In the two years since Wu Zhigang’s retirement, Taoli Bread’s performance has fluctuated significantly. Also in the past two years, the actual controller Wu Zhigang’s family has cashed in a total of 3.633 billion yuan through stock reduction. Author: Lei Yanpeng, Editor: Liu Xiao Ying, head Figure from: Vision China
After retiring from the Sanchi podium at the age of 60, he started his own business selling bread. Twenty years later, the former teacher became the “Bread King of the Northeast”, and wealth also came in.
This person is Wu Zhigang, the founder of Taoli Bread. On the 2020 Forbes China Rich List, ranked by place of residence, Wu Zhigang’s family has a wealth of 30.1 billion yuan, making it the richest man in Shenyang.
Starting from Dandong, a border city on the Yalu River, to Shenyang, the provincial capital, to occupy the Northeast market, Wu Zhigang wants to replicate the peach and plum bread to the whole country through the “central factory + wholesale” model, but , The expansion road is not smooth.
In the past two years, the growth rate of Taoli Bread’s performance has slowed down, and the growth rate of revenue and net profit has dropped to single digits. The performance report for the first quarter of 2021 released on the evening of April 11 showed that revenue was 1.327 billion yuan, an increase of only 0.31%; net profit attributable to the parent was 163 million yuan, an increase of -16.27% year-on-year, setting a first-quarter performance since Taoli Bread went public Record for the worst growth.
Furthermore, the Wu Zhigang family, as the actual controller, continued to reduce their holdings and cash out on a large scale after the expiration of the restriction period, which also attracted a series of doubts.
The richest family cashed in over 3.6 billion
Tao Li Bread is a typical family business. A huge family crony runs through the company’s equity and management.
Wu Zhigang was born in 1935 and spent his life in Dandong before the age of 60. In this small border town, he worked as a telegrapher and a teacher in the Dandong City Telecommunication Bureau, from Dandong No.1 Silk Factory School to Dandong Silk Industry School.
In 1995, Wu Zhigang, who had worked hard for most of his life, retired. The routine operation should be to enjoy the old-age life of a sweet-smelling grandson. However, under the spring breeze of reform, Wu Zhigang was moved to start a business.
He took his second son, Wu Xuequn, to open a bakery in the local area. Perhaps because of his teaching, he named the bakery “Peach and Plum”, probably because he wanted to sell peach and plum bread all over the world.
A full 20 years later, in 2015, Wu Zhigang and his sons brought Taoli Bread to the A-share market, and taoli Bread also became China’s “first share of bread”. At the time of listing, among the natural-person shareholders of Taoli Bread, there were about 20 relatives of Wu Zhigang’s family.
After the expiration of the sales restriction period, Wu Zhigang and his family members started a continuous reduction in holdings.
As of the end of 2018, the top eight shareholders of Taoli Bread are all members of the Wu Zhigang family. Among them, the top five shareholders Wu Xuequn, Wu Xueliang, Wu Zhigang, Sheng Yali, and Wu Xuedong are the actual controllers of the company, holding a total of 74.46% of the shares of Taoli Bread; Wu Zhigang and Sheng Yali are husband and wife, and Wu Xuedong, Wu Xuequn and Wu Xueliang are their eldest sons and second sons, respectively And three sons.
The other three shareholders are Sheng Yali’s younger brother and sister: Sheng Long, Sheng Yaping, and Shengli. The three persons collectively hold 8.34% of the shares of Taoli Bread.
At the same time, Wu Zhigang is the chairman of Taoli Bread, Wu Xuequn is the director, general manager, and executive general manager, Wu Xueliang is the vice chairman and executive general manager, and both Wu Xuedong and Shenglong are directors of the company.
In addition, Wu Zhigang’s younger brother Wu Zhidao, Wu Xueliang’s wife Xiao Shuyan, Sheng Long’s wife Fei Zhihui, Sheng Long’s brother-in-law Lu Changen and other close relatives of the actual controller and close family members all hold shares in the company.
In 2018, the directors and supervisors of Taoli Bread have reduced their holdings. At the end of December of the same year, Taoli Bread went public for three years and ushered in the large-scale lifting of the ban on the initial public offering of restricted shares. Only five days later, the Wu Zhigang family announced an announcement of their shareholding reduction plan. From this time on, the Wu Zhigang family began to reduce their holdings.
The implementation of the share reduction began in January 2019. As of February 20, 2021, Wu Zhigang and his family members have disclosed 7 stock reduction plans and announcements on the results of the reduction. In the past two years, the Wu Zhigang family has cashed out a total of 3.633 billion yuan through stock reduction.
In 2020 alone, the Wu Zhigang family cashed out 1.754 billion yuan. In 2021, as of April 5, it has cashed out 436 million yuan.
In addition, 2In September 019, Taoli Bread publicly issued 10 million convertible corporate bonds (1 billion yuan), and Wu Xuequn, Wu Xueliang, Sheng Yali and Wu Xuedong alloted them 55.27%. On the day the convertible bonds were listed for trading, Sheng Yali emptied her bonds. As of February 20, 2020, less than half a year after the listing and trading, the four members of this family reduced their holdings to only 5.41%.
The announcement of the results of the reduction of Taoli Bread on February 20, 2021 shows that as of the announcement date, Wu Xuequn, Wu Zhigang, Wu Xueliang, Sheng Yali, and Wu Xuedong still hold 61.54% of the shares of Taoli Bread, while Shenglong and Xiao Shuyan , Shengli, Sheng Jie, Sheng Yaping, Sheng Ling, Fei Zhihui, Lu Changen, Wu Zhidao still hold 6.37%. The Wu Zhigang family holds 67.91% in total.
Isn’t it optimistic about the company’s development prospects that the actual controller family continues to reduce their holdings and cash out?
After the shift, the pace of growth slowed down
After retiring as a teacher, Wu Zhigang used his retirement time to create the second spring of his career. Not only did he sell bread to the Northeast, he also became famous. More importantly, the wealth he has created during these two decades is unimaginable when he was a teacher.
Wu Zhigang was once the oldest chairman of A shares. In April 2019, the 84-year-old Wu Zhi just retired from the position of chairman of Taoli Bread, and finally handed over the business of Taoli Bread to his sons. At that time, the sons were not young anymore.
After Wu Zhigang retired to the second line, his 48-year-old third son Wu Xueliang took over as chairman and concurrently executive general manager; 53-year-old second son Wu Xuequn became director, general manager, and executive general manager; 56-year-old eldest son Wu Xuedong As a director, as well as the executive director and general manager of the subsidiary Jinan Taoli; Wu Zhigang’s 78-year-old wife Sheng Yali is still a director, and Sheng Long is also a director of the company.
In the two years after Wu Zhigang retired, that is, the two years after his sons officially took over, Tao Li Bread’s performance has fluctuated greatly.
First in 2019, Taoli Bread’s operating income increased by 16.77% year-on-year, but net profit only increased by 6.42%. This is the first time the company’s growth rate has fallen to single digits since its listing. The explanation given by Taoli Bread is that in order to effectively respond to market competition and increase market development, the company has increased its promotional activities, resulting in a year-on-year increase in the sales expense ratio.
In 2020, Taoli Bread achieved operating income of 5.963 billion yuan, a year-on-year increase of 5.66%; net profit was 883 million yuan, a year-on-year increase of 29.19%. This is the first time that revenue growth has dropped to single digits since the company went public.
As for the reason why the growth rate of net profit far exceeds the growth rate of revenue, Taoli Bread said that the increase in sales revenue has promoted the expansion of production scale, and the overall scale effect has increased; at the same time, it is affected by the national phased social security reduction and exemption policy. , The company’s costs have also decreased.
In 2020, the gross profit margin of Taoli Bread will be the lowest level since its listing, but at the same time, the net profit margin will be the highest level since its listing.
Among these, the most influential one is sales expenses. In contrast to 2019, sales expenses in 2020 are negative growth.
In 2020, the sales expenses of Taoli Bread will be 524 million yuan, a sharp decrease of 57.31% compared to 2019. The company explained that it is mainly due to the implementation of the new revenue standards in 2020 and the adjustment of product distribution service fees. Due to operating costs.
Since its listing, Taoli BreadThe sales expense ratio of the company continues to rise, from 14.04% in 2015 to 21.76% in 2019, showing an increasing trend year by year. In 2020, there will be a sudden turn and drop to 8.79%.
As a leading enterprise in the short-term bread industry, Taoli Bread’s main business and main products have not undergone major changes in 2020.
In terms of products, the company’s core products are the bread and pastries of the Taoli brand, which accounted for 97.89% of revenue in 2020, which is the absolute reliance of Taoli bread; and the two major festivals developed for traditional holidays Sexual products-moon cakes and zongzi, have always been marginal products of the company, accounting for 1.97% and 0.13% of revenue respectively in 2020, which has a negligible impact on performance.
Therefore, how well the bread and pastries sell is directly related to the performance of the peach and plum bread.
In 2020, bread and pastry products will achieve operating income of 5.837 billion yuan, an increase of only 5.60% over the same period last year. Although the company claims that star products such as ripeness continue to grow steadily, and new products such as waffle cakes and soft mountain toast bread have shown relatively high growth, overall, the bread and pastry business of Taoli Bread last year was not as good as in previous years. it is good.
This is not unrelated to the obstruction of the national expansion of Taoli Bread.
Lost in Shanghai, defeat in Shenzhen
Wu Zhigang’s family has always wanted to sell peach and plum bread to the world. This is also the strategy of peach and plum bread: Focus on small but refined, not seeking more varieties, but pursuing the scale of production and sales of single products , While reducing costs.
Nowadays, my country’s bakery industry mainly has two types of production and operation models: one is to set up a central factory in the sales area and radiate the region in the form of wholesale. This model can improve production efficiency and enhance scale effects; One is to set up chain bakery, this model can meet consumers’ requirements in terms of product quality, taste and freshness to the utmost extent.
Bread products can be roughly divided into short-term guarantee, medium-term guarantee, and long-term guarantee according to the length of the shelf life. Of course, different products have different characteristics, and manufacturers have different business models.
The products of peach and plum bread are mostly products with short shelf life. The shelf life of short-guaranteed bread is very short. Generally, 7-9 days in winter and 3-7 days in summer. Therefore, peach and plum bread mainly adopts the production model of “production based on sales”, and the production plan is made according to market demand. , And then uniformly produced by the central factory, and finally wholesale to supermarkets and distributors in a certain area.
This is the model that Taoli Bread practiced in the Northeast market in the early years, that is, the “central factory + wholesale” model.
This model is conducive to standardized production, and can reduce production costs through scale. More importantly, it is easier to replicate when expanded, and it can be called an “accelerator” on the road to expansion of peach and plum bread.
Before it went public in 2015, Taoli Bread, which occupied the northeastern market, had already established a foothold in North China. So, after it went public, it began to go south and east, while building a central factory while seeking with supermarkets Cooperation. As of the end of 2020, Taoli Bread has established production bases in 19 regions across the country.
Tao Li Bread stated in its annual report that in 2020, the company will continue to increase its efforts to expand into new markets in East China and South China, continuously increase investment in key customers, and improve the quality of individual stores; at the same time, it will mature in Northeast and North China. The market continues to accelerate the refinement and sinking of the sales network, tap market potential, and consolidate and expand the company’s product market share.
From a regional perspective, Tao Li Bread’s performance still depends on the “base camp” Northeast market.
In 2020, the Northeast market’s revenue will still account for nearly half of the company’s revenue. The second largest market is North China, and the third largest market is East China; Southwest, South China, and Northwest China are next. Central China has the smallest income.
In fact, many of the descendants of companies located in East China, South China, and China markets are still losing money. Taoli Bread listed 37 major holding companies in its annual report, of which 17 are at a loss-mainly in these three markets.
In 2020, Shenzhen peach and plum and Jiangsu peach and plum will lose 13.86 million yuan and 9.73 million yuan respectively; followed by Shanghai peach and plum, Nanchang peach and plum, Xiamen peach and plum, Hainan peach and plum, and Fuzhou peach and plum, with losses of 5 million yuan. Yuan and above; then Guangxi peaches and plums, Hefei peaches and plums, etc.
In 2019, 20 of Taoli Bread’s main holding companies were at a loss, with a total loss of 73.57 million yuan. In 2020, the 17 major holding companies that are in loss will have a total loss of 71.92 million yuan.
2020 is basically the same as 2019. The main holding companies with the worst losses are still in East China and South China.
From the perspective of the East China market, Shanghai peaches, Jiangsu peaches, Nanchang peaches, Zhejiang peaches, and Hefei peaches are already losing money. For example, Shanghai Taoli, which was established in September 2000, started to lose money in 2018. The current loss was 1.2394 million yuan. In 2019, the loss expanded to 12.6882 million yuan. In 2020, it lost 6.5362 million yuan.
In the South China market, peach and plum bread is also difficult to integrate into. For example, Shenzhen Taoli, which was established in 2015, suffered a loss of RMB 6,641,200 in 2018. The loss in 2020 has doubled.
In November 2020, Taoli Bread announced that according to the company’s current actual operating conditions and subsequent business development plans, in order to optimize resource allocation and asset structure, reduce management costs, and improve operational management efficiency, it intends to cancel the company’s entire The subsidiary Nanchang Peach and Plum and Jinan Peach and Plum. In January 2021, after an announcement, Shenzhen Taoli was also cancelled.
South China, East China and other regions have always been important cities in the bakery industry. From well-known domestic and foreign brands to local brands, such as Dali Garden, Bimbo, Manchester, Yamazaki, Paris Baguette, Yuan Zu, Christine, Bread Talk, Hollyland, Delicious, 85°C, more unknowns. Whether it is bread, cakes, or pastries, the competition is getting fiercer.
New tea brands such as Nayuki’s tea also make bread, and many brands do well online. This will also have a greater impact on the peach and plum bread that mainly sells supermarkets, convenience stores, commissaries and other channels.
The baking industry has a low threshold, serious homogeneity, and a relatively fragmented competitive landscape. In 2019, the total market share of the top five brands in the industry was less than 11%, and the market share of Taoli Bread was only 3%.
The analysis of Zhongyuan Securities believes that scale and single product will help companies maximize their benefits in the initial development, but there will be companies responding to the market in the later stages.For the problem of inadequacy, for peach and plum bread, there is also a lack of flexibility in production.
Tao Li Bread said that in the future, the company will further strengthen and develop bakery products with loaf and pastry as its core, and steadily develop traditional holiday products such as moon cakes, and further enrich the company’s product line. However, the pressure is conceivable.
At present, the situation of Taoli Bread is not optimistic. The descendants of East China, South China and other regions have been unable to realize profitability for a long time, and the performance growth of listed companies has also encountered problems. It is not easy for the sons to realize Wu Zhigang’s dream of “all over the world”.