Prior to this, Best Store was the proud work of Hillhouse Capital Zhang Lei.
Editor’s note: This article is from the WeChat public account “niudaocaijing” (ID: niudaocaijing), author: Huang Fanghua, editor: Wu Dalang. Original title: “Abandoned” by Hillhouse Capital? 》
As the first domestic snack food stock, Liangpin Shop’s debut was the peak, and then it fell all the way.
Since its listing in February 2020, the stock price has risen rapidly, from 9 yuan per share to 87 yuan per share. This is the highlight moment of the good product store after the listing. In July of the same year, the share price of Liangpin Store began to turn around, slumping all the way to 45 yuan per share.
What caused the attention of the outside world was that on February 26 this year, BESTORE issued an announcement stating that Hillhouse Capital, the third largest shareholder holding 11.67% of shares, and people acting in concert, would reduce their holdings by no more than 6% due to their own financial needs. share.
In this regard, some people think that Hillhouse Capital is no longer optimistic about good shops and will be “abandoned” by Hillhouse Capital.
01 Lose money to sell yelling
Many domestic enterprises like to be tricky, and always hope to “enclose a piece of land” in the market to join in and collect rent, or to change the design and packaging of the goods, in good name Said research and development.
The field of consumer goods is even more serious. Companies are more willing to invest in the “face” of design, marketing, and creativity, but they have little interest in the hard work involving R&D, manufacturing, and channels.
That’s the problem with Best Shop. BESTORE is willing to spend money on marketing investment.
Not long ago, BESTORE announced the financial report for the first quarter of 2021. A very interesting statistic is that the sales expenses of Best Stores for marketing have increased rapidly, exceeding revenue.
According to the data, the sales expenses of BESTORE in the first quarter of 2021 reached 540 million yuan, a year-on-year increase of 38%, accounting for up to 21% of revenue.
In comparison, the total revenue of BESTORE in Q1 of 2021 was 2.57 billion yuan and 1.91 billion yuan in the first quarter of 2020, an increase of 36% year-on-year.
In fact, the sales expenses of Best Stores have remained high in recent years.
Financial data shows that the sales expenses of BESTORE in 2015 were 719 million yuan, 2016 was 952 million yuan, 2017 was 1.055 billion yuan, 2019 is 1.581 billion yuan, and 2020 is 1.57 billion yuan.
Marketing expenses remain high, which is due to the OEM model of Best Stores. That is, BESTORE entrusts other factories to produce, and is responsible for design, marketing, etc. Under this model, the profitability of Best Stores is actually through packaging design and market launch to earn the difference in commodity prices.
In 2020, BESTORE will increase investment in social e-commerce, launch a large number of star live broadcasts on Douyin Kuaishou, and establish an anchor system, which is also a loss of money.
Data from the 2020 annual report shows that Liangpin Store has in-depth cooperation with over 150 top celebrity anchors, and completed more than 3,700 live broadcasts throughout the year. The cumulative terminal sales of social e-commerce omni-channels are 123 million yuan.
Let’s not talk about the marketing expenses of starring and self-built anchors. The sales of 3700 live broadcasts were 123 million yuan, which is only 33,000 yuan per game.
In contrast to the large-scale marketing efforts, BESTORE’s R&D investment is pitiful. In 2015, 2016, 2017, 2018, and 2019, R&D investment was 5.25 million yuan, 25.5 million yuan, 2015 million yuan, 20.81 million yuan and 27.363 million yuan.
The proportion of R&D investment in BESTORE has shown a downward trend year by year. According to the 2020 financial report data, Liangpin Store invested 34 million yuan in research and development, and its revenue accounted for only 0.4%.
02 No increase in revenue, no increase in profit
The high amount of marketing investment has dragged down the profit of Best Store.
According to the financial report data, in the first quarter of 2021, the net profit of BESTORE was 1.02 yuan, after deducting non-profits, it was 90 million yuan, which was 16% and 23.4% respectively.
Previously, Best Shop announced its 2020 annual report. The data showed that the annual revenue was 7.894 billion yuan, an increase of 2.32% year-on-year; the net profit attributable to the parent was 344 million yuan, an increase of 0.95% over 2019.
It can be compared with the outstanding performance of the Best Store before the listing. From 2016 to 2019, the revenue of the Best Store increased from 4.29 billion to 7.71 billion, an increase of 79.7%; the net profit attributable to the parent increased from 99 million to 340 million in the same period. , The increase rate reached 243.4% during the period.
The channels of Best Store are mainly divided into two: one is online channels, mainly e-commerce platforms such as Tmall and JD; the other is offline stores. As an offline snack company, the latter is the main channel for Best Stores.
According to the financial report data, in 2021, Q1’s e-commerce revenue from Best Stores reached 4 billion yuan, accounting for 52%; offline channels completed 3.685 billion yuan throughout the year, accounting for 48%.For the first time, online channels surpassed offline channels.
In the past year or so, in addition to online platforms such as social e-commerce, BESTORE has also expanded rapidly offline. The data shows that there will be 622 newly opened stores and franchised stores in 2020, an increase of 23% from the 505 new stores in 2019.
In addition, the number of closed stores was 124 directly operated stores and 229 franchised stores. By the end of 2020, BESTORE had added 285 stores, including 32 directly-operated stores and 253 franchised stores.
It can be seen from the financial report of Liangpin Store that the performance of offline stores is not satisfactory: the revenue of the direct-operated store business in 2020 will drop by 14.1%, and the franchise wholesale sales business will drop by 2.78%.
03 Gao Ling reduces its holdings, and the good store is not fragrant
Heavy marketing and light products. After years of accumulation, Best Shop is still planted with quality problems.
On March 21st, some consumers exposed on social platforms that spoiled maggots occurred in a bag of chicken intestines they bought at the flagship store of Liangpin Store. In this regard, the customer service of BESTORE claimed that it was caused by the damage of the packaging, and hoped to raise the price from 40 yuan all the way to 1,000 yuan.
For Best Shop, the two issues exposed in this consumer quality and safety incident are:
1. Do not avoid it, indicating that the quality problem did not happen by accident. In addition, blindly want to eliminate bad reviews to fix the aftermath, and don’t pay attention to quality feedback.
2. The quality problem is the foundry Hubei Wugongji Food Co., Ltd., and the foundry model has revealed its ineffective quality control.
When Liangpin Shop was asked about the punishment of the suppliers involved, Liangpin Shop stated that “Since the cooperation with Wugongji, the daily random inspections of products have been qualified.”
Actually, this is not the first time that BESTORE has involved food quality and safety issues.
In February last year, Liangpin Store disclosed in the prospectus disclosed before the listing that a food safety issue had occurred before.
On March 21, 2017, Liangpin Shop was fined 642,800 yuan by the Hubei Food and Drug Administration for products processed by suppliers that did not meet food safety standards.
According to media reports, at the end of 2016, Liangpin Shop was also approved by Chengdu Food and Drugstore in Sichuan Province for its Sichuan subsidiary “Sichuan Liangpin Shop”.The Food Supervision and Administration Bureau found out that the “Flamingo Mushroom” sold at Qionglai Linqiong East Street Store was unqualified and was named.
In February 2017, BESTORE was punished by the Hubei Food and Drug Administration because a cashew nut product produced by a supplier was found to be too moldy.
Safety and quality are frequent, and the proportion of R&D investment continues to decrease. The current barriers are very unfavorable for BESTORE to enter the snacks field, which is mainly composed of children, pregnant women, and the elderly.
As we all know, children and pregnant women are more sensitive to food safety and health. In the case where product quality cannot be guaranteed, BESTORE will undoubtedly increase its own risks.
On February 26, Liangpin Shop issued an announcement stating that Hillhouse Capital plans to reduce its holdings of the company’s shares by no more than 24.06 million shares due to its own funding needs. It is worth noting that the scale of Hillhouse’s holdings this time exceeds more than half of its initial holdings.
According to the closing price of 65 yuan on that day, Hillhouse Capital will cash out about 1.565 billion yuan. On March 1, the share price of Liangpin Store fell by 9.56%, approaching the lower limit, evaporating about 2.6 billion from the previous trading day.
The early investors of Liangpin Shop, Hillhouse Capital, significantly reduced its holdings, and it has undoubtedly become the vane of the market.
Previously, Liangpin Store was the proud work of Hillhouse Capital Zhang Lei; now, Liangpin Store is no longer a long-term friend of Hillhouse, regardless of its performance or product quality.