A pit planted twice, the blue moon evaporated nearly 60 billion, Zhang Lei's investment myth broke the story of the blue moon Blue moon planted on the channel twice

Text | Jin Wei

The "first share of laundry detergent" Blue Moon was listed for half a year and suffered a major change in performance.

Recently, Blue Moon issued a 2021 semi-annual profit warning, it is expected that the comprehensive loss attributable to shareholders in the first half of the year will be about 44 million Hong Kong dollars, and in the same period last year, Blue Moon made a profit of 302 million Hong Kong dollars, from making 300 million Hong Kong dollars to a loss of 40 million Hong Kong dollars, the contrast is a bit large.

In the capital market, Blue Moon's stock price has fallen and fallen. On December 16 last year, Blue Moon was listed on the Hong Kong Stock Exchange, and its market value reached HK$112.2 billion at its peak, which became the peak of Blue Moon, and its stock price has been declining since then.

As of the close of trading on July 30, Blue Moon reported 7 Hong Kong dollars per share, with a total market value of 41 billion Hong Kong dollars, down more than 60% in more than half a year, shrinking 70.8 billion Hong Kong dollars (about 58.8 billion yuan) The market is not just a "waist cut".

On August 2, Blue Moon rushed higher and fell back, and is currently rising more than 3%. Combined with the performance of half a year, the decline is still huge.

The story of Zhang Lei's investment in Blue Moon has always been regarded as an investment classic, this time, Blue Moon's performance has changed its face, its market value has shrunk dramatically, and Zhang Lei's investment myth has been broken.

<h1 class="pgc-h-arrow-right" data-track="3" > the story of the blue moon</h1>

The story of Hillhouse Capital founder Zhang Lei's investment in Blue Moon has always been talked about by the market, and Zhang Lei said that Blue Moon is like the early "Chinese version of Procter & Gamble", which means that its prospects are unlimited.

Founded by Luo Qiuping, a graduate of the Department of Chemical Engineering, Blue Moon reviewed the development process of Blue Moon Company, and there were two major opportunities.

In 2000, Blue Moon took the lead in launching bacteriostatic hand sanitizer, and in 2003, due to the importance that the SARS people attached to hygiene, and because of the risk of cross-infection of soap, Blue Moon antibacterial hand sanitizer was quickly favored by the market.

In 2008, Zhang Lei met Luo Qiuping and persuaded him to shift the focus of Blue Moon's business to a new product called laundry detergent. At that time, China's washing market was mainly based on washing powder and soap, and the market share of laundry detergent was less than 4%.

In 2008, Blue Moon launched laundry detergent, with the help of the East Wind of the Beijing Olympic Games, invited sports star Guo Jingjing to do endorsements, quickly won a large number of consumers, laundry detergent began to popular in the market.

With the increase in the popularity of Blue Moon and the rise in terminal fees, Luo Qiuping hoped that the store would treat Blue Moon specially, which was rejected by traditional hypermarkets. In 2015, there was a withdrawal incident in hypermarkets, and various channel providers boycotted Blue Moon, and Blue Moon faced nationwide removal.

In the midst of the crisis, Hillhouse Capital invested in JD.com, and Zhang Lei tied the line from the middle, let Blue Moon on JD.com, and successfully transformed to e-commerce channels, and by 2019, online sales channels contributed nearly half of Blue Moon's sales.

Thanks to the continuous improvement of the penetration rate of laundry detergent in the Chinese market and the continuous expansion of the market size, from 2017 to 2019, Blue Moon's operating income increased from HK$5.632 billion to HK$7.050 billion, with a compound annual growth rate of 11.9%, while the net profit attributable to the mother increased from HK$0.86 billion to HK$1.080 billion in the same period, with a compound annual growth rate of 254.0%.

At the same time, Blue Moon's gross profit margin also increased from 53.2% in 2017 to 64.2% in 2019, which is very eye-catching.

December 16, 2020, (06993. HK) was listed on the Hong Kong Stock Exchange and had a total market capitalization of HK$112.2 billion at its peak.

However, just over the past six months of listing, Blue Moon's performance has suddenly changed from profit to loss, with an estimated loss of HK$44 million, compared with a profit of HK$302 million in the same period last year.

Affected by the pre-loss announcement, Blue Moon opened with a sharp decline at the time, and the final decline on the day reached 5.05%.

For this performance change, Blue Moon gave four explanations in the announcement, namely: first, there was a surplus of lower-priced products on the platform of non-Group customers in the market, resulting in interference with the Group's pricing strategy and the price system of the Group's products in the market, which affected the negative impact of gross profit margin of about 9% in the first half of the year; second, the cost of raw materials increased compared with the cost in the first half of 2020; third, some "supremes" returned in the first half of 2020. The brand's concentrated laundry detergent was bundled with other products in the first half of 2021 and sold at a discounted price, which had a negative impact on gross margin of 1% in the first half of 2021, and fourth, since the fourth quarter of 2020, the developed laundry business has generated a loss of about HK$67 million.

<h1 class="pgc-h-arrow-right" data-track="5" > blue moon was planted on the channel twice</h1>

Of these four reasons, the first point platform is the biggest factor, affecting Blue Moon's gross margin of 9%.

Since it is a non-customer platform, why is there a large number of low-cost products of the company, and it has an impact on its existing price system?

Originally, in the blue moon system, it was divided into contracted customers and non-customers, not customers in order to increase sales and thus reduce the price of blue moon products, resulting in dissatisfaction with the platform as a customer, in order to calm the dissatisfaction, blue moon will give customers several discounts.

At present, as a well-known brand, Blue Moon has long been laid out on Tmall, JD.com and other platforms, and one of the biggest uncertainties is community group buying. In recent years, the rise of community group buying, they have launched various subsidies to occupy the market through price wars.

Judging from the data of various platforms, the price of the same product of Blue Moon on different platforms fluctuates greatly, especially the community group buying platform in order to win users also promotes through subsidies and discounts, which disrupts the normal price system to a certain extent, resulting in Blue Moon becoming a "victim".

At the same time, a variety of Blue Moon cottage goods rampant, there are reports that a bag of 500g of Blue Moon bag laundry detergent in the Jingdong official flagship store price of 10.9 yuan, fan price of 9.9 yuan, but in some offline supermarkets and "idle fish" and other platforms, a box of 10 bags of the above similar products price is only between 23 yuan -35 yuan, calculated that a bag of unit price is only about 1/3 of the official retail price. On Internet platforms such as Zhihu and Baidu, there is not only a lot of news about "the sale of counterfeit Blue Moon laundry detergent is investigated", but also the topic discussion of netizens on "how to identify true and false Blue Moon laundry detergent".

It is precisely because the new channels impact Blue Moon's original channels and price system, coupled with the impact of "flooded" copycat goods on the market, resulting in a significant reduction in Blue Moon's profits, which to a certain extent shows that Blue Moon's ability to control channels is still a great deficiency.

In fact, this is not the first time that Blue Moon's channel has gone wrong. As mentioned above, in 2015, Blue Moon broke up with traditional supermarket channels due to pricing problems, and at that time, many stores including Carrefour, Auchan, RT-Mart and so on broke with it, and Almost all Blue Moon products were removed from the shelves. It was also at this time that brands such as Willus, Tide, Super Energy, Libai, Bilang, and Langqi began to rise rapidly.

However, the solution of that crisis, thanks to the rise of e-commerce represented by Jingdong and the help of Zhang Lei, this time, the new community group purchase once again impacted Blue Moon's channels, but Blue Moon seems to have no good way, can only watch the company's profits continue to suffer.

This is tantamount to saying that the same channel pit, the blue moon planted twice.

If you can't solve the problems of channels, fakes, etc., it reflects the company's management system, and Blue Moon also has insufficient response to industry competition and industry development trends.

When Blue Moon was listed, at that time, institutions generally mentioned that it faced two problems: one was the pressure of market competition, and the market share gap between Blue Moon and the second place was not large. The washing product market is characterized by a wide variety and serious homogenization, and the strength of Blue Moon's competitors cannot be ignored;

The second is the pressure of product upgrading. In the future, the direction of the development of laundry detergent is either concentrated laundry detergent or laundry gel beads. However, Blue Moon does not seem to have outstanding results in both new categories.

At present, laundry gel beads are rising and growing rapidly in China. According to Euromonitor International data, the size of China's laundry beads market has exceeded 500 million yuan in 2019, and it is expected to maintain a high compound growth rate of more than 35.8% in the future.

With the help of the operation of social platforms, laundry gel beads quickly occupied the minds of the young generation of consumer groups. Libai, Mysterious and Bilang have firmly occupied the top three positions in this emerging market, while Blue Moon is somewhat indifferent.

Zhang Lei's book "Value" has been regarded as a guideline by countless investors, among which the story of Zhang Lei's investment in Blue Moon is a classic case, as early as 2010, Hillhouse Capital invested $45 million in Blue Moon's angel wheel, and added $1.03 million the following year.

On the eve of Blue Moon's listing, Hillhouse Capital had received a dividend of HK$230 million, when the market estimated that hillhouse capital's cumulative investment income could exceed 20 times as Blue Moon's valuation soared.

However, after the listing of Blue Moon, it did not create a lasting myth, but instead embarked on a long downward journey. With the disclosure of Blue Moon's semi-annual report, the company's channels, management, competition and other issues have been exposed, Blue Moon, to make a Chinese version of Procter & Gamble still has a long way to go.