On May 22, 2017, Luo Fei, then Chairman and CEO of Biostime, announced at the Biostime Dealer Conference that Biostime Group was officially renamed as "H&H Group".
Regarding the reason for the name change, Luo Fei once explained:
Biostime was used in the Hong Kong IPO in 2010, but now it has not only one Biostime brand, but also Swisse, so when people talk about Biostime, they don't know whether they are talking about a brand or a group.
Yes,At that time, Biostime Group was no longer limited to Biostime.
Biostime, a company engaged in infant nutrition founded by the Luo Fei brothers since 1999, has dominated the domestic infant health care product track for nearly 20 years with the probiotic brand "Biostime".
The appearance of a mixed-race baby, the sentence "the baby is less sick, the mother is less worried", plus the celebrity endorsement, just a dozen seconds of advertising, after 2002, almost in the ** time period of each David TV advertising screen, once convinced how many parents were convinced:
Biostime French Biostime is from France.
In fact, Biostime not only sells probiotics, but also infant milk powder.
And Luo Fei's idea of cutting into infant milk powder is also quite unique.
Around 2008, the melamine incident caused domestic milk powder to completely lose trust in the hearts of consumers. Luo Fei smelled a business opportunityIn France, 10,000 euros were spent to register the company "French Biostime".
Subsequently, the French Biostime Company launched infant milk powder in the name of "French Biostime" in China, emphasizing the use of European milk source original cans to import, and the milk source merchants are all from abroad, so far it has become one of the ranks of high-end infant milk powder.
Since then, Boss Luo has probiotics in his left hand and high-end infant milk powder in his right handWith the brand of [French Biostime], the company has been listed on the Hong Kong Stock Exchange all the way.
In 2010, Boss Luo rang the bell at the Hong Kong Stock Exchange. In that year, Biostime Group achieved an operating income of 123.6 billion yuan, net profit 26.6 billion yuan.
If there was no 2013 National Supervision and Inspection and Anti-Monopoly Bureau to punish 6 foreign milk powders such as Biostime and Abbott for monopoly, Boss Luo and his Biostime should still be able to maintain the myth of high growth.
On August 7, 2013, the state announced that six milk powder companies including Biostime had violated the anti-monopoly lawA total of about 6 fines were imposed for acts of restricting competition700 million yuan, becoming the largest fine issued in the history of China's anti-monopoly.
And this punishment made the true identity of the French Biostime's "fake foreign milk powder" and the man behind it, Luo Fei, surface.
At that time, the voice of the economy "Tianxia Company" in an article entitled "Biostime Dressed in the Cloak of Foreign Milk Powder to Reveal the Huge Profits Behind the Fake Foreign Devils" mentioned that if there was no such punishment, perhaps more people would not have realized that this domestic product dressed in the coat of foreign milk powder has become the most expensive can of milk powder.
The fake foreign brand incident had a great impact on Biostime Group.
Prior to 2013, Biostime's revenue and net profit had maintained more than double-digit growth for many consecutive years. However, after the "fake foreign brand" incident, Biostime's revenue and net profit fell sharply in 2014.
It was also from this year that Luo Fei began to change his thinking and opened the road of global mergers and acquisitions;
In 2013, the company announced its stake in a well-known French dairy manufacturerisigny sainte mère（ism）；
From 2015 to 2016, it was announced that it had completed the sale of a world-renowned health care product brandswisse100%The acquisition took 2 years, with a total investment of 10.2 billion yuan;
In 2016, the company also acquired Health Times, an organic infant food brand in the United States, and a maternal and child care brand in Francedodie；
After announcing the name change to H&H Group, Luo Fei acquired the French organic baby food brand good GOT.
So far, the former Biostime and today's H&H Group have brought together four high-end brands:
Australia's leading sales volumenatural health brand Swisse;
French high-endInfant care productsbrand dodie;
36 years of American historyHealthy Times, an organic infant food brand;
As well as has been working onBiostime, a high-end brand for the infant market.
I have to admire Boss Luo's vision, pattern and courage, a local private enterprise in Guangzhou, insists on practicing the strategy of globalization to the end.
And to build this nutrition empire, the price Luo Fei paid is,15 billion or so.
In fact, Boss Luo really has a vision, such as in the acquisition of Swisse.
Long before the merger and acquisition of H&H Group, Swisse had already entered China through the Internet, and its main products covered vitamins, collagen gummies, herbal and mineral supplements, etc.
After the completion of the full acquisition in 2016, H&H Group began to operate the sales of Swisse in China.
The 2016 annual report shows thatH&H Group's revenue growth rate returned to double-digit growth, with a year-on-year increase of 35% compared with 2015.
Swisse's revenue continues to grow. Public data shows that in just one year from 2015 to 2016, Swisse's revenue increased from 8500 million to 235.1 billion, a doubling of the amount.
It is also based on the success of Swisse in China that H&H Group's share price has started a wave of climb since it changed its name in 2017.
This wave of ** lasted until May 2018, H&H Group'sThe share price once exceeded 50 Hong Kong dollars, with a market value of more than 32 billion Hong Kong dollars, the second market value high since its listing in 2010.
After a series of mergers and acquisitions, H&H Group's industry has three main sectors, infant nutrition and care products (BNC), *nutrition and care products (ANC) and pet nutrition and care products (PNC).
From 2019 to the first half of 2023, the company's operating income was 1092.5 billion yuan, 1119.5 billion yuan, 1154.8 billion yuan, 1277.6 billion and 698.1 billion, the growth rate of revenue is very slow.
What's more,Behind the slowdown in performance, there are also two big thunders: sky-high goodwill and high-leverage operation.
According to the annual report data of previous years, H&H Group's total assets increased from 138400 million to 213 in mid-2023700 million, of which, goodwill alone, from 46 in 20143.7 billion, 78 by mid-20238.1 billion.
Its asset-liability ratio was 56 in 201401%, which soared to 73 in 201597%, mainly due to the amount of liabilities from 37 in 20141.4 billion soared to 102 in 2015400 million. That's an extra 652.6 billion, most of which was spent on the acquisition of Swisse.
As of the 2023 interim report, H&H Group's asset-liability ratio remains close to 70% (68.).83%). As of mid-2023,H&H Group's non-current liabilities are as high as 662.3 billion.
In the middle of 2023, H&H Group's ending cash and cash equivalents were 213.8 billion yuan. According to the 2023 interim net profit of 60.8 billion calculation, it will take nearly 11 years for Boss Luo to repay this part of the bank loan.
High debt ratios come with high financial costs. H&H Group's financial cost in the first half of 2023 is as high as 35.8 billion, accounting for about 6% of the net profit in the same period.
According to a report by 21st Century Business Review, in mid-2023, Luo Fei negotiated a three-year note with a face value of $58.2 millionThe annual coupon is as high as 135%。S&P's rating for H&H is only "BB+".
After three years of magic, health care products have once again become the standard for young people.
However, with the deep involution of the market, although the market demand is still growing, due to the low technical barriers and low entry barriers, there are many market participantsConsumers are also facing more brand choices, especially as more niche categories are flocking to the market.
From the perspective of technical barriers, H&H Group itself does not have strong R&D capabilities, whether it is in the first-class health care products track or the infant track, and mainly relies on sales-driven.
In the first half of 2023, the company's sales expenses amounted to 264.1 billion yuan, accounting for 3783, which is equivalent to paying nearly 38 yuan in sales cost for every 100 yuan sold.
Corresponding to this,The company's R&D expenditure is only 15.8 billion yuan, and from 2018 to 2022, it will be at 1Hovering around 5 billion yuan.
Looking back on Boss Luo's family history, there is not only a unique personal vision, but also the east wind of the times.
In 2018, H&H Group, which completed the full acquisition of Swisse, exceeded the 10 billion revenue mark.
At this time, the high-spirited Boss Luo set a revenue target of 14 billion yuan in 2020. In 2019, the new CEO An Yuting, who received a sky-high annual salary (30 million),It is also proposed that China will achieve a revenue target of 20 billion yuan in 2023.
But then the sluggish performance poured a basin of cold water on H&H and Boss Luo.
4 years have passed, not to mention the 20 billion goal in 2023H&H Group has not even completed the target of 14 billion proposed by Boss Luo.
The market value of H&H Group has also fallen from a high of more than HK$32 billion.
As of press time on March 4thH&H Group closed 11HK$54 shares, with a total market capitalization of 745 billion, not even the amount of the original acquisition of Swisse.