At present, China’s beer market has been gradually divided up by five major brands. Lanzhou Huanghe Enterprise Co.Ltd(000929) ( Lanzhou Huanghe Enterprise Co.Ltd(000929) , SZ; yesterday’s closing price of 8.93 yuan) with weak main business and discord among shareholders is now speculating in stocks all year round. In 2021, it helped the company turn around its losses through stock speculation and selling the equity of Sun company, realizing a net profit of 23.737 million yuan, while the income from securities investment was 188084 million yuan.
Lanzhou Huanghe Enterprise Co.Ltd(000929) is a well-known beer brand in Northwest China. However, the performance fell again in the first quarter. In the face of contradictions among shareholders and the squeeze of industry giants, Lanzhou Huanghe Enterprise Co.Ltd(000929) how far can we rely on stock speculation?
last year, the company made up its losses by speculating in stocks and selling assets
The annual report shows that Lanzhou Huanghe Enterprise Co.Ltd(000929) achieved revenue of about 309 million yuan in 2021, with a year-on-year increase of 0.62%; The net profit attributable to the parent company was 191139 million yuan, turning losses into profits year-on-year; The net profit after non deduction was -250791 million yuan, and the loss increased by 10.53%.
In the previous performance forecast, the company said that the main reason for turning around the loss in 2021 was the disposal of 60% equity of Gansu Qinghe Jiayuan Real Estate Co., Ltd., the grandson company, the disposal of securities investment and holding income. Among them, the securities investment income was 188084 million yuan, and the net profit contributed by the disposal of the equity of the sun company accounted for 131.47% of the total net profit.
Lanzhou Huanghe Enterprise Co.Ltd(000929) is mainly engaged in the production, wholesale and retail of beer and malt. At the initial stage of listing, with the expansion of China’s beer market, it can achieve a certain profit almost every year. With the “Yellow River beer”, it is known as the “king of Western beer”, and its market share in Gansu Province once exceeded 70%.
In recent years, stock speculation has made the company’s performance unstable. From 2015 to 2020, the net profits were 78.12 million yuan, – 25.62 million yuan, 12.64 million yuan, – 65.72 million yuan, 2.524 million yuan and – 516909 million yuan respectively. The corresponding investment income is 99.1 million yuan, – 14.65 million yuan, 8.02 million yuan, – 77 million yuan, – 30.33 million yuan and – 33.22 million yuan, mostly securities investment income or loss.
In 2021, the company once again relied on stock speculation to “make a lot of money”, so what stocks did the company buy?
According to the annual report, Lanzhou Huanghe Enterprise Co.Ltd(000929) held eight stocks with a total initial investment cost of 153 million yuan, a total book value of 74.73 million yuan at the beginning of the period (only four stocks), and a total book value of 149 million yuan at the end of the period. Among the 8 stocks held by the company, except Metallurgical Corporation Of China Ltd(601618) , Guangzhou Baiyunshan Pharmaceutical Holdings Company Limited(600332) , China Jushi Co.Ltd(600176) , Xinxing Ductile Iron Pipes Co.Ltd(000778) the total profit and loss during the reporting period is 174248 million yuan Gansu Qilianshan Cement Group Co.Ltd(600720) , Shenzhen Airport Co.Ltd(000089) , Safbon Water Service (Holding) Inc.Shanghai(300262) , Wutong Holding Group Co.Ltd(300292) the total profit and loss during the reporting period was -9533600 yuan, and the total profit and loss for the whole year was 7891200 yuan.
“Stock speculation” is the focus of the company’s attention by the outside world, but the company’s performance over the years has continued to be sluggish.
After 2013, Lanzhou Huanghe Enterprise Co.Ltd(000929) began to decline. From 2014 to 2019, the company’s revenue decreased by more than 10% year-on-year. By 2020, the year-on-year decline in revenue has expanded to 32.68%, the net loss after deduction is close to 23 million yuan, and the loss has expanded by 159.29%. By 2021, the net profit after deduction has been negative for four consecutive years.
Xiao Zhuqing, a wine expert, said: “stock speculation, including the transfer of the equity of subsidiaries, is only an expedient measure, which has no contribution to Lanzhou Huanghe Enterprise Co.Ltd(000929) ‘s core competitiveness, brand improvement, future sustainable development and consolidation of the core base market.”
poor performance is related to discord among shareholders
Behind the fluctuation of stock speculation performance, there is also the problem of the company’s main business. According to the data of China Commercial Industry Research Institute, the national beer output in 2021 was 35.624 million kiloliters, Lanzhou Huanghe Enterprise Co.Ltd(000929) saying that “the beer output in 2021 was 91200 kiloliters”, accounting for only 0.26%. Moreover, Lanzhou Huanghe Enterprise Co.Ltd(000929) has only basically maintained nearly 30% of the market share of Gansu and Qinghai provincial markets.
According to the annual report of 2021, the revenue of the company’s main beer middle and high-grade, middle-grade and ordinary categories was 83.25 million yuan, 71.55 million yuan and 66.81 million yuan respectively, with a year-on-year increase of – 16.05%, – 9.01% and 76.63%, and the corresponding gross profit margin was 23.35%, 21.07% and 9.6% respectively.
You know, in recent years, with the trend of consumption upgrading, major liquor enterprises have increased the size of medium and high-end, optimized the product structure and improved the company’s gross profit margin. The comprehensive gross profit margins of Chongqing Brewery Co.Ltd(600132) ( Chongqing Brewery Co.Ltd(600132) , SH) and Tsingtao Brewery Company Limited(600600) ( Tsingtao Brewery Company Limited(600600) , SH) beer sector in 2021 were 51.35% and 36.73% respectively, much higher than 18.47% of Lanzhou Huanghe Enterprise Co.Ltd(000929) .
Xiao Zhuqing said: “Budweiser InBev, China Resources snowflake, Tsingtao Brewery Company Limited(600600) , Beijing Yanjing Brewery Co.Ltd(000729) , Chongqing Brewery Co.Ltd(600132) have completed the layout of production bases across the country. In the process of high-end, we have continuously increased market expenses, increased profits, carried out the interaction of consumer circle marketing and created cultural IP. In this process, we found that Lanzhou Huanghe Enterprise Co.Ltd(000929) has fallen behind.”
According to the data disclosed by China Wine Association, in 2020, China’s beer market was divided by five groups – China Resources beer, Tsingtao Brewery Company Limited(600600) , Beijing Yanjing Brewery Co.Ltd(000729) , Budweiser InBev and Carlsberg, which accounted for 92% of China’s beer market. With the recent expansion of the above giants, the market left to Lanzhou Huanghe Enterprise Co.Ltd(000929) has become less and less.
Lanzhou Huanghe Enterprise Co.Ltd(000929) said that in order to survive and develop in the gap of fierce market competition with leading enterprises in the industry, we must comply with the trend of beer consumption demand gradually upgrading to high-end, diversified and personalized, meet the differentiated needs of local market consumer groups for product taste, packaging and marketing, adjust and optimize product structure and increase the proportion of medium and high-end products, Focus on launching medium and high-grade new products with more local geographical and cultural characteristics and more differentiation, reshape the product value chain, improve the profit contribution rate of single products, take this as a breakthrough, coordinate the two central work of production and sales, and promote the reform of all aspects of enterprise management as a whole, so as to drive the sales volume of mainstream products to resume growth and improve the overall profitability.
On the other hand, Lanzhou Huanghe Enterprise Co.Ltd(000929) poor performance is also related to the perennial discord among major shareholders.
Lanzhou Huanghe Enterprise Co.Ltd(000929) the top two shareholders are Lanzhou Huanghe Enterprise Co.Ltd(000929) Xinsheng Investment Co., Ltd. (hereinafter referred to as Xinsheng investment) and Hunan Yucheng Investment Co., Ltd. (hereinafter referred to as Hunan Yucheng), holding 21.5% and 5% respectively. Yang Shijiang is the actual controller of Xinsheng investment and Lanzhou Huanghe Enterprise Co.Ltd(000929) and Tan Yuexin is the actual controller of Hunan Yucheng.
Since 2017, Hunan Yucheng has sued the other party on the grounds of objection to the voting of resolutions of the general meeting of shareholders and the board of directors.
On the surface, the lawsuit is because the two shareholders have objections to the voting of the meeting, but in fact, it is caused by the disagreement between the shareholders of the company.
According to Lanzhou Huanghe Enterprise Co.Ltd(000929) previous announcement, at the beginning of 2008, Hunan Yucheng sought “backdoor listing” and negotiated with Lanzhou Huanghe Enterprise Co.Ltd(000929) Enterprise Group Co., Ltd. (hereinafter referred to as Yellow River Group) to implement major asset restructuring of Lanzhou Huanghe Enterprise Co.Ltd(000929) enterprise group. After consensus, the two sides signed a series of legal documents on asset restructuring, including the cooperation agreement and the restructuring agreement. Since then, Hunan Yucheng started the agreed asset restructuring twice in 2016 and 2018, but both ended in failure.
The annual report shows that from June 2021, Hunan Yucheng began to withdraw the prosecution of relevant cases. On February 18, 2022, Lanzhou Huanghe Enterprise Co.Ltd(000929) received the relevant award, which showed that China International Economic and Trade Arbitration Commission made an award to cancel the restructuring agreement signed by both parties and reject other arbitration requests and counterclaims of both parties.
However, the contradiction between Lanzhou Huanghe Enterprise Co.Ltd(000929) two major shareholders has not ended. On March 10, 2022, the case of contract dispute between Huanghe group, which is wholly controlled by Yang Shijiang, and Hunan Yucheng and Hunan Xinyuan was accepted and filed by Lanzhou intermediate people’s court.
Xiao Zhuqing said: ” Lanzhou Huanghe Enterprise Co.Ltd(000929) should solve the fundamental problems from the top-level design. There are disputes among shareholders, which shows that we are not in a thinking platform and lack consensus. If we do not carry out the top-level design, Lanzhou Huanghe Enterprise Co.Ltd(000929) the future will be more and more difficult.”
It is worth noting that the first quarterly report of Lanzhou Huanghe Enterprise Co.Ltd(000929) 2022 shows that from January to March, the company achieved a revenue of 72.61 million yuan, a year-on-year decrease of 28.45%, a net loss of 3.28 million yuan, a year-on-year decrease of 139.46%, and a non net loss of 4.06 million yuan, a year-on-year decrease of 788931%.
Lanzhou Huanghe Enterprise Co.Ltd(000929) said that in the future, it will continue to actively respond to such fine management measures as implementing group operation integration, optimizing production capacity, differentiated development, increasing the proportion of medium and high-grade products, moderately raising prices, increasing marketing investment, increasing revenue, reducing costs and increasing efficiency, and strive to improve the quality and efficiency of the company’s development. In the future, the company will continue to pay close attention to the political and economic situation and market changes, fully implement various risk control measures, strive to minimize the adverse impact of securities investment, and continue to prudently judge the necessity and feasibility of securities investment according to the changes of securities market situation. If necessary, the company will suspend securities investment at an appropriate time to avoid a great impact on performance.
