"Investor.com" Hou Shuqing
If appetite is also a kind of capital, 2024 may be a good opportunity for you to satisfy your appetite and enter the market to buy the bottom. Snacks, milk tea, hot pot, and other delicacies that can supplement your "guilt" are becoming cheaper and perhaps more delicious.
With the release of the financial data of major enterprises in various consumer tracks, the trend of chain catering, leisure snacks, and new tea drinks in 2023 has also surfaced. The players are surprisingly unanimous in their direction: price reduction. At the same time, there are also warm and cold between the three tracks.
While the unit price of chain restaurants is declining and the elimination of customers is accelerating, the recovery process of leading enterprises is accelerating; The snack food industry is collectively cold, and even the leading companies are facing growth difficulties; The new tea beverage industry has gradually come out of the consolidation period, and tends to be unified in price, scale and strategy, and the listing tide has arrived.
Chain restaurants: recovering, but the unit price of customers is under pressure
In 2023, most F&B businesses are showing a strong recovery momentum.
According to the 2024 Catering Enterprise Development Report jointly released by KPMG and various industry associations, the operating income of catering enterprises above designated size in 2023 exceeded 1.3 trillion yuan, an increase of 20.9% over the same period in 2022. The proportion of enterprises above designated size in the overall revenue of the industry has increased from 20.2% in 2019 to 25.3%, and the industry concentration has further increased, and most of the good news in 2023 are also listed companies in the industry.
The strong recovery in 2023 is very closely related to the end of the epidemic, which is reflected in the pot circle (02517. HK) has been confirmed in its revenue performance. In the four years from 2020 to 2023, the company's revenue will be 2.965 billion yuan, 3.958 billion yuan, 7.173 billion yuan and 6.094 billion yuan respectively.
During the pandemic, the total number of stores increased from 1,441 at the beginning of 2020 to 9,216 at the end of 2022. However, by the end of 2023, the number of stores in the pot ring will only increase to 10,307, and the revenue will be about 1 billion less, showing a rare "reverse growth" in the industry. Consumers who have been suffocated still prefer offline dining to eat at home rather than eating at home.
After the demand was released, the cash flow brought by the surging passenger flow made Helens (09869. HK), Quanjude (002186), Tang Palace China (01181. HK), Tehai International (09658. HK), Taixing Group (06811. HK) not only turned a profit in 2023, but also doubled its net profit. Jiumaojiu (09922. HK) has achieved a net profit growth of 819.24%, and hot pot is gradually maturing as the "third growth curve".
Xiabu Xiabu on the hot pot track (00520. HK) annual revenue of 5.918 billion yuan, a year-on-year increase of 25.25%, slightly outperforming the industry market, and the revenue scale swept away the decline in 2022 and basically recovered to the level of 2019-2021; A similar situation occurred in Haidilao (06862. HK), the company's annual revenue increased from 31.089 billion yuan in 2022 to 41.453 billion yuan, a year-on-year increase of 33.55%, which was basically the same as 41.112 billion yuan in 2021.
But at the same time, there are also a number of catering companies that will encounter Waterloo in 2023, and the first one is the baking track. Hutou Bureau, Standard Chartered Cake Shop, and Momo Dim Sum Bureau, as the representative brands of "new Chinese baking", were once in the limelight, but after entering 2023, they showed their decline and ended dismally after "entering and leaving the ICU" several times. Serious homogenization, slow innovation, and supply chain shortcomings are their common cruxes. After spending all the financing, maybe for a period of time, there will be no more waves on the baking track.
The problem of brand aging and new brands being difficult to start has always been a headache for listed companies. Xiabu Xiabu's newly established barbecue brand in 2022 has only one store in Shanghai as of April after the closure of its stores, and the company's overall performance is still below the profit and loss line; Jiumaojiu also stopped operating the Cantonese cuisine brand "Uncle Nawei is a Chef" in April, and the number of stores of Jiumaojiu Northwest Cuisine, which it started, is currently only in single digits. The power conversion of new and old brands is a major test for catering companies, and what is even more a headache for the management is that this kind of handover will not happen only once.
The recovery of the industry and the recovery of performance are still the main theme of chain restaurants, but the decline in customer unit price is also a common phenomenon in 2023. The unit price of Haidilao has fallen below the 100 yuan mark (99.1 yuan), the unit price of Xiabu Xiabu in first-tier cities has dropped from 67.9 yuan to 63.4 yuan, and although Jiumaojiu's profit has grown the fastest, the unit price of its hot pot has also fallen the most, from 128 yuan to 113 yuan, and Taier sauerkraut fish has also fallen from 77 yuan to 75 yuan.
The founder Li Xuelin once said that the overall decline in Hefu noodles was about 30%, mainly adjusting the price of old products, and increasing the proportion of products in the price band of 25-30 yuan; Wang Yujing, CMO of Domino's China 01405.HK, once said that the company would not follow the trend of price reduction, but the unit value of Domino's shares will still drop by about 7% in 2023.
Casual snacks: There is no recovery, but the unit price is also under pressure
There are also a lot of discounts on the casual snack track, but the report cards handed over by the companies behind them are not ideal. In 2023, the original upstream, midstream and downstream pattern of the snack industry has undergone drastic changes, with retailers, wholesalers, manufacturers, and ingredient suppliers fighting together, and some brands being disrupted.
Even the top three companies in the leisure snack industry in terms of net profit in 2023: BESTORE, Three Squirrels, and Qiaqia Food have seen negative growth in operating income.
According to the 2023 annual report released by BESTORE (603719), the company's annual revenue was 8.046 billion yuan, down 14.76% from 9.44 billion yuan in the same period last year. The net profit attributable to the parent company fell by 46.26% from 335 million yuan in 2022 to 180 million yuan, a decline of nearly half. Behind the 8 words "annual revenue growth under pressure" in BESTORE's financial report is that the company will implement the largest price adjustment measure in the company's history in 2023, involving more than 300 major products, with a price reduction of nearly 22%.
The revenue of Qiaqia Food (002557) was 6.806 billion yuan, down 1.13% year-on-year, and the net profit attributable to shareholders of listed companies fell 17.77% to 803 million yuan. In terms of decline, Qiaqia's decline eased slightly, but its gross profit margin fell from 31.96% to 26.75%, which was the largest decline in gross profit margin among A-share listed snack companies.
The three squirrels (300783) look slightly better than the first two: they are making more profits, but not increasingly. The annual revenue was 7.115 billion yuan, a year-on-year decrease of 2.45%, but the net profit attributable to the parent company increased by 69.85% year-on-year to 220 million yuan. And that's not the worst, this is the fourth year of revenue decline for the three squirrels since 2020, and the net profit growth is due to the company's net profit plummeting by 68.61% in 2022.
In order to save the situation, Three Squirrels once put forward the concept of "high-end cost performance", that is, while ensuring quality, it can achieve price advantage by optimizing the supply chain. The company's macadamia nut prices in 2023 decreased by about 30% year-on-year, and it is following the trend of neighborhood snack stores to improve the efficiency of reaching consumers and improve cost performance.
Behind this is a change in consumers' consumption concepts. Around 2016, a wave of consumption upgrades gave birth to a group of snack companies, namely Three Squirrels, BESTORE and Baicaowei, which produced snacks with exquisite packaging, delicious taste and brand image to keep up with the trend. But today's consumers are aware that the premium brought by packaging and corporate image does not match the slight improvement in consumer experience, and that snacks are enough as long as they are delicious.
The developed e-commerce and logistics system in China has responded to this demand, and affordable snacks have been accepted by more and more people. The number of various affordable snack collection stores that are closer to the community than "Internet snacks" is also growing. According to a research report released by iiMedia Consulting, as of October 2023, the number of domestic snack collection stores has exceeded 22,000.
Different from the gradual increase in the concentration of the chain catering industry, new competitors and new channels continue to emerge online and offline, but continue to squeeze the living space of the leading leisure snack enterprises. This kind of transformation is too fast for the head enterprises with a market value of tens of billions of dollars. Among the 10 A-share snack companies, 6 have seen a decline in gross profit margin in 2023.
Freshly made tea: the era of low prices has entered its third year
The general price reduction of milk tea is not new, this trend is driven to some extent by the demand side where consumers are located, but the pressure on the supply side is also very high, especially for high-priced brands: they used to be able to use the price range of 25-35 yuan and exquisite store decoration, creating an atmosphere of "our brand is very promising". But obviously, high prices are also a kind of self-trapping, which is equivalent to self-isolation from the vast sinking market.
And this part of the high-priced brands is also the most active price adjustment. In February 2022, Heytea announced that it had completed the first comprehensive product price adjustment, and announced that it would no longer launch products above 29 yuan within the year. Naixue also announced a significant price reduction a month later, launching a "relaxed series" of fresh fruit tea in the range of 9-19 yuan.
Since then, it is difficult to find a drink for 30 yuan a cup in the market.
On September 22, 2022, Mixue Bingcheng handed over its first prospectus to A-shares, and its huge store scale and brilliant financial performance amazed the entire market. After that, the franchise brands in the price range below 20 yuan were popular in the primary market, and Tea Baidao, Gu Ming, Shanghai Auntie, etc. entered the period of accelerated store expansion.
By the end of 2023, there is still only one brand with more than 10,000 stores in the industry, with 36,153 stores. But behind it, there are more than 8,000 stores of tea Baidao and ancient tea, as well as more than 7,000 Yihetang, Shuyi Yao Xiancao and Shanghai Auntie.
Although Mixue Bingcheng maintained a faulty lead, its A-share listing road was not smooth, and there was no further progress after the A-share submission until January 2, 2024, when Mixue Bingcheng submitted a prospectus to the Hong Kong stock market.
At present, the mainstream listing direction of C-end ready-made tea enterprises is not A-shares, but Hong Kong stocks and U.S. stocks. Tea Baidao has been successfully listed in Hong Kong stocks recently, Gu Ming and Shanghai Auntie have been listed in Hong Kong stocks, and Bawang Tea Ji and Cha Yan Yue Se have also frequently reported listing news, and there is news that Bawang Tea Ji is targeting U.S. stocks.
Nayuki, which has been listed for nearly 3 years, finally achieved its first meager full-year profit in 2023. The company's operating income is 5.164 billion yuan, but the net profit attributable to the parent company is only 13 million yuan, the net profit margin is only 0.21%, and the market value has been sluggish for a long time; On April 23, Chabaidao, which had just been listed, fell below the issue price of HK$17.5 at the opening, and as of the close, the stock price fell by more than 26% to HK$12.8.
Maybe it's Nayuki's tea (02150. HK) went to Hong Kong to bleed and listed too much, resulting in a very cautious attitude towards this track in A-shares, but it favored the upstream of the industry. Tianye shares, fresh drinks, Dexin food, which provide fruit raw materials, Snowman shares and Qinyuan shares that produce production equipment, and even Hengxin Life, which produces packaging materials, have been successfully listed.
These upstream companies can avoid the Red Sea at the C-end, and their customer scope is not limited to milk tea, which is more stable. The downstream seems to be a never-ending red sea, consumers will always look forward to the next new product or brand, and enterprises will always be exhausted in the innovation and shaping the second curve. (Produced by Thinking Finance)■