Fuling squeezed vegetables, how much value can be squeezed? Why performance is under pressure How to achieve growth in the future Conclusion

The situation of "squeezing vegetables" Fuling is getting worse.

Last Saturday, Fuling Cai Cai released its third-quarter performance report. The report shows that in the first three quarters, the company achieved operating income of 1.955 billion yuan, an increase of 8.73% year-on-year; net profit attributable to the mother was 504 million yuan, down 17.92% year-on-year.

In a single quarter, the company achieved revenue of 609 million yuan in the third quarter, an increase of 1.30% year-on-year; net profit attributable to the mother of 127 million yuan, down 39.07% year-on-year; deduction of non-attributable net profit of 113 million yuan, down 45.54% year-on-year.

In contrast, the company's revenue and attributable net profit in the first quarter increased by 46.86% and 22.73% year-on-year, and the revenue and attributable net profit in the second quarter fell by 10.8% and 27.6% year-on-year, respectively, and the revenue in the third quarter was better than the previous quarter, but the net profit attributable to the mother was further under pressure.

During the year, Fuling Juice fell by nearly 48% at one point, experiencing the largest drawdown since its listing in 2011, with a market value that fell by 21.7 billion yuan at one point. In the past two months, the stock price seems to have bottomed out and rebounded, with a cumulative increase of 30%. However, from a fundamental point of view, the future road of Fuling juice is still not easy to walk.

<h3>01</h3>

< h1 toutiao-origin="h3" > why performance is under pressure</h1>

In terms of revenue, the growth rate of Fuling squeezed vegetables in the second and third quarters of this year decreased significantly compared with the first quarter. The main reason is that after the normal shipment in the first quarter of this year, the demand is relatively weak, and the second and third quarters began to destock. At the same time, the same period last year supplemented inventory shipments, resulting in a relatively high base.

There are two main reasons for the pressure on the profit of Fuling squeezed vegetables during the year. One is because of the rising cost of raw materials, and the other is because of the increase in sales and other expenses.

The main raw material of squeezed vegetables is the head of green vegetables, which accounts for about 45% of the cost of squeezed vegetables. Since the head of green vegetables must be pickled after harvesting before it can be produced, the new raw materials are generally used from May, and the company's raw material costs will generally increase in the third quarter.

However, compared with the price of previous years, the price increase of green cabbage head this year is significantly larger. Since 2018, the price of green cabbage has ushered in a wave of rising cycles, and the growth rate has gradually increased. According to data from the Fuling District Government of Chongqing Municipality, the average purchase price of the Vegetable Head Market in 2020 was 900 yuan / ton, and this year the price soared to 1300 yuan / ton, and the price growth rate also rose from about 30% last year to about 50%.

In 2017, due to the impact of ice and snow weather, the supply of green cabbage head fell sharply, ending the previous round of rising cycle. Due to the shortage of supply, the planting enthusiasm of farmers in 2018 has increased and will continue until 2020. However, at the beginning of this year, Zhejiang, a major province of green cabbage head cultivation, suffered a relatively serious snow disaster, resulting in a sharp decline in the production of domestic green cabbage head, and Zhejiang and other squeezed vegetable processing enterprises have come to Fuling to buy green cabbage heads, which has raised the price of green cabbage heads in Fuling area.

The sharp increase in the price of the cost side has made the gross profit margin of Fuling squeezed vegetables continue to decline. From the first quarter to the third quarter of this year, the company's gross profit margin was 60.07%, 58.85% and 51.64% respectively.

The decline in attributable net profit was mainly due to an increase in expenses such as sales. In the first three quarters of this year, the company's sales expenses increased by 123.24%, 50.78% and 90.32% respectively compared with the same period last year; management expenses increased by 38.04%, 32.12% and 75.64% respectively compared with the same period last year.

Among them, the company's sales expense ratio in the first three quarters was 24.17%, 26.31% and 29.61%, respectively, which has reached a quarter to one-third of the entire sales, and the sales expense rate in the third quarter has hit a record high.

In the first half of this year, the sales cost of Fuling squeezed vegetables reached 339 million yuan. Among them, the brand publicity cost is as high as 167 million yuan, in the third quarter of this year, the company continued to invest 0.56 billion yuan for brand promotion, and in brand promotion, the main new media launch. In the past few years, the company's brand promotion cost expenditure has averaged in the range of 1 million yuan to 2.5 million yuan per year.

It is reported that Fuling squeezed vegetables have greatly increased sales costs, on the one hand, in order to expand the sinking market in third- and fourth-tier cities, on the other hand, to warm up the expanding production capacity.

On May 14 this year, Fuling Cai Cai released a fixed increase plan to issue 98.2728 million shares at an issue price of 33.58 yuan per share, raising a total of 3.3 billion yuan. The funds raised will be used for the construction of the Wujiang Fuling Vegetable Juice Green Intelligent Production Base (Phase I) Project and the Wujiang Fuling Vegetable Juice Intelligent Information Project System.

<h3>02</h3>

<h1 toutiao-origin="h3" > how to achieve growth in the future</h1>

Performance decline, but active expansion, Fuling squeezed vegetable gourd what kind of medicine is sold?

From the demand side, the growth rate of the domestic packaging squeezed vegetable market has not increased in recent years, but has a slowdown trend. From 2013 to 2017, the sales volume of domestic packaged squeezed vegetables increased from 186,000 tons to 278,400 tons, with an average annual compound growth rate of 6.95%, and its growth logic was mainly the substitution of packaged squeezed vegetables to bulk squeezed vegetables. However, after 2017, the market growth rate of domestic packaged squeezed vegetables began to slow down.

In addition, the pattern of the domestic packaged squeezed vegetable market has been relatively stable, and the market share of Fuling squeezed vegetables is currently as high as 36.41%, which is about 3 times that of the second Yuquan squeezed vegetables. When the growth rate of the industry slowed down, Fuling Juice wanted to further divide the market cake, and it was not as easy as imagined.

The growth rate of market demand has slowed down, and the performance of Fuling squeezed vegetables has also shown similar signs in recent years. Revenue growth rate fell from 35.64% in 2017 to 6.05% in 2019; the growth rate of attributable net profit remained relatively stable at about 60% from 2016 to 2018, but suddenly fell to 3.93% in 2019.

Last year, benefiting from price increases and home dividends under the epidemic, the company's revenue growth rate increased, while the decline in sales expenses and management expenses increased the company's net profit attributable to the mother last year. However, from the overall trend in recent years, Fuling squeezed vegetables have fallen into the bottleneck of slowing growth.

In the face of growth bottlenecks, fuling squeezed vegetables choose one is to increase the price and increase the volume, and the other is to expand the category.

According to the data of CITIC Construction Investment, from 2008 to 2018, the direct or indirect price increase of the company's products has reached 12 times. The ex-factory price of its 70-gram package of Wujiang squeezed vegetables rose from 0.5 yuan before 2008 to 2 yuan in 2018. Today, the online retail price of the product has risen to 2.7 yuan a bag.

In terms of volume, Fuling squeezed vegetables is constantly expanding the county-level sinking market and actively expanding production capacity.

CICC grassroots research shows that in 2022, the price of green cabbage head is expected to fall to less than 800 yuan / ton, and the superposition company will increase the capacity of the cellar pool, which can purchase more green cabbage heads, which is convenient for hoarding raw materials to smooth the cost pressure when the price of green cabbage heads is low, and the price increase is superimposed, and it is expected that the decline in the cost of green cabbage heads will be good for gross profit margins in the second half of 2022.

However, price increases may not be able to make consumers buy it. Excessive retail prices may in turn dampen market demand.

In addition, the expanded production capacity also requires a climbing process of capacity release, and the short-term contribution to the growth of Fuling juice performance is also small. Coupled with the increasing number of channels to expand, the company's sales expenses are also growing, which is bound to affect profits.

At the same time, Fuling squeezed vegetables began to expand horizontally such as radish, kimchi and so on. But at present, squeezing vegetables is still the main force of the company's revenue. As of the first half of the year, squeezed vegetables accounted for 89.22% of the company's revenue, radish and kimchi accounted for 3.01% and 6.15% respectively. In terms of profit contribution, squeezed vegetables accounted for 91.06% of the total revenue, radish and kimchi accounted for 2.74% and 3.76% respectively.

The growth of new categories is also not optimistic. In the first half of the year, the revenue growth rate of squeezed vegetables, radishes and kimchi was 16%, -28% and 1% respectively year-on-year. In addition, squeezed vegetables, radish and kimchi are the same as meal food, not a completely irreplaceable relationship, and may even compete with each other, and it is still unknown whether it can help Fuling juice to a higher level in the future.

For Fuling Squeezed Vegetables, what is more internal and external is that the rise of community group buying has caused a huge impact on the traditional supermarket channels.

In the past, consumer goods such as Fuling squeezed vegetables needed to be increased by layers of distributors and eventually passed to consumers. As a result, its terminal selling price will have a premium of 45% to 50% more than the ex-factory price. Community group buying cuts the intermediate link, and it has more advantages and competitiveness in terms of price.

In August this year, Fuling Cai Cai announced that it had begun to deploy channels such as community group buying. Without the layout of community group buying, the company's sales channels have been impacted, and sales will inevitably decline; the layout of community group buying, the company must endure the high bargaining power of the huge community group purchase platform, accept low-price sales, and the gross profit margin of the company's part will also be negatively affected. Either way, the rise of community group buying is not a good external market environment for Fuling Juice.

<h3>03</h3>

< h1 toutiao-origin="h3" > epilogue</h1>

In the past two months, the stock price of Fuling Cai Cai has retraced by nearly 30%, which seems to have bottomed out and rebounded. More because, under the big market of plate rotation, some funds in the market have flowed back from the new energy and cyclical plates to the medical, consumption and other sectors with large retracements. Although fundamentals continue to deteriorate, some funds still increase their positions against the trend. According to the third quarterly report of Fuling Cai Cai, among the top ten outstanding stocks, The Hong Kong Securities Clearing Company of Beijing Capital has 2.68 million shares, an increase of 0.3%; Fuguo Tianhui Select Growth has increased its holdings by 2.52 million shares, an increase of 0.28%.

From the low of August 2019 to the high of August 2020, the share price of Fuling Cai Cai has doubled, but its performance growth has long been slowing down. Due to the increase in global liquidity caused by the epidemic, coupled with the institutional group into the consumption and other sectors last year, companies such as Fuling Cai Cai, which has slowed down, still enjoy the benefits of this wave of increased liquidity.

Since the beginning of this year, the sharp retracement of stock prices has actually been the result of valuation and fundamentals. In the track of limited growth ceilings such as cai cai, it remains to be considered whether the volume and price of Fuling cai cai and the expansion of category strategies can help the company effectively open up the market increment.

This article originated from Grand Gateway