"Investor Network" Xie Yingjie
Edited by Wu Yue
It seems that BESTORE's revenue has steadily increased in recent years.From 2019 to 2021, this indicator will reach 7.7 billion yuan, 7.9 billion yuan and 9.3 billion yuan respectively.
But in fact, the company's profitability and total asset turnover are declining, while inventories and external guarantees are increasing.
Some important shareholders are "voting with their feet". Since the lifting of the ban on shares in February last year, Hillhouse Capital has carried out two rounds of six reductions in BESTORE.If the reduction is completed according to the recent plan, Hillhouse Capital will only have 1.51% of the shares remaining, which is only one step away from liquidation.
"Investor Network" recently contacted the company on a series of questions and got some answers.
Why is the net profit attributable to the parent stagnant?
Since 2021, the performance of snack food companies has generally been under pressure. In addition to the high performance base pressure in previous years, the most important factor is the influence from the channel side, that is, the decentralization of traffic, the rise of emerging channels such as community group purchases and live broadcasts, and the continued cost of food procurement. As a result, the market share of leading companies has been impacted.
As the industry enters the red sea of competition, BESTORE continues to expand SKUs through all categories to drive revenue.At the same time, companies have to maintain high marketing investment in order to maintain a high-end brand image.In 2021, the sales expenses of BESTORE will reach 1.672 billion yuan, a year-on-year increase of 29.83%.
The above factors aggravated the operating pressure, and the net profit attributable to the parent company stagnant.From 2019 to 2021, the net profit attributable to the parent of BESTORE is 340 million yuan, 344 million yuan and 282 million yuan respectively. Correspondingly, the gross profit margins in the same period are 32%, 30.5% and 26.77% respectively.
It is worth mentioning that in 2021, BESTORE will receive 92.9344 million yuan in government subsidies related to operations, an increase of 37.38% over 2020.However, in this context, the company still increased revenue but not profit, and this trend continued into the first quarter of this year.
In the first quarter of this year, the company's revenue was 2.942 billion yuan, a year-on-year increase of 14.3%; the net profit attributable to the parent was 93.06 million yuan, a year-on-year decrease of 8.86%.
The fundamental crux of the homogenization of the casual snack industry is that many brands are highly dependent on foundries and lack product development capabilities.
In 2021, the research and development expenses of BESTORE’s main business will be 39.6656 million yuan, accounting for 0.43% of its revenue; in the same period, the research and development expenses of the three squirrels, Yanjinpuzi, and Qia Qia Foods will be 57.54 million yuan, 55.19 million yuan, and 45.085 million yuan. It accounted for 0.6%, 2.42%, and 0.75% of revenue.
BESTORE takes the high-end route, why is the R&D investment not as good as that of its peers?The company did not directly answer this question, but told Investor.com: "The company has increased investment in research and development for four consecutive years, with a compound annual growth rate of 18.46%, and will continue to increase investment in research and development. Barriers to differentiated advantages. As of the end of 2021, the company has launched 19 technological innovation projects, developed and mastered advanced food nutrition and health processing technologies such as new puffing technology and vegetable meat production and processing technology, of which 13 technologies have been applied to the new market. product."
Hillhouse Capital continues to reduce its holdings
In the view of some institutions, the snack food industry as a whole has entered a downward period, and BESTORE is still actively transforming and has achieved some results.For example, Everbright Securities pointed out in the research report that the short-term pressure on the profit side is mainly due to the company actively adjusting the channel structure to promote the omni-channel layout, and the process of offline store expansion has slowed down due to the impact of the epidemic.Company profitability is expected to recover in 2022.
There are also some views that are not optimistic about its future prospects.The reason is that starting from 2020, the total asset turnover rate of BESTORE has shown a downward trend, with 2.2 times, 1.97 times, and 1.94 times respectively in the past three years, which means that the overall operating cost has increased and the growth momentum has shown signs of decline.
Taking the inventory indicator as an example, in 2021, the indicator will be as high as 1.13 billion, accounting for 20.84% of the total assets. In 2020, the inventory amount will only be 620 million, an increase of 83.06% year-on-year. The shelf life of casual snacks is generally relatively short. A small loss.
Contrary to the trend of inventory increase, the company's inventory turnover days decreased from 52 days to 46 days from 2020 to 2021.The company's business model has not fundamentally changed, has the company adjusted its cost indicators?
"All the company's products keep at least 1/3 of the saleable time as risk control, and the logistics of temporary products are directly frozen in accordance with the system requirements. By improving the efficiency of inventory turnover, the risk of ending inventory exceeding the shelf life is reduced, and the inventory beyond the shelf life is reported in time. The above situation reduces the possibility of the risk of falling prices of inventory at the end of the period." BESTORE explained, "The Spring Festival in 2022 is earlier than the Spring Festival in 2021, and the stocking up in the peak season of New Year sales will lead to an increase in inventory. The company has improved the efficiency of production and sales coordination and further improved inventory turnover. efficiency."
It is worth noting that under the mode of OEM processing, the cost and difficulty of quality control of BESTORE will increase, resulting in product quality problems, which may lead to the risk of inventory impairment.
As early as 2017, BESTORE was investigated and punished for this. The products processed and produced by two suppliers entrusted by its subsidiary did not meet food safety standards. Hubei Food and Drug Administration issued the "Decision on Administrative Penalty"; March 2021 In January, the company made a hot search on Weibo due to the chicken sausage raw maggot incident, which aroused widespread concern among consumers.On the Heimao Complaint [Complaint Entry] platform, there are more than 1,000 complaints about BESTORE.Among them, foreign objects in food, insects and hair in products are the hardest hit areas.
BESTORE told Investor.com: "Since its establishment, the company has been carrying the high-standard pursuit of 'conscience quality', and has meticulously controlled product quality from all aspects of the industry chain. The ultimate pursuit of quality has allowed consumers to recognize the brand, and the company has been leading the national sales of high-end snacks for 7 consecutive years. The company will carefully analyze the reasons for customer complaints, optimize management, and strive to bring customers a better product experience. "
But on the other hand, some important shareholders are "voting with their feet".Public information shows that since the lifting of the ban on shares on February 24 last year, Hillhouse Capital has carried out two rounds of six reductions in BESTORE.
The latest announcement shows that the fund under the name of Hillhouse Capital plans to reduce the total number of shares in the company through block transactions or agreement transfers by no more than 24.06 million shares, and the total amount does not exceed 6% of the company's total share capital.Before the announcement, Hillhouse Capital still held 7.51% of the shares. If the reduction is completed according to the plan, the remaining 1.51% of the shares will be only one step away from clearing the position.
(Partial reduction record of BESTORE by funds under Hillhouse Capital)
Are shareholders divided over their judgments about future prospects?BESTORE said: "Based on its own capital needs, Hillhouse Capital plans to reduce its holdings in the secondary market to make a profit, which is in line with investment logic, and has regulated its information disclosure obligations. There is no disagreement."
Entrusted Loans Increase Interest Income
Hillhouse Capital is not the only institutional investor to reduce its holdings in BESTORE.In the middle of last year, the National Social Security Fund and the foreign-owned Norges Bank also reduced their shares in BESTORE in a liquidation manner.As of the end of the first quarter of 2022, the total number of shares held by institutions in the company was 6.334 million shares, a significant decrease from 17.01 million shares at the end of 2021.
BESTORE is also experimenting with various channels to increase revenue.The 2021 annual report shows that the company's interest income reached 64 million yuan, and during the reporting period, it issued 41.15 million yuan of entrusted loans to eligible franchisees, with a loan interest rate of 4.86%.
"The essence of 'entrusted loan' is 'private lending', which is issued to an unspecified number of people, which constitutes professional lending. In recent years, it has been associated with a series of financial derogatory terms such as shadow banking and evasion of supervision. The entrustment issued by the China Banking and Insurance Regulatory Commission Loan-related fines have been on the rise in recent years," said a bank insider.
BESTORE explained to Investor.com: "In order to support franchisees, enhance cooperative relations, and improve the efficiency of the company's capital use, the company entrusts banks to issue entrusted loans to eligible franchisees. According to the contract, the interest income belongs to the company. The source of funds for the loan is the company's temporarily idle self-owned funds."
It is worth noting that the cash flow level of BESTORE is not optimistic.In 2021, the company's debt ratio will exceed 60%, the current ratio and quick ratio will be 1.32 and 0.95, respectively, and the debt repayment level will be lower than normal.In addition, the equity pledge rate of Ningbo Hanyi Investment Management Partnership, the largest shareholder, reached 51.65%, accounting for nearly 20% of the total share capital.
In this regard, BESTORE said: "In response to the traditional peak sales season in the fourth quarter, the company will increase the stocking of snacks, and the accounts payable will be recorded as current liabilities. Therefore, the debt ratio reflected at the end of the year is relatively high, but it is still at a normal level. There is no problem with solvency; pledge is a reasonable means of asset allocation. At present, the proportion of equity pledge by the company's largest shareholder is within a reasonable range, and the pledge risk is controllable, and there is no adverse impact on the listed company. "
Not only that, the company will guarantee 1.524 billion yuan to its holding subsidiaries in 2021, and the guaranteed amount will account for 25.36% of its net assets, a new high since listing.
The performance of some subsidiaries is mediocre, such as Hubei Liangpinpuzi E-commerce Co., Ltd. and Ningbo Liangpin Interactive Entertainment Network Technology Co., Ltd., which will lose 49.82 million yuan and 69.66 million yuan respectively in 2021.
What is quite strange is that the above two companies are mainly engaged in e-commerce business, but in 2021, the company's e-commerce business revenue will reach 4.858 billion yuan, an increase of 21.42% year-on-year. Loss?
Some market participants pointed out that some companies have invested in a large number of unlisted companies, and many investment income may not be accurately calculated, and this part of the profit and loss has become a "reservoir" of profits.Quite a number of listed companies often have performance modifications, so what about non-listed companies?
"The company guarantee is to support the business needs of Hubei Liangpinpu Food Industry Co., Ltd., a wholly-owned subsidiary of the company, and it provides a guarantee within the credit line, which is not related to the entrusted loan." Liangpinpu responded, "As a listed company, the company has always Adhering to the principle of credibility, and operating in accordance with the requirements of listed companies, Hubei Liangpinpuzi E-Commerce Co., Ltd. and Ningbo Liangpin Interactive Entertainment Network Technology Co., Ltd. are all subsidiaries of listed companies, which have been included in the scope of the consolidated statements, and the annual financial data has been audited and confirmed by an accountant institution ." (Produced by Thinking Finance)
