, this was mainly due to the low base last year, and the company has not yet recovered to the revenue level of the first quarter of 2022.
Weilong Co., Ltd. is a wine enterprise integrating grape planting, production and sales, which was listed on the main board of the Shanghai Stock Exchange in 2016. The company's wine product series include organic series, ecological series, brandy, sparkling wine, etc., a total of more than 100 kinds, covering high, medium and low grades and different flavor product lines.
However, in recent years, the domestic wine market has been affected by factors such as the economic situation, consumption downgrade, and other alcoholic beverage squeezes, and the market has continued to be sluggish, and the performance of Weilong shares has also plummeted.
Titanium Media APP noticed that the revenue of Weilong shares at its peak exceeded 800 million yuan, but it has been on a downward channel since 2018. From 2019 to 2022, Weilong's revenue was 667 million yuan, 392 million yuan, 474 million yuan and 499 million yuan respectively, and the net profit attributable to the parent company was -26 million yuan, -220 million yuan, -414 million yuan and 12 million yuan respectively. In 2023, the company's operating situation will deteriorate again, achieving revenue of 385 million yuan, a year-on-year decrease of 22.85%, and net profit attributable to the parent company of -155 million yuan, once again falling into the quagmire of losses.
Source: Wind
According to data released by the National Bureau of Statistics and the General Administration of Customs, domestic wine production has been declining for ten consecutive years. In 2022, domestic wine production was 214,000 kiloliters, and in 2023 this figure has fallen to 143,000 kiloliters, a year-on-year decrease of 71,000 kiloliters. At the same time, wine imports decreased from 337,000 kiloliters in 2022 to 249,600 kiloliters in 2023, a year-on-year decrease of 87,400 kiloliters, and also showed a continuous downward trend.
In 2023, the wine market also saw a decline in sales volumes. According to data from Whale Staff, the sales volume of wine on the Jingdong platform in 2023 will be 11 million+, a year-on-year decrease of about 15%, and the sales volume will be nearly 3.4 billion, a year-on-year decrease of about 14%.
Despite this, Weilong said that with consumers' increasing concern about environmental protection and food safety, as well as the favor of domestic brands, organic wine and ecological wine, as a healthy and environmentally friendly drink, still have great market potential.
The company did increase the production of organic and ecological wines last year, which increased by 20.04% year-on-year. However, its sales volume fell by 26.33% year-on-year, and the inventory increased by 111.48% compared with the previous year, indicating that sales were less than expected. At the same time, the company's traditional wine sales fell by 23.82%, and other wine sales fell by 63.83%.
Source: Company announcement
In fact, at this stage, the consumption demand for domestic wine is still insufficient, and the current domestic wine market is in the stage of stock competition, and the market competition has been very fierce. In addition, on March 28 this year, the Ministry of Commerce announced that in view of the changes in China's relevant wine market, China will terminate the imposition of anti-dumping duties and countervailing duties on imported wines originating in Australia from March 29. Some people in the industry believe that the return of foreign competitors to the competition will inevitably bring greater challenges to domestic wine companies.
The company also admitted in the annual report that "if the wine import volume still maintains rapid growth in the future, it will have a greater impact on the domestic wine industry and other domestic brand wines." ”
In this context, the company has had to increase its marketing investment. In 2023, Weilong's sales expenses will increase by more than 13% from the previous year to 102 million yuan, and the sales expense ratio will reach 26.55%. However, this still did not stop the decline in revenue.
It is worth noting that, according to the new delisting regulations, the main boards of the Shanghai and Shenzhen stock exchanges respectively changed the risk warning standard for the delisting of loss-making enterprises from "negative net profit + operating income less than 100 million yuan" to operating income from the current standard of "less than 100 million yuan" to "less than 300 million yuan", and included "total profit" in the scope of loss consideration, and the revised indicator is "the lower of the total profit, net profit, and non-net profit is negative". Judging from this standard, Weilong shares are not far from the red line.
In terms of stock price, last year, as Jiuhe Cloud Investment became the largest shareholder of Weilong shares, the company's share price rose sharply, and hit 14.46 yuan intraday on June 19, reaching a high point of the year. This is mainly due to the fact that Jiuhe Cloud Investment's main business is artificial intelligence application software development, and it has a local state-owned background in Shandong, which triggered the market's conjecture about the concept of injecting computing power into the company, and the company's stock price even went out of the "seven days and six boards" market.
However, Weilong later clarified that the company had no restructuring plan, and its main business was still focused on wine production and sales, and its stock price fell in response. Then in December last year, the company's stock price ushered in another wave of rise, reaching 13.55 yuan intraday on December 22.
Source: Wind
At the same time, the original major shareholders of Weilong shares continue to reduce their holdings, among them, the reduction of Yang Guangdi and his concerted actors can be said to be quite "accurate".
According to the announcement, Tongda Import and Export reduced its holdings of 6.525 million shares through block trading on June 15 and 16, 2023, with a price range of 12.58-13.27 yuan, and cashed out 84.5168 million yuan. Yang Guangdi seized the market in December and reduced his holdings of 3.1696 million shares of Weilong shares from December 20 to 21, 2023, with a price range of 11.78-12.96 yuan, and cashed out 40.8779 million yuan.
Entering 2024, the share price of Weilong shares has been hovering around 9 yuan, closing at 8.6 yuan as of April 23.
(This article was first published in Titanium Media APP, author|Zhai Biyue)