The Royal Group, which barely relied on "selling" to make a positive profit, is falling into new performance anxiety. On the evening of January 30, Royal Group released its 2023 annual performance forecast, which is expected to achieve a net profit attributable to shareholders of listed companies of 70 million to 90 million yuan, and a net profit of -1 after deducting non-recurring gains and losses46.5 billion to -126.5 billion yuan, the year-on-year loss further expanded. In the past four years, the cumulative loss of non-net profit was nearly 1 billion yuan.
Royal Group relied on high-quality assets to support its performance, but it also lost a major revenue force. With the intensification of competition in the dairy industry, the resignation of senior executives, the freezing of equity and other negative aspects, how should the former "king of China's buffalo milk" Royal Group survive this winter?
Rely on "selling" to correct performance.
On January 30, Royal Group made a "spoiler" on the 2023 annual results, and it is expected to achieve a net profit attributable to shareholders of listed companies of 70 million to 90 million yuan, an increase of 482 over the same period last year19%—648.53%。
Founded in 2001, Royal Group is a comprehensive listed company with buffalo milk specialty dairy products as the core and photovoltaic technology to empower the dairy industry. So far, dairy and photovoltaic are the two businesses that have contributed the most to its performance.
As for the main reason for the growth of performance in 2023, Royal Group said that it was attributed to a series of measures around buffalo milk products, as well as the active development of distributed and residential photovoltaic EPC business in combination with its own resources, which provided an effective boost to the company's profitability.
But in fact, the biggest "hero" of the positive net profit of Royal Group is the income from the disposal of high-quality assets. During the reporting period, Royal Group achieved a net profit of -1 after deducting non-recurring gains and losses46.5 billion to -126.5 billion yuan, compared with the same period last year, the loss further expanded.
It is worth noting that the non-net profit of Royal Group has been negative for four consecutive years, and the cumulative loss of non-net profit is nearly 1 billion yuan.
Repeatedly "wading into troubled waters".
Since the development of the West Royal Industrial Park, Royal Dairy Group, Royal Agriculture and Light Complementary (Guangxi) Technology, and its listing on the frozen period, "not doing business" has always been a lingering label of Royal Group. Some companies rely on side businesses to open up the "second growth curve", but Royal Group has been "wading in troubled waters".
In 2014, Royal Group acquired Yujia Film and Television and entered the film and television industry; In 2015, it acquired the cultural media company Shengshi Jiaoyang and the Internet information company Perfect **, and invested in the animation preschool education operation company Beiguang HD; In 2017, it acquired Zhuwang Technology, a mobile information service provider. In three years, Royal Group has spent more than 2 billion yuan on diversified mergers and acquisitions. In 2022, Royal Group will enter the photovoltaic industry, and will take the N-type TOPCON photovoltaic cells, which require a very large amount of investment, as the main direction. As of the end of September 30, 2023**, Royal Group's total assets were 53500 million yuan, down 9 percent year-on-year54%；The total liability is 346.6 billion yuan, down 10 percent year-on-year09% and the debt ratio was 6479%, which is higher than the industry average for the same period.
On the one hand, with the great changes in the new copyright market and the cold of the film and television industry, the performance of Royal Group has plummeted, and there will even be 6a huge loss of 1.6 billion yuan; In October 2023, Royal Group announced the transfer of 80% of the equity of Anhui Royal Green Energy Technology and the cancellation of its holding grandson company, Royal Jinghua (Guangxi) New Energy Technology
To add insult to injury, Royal Group was caught in a lawsuit of more than 400 million yuan due to contract disputes. On the evening of November 21, 2023, Royal Group announced that due to a partnership contract dispute with the company and Royal Digital Intelligence *** hereinafter referred to as "Royal Digital Intelligence"), Tai'an Dongyue Wealth Equity Investment *** hereinafter referred to as "Dongyue Wealth") filed a lawsuit with the Tai'an Intermediate People's Court, and the case has been accepted by the court. The amount involved in the case was invested in the principal amount of 3100 million yuan. Affected by this case, Dongyue Wealth applied to the Tai'an Intermediate People's Court for property preservation, and the Tai'an Intermediate People's Court ruled to freeze the total amount of equity of Royal Group about 4100 million yuan, the equity of the enterprise is the development of Guangxi Royal Industrial Park
Return to the main business of buffalo milk.
Selling children to "repay debts" and withdrawing from photovoltaics, all kinds of moves show that Royal Group has been returning to the main business of buffalo milk, but it is not easy to achieve a turnaround.
Recently, Royal Group said in an institutional survey that the company's current product line is mainly liquid dairy products with buffalo milk as the core, and after the high-quality provenance of Nelilafi buffalo is successfully introduced into China in the future, based on the characteristics of high dry matter of buffalo milk and Nililafi buffalo can be used for both milk and meat, buffalo milk cheese, buffalo meat, and buffalo milk powder are expandable product directions, and related product lines are already being planned.
Dairy analyst Song Liang said, "Last year, due to the fact that the entire white milk market was in the first battle, the first strength was very large, although the total sales volume was growing, but the overall sales declined." With the normalization of enterprises, this year's dynamic sales situation is still severe, and small and medium-sized dairy enterprises are facing a lot of challenges.
At present, the remaining industries of Royal Group still include dairy products, breeding, ranching and other industries. Royal Group emphasized that the proceeds from the sale of Lysil will be invested in three supporting measures: "Dairy Buffalo Provenance Chip Strategy", "Construction of 10,000 Dairy Buffalo Smart Ranch" and "Focus on Building New Kinetic Energy in East China".
It is worth noting that after the divestment of Lysil Dairy, the dairy sector of the Royal Group will lose "one arm". According to the data disclosed by Royal Group, the revenue of Lysil Dairy in the first half of 2023, 2022 and 2021 will be 4700 million yuan, 11100 million yuan, 9500 million yuan, accounting for % of revenue. With the operating data and performance of Lysil Dairy no longer consolidated from the second half of 2023, Royal Group's performance in 2024 may change face.
However, according to Zhu Danpeng, an analyst of China's food industry, "the whole of China's buffalo milk has been sought after and favored by the new generation of consumers in the past three years." Especially in the southern market, buffalo milk has a very good market base. However, the failure of the Royal Group to further realize the consumption dividend is a strategic mistake of the entire company, and there is still a lot to be done if it refocuses on its main business, buffalo milk in the future."
On January 30, a reporter from Beijing Business Daily sent an interview letter to the Royal Group by email for issues such as the continuous decline of buffalo milk business, but did not receive a reply as of press time.
Beijing Business Daily reporter Kong Wenxie.