The 10 billion dream of the "King of Melon Seeds" Qiaqia Food (hereinafter referred to as "Qiaqia") has been shattered.
On May 15, Qiaqia held an online briefing on the 2023 annual results, and the company's management responded to external concerns about cost control, performance targets, channel planning and other issues.
Photo by Zuo Yu
Revenue fell for the first time in 13 years of listing
In 2023, Qiaqia will achieve revenue of 6.806 billion yuan, a year-on-year decrease of 1.13%; The net profit attributable to the parent company was 803 million yuan, a year-on-year decrease of 17.77%.
This is also the first time in the 13 years since its listing that Qiaqia's revenue has declined. As for the reasons for the decline in performance, it was explained in the performance express report that the first and fourth quarters of 2023 were affected by the Spring Festival inter-period factors, and at the same time affected by the rising procurement cost of sunflower seed raw materials.
In January this year, Qiaqia said that since the Spring Festival in 2024 is in February, the company's delivery before the Spring Festival is expected to be mainly concentrated in January, and the delivery in December 2023 will be affected to a certain extent due to the Spring Festival inter-period factor. In the fourth quarter of 2023, Qiaqia's revenue was 2.327 billion yuan, a slight decrease from 2.5 billion yuan in the previous year.
But the problem is that the Spring Festival intertemporal factor is not unique to this year, such as the Spring Festival in 2020 (January 24-February 2), the Spring Festival in 2021 (February 11-February 17), the Spring Festival in 2022 (January 31-February 6), and the Spring Festival in 2023 (January 21-January 27), and the stocking nodes have changed to varying degrees every year. Especially in 2020, there was also a situation where the Spring Festival stocking in the first quarter and the fourth quarter was staggered, but the revenue of that year still increased by 9.35%.
The Spring Festival intertemporal factor has existed for many years, which is obviously not a convincing reason, and the more real reason may be that Qiaqia melon seeds are "not easy to sell".
Qiaqia products are mainly divided into sunflower seeds, nuts, other products and other businesses. Among them, sunflower seeds, as the company's "trump card" product, will have a revenue of 4.27 billion yuan in 2023, a year-on-year decrease of 5.36%, accounting for 62.75% of revenue. The other three types of income all rose to varying degrees.
It should be noted that in the past two years, Qiaqia has raised the price of sunflower seed series products twice. In October 2021, it adjusted the ex-factory prices of sunflower seed series products, pumpkin seeds and small and fragrant watermelon seed products, with price increases ranging from 8% to 18% for each category; In August 2022, the ex-factory price of sunflower seed series products was adjusted, and the overall price increase was about 3.8%. Taking this factor into account, the actual sales volume of Qiaqia sunflower seeds in 2023 may decline even more.
At the performance meeting, some investors raised the idea that "consumers are worried about the reduction of cost performance after continuous price increases, and consumers will turn to other brands".
Minsheng Securities pointed out that the decline in melon seeds is mainly due to the Spring Festival period, weak consumption power, the impact of low-priced products, and more investment in nuts during the New Year's Festival. It is understood that the blue bag flavored melon seeds are positioned at young consumers, and the packaging also uses bright colors such as blue and orange.
The growth rate of nuts declined
The melon seed business, the fist product, is unfavorable, and the second growth point of Qiaqia is also facing a sharp decline in growth rate.
As early as 2018, the market share of Qiaqia melon seeds in the domestic packaged melon seed market exceeded 50%, ranking firmly in the industry. This is also accompanied by a problem, in the tens of billions of packaged melon seed market, the market share and revenue growth space that Qiaqia can further obtain are relatively limited.
In order to change the problem of single product structure, since 2017, Qiaqia Food has successively launched a series of products with nuts as the core, such as daily nuts, original nuts, flavored nuts, and nut cereals, in an attempt to create a second growth curve, and the nut market space is significantly larger than that of the packaged melon seed market.
Nut products have indeed become the "locomotive" of Qiaqia's performance growth in recent years.
According to Choice data, Qiaqia nut products have grown from 247 million yuan, accounting for 6.86% of the revenue, in 2017, to 1.753 billion yuan, accounting for 25.75% of the revenue in 2023, and the revenue has increased 6 times in the past 6 years. The company's overall revenue also rose from about 3.6 billion yuan in 2017 to 6.8 billion yuan last year.
However, from the trend point of view, the revenue growth rate of nut products is declining, with growth rates of 43.82%, 18.78%, and 8% from 2021 to 2023, respectively, and the development trend is not optimistic.
In addition, a record of investor relations activities in July 2021 stated that the three-year strategic goal of Qiaqia is to achieve tax-included sales revenue of 10 billion yuan in 2023, including 6 billion tax-included income from melon seeds, 3 billion tax-included income from nuts, and 1 billion tax-included income from snack foods.
Obviously, Qiaqia's "10 billion dream" failed to come true. In this regard, the reporter of "International Financial News" asked when the company would be able to achieve its goal at the performance meeting, but the negotiation did not respond positively.
Gross profit margin hit a record low
In the past year, keywords such as "raw materials", "cost" and "purchase price" can often be seen in the record form of Qiaqia's investor relations activities, which mostly point to the rise in raw material prices, resulting in higher procurement costs and affecting the company's profits.
The result of this phenomenon is more intuitive in the annual report: in 2023, the net profit attributable to the parent company of Qiaqia will decrease by 17.77% year-on-year, the largest decline since listing.
Specifically, in 2023, the operating cost of Qiaqia will be 4.985 billion yuan, an increase of 6.44% year-on-year. Among them, 83.64% was direct material costs, reaching 4.169 billion yuan, up 6.77% year-on-year. In September 2023, Qiaqia said that the procurement cost of sunflower seed raw materials has risen rapidly for two consecutive years, mainly due to the rise in land rent, labor costs, reduced production due to weather in 2022, and increased demand for sunflower seed exports.
In 2023, the gross profit margin of Qiaqia will decline by 5.21 percentage points year-on-year to 26.75%, a new low since listing; Net profit margin fell by 2.42 percentage points to 11.8%, a new low in nearly five years.
Some investors asked Chen Xianbao, chairman of Qiaqia Food, at the performance meeting: The company's melon seed industry chain has been deeply cultivated for many years, why is the cost control so fragile, and after two price increases, the company's melon seed gross profit margin and profit margin will fall to a historical low in 2023? If product cost fluctuations continue to occur in the future, how can the company's supply chain achieve industry-leading comprehensive cost?
Chen Xianbao responded that the company will increase the cooperation of order agriculture, increase the proportion of direct procurement, and establish strategic cooperative relations with excellent suppliers, in order to reduce the cost of raw material procurement and improve the stability of raw material quality; The company will continue to carry out cost optimization of the whole industry chain, and continuously improve the efficiency and effectiveness of operation and management through product design, technological innovation and process optimization, so as to maintain the cost leadership of the whole industry chain.
Entering 2024, the cost pressure on sunflower seed raw material procurement has eased. According to the news in February, the purchase price of sunflower seeds at that time decreased by about 10% compared with the purchase price high in April and May 2023. In the first quarter of 2024, its gross margin has recovered to more than 30%.
In terms of channels, more than 80% of Qiaqia's revenue comes from distribution and other channels. As of the end of 2023, there are 1,479 dealers in Qiaqia, including 1,358 in China and 121 abroad, and the total number of dealers has increased significantly from nearly 1,100 in the previous year.
Qiaqia explained that the increase in the company's dealer customers mainly came from the county and township markets and overseas markets. In 2023, Qiaqia will begin to make efforts in county and township channels to tap the consumption potential of the sinking market, and it plans to increase about 200 county-level dealers every year in the future.
In addition to developing county dealers, snack wholesale channels are also expanding to county towns and towns.
In 2023, the performance of Qiaqia from the snack wholesale channel will increase from about 5 million yuan in January 2023 to about 30 million yuan in December 2023, and the revenue of this channel will be nearly 200 million yuan in 2023. "At present, the dividends of the rapid development of the snack wholesale channel may still be 2 to 3 years, and the company will continue to penetrate the channel and seize this opportunity."
At the performance meeting, in response to the reporter's question about the revenue expectation of the snack wholesale channel this year, Xu Tao, deputy general manager of Qiaqia, replied that the company's basic sales target for the snack wholesale channel in 2024 is 300 million to 400 million yuan.