A number of data in the annual report of Black Sesame were inquired by the Shenzhen Stock Exchange, and the performance of e-commerce declined and cross-border investment was blocked

A number of data in the annual report were inquired by the Shenzhen Stock Exchange because they did not conform to common sense, and there was no substantial progress in cross-border new energy when the e-commerce business declined

"China Science and Technology Investment" Long Min Yixin

Recently, black sesame (000716. SZ) received an inquiry letter from the Shenzhen Stock Exchange regarding its 2023 annual report, in which the Shenzhen Stock Exchange raised inquiries about a number of key issues in the annual report of Black Sesame. Among them, the operating income in the reporting period was 2.677 billion yuan, a year-on-year decrease of 11.25%, and the net profit attributable to shareholders of listed companies (hereinafter referred to as "net profit") in the reporting period was 43.0782 million yuan, a year-on-year increase of 130.70%, and the two trends are very different.

The letter of inquiry also pointed out that the performance of Shanghai Liduoduo E-commerce Co., Ltd. (hereinafter referred to as "Liduoduo"), a subsidiary of Black Sesame, continued to decline after the performance commitment period. In addition, Black Sesame transformed the main business of its wholly-owned subsidiary, Jiangxi Xiaohei Xiaomi Food Co., Ltd. (hereinafter referred to as "Jiangxi Xiaohei Xiaomi"), into the production and operation of the new energy industry, and during the reporting period, the company's energy storage battery production base project did not have substantial investment and construction.

On April 26, Black Sesame released its financial report for the first quarter of 2024. According to the financial report, during the reporting period, black sesame achieved operating income of 459 million yuan, a year-on-year decrease of 25.7%; The net profit was 3.1979 million yuan, a year-on-year decrease of 69.12%.

The share of e-commerce business declined

At present, the main business of black sesame covers the production and operation of black sesame paste, black sesame beverages, rice, coarse grains, candies and other foods, as well as the operation of e-commerce platforms.

Black Sesame's e-commerce business specifically includes the online operation of its own products and the Internet channel operation business provided for other brand merchants, and the expansion of online live broadcasts, short videos, Internet celebrity IP creation and other businesses. The sales model of e-commerce is mainly direct sales and distribution (distribution) sales model, including direct sales or authorized agent distribution of mainstream e-commerce platforms, and sales business such as live streaming.

In 2017, Black Sesame acquired Liduoduo and officially started its e-commerce business. During the performance commitment period from 2017 to 2019, Liduoduo achieved net profits of 64.1637 million yuan, 80.1702 million yuan and 75.3667 million yuan respectively, with a performance commitment completion rate of 97.64%. After the performance commitment period, the net profit of Liduoduo from 2020 to 2023 will be 41.5271 million yuan, 31.3285 million yuan, -188 million yuan and -10.5488 million yuan respectively, of which Liduoduo's operating income in 2023 will decline by 28.12% year-on-year.

In the letter of inquiry, the Shenzhen Stock Exchange expressed doubts about the continued decline in Liduoduo's performance after the performance commitment period, and asked Black Sesame to explain the reason. It is worth noting that last year, the Shenzhen Stock Exchange also asked Black Sesame to explain the reasons and reasonableness of the continuous decline in performance of Liduoduo and its subsidiaries since the performance commitment period. In addition, in recent years, some brands have changed their sales model and adopted the direct sales model, and no longer adopted the original distribution model (the original main cooperative brands of Liduoduo, Hershey's Chocolate, Yili Milk, Coca-Cola, and Ferrero Chocolate have been successively adjusted to the direct sales model), which has had a greater impact on Liduoduo's revenue and profitability.

According to the public financial report, in 2021, the main revenue contributed by the e-commerce business will be 2.172 billion yuan, surpassing the main food business, accounting for 53.97% of the total revenue; However, in the following two years, the share of e-commerce business dropped from 53.97% to 34.14%, behind the main food business. According to Black Sesame's 2023 annual report, the operating income of black sesame e-commerce sales reached 1.056 billion yuan, accounting for 40.68% of the total revenue, a year-on-year decrease of 25.08%. The number of dealers selling e-commerce decreased from 24 at the end of 2022 to 18 at the end of 2023.

Zhang Xinyuan, head of research at Kefangde Think Tank, told China Science and Technology Investment: "The main reasons for the decline in revenue of black sesame e-commerce business may be the intensification of market competition, changes in consumer demand, insufficient brand influence and low management and operation efficiency. In the current highly competitive environment of the e-commerce industry, Black Sesame should re-examine its positioning and development direction in the e-commerce field, increase investment in brand promotion and marketing, and improve its brand awareness and reputation. At the same time, it is necessary to optimize the management and operation system, improve efficiency, and reduce costs to revitalize performance. ”

Cross-border new energy is blocked

On the other hand, Black Sesame tries to seek new growth points through cross-border new energy fields. In 2017, Black Sesame announced its entry into the field of new energy, and in October 2022, it invested in Tesson New Energy Co., Ltd. (hereinafter referred to as "Tesson New Energy"), increasing its capital by 500 million yuan, thereby obtaining 59.09% equity of Tesson New Energy. However, Black Sesame's investment in the field of new energy has not achieved the expected results. In April 2023, Black Sesame announced that it had decided to terminate the capital increase of Tesson New Energy due to the uncertainty of the preferential policies for the support of Tesson New Energy.

In 2023, Black Sesame announced that it will transform the main business of its subsidiary Jiangxi Xiaohei Xiaomi into the production and operation of the new energy industry, and plans to invest 3.5 billion yuan to build a lithium iron phosphate energy storage lithium battery production base. According to Black Sesame's "Announcement on the Reply to the Inquiry Letter of the Shenzhen Stock Exchange's 2022 Annual Report" in June 2023, the construction period of the first phase of the production base is from May 2023 to March 2024, and the trial production period is from April 2024 to December 2024. However, in this year's annual report, there is no substantial investment in the construction of the production base project.

After experiencing cross-border attempts and setbacks, Black Sesame began to re-examine its development strategy. In the 2023 annual report, Black Sesame said that it will adhere to the development strategy of the health industry and concentrate resources on health food management.

Zhang Xinyuan further said: "After black sesame returns to the main health food business, it has the advantages of brand awareness, consumer recognition and channel advantages, which will help it regain market share. At the same time, black sesame has rich experience in R&D, production and management in the field of health food, which is its core competitiveness after returning to its main business. Looking forward to the future, black sesame has broad prospects for development in the field of health food, especially in functional food, nutritional food and other market segments. Black sesame can further consolidate and enhance its competitiveness in the field of health food by strengthening R&D and innovation, improving product quality, expanding channels, and strengthening brand building. ”

In response to the inquiry about black sesame and its future business development, the reporter sent a letter to black sesame, but as of press time, no reply has been received.