asiaqualifiersworldcup2022| There is a hidden concern behind Tianyoude Wine's brilliant performance: the wine business has lost control of the company's loss

On the evening of April 18th, Tianyou de Liquor (002646Asiaqualifiersworldcup2022.SZ, with a share price of 10.46 yuan and a market capitalization of 5 billion yuan, announces its annual results for 2023. According to the annual report, the company achieved an operating income of 1.21 billion yuan, an increase of 23.50% over the same period last year, and a net profit of 89.5813 million yuan, an increase of 18.36% over the same period last year.

A reporter from the Daily Economic News found that although Tianyou de Liquor had both revenue and net profit.Asiaqualifiersworldcup2022It has reached a new high in recent years, but the capital markets are not buying it. The day after the results were announced, the company's shares closed down 2.03%. In the long run, the company's share price has fallen by more than 50% since June 2021.

Combing through the annual report of Tianyou de Liquor in 2023, it is found that the company has some problems, such as the growth rate of the market outside the province is not as fast as that in the province, the loss of some business directions and the loss of control over some subordinate companies. Whether diversification strategy is a booster or a double-edged sword, perhaps the market has given the answer.

Last year's revenue was close to the pre-2019 level.

Tianyou de wine is mainly engaged in the research and development, production and sales of highland barley wine, mainly engaged in many brands of highland barley wine, such as "Tianyou de, Huzhu, Yongqing and Shiyide", as well as "Maxwell" brand wine. The company is a leading enterprise in highland barley wine industry.

Judging from the revenue and net profit data, Tianyou de Liquor's performance is impressive. From 2019 to 2023, the company's total operating income was 1.254 billion yuan, 764 million yuan, 1.054 billion yuan, 980 million yuan and 1.21 billion yuan respectively. The total revenue in 2023 reached the highest level in the last four years, approaching the 2019 revenue scale before the epidemic. From 2019 to 2023, the net profit was 36.12 million yuan, loss 151 million yuan, 63.22 million yuan, 75.68 million yuan and 89.58 million yuan respectively. The company's net profit reached a new high in nearly five years.

It can be seen that the operation of the company has been greatly improved in 2023. As for the reasons for the warming of performance, Tianyou de wine said that with the gradual recovery of the consumer market, the company continues to optimize the product line, defines the main products in each price segment, adheres to the product positioning of the brew of the four seasons and the true year of the country, and focuses on promoting the product growth in the core price range from 150 yuan to 200 yuan, focusing on promoting the product growth in the core price range from 150 yuan to 200 yuan, with good sales in the core areas.

China's liquor industry has a vast territory, and the northwest region is not the core liquor producing area, but it has four listed companies, including Qinghai Tianyou de Liquor, Gansu Huangtai Liquor Industry, Xinjiang Yilit Liquor and Gansu Jinhui Liquor, which are jokingly called "Northwest F4" in the industry.

Since 2023, the liquor industry has been faced with the problems of overstock and upside-down prices. Liquor enterprises have focused their development on high-end and nationalization. God, Youde wine is also secretly working. In the market outside the province, the operating income of Xizang Aragarbo, a subsidiary, increased by 42.56% in 2023 over the same period last year, and its net profit increased by 419.51% over the same period last year. With regard to the substantial increase in the net profit of the subsidiary, a person from Tianyou de Liquor told the Daily Economic News that Xizang's area is currently focusing on ultra-high-end products, and the company is actively expanding its group-buying business and has achieved certain results.

In 2022, the proportion of revenue within and outside Qinghai province was 64.67% and 31.67%, respectively, compared with 66.65% and 30.93% in 2023. From a sub-regional point of view, in 2023, provincial and non-provincial income increased by 27.28% and 20.63% respectively compared with the same period last year. In other words, despite the strong performance of the market outside the province, the market in the province is growing faster, which leads to a slight decline in the company's share of revenue outside the province. This also makes investors have some concerns about the company's ability to continue to expand outside the province.

China's wine-making raw materials are mainly sorghum, rice and so on. Although the taste of highland barley wine is unique, it is also relatively minority. Cai Xuefei, a wine commentator, said that the highland barley wine of Tianyou de Liquor has many quality advantages such as plateau ecology and highland barley, which is in line with the current domestic trend of diversified and healthy consumption, but the process in national category promotion and taste cultivation is slow. At the same time, channel construction and model innovation are relatively conservative, corporate strategy is not focused enough, and there is a lack of national super single products.

With regard to the expansion of the company outside the province, Tianyou de Liquor said that the part outside the province is to consolidate the stronghold market in Qinghai and move the strategy forward to Gansu market with large population base and large liquor consumption capacity. at the same time, the nationalization process takes Shanxi, Shaanxi and Henan as the strategic core market, focusing on key areas and key resources, and making every effort to create a model market. In addition, we will actively lay out key markets such as Wuxi in East China, Fuzhou and Nanning in South China, and Zhangjiakou in North China to do a good job in the preliminary work for the nationalization process of the company.

Loss in wine business

Tianyou de Liquor is not only actively developing the national market, the company is also expanding new business forms. Tianyou de Liquor said in its annual report that in the next five years, the company will "focus on the liquor sector", "expand new formats", "strengthen strategic brands" and "build core product series". We will continue to explore and innovate live broadcast and e-commerce business development models, and vigorously expand new forms of business such as whisky and wine.

However, new business type's expansion also seems to be quite difficult. At the end of 2013, Tianyou de Wine, then known as "Highland barley wine", acquired Catacula winery in Napa Valley in the United States and named it Maxwell winery. Napa Valley is one of the few "subtropical summer dry climate zones" on earth that can grow extremely high-quality wine grapes. Through this acquisition, the company can expand its range of business, and on the other hand, it can promote its nationalization process by promoting wine.

But things don't seem to be going well. According to the financial report of 2023, last year, Tianyou de wine production and sales business realized revenue of 16.9035 million yuan and net profit of-16.5217 million yuan.

In this regard, Tianyou de Wine said that the overall American market in the fourth quarter of 2023 is not very good, and the whole industry is relatively difficult. at present, the company is making great efforts to develop the membership system, and the winery can also carry out catering business, which is very rare in Napa Valley and will certainly continue to improve in the future.

Cai Xuefei believes that regional brands like Tianyou de do face multiple difficulties such as product structure upgrading and cross-regional development in the sinking market environment of famous wines. Tianyou de Liquor has increased the construction of the winery of the enterprise, and carried out many experience activities of returning to the factory based on Qinghai ecology and regional cultural characteristics throughout the country, and achieved certain results. The company has also laid out a large number of diversified business forms, such as whisky and wine, which do not contribute directly to sales at present, but they still have great potential for development. If the strategy is appropriate and some policy support is added, it will be of great benefit to the future of the enterprise.

The control of a Sun company falls aside.

The downturn in new business is only one aspect, and Tianyou de Liquor may also face strategic adjustments from subsidiaries and Sun Company. Earlier this year, Tianyou de Liquor applied to the Intermediate people's Court of Yinchuan City, Ningxia Hui Autonomous region for the bankruptcy reorganization of its subsidiary Ningxia Legend Tianyou de Highland barley Liquor sales Co., Ltd. At that time, the company said that Ningxia Legend is a non-important subsidiary controlled by it, and that the filing for bankruptcy liquidation would not have an impact on the overall operating data and regional sales of Tianyou de Liquor.

In addition, the reporter consulted the annual report and found that Tianyou de Liquor holding subsidiary Zhongjiu Times (Beijing) Co., Ltd. (hereinafter referred to as "Zhongjiu Times") lost control over China Liquor (Beijing) chain Business Management Co., Ltd. (hereinafter referred to as "Zhongjiu chain") on June 30, 2023. China Liquor chain and its subsidiary Qinghai Zhongjiu Trading Co., Ltd. will no longer be included in the scope of the merger from July 1 of that year. To become a joint venture in the Chinese wine era.

When it comes to the Chinese wine era, we may not be very familiar with it, but when it comes to China Wine Network, many people in the industry may know it. China Liquor Network is an e-commerce platform for B2C and O2O of medium and high-grade alcohol commodities, which belongs to the Chinese wine era as well as the Chinese wine chain. In July 2015, highland barley wine (the predecessor of Tianyou de Liquor) bought a 90.56 per cent stake in the China Liquor era for 144 million yuan. Relying on this acquisition, the company intends to actively layout e-commerce, so as to expand the sales of its own products.

But the Chinese wine era did not bring much return to Tianyou de wine. From 2015 to 2021, the losses of Zhongjiu era were 41.63 million yuan, 46.75 million yuan, 32.32 million yuan, 21.85 million yuan, 17.22 million yuan, 6.44 million yuan and 350, 000 yuan respectively.

Until the first half of 2022, Tianyou de Liquor semiannual report revealed that the net profit in the wine era was 1.56 million yuan. According to the 2023 annual report, the operating income of the China Liquor era is 152 million yuan, but the net profit is only 1.8349 million yuan, while the final balance of goodwill is as high as 179 million yuan.

Despite the turnaround, the profit in the Chinese wine era is not large, and recently lost the control of the Chinese wine chain. What is the situation of the company? Tianyou de Liquor told reporters that the Chinese wine chain needs to develop on its own in the future, and it needs a more flexible mechanism. At present, the Chinese wine era still holds a partial stake in the Chinese wine chain, which is only an internal adjustment based on the company's strategic direction. In the Chinese wine era, the sales growth rate has been good recently, and the follow-up is mainly to solve the profit problem. At present, the main responsibility of the Chinese wine era is to sell Tianyou de highland barley wine.

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