H1 Revenue Growth Slows, Jinhui Liquor Faces H2 Pressure
In the first half of this year, Jinhui Liquor achieved a revenue of 1.753 billion yuan, a year-on-year increase of 15.17%; the profit attributable to the shareholders of the listed company was 295 million yuan, a year-on-year increase of 15.96%.
In the 2023 annual report, Jinhui Liquor set a business plan to strive for a revenue of 3 billion yuan and a net profit of 400 million yuan in 2024, and has already completed more than half in the first half of this year.
However, under the overall competition of the industry's existing stock, as a regional famous liquor in the northwest region, Jinhui Liquor is promoting the process of high-end and nationalization.
As the competition becomes increasingly fierce, can Jinhui Liquor maintain this growth rate in the second half of the year?
01 The slowdown of revenue growth Looking at the performance of a single quarter, it is not easy for Jinhui Liquor to achieve the annual target.
In the first quarter of this year, the revenue growth rate and net profit growth rate of Jinhui Liquor were 20.41% and 21.58% respectively.
Based on this calculation, the second quarter's sequential narrowing.
According to the research report of Zhongyuan Securities, compared with the first quarter, the second quarter's revenue growth rate narrowed by 12.68 percentage points, and the net profit growth rate narrowed by 11.92 percentage points, and the growth momentum has been somewhat restrained.
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Looking at the long-term line, the growth of Jinhui Liquor in the first half of the year is basically better than the whole year.
Analyzing the semi-annual report data in previous years, it can be seen that from January to June 2021, 2022, and 2023, the revenue growth rate of Jinhui Liquor was 36.59%, 26.13%, and 24.25% respectively; the net profit growth rate was 55.89%, 13.06%, and 20.06% respectively.
From the data, it is obvious that Jinhui Liquor has performed quite well in the first half of recent years.
However, the annual report data is not as good as the semi-annual report data.
From 2021 to 2023, the revenue growth rate of Jinhui Liquor was 3.34%, 12.49%, and 26.64% respectively; the net profit growth rate was -1.95%, -13.73%, and 17.35% respectively.
Superimposed on the deceleration of the second quarter this year, it has increased the uncertainty of the realization of Jinhui Liquor's annual target.
At the same time, the secondary high-end has become the focus of many liquor companies.
According to the "2024 China Baijiu Market Mid-term Research Report", high-end baijiu still has an advantage in gift-giving and business banquet scenes, but the main choice of baijiu for friends and family gatherings and wedding banquets continues to return to the secondary high-end price product.
In the 2022 annual report, Jinhui Liquor divided the products into low, medium, and high grades, among which the low-grade products are products with an ex-factory price of less than 30 yuan/500ml; medium-grade products are products with an ex-factory price of 30 yuan to 100 yuan/500ml; high-grade products are products with an ex-factory price above 100 yuan/500ml.
In the 2023 annual report, Jinhui Liquor no longer divides the products into low, medium, and high grades in the financial report, and directly divides the products according to the ex-factory price, which is divided into more than 300 yuan, 100-300 yuan, and less than 100 yuan, and the product structure has been re-divided.
In 2023, Jinhui Liquor's revenue of products above 300 yuan was 401 million yuan, a year-on-year increase of 37.13%; the revenue of products between 100-300 yuan was 1,288 million yuan, a year-on-year increase of 32.28%; the revenue of products below 100 yuan was 816 million yuan, a year-on-year increase of 14.22%.
The revenue proportion was 16.01%, 51.42%, and 32.57% respectively.
The financial report shows that the products above 300 yuan/500ml mainly include Jinhui vintage series, Jinhui Laojiao series, etc.
; the products between 100-300 yuan/500ml mainly include Rouhe Jinhui series, Jinhui positive energy series, Century Jinhui Five-Star, etc.
; the products below 100 yuan/500ml mainly include Century Jinhui Four-Star, Century Jinhui Three-Star, Century Jinhui Two-Star, Jinhui Chenniang, etc.
In the first half of this year, Jinhui Liquor's revenue of products above 300 yuan was 313 million yuan, a year-on-year increase of 44.71%; the revenue of products between 100-300 yuan was 890 million yuan, a year-on-year increase of 14.97%; the revenue of products below 100 yuan was 522 million yuan, a year-on-year increase of 1.77%.
The revenue proportion was 18.14%, 51.61%, and 30.25% respectively.
Jinhui Liquor once stated that the current high-end products are led by Jinhui 28, Jinhui 18 and other vintage series, focusing on resources, seizing brand influence and sales volume, and radiating other products downward.
From the data, although the products above 300 yuan have the highest growth rate, the proportion of low-end products below 100 yuan is still relatively high, and its high-end progress needs to speed up.
02 The progress of nationalization is relatively slow In 2016, Jinhui Liquor went public, and in that year's financial report, Jinhui Liquor stated that the company continued to consolidate the market in Gansu Province while steadily expanding into markets outside the province such as Ningxia, Shaanxi, Xinjiang, and Tibet, gradually becoming a strong baijiu brand in the northwest region.
According to the research report of Cinda Securities, before 2020, Jinhui Liquor's strategy was "based in Gansu, develop the northwest, and focus on breakthroughs", focusing on the northwest market represented by Gansu.
After 2020, Jinhui Liquor adjusted its strategic direction to the strategic path of "laying out the country, cultivating the northwest, and focusing on breakthroughs", while consolidating the Gansu base market, actively increasing the development efforts of the northwest market, the East China market, the northern market, and the Internet market.
The turning point from focusing on the northwest to developing the country was that in 2020, Yuyuan Shares, a subsidiary of Fosun Group, took over the 30% stake in Jinhui Liquor held by Yate Group, took over Jinhui Liquor, and promoted its national development.
In September 2022, Yuyuan Shares and Hainan Yuzhu, subsidiaries of Fosun Group, transferred 13% of Jinhui Liquor's shares to Yate Group and Longnan Kelite.
The controlling shareholder of the company changed back to Yate Group and its consistent action person Longnan Kelite.
This change also attracted attention from the outside world, whether Jinhui Liquor would change its national strategy.
However, at present, nationalization is still the main development strategy of Jinhui Liquor - in the semi-annual report for 2024, Jinhui Liquor mentioned that it adheres to the strategic path of "laying out the country, cultivating the northwest, and focusing on breakthroughs".
In the record form of the investor reception research activity disclosed in January this year, Jinhui Liquor stated that it has achieved full coverage of all prices, channels, and regions in Gansu Province, and the Century Jinhui Star series, Rouhe Jinhui series, and Jinhui vintage series products have become the main sales products of Gansu baijiu; in the northwest market such as Shaanxi and Ningxia, the energy Jinhui series products with a price range of 100-400 yuan are mainly used to develop the market, and as the influence increases, the Jinjin Jinhui series products with a price range of 100 yuan are introduced into the Shaanxi market, the group purchase channel is laid out, and the high-end vintage series products are focused on resources to consolidate the market; in the East China market such as Jiangsu, Henan, Shandong, and Zhejiang, the Jinhui Laojiao series products with a price range of 300-900 yuan are mainly used to develop the market.
From the perspective of revenue proportion, Jinhui Liquor's nationalization still has a long way to go.
In the first half of this year, Jinhui Liquor's revenue in the province was 1,349 million yuan, a year-on-year increase of 16.84%; the revenue outside the province was 376 million yuan, a year-on-year increase of 7.79%.
Compared with the revenue volume and growth rate, Jinhui Liquor's influence outside the province is still not as good as inside the province.
However, Jinhui Liquor is still increasing its investment outside the province.
As of the end of the report period, there were 286 distributors in the province and 739 distributors outside the province.
This investment is also reflected in the sales expenses.
In the first half of this year, Jinhui Liquor's sales expenses were 336 million yuan, a year-on-year increase of 13.95%.
Jinhui Liquor stated that it was mainly due to the increase in the company's new market development, brand promotion, and consumer cultivation expenses.
The management expenses were 170 million yuan, a year-on-year increase of 24.37%, and Jinhui Liquor disclosed in the investor relations activity record form that it was because the company expanded the market area, increased the number of personnel, and increased wages, social security expenses, etc.
03 When will the peak consumption season come?
According to statistics, the slowdown of growth in the second quarter is a common phenomenon among listed baijiu companies, and many securities institutions also predict that the performance of baijiu companies may improve gradually in the second half of the year as the peak consumption season approaches.
However, as the Mid-Autumn Festival approaches, the price of Feitian Maotai, which is seen as a weathervane, has started to fall.
According to today's liquor price data, on August 10th, the original box and loose piece wholesale reference prices of 24-year Feitian Maotai 53 degrees/500ml were 2,700 yuan/bottle and 2,435 yuan/bottle, respectively.
On September 10th, the prices of the original box and loose pieces had fallen to 2,540 yuan/bottle and 2,380 yuan/bottle, respectively.
According to media reports, this year's Mid-Autumn Festival liquor consumption market is not as good as in previous years, and the willingness of distributors to make payments for stock preparation and channel promotion is very low.
In this situation, it may not be easy for Jinhui Liquor to achieve this year's sales target.
On the other hand, the current competitive situation in the baijiu industry is a huge challenge for regional famous liquors.
In the semi-annual report for 2024, Jinhui Liquor stated that the trend of concentration and differentiation in the baijiu industry is intensifying, and market competition is becoming increasingly fierce.
Consumers' demand for high-quality, high-added-value baijiu products continues to increase, and market share is gradually converging towards leading companies and regional leaders.
Minsheng Securities also stated in its research report that famous liquor brands expand their product line combinations with price extension and regional sinking strategies to further squeeze the growth space of small and medium-sized brands; under the trend of high concentration and strong differentiation in the industry, the survival battle of small and medium-sized brands and the growth war of leading brands are intensifying, and the strategy of "using channels to fight against brands" and "the terminal is the king" to build high channel barriers has also become an inevitable choice in the competition for market share.
It can be predicted that the "price for volume" in the stage of stock competition will continue, but with the addition of resources such as manpower and expenses, the first-mover advantage will also be erased, and the marginal utility will decrease.
Under the stock competition, regional famous liquors will be squeezed more and more by national famous liquors, and stepping out of the provincial market with visible growth space is also a way to win future growth opportunities.
In the record form of the investor reception research activity in November 2023, the scale of the baijiu market in Gansu Province is about 8 billion yuan, and the competitive pattern presents a "one super many strong" situation, and Jinhui Liquor has a significant market share advantage.
As the provincial capital, Lanzhou has a large market space, strong inclusiveness, and fierce competition.
Jinhui Liquor competes with foreign brands and local brands in the provincial capital city, with foreign brands mainly including Jiannanchun, Wuliangchun, etc., and local brands mainly including Hongchuan, Binhe, etc.Huafu Securities has calculated that, based on the provincial market share of other leading northwestern liquor companies, Jinhui Liquor still has about 1.3 billion yuan of market share growth potential within the province.
However, as nationally renowned liquors penetrate deeper into the market, the growth space for Jinhui Liquor will also be compressed, and it will need to expand beyond the province to find more market opportunities.
For Jinhui Liquor, how to further accelerate the optimization of its product structure, enhance the nationalization process, and ensure a more stable competitive edge under the competition of existing market share is crucial.