Text|Produced by Zhou Rong|The world's wealth.
Revenue growth and net profit decline for three consecutive years are like "only blossoming but not bearing fruit".
On February 1, the "first share of bread" peach and plum bread (603866SH) released its 2023 annual results report.
According to the announcement, Taoli Bread's total operating income in 2023 will be 6.8 billion yuan, a slight increase of about 1% year-on-year; The net profit attributable to the parent company was less than 600 million yuan, a year-on-year decrease of more than 10%.
This performance is also reflected in the share price of Taoli Bread. The day before the release of the 2023 annual performance report, the share price of Taoli Bread hit a new low in nearly 8 years, less than half of the high in March 2023.
In this regard, many investors are quite disappointed with the business status and performance of Taoli Bread.
It is worth noting that this is the third consecutive year that Taoli bread has increased its income without increasing profits. What's the problem?
The predecessor of Taoli Bread was Shenyang Taoli Food*** was established in 1997 and listed in 2015. At present, the main products of Taoli bread are bread, moon cakes and zongzi, among which the bread is the most abundant.
Wu Zhigang, the founder of Taoli Bread, started his business after retiring at the age of 60, and successfully brought Taoli Bread to the Shanghai Stock Exchange at the age of 80, becoming the oldest chairman of the A-share market.
The current chairman is Wu Xueliang, the son of Wu Zhigang, who officially took over Taoli Bread in 2019. However, in recent years, the life of peach and plum bread has not been easy.
2023 is not the first year that Taoli Bread will increase revenue without increasing profits, and since 2019, the pressure on the revenue side and profit side has become an unavoidable topic for Taoli Bread.
According to the financial report data, in the past three years, the average growth rate of Taoli Bread's operating income is about 6%.
At the same time, the company's net profit attributable to the parent company has declined year-on-year for three consecutive years, except for a 10% decline in 2023, a decline of nearly 14% in 2021 and 16% in 2022.
While the net profit is decreasing year by year, the company's gross profit margin is also increasing year by year.
Taoli Bread has become a leader in the industry with its short-term bread business. However, in recent years, this business has gradually exposed problems and become a burden on the company's development.
According to the 2022 financial report data, the gross profit margin of bread and pastry products is 24%, zongzi is 37%, and other products are about 36%. However, due to the disproportionate proportion of bread and pastry products in the company's business, the overall gross profit margin was less than 24%, a year-on-year decrease of 23 percentage points.
Entering 2023, the challenges faced by Taoli Bread are becoming more and more severe.
Affected by some raw materials***, operating costs** exceeded 2% in the first half of 2023.
What's more unfavorable is that in the first half of the year, the three expenses (sales expenses, management expenses, and financial expenses) of Taoli bread also showed an upward trend.
Specifically, the selling expenses **26% to 2600 million yuan, management expenses **167% to 0700 million yuan.
It is worth noting that financial expenses soared by 2 year-on-year2 times, reaching nearly 11 million yuan. The company explained that the financial expenses** were mainly due to the increase in interest expenses during the reporting period. This phenomenon has undoubtedly put more pressure on the profitability of Taoli Bread.
In the face of such a dilemma, how to adjust the strategy in the market and reverse the situation has become an important topic for future development.
In 2015, the year of its A-share listing, Taoli Bread, which started its business in Northeast China, decided to start a southward expansion strategy in order to achieve the grand goal of "peach and plum all over the world".
Under the guidance of this strategy, Taoli Bread has gradually established a first-class factory in the southern market, and actively explores supermarket channels to meet the needs of consumers in the south.
However, the road to the south was not all smooth sailing, and it also became one of the important reasons for the decline in the profits of Taoli Bread.
As a northern brand, Taoli Bread faced the dilemma of difficulty in proportioning input and output when exploring the southern market. Due to the high requirements of short-term products such as bread from the factory to logistics and distribution, its operating costs in the southern market have risen.
In order to expand the southern market, Taoli Bread has made great efforts in investing in buying land and building a production base. For example, in December 2022, Foshan Taoli Bread spent 45.8 million yuan to bid for a 60,000-square-meter plot of land, which is planned to be used for the construction of the South China Bakery Food Center project.
As of the first half of 2023, Taoli Bread has three production base projects under construction in the southern region, namely Quanzhou and Guangxi production base projects, and Shanghai production, R&D and operation headquarters integrated industrialization base project.
Although the promotion of these projects reflects the determination of Taoli Bread in the southern market, it is also facing cost pressure and challenges.
According to the description of the 2023 semi-annual report, Taoli Bread continues to increase its efforts to develop new markets such as East China and South China. Under the pressure of continuous investment, East China and South China lost nearly 20 million.
At present, the profitability of Taoli bread mainly depends on the Northeast region, and in the first half of 2023, the operating profit from the Northeast region reached 45.4 billion yuan.
Not only profits, but also the overall capacity utilization rate of Taoli bread has also been dragged down by East China and South China.
In 2022, the average capacity utilization rate of Taoli Bread in all regions of the country will be about 81%, of which the capacity utilization rate of production bases in Northeast China and North China will be above 85%.
In the first half of 2023, the overall capacity utilization rate of the company's production bases that have been put into use is approximately 73%. Among them, Southern, Central and Eastern China are below the average.
The reason given in the announcement is that the production base has been put into operation for a short time and the capacity utilization rate is relatively low during the transition period.
In the future, whether Taoli Bread can successfully explore other markets and improve the overall capacity utilization rate while maintaining the advantages of the Northeast region will directly affect the company's development prospects.
Taoli Bread is a typical family business, Wu Zhigang and his concerted actors, including his wife Sheng Yali and three sons Wu Xuequn, Wu Xueliang and Wu Xuedong, hold a total of more than 900 million shares of the company.
Family members together constitute the actual controller of the company, and as of September 30, 2023, their total shareholding ratio is close to 57%, and they have the absolute right to speak in the company.
From 2018 to 2022, Taoli Bread paid a total of 2.9 billion yuan in dividends. According to the proportion of shareholdings, more than 1.6 billion yuan has entered the pockets of Wu Xuequn, Wu Xueliang and other actual controllers.
However, at the same time, some of the shares of some actual controllers are still in a pledged state.
According to the latest supplementary pledge announcement issued by Taoli Bread on February 1, 2024, after the completion of the supplementary pledge of shares, the cumulative pledge ratio of shares controlled by Wu Xuequn and his concerted actors accounts for more than 30% of the company's shares held by him, accounting for about 17% of the company's total share capital, and the pledge ratio is relatively high.
In addition, according to Taoli Bread's announcement on August 23, Wu Zhigang and Sheng Yali have a cumulative number of frozen shares of 33 million shares and more than 17.36 million shares, accounting for their respective shareholdings, respectively, and the freezing expiration date is August 2026.
As a food company, food safety is naturally the top priority of its business development. However, in recent years, the food safety problems of peach and plum bread have attracted the attention of consumers.
Searching for "peach and plum bread" on the Black Cat complaint app, the number of complaints is as high as 421.
The complaints focused on foreign objects in the bread, spoiled bread, and expired bread.
There is also the "flying knife" incident at the beginning of 2023, which has also attracted widespread attention.
According to the information displayed by Tianyancha, Taoli bread not only has its own risks, but also has more than 700 surrounding risks.
Of course, Taoli bread also has its own advantages, such as the first-class factory and logistics system that have been rolled out over the years. The short-term bakery market has great potential, and Taoli Bread is currently the leader in this market.
However, in the face of fierce market competition and ever-changing market demand, how can Taoli bread make consumers more satisfied? How to change the situation of long-term increase in income but not profit, and let shareholders experience more "sense of gain" in the capital market? "The World Wealth" will continue to pay attention.
end - Disclaimer: The information in this article does not constitute investment advice.