Guo Guangchang Won The First Battle In Liquor Making, And The Net Profit Of Jinhui Liquor Increased By 20% Last Year

Guo Guangchang won the first battle in liquor making.

On March 20, the first annual report of liquor listed companies in 2020 disclosed that: Jinhui liquor (603919. SH), a strong liquor enterprise in Northwest China owned by Guo Guangchang, the actual controller, achieved a net profit increase of more than 20% last year. Among them, the liquor industry was hit hard by the epidemic, and the sales situation in the fourth quarter reversed greatly, which became an important turning point for the growth of Jinhui liquor's performance last year.

In May last year, Guo Guangchang, who was eager to lay out in the liquor industry, agreed to buy 30% of the equity of Jinhui liquor from Yate investment through his holding Yuyuan shares (600655. SH), becoming the largest shareholder of Jinhui liquor. From September 16 to October 15, 2020, Hainan Yuzhu, a wholly-owned subsidiary of Yuyuan shares, increased its 8% shares in Jinhui liquor by means of tender offer. Yuyuan shares and its acting partner Hainan Yuzhu jointly held 38% of the company's shares. Yuyuan shares were the controlling shareholder of the company. Guo Guangchang further consolidated the actual control position of Jinhui liquor.

Jinhui liquor is located in Fujia Town, Huixian County, Longnan City, Gansu Province. It is a leading liquor production enterprise in Gansu Province. It is located in the Huicheng basin, which is known as "longshangjiangnan" in Qinba mountain area at the border of Gansu, Shaanxi and Sichuan. It is located in the famous liquor corridor in the upper reaches of China's Yangtze River System (Jialing River water system).

Jinhui liquor was changed hands twice in history.

In the Ming and Qing Dynasties, there were large-scale and well-known liquor (Shaojiu) workshops such as "yongshengyuan", "wanyucheng", "jinshenfang" and "gongxinfu". In 1951, the Economic Committee of Huixian people's Government of Gansu Province established "Gansu Huixian distillery" on the basis of "yongshengyuan" and other liquor (liquor) workshops. In 1977, the famous "longnanchun" brand liquor was developed. The enterprise was renamed as Gansu longnanchun Liquor Group (also known as longjiu group).

However, according to the letter of intent of Jinhui Liquor Co., Ltd., the production and operation of longjiu group was in trouble due to poor management in the 1990s. In 2004, longjiu group went to the point of policy bankruptcy. In 2006, Longnan intermediate people's court approved the bankruptcy liquidation group of longjiu group to transfer the whole assets of longjiu group to the enterprises invested by Yate investment group by agreement. In 2009, Yate set up Huixian Jinhui liquor industry Co., Ltd., which transferred the business and assets related to liquor business of longjiu group. In 2012, Huixian Jinhui liquor industry Co., Ltd. was changed into Jinhui Liquor Co., Ltd., and became the second listed liquor company in Gansu Province in 2016.

Now, what is the fate of Jinhui liquor?

Sales revenue of products above 100 yuan increased by 30%

The name of Jinhui wine originated from the Song Dynasty. According to the county annals of Huixian County, in 1134, after Wu Zhen, a famous anti Jin general of the Southern Song Dynasty, won the battle between xianrenguan and Jinbing in Huixian County, the officers and men drank their helmets to express their feelings, so they got the name "golden helmet wine". Wu Zhen changed his name to "Jinhui wine" by "why not call it golden Hui wine, Huizhou is beautiful". In 1984, Longnan spring wine and Jinhui Daqu won the title of high-quality liquor in the liquor quality competition of the Ministry of light industry, and were very popular for a time.

Only half a year after Guo Guangchang acquired the owner of Jinhui liquor, the annual report of 2020 showed that Jinhui liquor had a good business situation again. Last year, the company achieved a revenue of 1.7 billion yuan, a year-on-year increase of nearly 6%, and a net profit of 330 million yuan, a year-on-year increase of 22%.

According to the data of the National Bureau of statistics, last year, the output of Liquor Enterprises above Designated Size nationwide reached 7.4 million liters, a year-on-year decrease of 2%, sales revenue of 583.6 billion yuan, a year-on-year increase of 4.6%, and a profit of 158.5 billion yuan, a year-on-year increase of 13%. As a result of consumption upgrading, the product structure moves up, thus enhancing the profitability of enterprises, faster than the growth of sales scale.

The annual report of Jinhui liquor also reflects the trend of liquor industry. The company believes that the liquor industry has entered the era of stock development, with obvious pattern differentiation, and enterprises with product, brand and channel advantages have achieved good development in the competition; under the general trend of industrial structure adjustment and consumption upgrading, industry merger and acquisition integration has been accelerated. In the future, enterprises with high-quality liquor production capacity and timely marketing transformation development will get development opportunities in the new liquor pattern during the "14th five year plan".

Specifically speaking, the sales revenue of Jinhui liquor with more than 100 yuan increased by nearly 30% year on year, which directly promoted the growth of net profit faster than sales revenue.

Last year, the sales revenue of high-end products such as Jinhui in the 28th year, the 18th year in Jinhui, and the soft Jinhui achieved 860 million yuan in sales revenue, an increase of 29% over the same period of last year, and the sales proportion exceeded half of the company's total sales revenue for the first time. The gross profit rate of its high-end products was 70%, up 2% year on year.

Jinhui liquor products are divided into three grades: low-grade products refer to products with external price below 30 yuan / 500ml, mainly representing Century Golden Emblem two stars, Golden Emblem aging, etc.; medium grade products refer to products with external price of 30 yuan to 100 yuan / 500ml, mainly representing century Jinhui three stars and century Jinhui four stars; and high-end products refer to products with external price of 100 yuan The products above RMB / 500ml are mainly represented by the 18th year of Jinhui, the five-star Century Golden Emblem, the gentle Golden Emblem series, and the Golden Emblem positive energy series.

In contrast, the production and marketing scale of Jinhui liquor's medium and low-grade products is shrinking significantly. Among them, the revenue of medium-grade products was 800 million yuan, a year-on-year decrease of 10%, and the gross profit rate dropped from 57% to 56%; the decline of liquor price below 30 yuan was more serious, with the revenue of only 28 million yuan last year, a year-on-year decrease of 30%, but the gross profit rate increased from 14% to 17%.

With the help of liquor peak season, consumption upgrading has obvious advantages in structural improvement. According to the annual report, by the fourth quarter of last year, the severe situation of the epidemic situation has been alleviated. Driven by the price increase of century Jinhui series and Jinhui products in the 18th year and the launch of new products on the eve of the national day and the Mid Autumn Festival of the "golden nine Silver decade", the revenue of Jinhui liquor in a single quarter was nearly 700 million yuan, which doubled the sales scale of the previous three quarters, making a half of the net profit of the whole year.

It is worth mentioning that although the production and sales of high-end liquor of Jinhui liquor increased by about 30% last year, both more than 4000 tons, but the production and sales of middle-grade liquor of the company were the largest, and the low-grade liquor were significantly decreased. As a result, the total liquor production of Jinhui liquor decreased by 9% last year, which was the same as the national liquor production.

Sales growth in regions other than main sales in Gansu

In addition to the double-digit growth of net profit driven by the improvement of product structure, Jinhui liquor believes that the company's brand influence has been further enhanced, and the sales growth rate of western Gansu and other regions including markets outside the province is more than 30%, which is the second major reason.

As a provincial leading enterprise, Jinhui liquor is located in Longnan, Gansu Province. The company divides the whole Gansu market into Southeast Gansu, including the base camp Longnan City and adjacent Tianshui City; Lanzhou and surrounding areas, including Lanzhou City and surrounding cities and counties; Central Gansu Province, including Dingxi City; and western Gansu Province, including Hexi region.

Other regions are sales areas in addition to the above markets.

Compared with the annual report of Jinhui liquor in 2019, the 21st century economic report found that last year, the company's sales increase was mainly reflected in western Gansu and other regions, from 120 million yuan to 160 million yuan, 200 million yuan to nearly 300 million yuan.

From the perspective of gross profit rate, all sales areas of Jinhui liquor are on the rise, all above 58%, and the gross profit rate of Lanzhou and its surrounding areas and other regions is the highest, all exceeding 64%. For the western part of Gansu Province, although it is the only area with gross profit rate lower than 60%, it has also increased by nearly two percentage points year on year.

After Guo Guangchang won Jinhui liquor, the king of Gansu was not willing to occupy a corner. At present, the sales share of Jinhui liquor in the province has dropped from 88% last year to 80%. Like Shanxi Fenjiu (600809. SH), going out of the province is the next step of Yuyuan holding Jinhui liquor.

This year, in the face of the current liquor industry development situation and market competition environment, combined with the company's long-term development plan, Jinhui liquor put forward the basic ideas including "market key breakthrough, brand double wheel drive level", set the revenue target at 2.1 billion yuan, an increase of 21% over the previous year, and expected to achieve a net profit of 380 million yuan, an increase of 14.69% over the previous year. Judging from the expected growth rate of sales revenue faster than the profit growth target, it will be the new strategy of Jinhui liquor this year to make large-scale production rapidly and not hesitate to increase investment and occupy territory.

According to the company, in terms of marketing, the marketing mode has changed from "deep distribution" to "deep distribution + big customer operation", and established a key customer department; optimized the marketing authorization system, gradually established the business entities with large regions as the unit, and granted them sufficient marketing strategy formulation rights, marketing expenses control rights, marketing personnel management rights and performance reward distribution rights; and supporting upgrading Marketing assessment system, market expansion, terminal dynamic sales and employee income are strongly related.

In terms of brand construction, Jinhui liquor proposes to continuously carry forward longjiu culture, consolidate its brand status, create a high-end liquor leader, activate longnanchun brand, awaken the emotional memory of loyal consumer groups, and actively layout high-end and secondary high-end fields. At the same time, the company launched the first phase of ESOP.

it happens that there is a similar case. Last year, following the layout of Jinhui liquor, Guo Guangchang also bid for 70% of the equity of Sichuan Tuopai shede Group Co., Ltd., the parent company of St shede (600702. SH), and became the actual controller of St shede. Shede wine has already become a national brand and receives more market dividends. On April 21, St shede, which has been replaced by a new owner, will issue its 2020 annual report.

When will the national strategy of Jinhui liquor be launched? From the current point of view, the province's sales share is too high Jinhui wine has not yet reached the best time.

It is worth mentioning that the substantial increase in net profit of Jinhui liquor last year is also related to the cost reduction and efficiency increase. Jinhui liquor announced that after the company optimized its internal management last year, the output of superior liquor exceeded the plan by 34 percentage points, with a year-on-year increase of 127%.

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