Can Yanghe'S Board Of Directors Return To Double-Digit Growth Rate After The 14Th Five Year Plan?

        At the beginning of the new year, liquor listed companies are about to usher in a board change. Yanghe shares (002304. SZ) passed the plan for the election of the board of directors on January 28. After the term of office of the current board of directors reached the end, Zhang Liandong, deputy secretary of the Party committee of Yanghe Co., Ltd., who has served for many years in the government and served as the Secretary of the Party committee of Yanghe Town, was elected to the board of directors of the company, to be voted at the provisional general meeting of shareholders on February 23 Yes.

After government officials were parachuted to Guizhou Maotai (600519. SH), Luzhou Laojiao (000568. SZ) and Wuliangye (000858. SZ), the government background of the candidate new director of Yanghe shares was generally recognized by the industry, which also reflected the local government's increasing control over the state-owned listed liquor companies.

The 21st century economic report reporter noticed that in the new board of directors to be born, 56 year old Wang Yao, the current chairman of Yanghe shares, no longer appears in the list of candidates for non independent directors.

Wang Yao passed the vote at the extraordinary general meeting of shareholders on February 10, 2015, replacing Zhang yubai as the chairman of Yanghe shareholders. In his term of office for nearly six years, Yanghe shares actively explored the way in related diversified fields. Yanghe shares are still in the third place of Baijiu, but the development speed has fluctuated greatly since last year.

When the dust of the new board of directors was settled, it coincided with the opening year of the 14th five year plan of liquor industry. Under the leadership of the new leader, can Yanghe stock increase its main business, return to the double-digit growth rate of performance, or continue to make efforts to diversify and wait for the fruits to bloom?

For Yanghe shares at this time, strategy and direction are more important than implementation.

The most outstanding contribution of diversified financial management income

During the epidemic period, Yanghe submitted the answer sheet last year, its financial investment ability in many liquor listed companies is quite eye-catching. As of the end of September, the company's investment realized and unrealized income contributed nearly one third of the net profit, which increased significantly compared with the same period last year. The investment income plus fair value change totaled about 2 billion yuan.

Over the past few years, the investment income of Yanghe shares has gradually increased in proportion to the profits. According to the annual report of 2019, the company's investment income is 850 million yuan, accounting for 8% of the total profit, mainly from financial management income, that is, the income from the disposal of trading financial assets such as stocks and trusts. By 2019, the total investment of Yanghe shares will reach 8 billion yuan.

The 21st century economic reporter has sorted it out. In 2019, among the subsidiaries invested by Yanghe Co., Ltd., Jiangsu Shuanggou Liquor Co., Ltd., with an investment amount of 1.7 billion yuan. Jiangsu Wealth Management Co., Ltd., a subsidiary of sujiu group, was invested 3 billion yuan. Guizhou guijiu Group Co., Ltd. acquired by Yanghe Co., Ltd. successively made an additional investment of 940 million yuan, and invested 1.5 billion yuan in Jiangsu Yanghe Investment Management Co., Ltd.

In a few years, the investment fields of Yanghe company mainly involve the following parts:

First, liquor production and sales. In addition to guijiu group, Hubei lihuacun liquor industry Co., Ltd., which is engaged in liquor, wine and fruit wine processing, Ningxiang miluochun liquor industry Co., Ltd., which produces liquor and liquor, and Harbin Binzhou Brewery Co., Ltd., which produces liquor, have been successively acquired by Yanghe.

In 2010, Yanghe bought 40.6% of Shuanggou liquor with a price of 536 million yuan and became its largest shareholder. After that, it wholly owned the latter and established sujiu group as the first level management organization.

Yanghe has also established Jiangsu zhongshiji liquor industry Co., Ltd. and launched a new whisky with the alcohol concentration of 40 degrees, with 700ml and 500ml respectively. In September 2018, after Yanghe Co., Ltd. was registered in Hong Kong, Yanghe Hong Kong Liquor Co., Ltd. was invested in October 2019.

Second, network technology and biological research based on health experience. Yanghe Co., Ltd. has established Jiangsu Shiyang Network Technology Co., Ltd., Jiangsu Yanghe micro guest hall Network Technology Co., Ltd., and has established Jiangsu kelit Biotechnology Research Institute Co., Ltd. and Jiangsu Shuanggou Health Wine Industry Research Institute Co., Ltd. Last year, the R & D investment of Yanghe reached 167 million yuan, an increase of 407% over the same period of last year, mainly due to the addition of seven original wine production R & D projects registered by Suqian science and Technology Bureau.

Yanghe shares set up an investment center. As early as 2015, the company decided to reposition the category in the liquor industry, focusing on the health industry. Yanghe Co., Ltd. said that it should make efforts in the diversification of beverage, pre mixed wine, rice, oil and other related aspects in addition to liquor, so as to create a big health food giant, and become the first food group in the liquor industry to focus on a variety of categories, including mature categories such as wine and pre mixed wine, as well as budding categories found in the food field. In the view of Yanghe shares, with the aggravation of the aging population and the consumption upgrading brought by economic development, the emerging small categories can also be bigger by small and stronger by large.

Sujiu group has become a platform for Yanghe to launch liquor and related diversified dual core strategy.

More than 20 enterprises have invested in it. At present, the most outstanding investment income of Yanghe shares is financial management income. In 2019, wine sales between Yanghe and Diageo will be 11 million yuan. In the first half of 2020, the red wine revenue of Yanghe shares was 91 million yuan, down 37% year on year. Other categories are still in the cultivation of large and medium-sized enterprises, and their profit status has not been publicly disclosed.

Revenue growth slows down

So far, Yanghe shares is still the third largest liquor listed company after Guizhou Maotai and Wuliangye.

However, the industry pattern is not static. On February 1, Luzhou Laojiao closed at 255.25 yuan per share and Yanghe shares closed at 20.166 billion yuan. Luzhou Laojiao is ahead of Yanghe shares with a market value of more than 370 billion yuan.

In the six years since 2015, the performance gap between Yanghe shares, Luzhou Laojiao and Wuliangye has changed greatly.

From 2015 to 2016, Yanghe shares and Wuliangye have recovered growth in the period of industry deep adjustment, and the gap between revenue and net profit is small. However, from 2017 to 2019, Wuliangye's annual revenue has exceeded 30 billion yuan, 40 billion yuan and 50 billion yuan with a growth rate of 10 billion yuan. Even affected by the epidemic situation, the main performance data released by Wuliangye on January 7 this year shows that in 2020, the company's operating revenue is expected to be about 57.2 billion yuan, and the net profit attributable to shareholders of listed companies is expected to be about 19.9 billion yuan, both increasing by 14% year on year, mainly due to the increase in sales of core products.

Yanghe shares has not yet released a performance forecast. In the first half of last year, the company's liquor sales revenue in the provincial and external markets decreased double-digit year-on-year. From the third quarter report, the company's revenue and net profit increased by 7% and 14% respectively from July to September last year, which completely reversed the declining trend of double decline in the first half of the year. However, from January to September, the company achieved revenue of 18.9 billion yuan, a year-on-year decrease of 10%, and a net profit of 7.18 billion yuan, a year-on-year increase of 0.55%, so far it has not broken through the 30 billion yuan mark.

It is worth mentioning that during the term of office of the board of directors, in 2019, the revenue and net profit of Yanghe Co., Ltd. declined by 4% and 9% respectively, which failed to achieve the target of revenue growth of more than 12% year-on-year. In 2019, the total sales revenue of Liquor Enterprises above Designated Size nationwide will reach 561.7 billion yuan, with a year-on-year increase of 8%.

Luzhou Laojiao is closely following Yanghe shares.

On January 12, Luzhou Laojiao released a performance forecast, saying that due to the increase in sales revenue of core products, the company's net profit attributable to shareholders of listed companies is expected to be 5.5-6 billion yuan in 2020, with a year-on-year growth of 20% - 30%.

The annual net profit of 6 billion yuan is very close to that of Yanghe shares. Six years ago, the net profit of Luzhou Laojiao was less than 1.5 billion yuan, and the gap between Luzhou Laojiao and Yanghe shares was 4 billion yuan.

From less than 10 billion yuan to nearly 20 billion yuan, the average annual growth rate of Luzhou Laojiao's revenue is 22.8% from 2015 to 2019. The average year-on-year growth rate of Wuliangye in the past five years was 19.4%, and that of Yanghe was 17%.

Judging from the average year-on-year growth rate of net profit in these five years, Luzhou Laojiao is the highest, which is 39%, and is maintained at more than 30%, with the highest year-on-year growth rate of 67.42%. 25% in Wuliangye and 11% in Yanghe.

In the face of huge fluctuations in performance growth, Yanghe Co., Ltd. proposes to be based on the wine industry, to be the company that knows the most about wine, how to make wine and how to sell wine, and to be the most dedicated, professional and farsighted wine enterprise. The longer-term development goal is to become a leading enterprise that constantly goes through the life cycle and has a long-term foundation. From the dual core strategy to focus on the main business, the intention is obvious.

The "1246" project in 2019 puts forward that "1" refers to unswervingly establishing a firm adherence; "2" refers to striving to pursue two major goals. The first is the revolutionary breakthrough of soft liquor. Focusing on the in-depth application of soft soft soft mechanism, it comprehensively improves the product personalization, characteristics and comfort after drinking, leads the consumption trend of liquor market, and creates the moving and pleasure of consumers. The second is to determine the revenue target.

"4" refers to conforming to consumption upgrading, seizing the opportunity of industry differentiation, comprehensively telling the story of brand and quality and high-dimensional competition; "6" refers to persisting in forging six forces.

Last year, it was regarded as a key year of transformation and upgrading by Yanghe Co., Ltd., proposing "Second Entrepreneurship" and upgrading "six forces", including focusing on the characteristics of the times, upgrading unique product power, focusing on digital empowerment, upgrading channel power, continuous innovation ability, focusing on mechanism adjustment and national feelings, and upgrading the cultural power of the times to realize dreams.

The epidemic is a big test. With famous liquor companies focusing on large single products, such as Guizhou Maotai's expansion of Feitian Maotai capacity, Wuliangye's upgrading and price raising of the eighth generation puwu and Luzhou Laojiao's continuous control and price increase of Guojiao 1573, Yanghe's ability to focus on and enhance the value of its core large single products depends not only on its brand strength, but also on the company's timely adjustment of strategic direction.

Yanghe shares, which is about to usher in a new board of directors at the beginning of the 14th five year plan, will return to double-digit growth this year. Whether it will continue to develop relevant diversification or focus on its main business remains to be seen.