Medicine in Maotai donga-jiaos war of change: net profit plummeted by more than 80percent year on year

category:Finance
 Medicine in Maotai donga-jiaos war of change: net profit plummeted by more than 80percent year on year


The reporter of international financial news noted that donga-jiao attributed its performance decline to the companys initiative to reduce channel customer inventory and control delivery, which had a certain impact on business performance. But behind this adjustment, dealers hoarded goods caused by the past price increase strategy of donga-jiao and disguised promotion of products under the current fierce competition Many problems in the ecological chain have gradually emerged.

In 2004, China Resources Co., Ltd. and Liaocheng state owned assets Bureau of Shandong Province jointly established China Resources donga to become the owner of donga gum. As of the end of September this year, China Resources donga and China Resources pharmaceutical investment Co., Ltd., as concerted actors, hold 32% of the total equity of donga gum.

Zhang Hua (pseudonym), a person close to donga-jiao, said in an interview with the international financial news that the active adjustment of donga-jiao this year and the evolution of its product direction are closely related to China Resources.

Photo source: Photo bug idea

One

Baima stock refers to the stock with long-term outstanding performance, high return rate and high investment value. In donga gum, these two points are very obvious in the past.

According to the public information, donga gum is mainly engaged in the R & D, production and sales of gum and its series of products. It is the largest gum enterprise in China. The companys main products include gum, ginseng and antler, which are also called three nourishing treasures. Among them, Ejiao products have always been the core business of dongejiao.

In 2006, the revenue and net profit of donga Ejiao were 1.069 billion yuan and 154 million yuan respectively. In 2018, its revenue and net profit have reached 7.338 billion yuan and 2.085 billion yuan respectively. At the end of 2018, the share price of donga Ejiao was about 40 yuan, an increase of more than ten times compared with about 3.3 yuan at the beginning of 2006.

In fact, the decline in the performance of donga Ejiao was shown in the 2018 annual report. According to the annual report disclosed by the company, in 2018, its revenue changed the past high growth momentum, down 0.46% year on year. In this year, its revenue in East China, South China, Southwest China and North China, which account for a large proportion of the market, declined.

In the first quarter of 2019, the revenue and net profit of donga Ejiao showed double-digit decline, but at that time, it did not cause too much water bloom. Until the evening of July 14, 2019, after the former top student released the half year performance forecast of 2019, many investors called Thunderbolt.

At that time, it expected the unaudited net profit in the first half of the year to be 181 million to 216 million yuan, a sharp drop of 75% to 79% year on year. Combined with the data of the first quarter, the other information expected to be released is that in the second quarter of this year, the net profit of donga-jiao showed a loss. Affected by this, on July 15, the share price of donga-jiao fell and stopped, and its market value evaporated by more than 2 billion yuan all day.

Or in order to stabilize investor confidence, on the morning of July 15, donga-jiao held a telephone exchange meeting for investors, attended by President Qin Yufeng, Secretary of the board, senior vice president and chief financial officer Wu huaifeng, senior vice president Liu Yanfeng, vice president Zhou Xiangshan, securities representative and director of the office of the Secretary of the board of directors Fu Yanjun.

Liu Yanfeng said at the meeting that at present, it will take about 1-2 years for donga Ejiao to digest its channel inventory.

Zhang Hua told the international financial news that the current adjustment being carried out by donga-jiao can be regarded as one-off adjustment of channels, which is part of its overall market strategy adjustment. Because it involves the interests of dealers, it does not exclude that there will be some subsidy agreements between donga-jiao and dealers in private. Its not easy to say how long this adjustment will last..

On the afternoon of October 31, the reporter interviewed donga-jiao on its internal adjustment. He said that at present, the company is actively optimizing and adjusting its development strategy, combing and enriching its product system, continuously launching donkey hide gelatin +, + donkey hide gelatin series products, promoting ready to eat, docking with new consumption, transforming new marketing, expanding new customer base, incubating multiple categories, improving the comprehensive value of donkey industry and experience tourism brand awareness, and making the whole industry chain bigger and stronger. In addition, it also focuses on promoting the reform of marketing mode, focusing on the construction of key projects and the development of important positions, and improving the comprehensive benefits of the industrial chain. On the whole, the terminal sales are good, the channel inventory is gradually reduced, and all measures need to be implemented continuously..

Two

From price increase to price reduction

Although donga-jiao said that the decline in performance was due to active adjustment, the price rise was still considered as one of the important factors leading to the collapse of donga-jiaos performance.

In April 2019, Zheshang Securities said in the research report that the price of donkey hide gelatin block of donga-jiao had been increased 18 times since 2005, with a price increase of 20 times.

Ten years ago, donga Ejiao was still 400-500 yuan / kg. In 2018, it even reached 3000-4000 yuan. A Chinese medicine practitioner with more than 30 years of experience recently told the international financial news that since the beginning of 2017, the Chinese medicine center where he works has started to sharply reduce the purchase volume of donga gum products. By the end of 2018, he had completely stopped purchasing donga gum and changed to other brands with more affordable prices.

With the rising price, the space for price increase is gradually narrowed, and the inventory sales of dealers have declined. Since 2019, reducing channel inventory has become a key word around donga-jiao.

Obviously, from profiting from hoarding to destocking, both donga-jiao and dealers want to change the passive situation they are facing. The most direct change brought about by the strategic adjustment is that since the end of last year, the price of donga-jiao has no longer increased.

Recently, a reporter from the international financial news visited several pharmacies in Shanghai and learned that at present, although the price of donga gum was maintained in the second half of last year, it has started a disguised price reduction mode.

In a large drugstore in Huangpu District, the reporter noticed that although the price of 250g and 500g of red label donkey hide gelatin for home use was 1490 yuan and 2980 yuan respectively, according to the drugstore staff, at present, donga gelatin is in the promotion period. If you buy two boxes of 250g red label donkey hide gelatin, you can send two boxes of compound donkey hide hide gelatin paste with the specification of 20ml * 48 pieces / box and the value of 468 yuan if you buy one box (red marked donkey hide gelatin), add 1 yuan to send a box (compound donkey hide gelatin paste). It said the price was quite cost-effective, equivalent to a 60% discount on the basis of the original price.

Compared with the price reduction in disguised form by bundling sales, the promotion of Liaocheng, Shandong Province, the base camp of donga-jiao is more direct. Recently, the reporter learned from an offline agent of donga-jiao in Liaocheng City, Shandong Province that at present, only 950 yuan is sold for 250 grams of red label-a-jiao, and 215 yuan for 300 grams of peach blossom jia-jiao cake with the original price of 460 yuan.

Now in Liaocheng, donga sells the price in the shop. If its high, no one will buy it. The above agents told reporters.

In fact, in addition to offline stores, donga-jiao on the e-commerce platform is also in price reduction and promotion. According to tmalls flagship store, the original price of 2 * 240g red label of 2878 yuan is 2333 yuan. Tmalls supermarket also shows that the actual price of 240g red label of 1223 yuan is 1173 yuan. In addition, according to the flagship store of donga Ejiao pharmacy, the original price of 500g red label donga is 2998 yuan, the purchase price of Jingdong flash is 2398 yuan, and a set of 70g * 6 bottles of Ejiao Guyuan cream is attached.

The boss of a retail drugstore in a provincial capital city in the northwest region told the international financial news that since this year, the channel business of donga-jiao is increasing its sales promotion efforts in order to quickly ship goods. Because the selling price is too high and the sales volume is not ideal, the frequency of picking up goods from dealers has decreased a lot since the end of 2017. However, judging from these times this year, although the price of the products remains unchanged, the rebate point of the products is higher. .

Its not hard to understand, it says, and its common in the pharmaceutical industry. At the current price, the sales situation is not ideal. In addition, the shelf life of donkey hide gelatin is 5 years. The dealers who have accumulated a large number of donkey hide gelatin do not dare to suppress the goods, so they can only sell the goods harder than before.

In fact, the five-year shelf life means that dealers have more storage space, but from the current market circulation of the product shelf life, we can also see that dealers are anxious to ship.

The reporter noted that no matter offline physical drugstores or online flagship stores, most of the current production dates of donga-jiao are concentrated in 2015, 2016 and 2017, and a few show that the production date is after 2018.

You dont want to see the shelf life written on it until 2020. The older the donkey hide gelatin is, the better. Maybe I have a hunch that the reporter has doubts about the Ejiao whose production date is June 2015. There are drugstore tellers who have been practicing the same conversation for countless times, speaking fast and asking themselves.

Three

In a report released in March 2019, prospective industry Research Institute pointed out: at present, there are more than 200 national donkey hide gelatin manufacturers, among which donga gum and Fujiao group have a huge competitive advantage in the industry. Donga gum mainly focuses on the high-end market, and the single product price ranks first in the country, while Fujiao occupies the middle and low-end market, with the highest production capacity. However, with the deepening layout of Tongrentang, Taiji group, Jiuzhitang and other large pharmaceutical groups in the area of donkey hide gelatin, the competition and shuffling in the industry are gradually fierce.

Donkey hide, the raw material of donkey hide, is also sourced from Shandong Province and processed by ancient methods. It is very sophisticated in material selection and accessories. Meanwhile, Beijing Tongrentang has a history of hundreds of years and has a far-reaching brand influence. Most importantly, our price is much cheaper than that of donga gum. In the above-mentioned Huangpu District drugstore, the Beijing Tongrentang counter teller who is less than 10 meters away from the donga glue counter told reporters.

The reporter noted that Tongrentang donkey hide gelatin does have an advantage in price at present. The price of 250 grams of red marked donkey hide gelatin is 1180 yuan, and that of 500 grams is 2350 yuan.

When the reporter said that the elders of his family had designated donga Jiao as their main product, the teller did not give up persuasion and immediately took out his cell phone from his pocket. After inputting whats the difference between donga Jiao and tongrentanga Jiao in the search interface, he opened one of the answers at the very skilled location and said to the reporter, you can see it on the Internet. Both are produced according to the Pharmacopoeia and the national standard. The raw materials It is the same as the process and quality and health standards, and the specific and clinical effects are not much different. The difference between the two is mainly in price .

With the enhancement of consumers health awareness and the increase of brands available for selection, compared with the previous focus on product brands, people now pay more attention to the product itself and choose the products that are suitable for them. The owner of the above retail drugstore told reporters that in recent years, the price of donga-jiao has been raised frequently. In addition to consumers, more and more drugstores will be more diversified in the purchase of donkey hide gelatin products. Take my drugstore for example, it wont buy a lot (donga-jiao). Just make sure it doesnt go out of stock for a rainy day..

In this context, it is clear that measures have been taken by donga-jiao. At the annual general meeting of shareholders in June this year, Qin Yufeng admitted that donga-jiao was facing the most difficult time in more than ten years. At that time, in view of the low price strategy of other Ejiao manufacturers, Dong Ejiao also said that it would further enrich its product line, expand to the middle and low-end market, and reap more market share.

It is reported that in terms of consumer cognition, donga-jiao has opened up new social retails such as pinduoduo, cloud, etc. through the product of differentiation + donkey hide gelatin, and the newly listed Dai Jiao Yan Guyuan cake has also brought opportunities for donga-jiao to explore the middle end and sink the market.

Its not easy to judge the effect of donga-jiao in the middle and low-end market, because the market is uneven and there are many enterprises with low level. Zhang Hua said that the brand image of donga Ejiao is still relatively old, and how to develop new product areas and influence the new generation of consumer groups deserves attention.

Four

Behind the changes

Some industry insiders, who do not want to be named, disclosed to reporters that behind the current initiatives of donga-jiao, it may mean that its previous high-end route will be switched in the future.

There are several backgrounds to be said. In 2004, Liaocheng state owned assets administration and China Resources signed an agreement to jointly fund the establishment of China Resources donga. Among them, Cr shares invested 230 million yuan in cash, holding 51% of the equity of the joint venture company, and realized the actual control of donga-jiao through Cr donga.

According to the 2004 annual report of donga-jiao, on March 2, 2005, the company received a notice from China Resources donga on the confirmation of transfer registration. The 29.62% shares of donga-jiao held by Liaocheng state owned Assets Management Bureau, the former controlling shareholder of the company, were invested in the newly established China Resources donga as capital contribution. The relevant transfer procedures were completed on January 7, 2005. Since then, China Resources donga Rubber Co., Ltd. has held 29.62% of the companys shares, becoming the companys largest shareholder.

In 2006, Liu Weizhi, who had been in charge of donga-jiao for more than 30 years, stepped down. China Resources sent Jiang Wei, who was ranked first in the leadership, as chairman of donga-jiao. Qin Yufeng was promoted from vice president of marketing to general manager.

In the system of donga-jiao, Qin Yufeng is an absolute veteran. According to public information, as early as 1974, Qin Yufeng entered the donga Ejiao factory to work. According to the report of Southern Metropolis Daily at that time, Qin Yufeng began to raise the price of donkey hide gelatin series products, which are relatively scarce in resources, step by step, so as to promote the value return of donkey hide gelatin industry.

In the donga-jiao system, it is the price increase led by Qin Yufeng. Up to now, this is the right way. Zhang Hua told the international financial news that since 2006, the price raising strategy of donga-jiao has been continuing, which is not an easy thing objectively. A professional manager, with the same market strategy for more than ten years, has been recognized by the board of directors, and the market reaction has been very successful. Its really not many. Qin Yufeng has driven the development of the whole donkey hide gelatin industry..

Qin Yufeng, who was born in 1958, may retire in the next two years, according to Zhang. In the future, the CEO of the new baton is likely to lead donga-jiao to take the fast consumer goods Pro people route. In recent years, donga Ejiao has raised the price, but in fact, the national standard of Ejiao has not been established, and other enterprises do not participate in the price increase, so donga is in an awkward situation. However, this information has not been confirmed by the East Arab side. Some insiders told the international financial news that in the past, China Resources Department was still strict in personnel control of donga-jiao, and Qin Yufengs future successor was also determined by China Resources Department. He pointed out that before, several pharmaceutical companies acquired by China resources were basically following the line of consumer goods. For example, Jiangzhong has been speeding up the development direction of home ready drugs and enriching the categories of daily drug products, which are generally promoted to the middle and low end. In the future, donga gum may also change in this direction as a whole. Reporter Wang Minjie Ma Yunfei source: editor in charge of international financial news: Yang bin_nf4368

Qin Yufeng, who was born in 1958, may retire in the next two years, according to Zhang. In the future, the CEO of the new baton is likely to lead donga-jiao to take the fast consumer goods Pro people route. In recent years, donga Ejiao has raised the price, but in fact, the national standard of Ejiao has not been established, and other enterprises do not participate in the price increase, so donga is in an awkward situation. However, this information has not been confirmed by the East Arab side.

Some insiders told the international financial news that in the past, China Resources Department was still strict in personnel control of donga-jiao, and Qin Yufengs future successor was also determined by China Resources Department. He pointed out that before, several pharmaceutical companies acquired by China resources were basically following the line of consumer goods. For example, Jiangzhong has been speeding up the development direction of home ready drugs and enriching the categories of daily drug products, which are generally promoted to the middle and low end. In the future, donga gum may also change in this direction as a whole.

Reporter Wang Minjie Ma Yunfei