Red Star Capital Bureau reported on April 26 that recently, Ziyan Food (603057. SH) released its 2023 annual report, with revenue down 1.46% year-on-year and net profit up 49.46%.
The situation of increasing profits without increasing income also continued to the first quarter of this year. According to the first quarterly report, Ziyan Food achieved revenue of about 695 million yuan, a year-on-year decrease of 8%, and a net profit of about 53.964 million yuan, a year-on-year increase of 20.87%.
The increase in profit did not increase revenue, and the reason for the decline in revenue was not explained
According to the annual report, in 2023, Ziyan Food will achieve an operating income of about 3.55 billion yuan, a year-on-year decrease of 1.46%, a net profit of about 332 million yuan, a year-on-year increase of 49.46%, and a non-net profit of about 278 million yuan, a year-on-year increase of 53.26%.
As for the reason for the decline in revenue, Ziyan Food did not give a specific explanation in the financial report, and the industry speculated that it may be related to the decrease in revenue of its main products.
According to the financial report, Ziyan Food's main products are fresh goods, including husband and wife lung slices, poultry products, etc. In 2023, Ziyan Food's fresh products will achieve operating income of about 3.004 billion yuan, a year-on-year decrease of 1.71%, and pre-packaged and other products will achieve an operating income of about 345 million yuan, a year-on-year decrease of 5.72%.
It is worth mentioning that Ziyan Food will open 510 new stores in 2023 and invest more sales expenses, but it has not been able to stop the decline in revenue.
By the end of 2023, the total number of Ziyan Food's stores nationwide reached 6,205, a year-on-year increase of 8.96%, with a net increase of 510 stores. Vigorously accelerate the development of stores and markets, which has correspondingly caused a sharp rise in the sales expenses of Ziyan Food. In 2023, Ziyan Food's sales expenses will reach 217.4 million yuan, a significant increase of 58.74% year-on-year. In the first quarter of 2024, Ziyan Food's sales expenses reached 36.2721 million yuan, a year-on-year increase of 5.80%.
Ziyan Food said in the financial report that the main reason for the increase in the company's sales expenses is "the development of new sub-brands, the expansion of new regions, the increase in advertising investment and the increase of corresponding sales personnel".
At the same time, its R&D expenses decreased by 3.46% from about $8.45 million in the same period last year to $8.16 million in 2023.
Profits increased sharply, mainly due to the decline in raw material prices
The decline in raw material prices is the main reason for the profit growth of Ziyan Food. Ziyan Food said in its annual report that the price of raw materials is close to the range of previous years, and the company has achieved cost reduction and efficiency improvement by optimizing the supply chain, improving production technology, and strengthening technological transformation, so that the net profit has increased greatly.
Ziyan Food previously mentioned in the financial report that raw materials accounted for more than 80.00% of the main business costs, of which whole chickens, beef, chicken feet, beef offal, pig trotters, pig ears, etc. accounted for more than 50.00% of the total raw material procurement.
Taking the "husband and wife lung slices" product, which contributes to about one-third of Ziyan Food's total revenue, as an example, the price of its raw material beef will drop sharply in 2023, from 77.88 yuan/kg in January 2023. According to the monitoring of the Ministry of Agriculture and Rural Affairs, the average price of beef in the national agricultural products wholesale market on April 19 was 66.01 yuan/kg.
Judging from the financial report, the operating cost of husband and wife lung tablets in 2023 will decrease by 20.52% year-on-year, and the gross profit margin will increase by 18.75 percentage points to 28.98%, becoming the highest gross profit margin among Ziyan food products.
However, although Ziyan Food's profit will increase in 2023, compared with the performance of previous years, its net profit in 2023 has not yet recovered to the level of 2020. According to the financial report data, Ziyan Food's net profit from 2020 to 2022 will be 358.7 million yuan, 327.6 million yuan, and 221.8 million yuan respectively.
A high proportion of dividends, but a high proportion of shares held by the actual controller
Since its listing in 2022, Ziyan Food has paid large dividends for two consecutive years, and most of them have flowed into the wallet of the actual controller's family.
In May 2023, there will be a change in the management of Ziyan Food, and the chairman of the board will be Ge Wuchao, the son-in-law of Zhong Huaijun, the founder and former chairman of Ziyan Food. The annual report shows that Zhong Huaijun, Deng Huiling, Zhong Qinchuan, Zhong Qinqin, and Ge Wuchao are acting in concert and belong to the same family. The total shareholding ratio of the actual controller family is as high as 77.21%, and it controls 79.55% of the voting rights of the company.
According to the data, in 2022 and 2023, Ziyan Food will pay dividends of 309 million yuan and 330 million yuan respectively, totaling 639 million yuan, while the total net profit of the above two years is only 554 million yuan. According to the calculation of 77.21% of the shareholding ratio of the actual controller family of Ziyan Food, about 493 million yuan has been pocketed by the actual controller family in two years.
In addition, when Ziyan Food was planning to go public, it said in the prospectus that since 2019, its production capacity has been at full capacity, and it has raised about 565 million yuan, which will be used for the second phase of Ningguo Food Production Base, the second phase of Rongchang Food Production Base, the construction project of storage base and the construction project of R&D and testing center.
In the 2023 annual report, Ziyan Food has extended the date for the above-mentioned projects to reach the intended usable state to 2026, and at present, Ziyan Food's investment in the above-mentioned IPO fundraising projects has not yet begun.
Editor Yu Dongmei is synthesized from Beijing Business Daily, Jiemian News, and Consumer Daily
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