itle “> Second, how about Huang Shanghuang’s growth ability and profitability?
The growth of halogen products companies depends to some extent on the expansion of the number of stores.
From 2014 to 2019, the scale of Huangshanghuang’s total operating income continued to expand. In 2015, the company merged with Jiaxing Zhenzhen Lao Lao Food Co., Ltd. to achieve a steady increase in revenue. Its revenue has grown rapidly in 2017 and 2018. One is part of the reason for the expansion, and the other is that Huang Shanghuang’s mass base is very small.
In 2019, Huangshanghuang achieved revenue of 2.117 billion yuan, a year-on-year growth rate of 11.54%, which is a significant decline compared to 2018, but its stores have expanded significantly, indicating that store efficiency has declined.
Data source: company announcement
From 2016 to 2019, Huang Shanghuang’s return to his mother’s net profit showed a steady increase. In 2015, net profit attributable to mothers decreased by 38.27% year-on-year to 60 million yuan, mainly due to the company’s accelerated market expansion and store development efforts in 2015, and market expenses increased by 56.76% year-on-year, thereby reducing the profit space of Huangshanhuang.
In 2019, Huangshanghuang realized a net profit of RMB 220 million, a year-on-year growth rate of 27.45%, which not only increased slightly from the previous month, but also significantly higher than the current period’s revenue growth rate. The main reason is that the company has increased its reserves when raw materials such as duck are cheap, so as to ensure that the company maintains a high profit growth rate.
Data source: company announcement
What are the reasons for the gap?
Compared with the same taste that is mainly based on the franchise model, Huang Shanghuang is in a weak position no matter whether it is business volume or profitability. Why is it so different?
First, economies of scale increase procurement cost advantages. With its strong supply chain capabilities and rapid expansion through the franchise model, it gradually forms a scale effect and improves its bargaining power with upstream, which leads to scale and profitability.
Second, the channel layout is wide and the reach is high. At present, the savory market covers the chain sales network of 31 provinces, autonomous regions and municipalities across the country, and the channels have sunk to third- and fourth-tier cities such as the county level. However, Huangshanghuang is mainly concentrated in the first and second tier cities in some areas of Jiangsu and Zhejiang, and a few areas (such as Jiangxi, Guangdong, and Fujian) at the county level of third and fourth tier cities have relatively narrow layouts.
Third, brand effect. Zewei has won widespread recognition in the market for its unique flavor of “spicy”, forming a certain brand awareness and relatively low investment in market costs. In 2018, Huangshanghuang’s market cost ratio was better than Zewei It is 4.42 percentage points higher, and reasonable fee control has released a great profit margin.
The scale effect is the biggest competitiveness of Luwei Company, and it is also the biggest competition barrier of Juwei. As Huang Shanghuang accelerates the expansion of stores and the improvement of the market layout, there is an opportunity to narrow the distance with the taste, but it is difficult to overtake the curve.