After the pre-loss announcement last Friday, Nai Xue's tea share price fell 15.91% to HK$1.48 per share on Monday (August 5).
The Red Star Capital Bureau noted that Nai Xue's tea (02150. HK) has a loss of 420 million yuan to 490 million yuan in the first half of this year, which is close to the loss level of the whole year of 2022. And 2022 is the year since 2018, except for 2021, when it was listed, Nai Xue's tea lost the most.
"During the rapid development of the new tea industry, although Nai Xue's tea entered the capital market earlier, it did not make full use of the industry dividends, resulting in a disadvantageous position when the industry competition intensified. At the same time, Naixue's tea is facing a two-way squeeze on cost and income in store operation, and there is limited room for cost optimization at the store end, while consumer demand has not recovered significantly, which further increases the operating pressure. On August 6, Chen Xiaolong, an operator in the food and beverage industry, told the Red Star Capital Bureau.
Li Weihua, a chain management expert, believes that Nai Xue's tea now needs to be repositioned strategically.
As of press time, the other party has not responded to questions such as how the Red Star Capital Bureau interviewed Nai Xue's tea will boost its performance in the second half of this year, what strategies it has for the low growth rate of the number of franchised stores, and whether it will turn to a small store model in the future.
Picture from Visual China
(a)
The half-year pre-loss is close to the loss in 2022
Nayuki's tea: Consumer demand has not recovered significantly
Recently, Naixue's tea issued a profit warning showing that the expected revenue in the first half of 2024 is about 2.4 billion yuan to 2.7 billion yuan, and the adjusted net loss (non-IFRS measurement) is about 420 million yuan to 490 million yuan.
Red Star Capital Bureau noticed that in 2023, Nai Xue's tea has just come out of continuous losses and turned losses into profits, with a net profit attributable to the parent company of 11.166 million yuan. From 2018 to 2022, Naixue's tea was in a loss-making state, of which, except for 2021, there was a change in the fair value of convertible and redeemable preferred shares of 4.329 billion yuan, resulting in a net loss of 4.525 billion yuan attributable to the parent company, and the net loss attributable to the parent company in 2022 was the highest, with a loss of about 469 million yuan.
The half-year pre-loss is close to the net loss level for the whole year of 2022, and it also exceeds the net loss level for the first half of 2022.
Regarding the loss, Nai Xue's tea said that consumer demand has not recovered significantly, store revenue is under pressure, and the group's store-end cost optimization has been basically in place, and the cost optimization of manpower, depreciation and amortization and other costs is limited in the short term, resulting in greater pressure on the store's operating profit margin.
"The competition in the tea track is very fierce, and external factors will definitely affect his performance, but it also has a lot to do with him." Li Weihua, a chain management expert, told the Red Star Capital Bureau on August 5.
Chen Xiaolong, an operator in the food and beverage industry, told Red Star Capital: "Nai Xue's tea loss may be mainly related to her own business philosophy and strategic thinking. ”
(b)
If you don't advance, you will retreat
The new tea beverage track has a positive momentum of enterprises
Naixue's tea is expected to have a revenue of 2.4 billion yuan in the first half of 2024, which is a decline compared with the same period last year, and a year-on-year increase of about 110 million yuan if it is 2.7 billion yuan, which is a significant decline compared with the growth rate of 549 million yuan in the first half of 2023.
In the first half of this year, some companies in the new tea beverage track are still gaining momentum.
According to a number of media reports, in May this year, Zhang Junjie, the founder of Bawang Chaji, said that the company's GMV (total merchandise transaction) in 2023 exceeded 10 billion yuan for the first time, reaching 10.8 billion yuan, and the same-store revenue growth rate was 88% year-on-year. In the first quarter of 2024, the GMV of Bawang Chaji exceeded 5.8 billion yuan in a single quarter, and it is expected that the GMV of the whole year of 2024 will exceed 20 billion yuan.
"The potential energy of the brand Naixue is now going down as a whole, and it has been surpassed too much by latecomers. Nai Xue's tea is currently not exposed enough, and there are few new products on the co-brand. Li Weihua said.
In the current tea drinking circle, if you don't advance, you will retreat.
Red Star Capital Bureau learned that Nai Xue's tea is based on "soft European bag + fruit tea" as the main product point, and it is an early Internet celebrity milk tea brand. In the past few years, under the demand of reducing costs and increasing efficiency, Naixue's tea has gradually reduced its European package product line and focused on the new tea beverage product line. However, the moat of various tea brands is not wide, and Nai Xue's tea does not have sufficient advantages in the new tea product line. Honey Snow Ice City, Tea Baidao (02555. HK), Shuyi Burning Fairy Grass and other brands have the price advantage that current consumers value; The latecomers, Bawang Tea Ji and Tea Yan Yuese, have become the new trend brands of tea drinks in the past two years from the level of product innovation.
The data also illustrates the problem, in 2023, the unit price of Naixue's tea direct stores will drop from 34.3 yuan to 29.6 yuan, but the price reduction has not brought about an increase in the average daily order volume of each store, and the average daily order volume of Nai Xue's tea per store will also decline from 348.2 yuan in 2022 to 344.3 yuan in 2023.
Screenshot from Nai Xue's tea 2023 financial report
(c)
Reduce the area requirements for franchised stores
Nayuki's tea faces a fork in the road
The average order volume and customer unit price of the store have declined, "the cost optimization of the store side has been basically in place, and the optimization and adjustment space of manpower, depreciation and amortization costs in the short term is limited".
As of June 30, 2024, the number of franchised stores is 297. Heytea, which opened half a year earlier than it, has more than 2,300 business partnership stores in one year.
At the end of June, Heytea announced on multiple social media accounts that the number of stores exceeded 4,000, an increase of 800 stores compared to the 3,200 stores announced at the end of 2023, and Naixue's tea had a net increase of 239 stores (including directly operated stores and franchise stores) in the first half of this year.
"Nayuki's tea positioning is awkward. They want to be the 'Starbucks of the tea world' and a third place. But tea and coffee are not a tonality, and they did not learn well in the third space, but pulled the rent manpower very high. At the beginning of the opening of the franchise, Nai Xue's tea franchise requirements were relatively high, which affected the expansion of the franchise stores. Li Weihua told the Red Star Capital Bureau.
The large store model of creating a third space is also a requirement for Naixue's tea when it first opened to join, and its requirements for store area are clearly limited to 90-170 square meters. In terms of investment budget, the budget for opening a Naixue franchise store starts at 980,000 yuan, while the franchise budget of other stores is around 500,000 yuan.
In February this year, their requirements for the area of franchised stores were reduced, and the starting price of the investment amount of a single store dropped to 580,000 yuan.
"Opening a small store is to meet the market demand, which will promote Naixue's franchise business. But the impact is limited, because its own performance is losing money, and the average customer price and store average customer order volume are also declining, why should franchisees choose this brand? Li Weihua said.
Chen Xiaolong believes that the joining of Nai Xue's tea opening and smaller store model is an adaptation to the current market environment, and this strategy may have a positive impact on performance, especially in the sinking market. However, whether this impact can be a way out for Nai Xue's tea still needs to observe the market's reaction and the company's ability to operate and manage the franchise model.
If Nai Xue's tea wants to seek a breakthrough, Li Weihua believes that it needs to reposition its strategy. Does the brand tonality still insist on the third place? How can the business model be more flexible? Sink or go to sea in the future? These are all issues that Nayuki's tea needs to be reconsidered. "The most fundamental thing is the cultivation of talents and teams, because they often 'know later'." Li Weihua said.
Red Star News reporter Zhang Luxi
Edited by Yang Cheng
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