Perhaps, Jiajiayue can “pass through” the “M&A” expansion path that many retail companies failed to follow in the past?
Editor’s note: This article is from the WeChat public account ” reveal “(ID: lingshouke) , author: Do not Chu fragrant.
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In three years, Jiajiayue (603708.SH) has conducted 5 mergers and acquisitions.
This time, the one that Jiajiayue fancyed was Inner Mongolia Victory:
On the evening of November 24, Jiajiayue issued an announcement stating that it intends to invest 375 million yuan with its own funds and hold Inner Mongolia Wei through transfer of equity.Lehui 70% equity in Supermarket Co., Ltd.
It is only one year after Jiajiayue acquired “Happy Awesome” last time.
In November 2019, Jiajiayue invested 210 million yuan with its own funds to acquire 75% of the reorganized Lexin Trading Company through transfer of equity and capital increase.
At that time, Jiajiayue stated that Lexin Trading had 31 stores located in Huaibei City in the north of Anhui Province, adjacent to Shandong. Geographically and geographically, it was in line with the company’s supermarket business development layout, and initially had the ability to support chain business development. Its logistics system and food processing facilities have a certain local market foundation and regional brand influence.
The acquisition of “Vidtory Supermarket”They also have advantages in outlets and regional brands.
Actually, since 2018, Jiajiayue has expanded from Shandong.
In March 2018, Jiajiayue acquired 9 stores of Qingdao local retailer Wiki Chain;
In November of the same year, Jiajiayue acquired a 67% stake in Zhangjiakou Fuyuexiang supermarket chain for 156 million yuan, and began to enter the Hebei market. Fuyuexiang owns 11 supermarkets (including 2 unopened stores) and 1 distribution Center;
In September 2019, Jiajiayue took over the China Resources Vanguard The supermarket purchased 7 supermarkets opened by China Resources Vanguard in Shandong for a price of 31.2 million yuan.
From the perspective of the acquisition model of 5 supermarkets that “do not stress military ethics” (note: there is no derogatory meaning here, it means that regional mergers and acquisitions do not follow the first principle of expanding the base camp and surrounding areas) “A” a unique way of expansion: relying on taking root in the region, intensively opening stores, and after consolidating the regional market, and then achieving national expansion through mergers and acquisitions.
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The logic of cultivating regional markets is not complicated:
Only by cultivating the regional market, can you understand your consumers better; with enough outlets and density, can you reduce costs and increase efficiency, form a scale advantage, so that your opponents have no place to intervene, and are more conducive to your own supply chain Build.
As of June this year, there were 844 Jiajiayue stores, including 166 hypermarkets, 599 general supermarkets, 13 department stores, and 66 other stores such as Baby Yue.
In the first half of 2019, Jiajiayue accounted for more than 80% of its stores in Jiaodong area (Qingdao, Yantai and Weihai, Shandong Province).
In fact, to some extent, this is also the result of deep cultivation of the region.
Jiajiayue started in Weihai, Shandong Province in 1981. Its main business is chain supermarkets and hypermarkets. It was listed on the main board of the Shanghai Stock Exchange in December 2016. Before listing, its development area was dominated by Shandong Province, and it was not until 2018 that it started the road of expansion. At that time, its operating income was 12.731 billion yuan, a year-on-year increase of 12.36%; realized net profit of 430 million yuan attributable to the parent, a year-on-year increase of 38.35%.
It can be said that Jiajiayue is not bad in the integration of the past several acquisitions.
CITIC Securities believes that Jiajiayue, as a regional supermarket leader in Shandong, has outstanding advantages in the fresh food supply chain. Prior to this, the mergers and acquisitions of Qingdao Wiki, Shandong China Resources Vanguard, Hebei Jiajiayue, and Anhui Happy Awesome have achieved certain results. .
“Qingdao Wiki has improved its operating efficiency after the merger and its net profit margin is similar to that of listed companies as a whole; 2020Q1-Q3: Hebei Jiajiayue has a cumulative loss of more than 20 million yuan, Shandong China Resources Vanguard has a cumulative loss of about 15 million yuan, Anhui Happy Awesome has a cumulative loss of about 25 million yuan. It is estimated that for the whole year of 2020: Hebei Jiajiayue will lose about 30 million yuan, Shandong China Resources Vanguard will lose 10-20 million yuan, and Anhui Joyful will lose more than 30 million yuan.”
Related M&A and integration experience of listed companies is expected to be replicated in the Inner Mongolia market.
Although it is expanding and digesting, Jiajiayue’s performance seems to be good.
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In the five years from 2015 to 2019, Jiajiayue has maintained a relatively high growth rate.
In the past five years, Jiajiayue’s revenue exceeded 10 billion yuan. From 2015 to 2019, its operating income was 10.486 billion, 10.77 billion, 11.33 billion, 12.731 billion and 15.264 billion; non-net profit was respectively 228 million, 236 million, 301 million, 382 million and 437 million yuan.
To some extent, Jiajiayue is a typical representative of deep ploughing in the regional market, and through “merger and acquisition” expansion, it is gradually moving towards a national retailer.
Insist on regional intensiveness, simultaneous development of multiple business formats, integration of urban and rural areas, and relying on an efficient supply chain system to achieve the goal of “walking into the community, going deep into the countryside, getting close to life, and building a ten-minute business circle”-this is Jiajiayue Strategy.
At the same time, it adheres to the centralized procurement model of “direct supply of fresh products from bases and direct purchase of grocery products by manufacturers”. The sales model is mainly self-operated, and the sales of self-operated products account for about 90% of the main business income of commerce.
In addition, Jiajiayue built logistics centers in Weihai, Yantai, Jinan Laiwu, Qingdao, Zhangjiakou and other places on the basis of intensively opening stores in the region, forming a three-dimensional logistics network supporting chain business expansion, and laying out fresh food processing bases. Standardize processing capabilities to improve supply chain efficiency.
Especially in the first half of this year, the normal temperature logistics distribution center of Yantai Lingang Comprehensive Logistics Park, the Jinan Laiwu Fresh Processing Center and the Zhangjiakou Comprehensive Industrial Park Project Phase I normal temperature logistics distribution center were completed and put into use. Improved the logistics efficiency of Jiajiayue.
April 2020The SAP system was officially launched to promote organizational change through process information and improve the standardization of business processes and operational efficiency.
These have laid a solid foundation for Jiajiayue’s expansion-digestion-further expansion.
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On the evening of November 24, Jiajiayue issued an announcement stating that the company signed an equity transfer agreement with Inner Mongolia Victory Industrial Co., Ltd. and Inner Mongolia Valehui Supermarket Co., Ltd. According to the agreement, the company intends to use its own funds for 3.75 RMB 100 million holds 70% of the equity of the target company through the transfer of equity.
From the perspective of the timing of acquisitions, the retail market under the influence of the “epidemic” may have a situation where the strong will become stronger and the weak will become weaker.
Actually, the “Vidtory Supermarket” is not operating well in Inner Mongolia.
According to the acquisition announcement, as of September 30, 2020, the target company’s total assets were 388,011,900 yuan, total liabilities were 39,410,600 yuan, and net assets were -6.0887 million yuan; in the first three quarters of 2020, operating income was 7.676852 million yuan and net profit -7,300,600 yuan; 2019 operating income of 57,549,200 yuan, and net profit of -11,039,100 yuan.
The subject company is mainly engaged in the supermarket chain operation business. It operates chain supermarkets under the brand of “Vidori Supermarket” in Hohhot, Baotou and Ulan Chabu in the Inner Mongolia Autonomous Region. It operates 25 stores, including Hohhot City, Baotou City and Ulanqab have 22, 1, and 2 respectively. The main formats are hypermarkets. There are also 8 supermarkets that have signed lease contracts and have not yet opened. The total contracted lease area of the stores is about 260,000 square meters.
“Vitori Supermarket” is a chain retail enterprise in the forefront of supermarket sales and brand influence in Inner Mongolia Autonomous Region.
CITIC Securities believes that the acquisition of “Victoria Supermarket” is synergistic with the existing Hebei Jiajiayue supply chain, and integration and efficiency improvement can be expected. In addition, Hebei Jiajiayue currently has three supermarket stores located in Ulanchabu, Inner Mongolia. After the merger, it is expected to form supply chain synergy with existing stores.
But continued expansion requires a process of digestion. Some securities analysts believe that Jiajiayue’s performance will be under pressure in the short term.
However, from the perspective of Jiajiayue’s acquisition path, it has always followed the idea of “connecting into one” with its existing stores. Perhaps, Jiajiayue can “pass through” the “mergers and acquisitions” that many retail companies failed to do in the past. “The Way to Expansion? (Original Works by Ling Beast Media)