** Bohufn
Author |An Xiao.
Since Bama Tea Industry voluntarily withdrew its IPO application in October, the domestic tea market has finally ushered in good news.
According to the IPO early report, Pu'er Lancang Ancient Tea Co., Ltd. has opened its IPO on December 14 and ended on the 19th, and plans to officially list on the main board of the Hong Kong Stock Exchange on December 22, 2023 with "6911" as the first day.
Lancang Ancient Tea, a tea company smaller than the Bama Tea Industry, is obviously lucky to be able to successfully apply for listing and enter the IPO. It is understood that since 2012, Anxi Tieguanyin, Bama Tea, China Tea Co., Ltd. and other tea companies have submitted their listings three or five times, but they have not run out of the "first share of tea". Among them, the eight horse tea industry has also submitted the table three times, and the reason for the withdrawal of the table is doubtful, but it includes 46 questions about the operation and management of its sales expenses and shareholders' affiliated companies. As one of the top three tea companies in the Pu'er tea industry, Lancang Ancient Tea also has many problems such as high sales expenses and inventory.
The third submission of the table knocked on the door of capital, obviously Lancang ancient tea is lucky and successful, but can it get off to a "good start"?
It has long been an open secret that the capital market does not love tea companies.
More than 10 years ago, Chinese tea companies started a battle for listing. In 2012, Anxi Tieguanyin issued a prospectus, firing the first shot in the battle for "the first share of tea". Subsequently, Huaxiangyuan, Bama Tea, China Tea Co., Ltd., Lancang Ancient Tea and other Chinese tea companies submitted prospectuses.
But for more than ten years, Lipton, which makes teabags, has won the first place in China, and the tea of Naixue in the new tea industry of Houlang has also been successfully listed.
However, judging from the capital progress this time, Lancang Ancient Tea has successfully become the lucky one to invite the capital market to "drink" the first cup of Pu'er tea, but this "first share of tea" is difficult to get off to a good start.
Judging by the financial data,Lancang ancient tea has been going downhill in the past two years.
On the one hand, revenue and net profit have declined year after year.
According to the prospectus, from 2020 to 2022, the revenue of Lancang ancient tea will reach 40.5 billion yuan, 55.9 billion yuan, 46.3 billion yuan, net profit was 12.3 billion yuan, 12.9 billion yuan, 0700 million yuan. In the first half of this year, revenue was 23.2 billion yuan, basically the same as the same period last year, net profit from 0300 million yuan to 0$2.4 billion.
The main revenue of Lancang Ancient Tea comes from the contribution of Pu'er tea, and the revenue of Pu'er tea products accounted for 94% of the company's revenue in 20200%, down in the first half of 2023 to 867%。
The gross profit margin that Lancang Ancient Tea has always been proud of has also begun to perform poorly.
As we all know, China's tea market can be called another "Moutai" industry, and Pu'er tea is recognized as the highest gross profit category in the industry, so the overall gross profit margin of Lancang ancient tea has maintained a high level in the industry.
The data shows that from 2020 to 2022, the overall gross profit margin of Lancang ancient tea is. 9%。Compared with peers, the average gross profit margin of Tianfu Tea, Bama Tea and China Tea in the same period was about %. However, in the first half of 2023, the gross profit margin of Lancang ancient tea will only reach 603%, also showing a downward trend year after year.
On the sales side, the sales volume and reputation of the main Pu'er tea category also showed a downward trend.
It is understood that Lancang Ancient Tea has three product lines: 1966, Tea Mother and Yanleng, of which 1966 is the company's classic product Pu'er tea, accounting for more than 60% of the total revenue all year round.
In 2022, the gross profit margin of the 1966 product line will reach 746%, but the sales volume is declining year by year, with 440 tons sold in 2022, 111 tons less than in 2021;Sales in the first half of 2023 were 248 tons, a decrease of 33 tons from the same period in 2022. In terms of overall sales data, the overall sales volume of Lancang ancient tea will also drop by 13 tons in the first half of 2023.
What's more noteworthy is that the Pu'er tea industry has been exposed to sky-high "financial tea" repurchases recently, and such scandals were also exposed in December. Encyclopedia data shows that at present, more than 270 people have reported the "financial tea" incident through various channels to protect their rights, and the amount involved is expected to exceed 200 million yuan.
This kind of bad business environment makes it even more difficult to sell Pu'er tea products.
Hence,The overall sales volume of Pu'er tea, Lancang Ancient Tea's main product, and the decline in reputation caused by the general environment are the main reasons for the decline in its net profit margin and gross profit margin.
In the face of this financial statement, Lancang Ancient Tea has submitted the prospectus many times before it has been followed, and now it has finally entered the IPO, which is a good start and a proof of its status and strength. However, as the first tea company to knock on the door of the capital market, the future may not be smooth sailing.
In terms of external factors,The whole tea market is a difficult "big bone", throughout the tea drinking culture of thousands of years, but the whole tea market is mixed, the entry threshold is high, and the business is difficult to do.
According to the Frost & Sullivan report, the size of China's tea market in terms of revenue increased from 240.6 billion yuan in 2017 to 331.8 billion yuan in 2022, and is expected to reach 441.2 billion yuan in 2027. Among them, the size of the Pu'er tea market is expected to increase from 17.4 billion yuan in 2022 to 24.4 billion yuan in 2027.
The market prospect is considerable, but due to the wide variety of tea in China and the lack of national standards for quality, the quality level of high-grade tea is relatively chaotic, and the price is relatively vague. As a result, there is a lack of integrity in China's commercial tea, too few tea brands, and consumers are often confused about the quality and quality of tea, unable to judge the authenticity, and the industry is also prone to chaos.
Not only is the market mixed, but the most important thing is that it is difficult to develop on a large scale.
Everyone knows that most of the tea is sold in bulk, in which the standard, quality, and selling price are difficult to measure, which is not conducive to the scale of tea brands. Tea is different from liquor, although the market is mixed, but the latter due to the "wine table culture" prevailing demand is relatively stable, the tea market is difficult to support large-scale development by tea tasting niche people or "gift-giving" attributes, soEven if capital understands the "windfall profits" of the tea industry, it is difficult to invest in a market that is difficult to develop on a large scale.
On the consumer side,Young people love to consume, but they don't understand tea.
As the main consumer of young people, they (he) prefer new tea drinks or tea bags that are more convenient to drink. For example, new tea brands such as Nai Xue's tea, Hey Tea, Mixue Bingcheng, and Tea Baidao are constantly favored by young people.
The tea bags that are closer to tea, through the newer trendy and convenient product forms, dominate the young market, among which the British brand Lipton even won the first place in China's teabag market, has set a market value of more than 10 billion, and the industry even circulated "China's 70,000 tea companies, but it is not comparable to a British Lipton" joke, and now the taste is richer after the change of new tea bags are more popular among young people.
All in allCapital understands the high profits of the tea market but does not love it, and young people do not understand it and do not love it. It is difficult to tell a new story after the launch of Lancang ancient tea, which only relies on the Pu'er tea category to win the world.
From the internal point of view of Lancang Ancient Tea, it is overly dependent on distributors.
At present, Lancang ancient tea mainly expands the national market with the mode of distribution as the main and direct sales as the supplement. The data shows that over the years, dealers have contributed more than seventy percent of the annual revenue of Lancang ancient tea. In 2018, the company's dealers were as high as 753, accounting for nearly ninety percent of the annual revenue, and now there are only more than 500 left.
As we all know, over-reliance on dealers will make enterprises fall into a very passive situation, once dealers are lost or poorly managed, it will have a negative impact on the brand. In the face of the decrease in the number of dealers, Lancang Ancient Tea said, "In order to improve operational efficiency, the results of active optimization".
However, the loss of dealers is followed by increasing inventory pressure on the company.
The data shows that from 2020 to 2022, the inventory amount of Lancang ancient tea is 47 billion yuan, 63.6 billion yuan, 78.4 billion yuan;In 2023, the first half of the year will reach 83.5 billion yuan. During the same period, the inventory turnover days were 1,345, 1,061, 1,641 and 1,588 respectively. Under normal circumstances, the inventory turnover days of Pu'er tea merchants in China are generally between 800 and 1900 days. Obviously, the inventory pressure of Lancang ancient tea will also affect the sales side in the future.
In order to release inventory pressure, most companies will increase sales by cutting prices or launching new products.
It is observed that at present, the product line of Lancang Ancient Tea has not shown a trend of large price reduction, but in order to broaden the consumer group and get closer to the young market, Lancang Ancient Tea is trying to become younger.
On the one hand, the update of channels, data shows that as of the first half of 2023, Lancang Ancient Tea's offline stores have successfully connected to e-commerce platforms such as Tmall, WeChat, and Douyin, and at the same time, through cooperation with KOL live broadcasts, further deepen the e-commerce business chain.
On the product side, in July 2022, Lancang Ancient Tea launched a product line that caters to the new middle-class consumer end, Yan Leng. It is understood that the Yanleng series has become more fashionable in terms of packaging, and the form has also adopted a small gram weight and convenient ready-to-drink method to get close to the young market. The price of this product line is also 1242-4363 yuan kg, ** similar to the company's 1966 series, which shows that the pace of Lancang ancient tea rejuvenation is still taking the high-end route.
But as can be seen from the above financial data,Lancang ancient tea, whether it is a channel or a new product line, has not yet become the core of the company. What's even more difficult is that the company's marketing expenses are also increasing in order to increase sales.
The data shows that from 2020 to 2022, the sales and marketing expenses of Lancang ancient tea will increase from 0$8.7 billion to $13.6 billion yuan, accounting for 21 percent of the total revenue in the same period5% to 295%, and 06.8 billion yuan, accounting for 291%。Growing marketing costs and inventory pressures will obviously further weigh on the company's revenue and net profit.
In the final analysis, the tea market is unpopular, capital does not love tea, young people do not understand tea, and it is difficult for middle-aged and elderly people who understand tea and have consumption strength to support the listing and development of tea companies. The new story of Lancang ancient tea after its listing, if you can't find a new audience group to open up sales, release inventory pressure and improve performance, I am afraid that in the end, you can only leave a false name of "the first share of tea".
References: 1. Liu Dafang: Lancang Ancient Tea has passed the hearing of the Hong Kong Stock Exchange, and the IPO inflection point of Chinese tea companies has come
2. Hong Kong stock graduate students: It is too cold in high places, Lancang ancient tea bows its head to keep warm
3. Zebra consumption: the old problem of Lancang ancient tea is unsolvable
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