Huang Shanghuang (002695) Research Briefing: Management Transformation + Marketing Radical Company Performance Returns to High Growth
Key points of investment: Mistakes in strategic positioning for expansion outside the province + rigid management mechanism have led to the company’s 5 years of poor performance after listing.
After the company went public in 2012, it started an expansion strategy outside the province. However, the product positioning of Huangshanghuang in Jiangxi Province is mainly food and gift food. This strategic positioning is not in line with the trend of young and casual people outside the province, resulting in a slow pace of expansion outside the province.
In terms of channels, the Northeast Market is also a street store, but the cold weather in the Northeast has a long time. Few people are willing to shop on the street, and more are shopping in the supermarket, which also causes the Northeast market to stagnate.
In addition, the company’s management mechanism is relatively rigid, sales incentives are averaged, and the phenomenon of eating big pot rice is more serious.
Many of the above reasons led to the company’s small store development progress in 2012-2016, with a small increase in performance.
The board of directors was re-elected, the management system was renewed, and marketing began to be radical.
The company’s board of directors was re-elected in September 2017, and the son of former chairman Chu Jun was elected as chairman.
After being elected as chairman, he is more pragmatic and aggressive in talent introduction, incentive mechanism and store development.
First, the company vigorously introduced marketing and management talents, and increased incentives for supplementary expenditures and equity.
With reference to wind data, the annual salary of executives has increased substantially in 2017 and 2018.
At the same time, in the “2019 Annual Director and Senior Management Remuneration Plan” announced by the company in March 2019, the company clearly stipulated that the salary of senior executives before the tax of 960,400,000 yuan / year, continued to increase significantly.
In addition, in June 2018, the company also provided incentives for executives and core management technicians to exchange equity. The number of supplementary stocks granted this time was 1,392.
600,000 shares, accounting for 2.
In the performance evaluation of daily management personnel, according to the structure of “basic salary + performance salary + year-end commission”, in addition to the usual basic expenditure and performance salary, the managers who have completed their tasks for the year can finally share a certain percentage of income and profitCommissioned bonus package.
The best provincial directors in 2018, salary + bonus incentives, up to more than 2 million yuan.
The provincial directors who did poorly had less than 100,000 yuan in bonuses.
This fully reflects the evaluation method that is completely linked to performance and salary, which has a positive effect on leadership performance motivation.
In terms of market development, the channel differentiation of the supermarket complex followed by the street-side stores is expected to increase by 1,000 tons a year in the next few years.
The company’s past product positioning was in food and gifts, and the channel development was directly at the street store. Due to product 深圳桑拿网 positioning errors and inadequate brand promotion, the development of stores outside the province was not very good.
Beginning in 2018, the company repositioned its products to meet the young and fashionable casual braised meat products, featuring “spicy” taste, which is different from Zhou Heiya’s “sweet and spicy” and the “spicy”. The channel development started from high-speed railAfter these high-potential energy stores started to form a good brand image and once had a high brand awareness, they will vigorously develop street stores.
Approximately 1,000 tons of new stores opened in 2018, of which high-speed rail accounted for about 15%, commercial supermarkets accounted for about 45%, street stores accounted for about 40%, new stores opened successfully with a high rate of closure, less than 5% The total number of stores exceeded 3,000 years.
At present, the company’s market stores are mainly Jiangxi, Guangdong, Fujian, Liaoning, and Jilin. There are more than 1,000 stores in Jiangxi and 3000 stores in Guangxi, Guangdong. There are more than 800 in Guangxi, Guangdong, and more than 200 in Fujian. LiaoningThere are about 200 tons in total with Jilin.
In 2018, the Liaoning and Jilin markets increased by more than 80%, which changed the phenomenon of stagnation in Northeast China in the past. This aspect benefited from the company’s positioning of products in terms of snack foods instead of opening stores in the supermarket complexThis changed the Northeast because of the long period of low temperature and the small number of people shopping at street stores, and consumers can purchase marinated meat products by the way when they went to the supermarket. New ideas opened up new development.
In 2018, the market pioneers continued to develop mature markets such as Jiangxi, Guangdong, Fujian, Liaoning, and Jilin, while also focusing on developing Changsha, Loudi, Huangshi, Hubei, Shaanxi, and Liuzhou, Guilin Market, etc.
In 2019, in addition to the sinking of channels in mature markets, it is also expected to focus on the development of Yungui River, Jiangsu, Zhejiang, Shanghai, Henan, and Shandong.
Based on the leader’s current enthusiasm for work and the pace of market development, we believe that Huangshanghuang’s net increase of 1,000 stores per year in the next 2-3 years is a high probability event, and the company’s development is expected to regain high growth.
Falling raw material prices + discounts, the company’s costs will continue to decline in the next 2-3 years.
The company’s main raw materials are duck by-products such as duck paw, duck neck, duck wings, and duck collarbone.
The price of duck by-products is opposite to the pig cycle, because consumers will choose to consume alternatives such as duck and duck meat due to rising pig prices, and the short period of duck and poultry breeding will cause duck and poultry farmers to rapidly increase the amount of duck and poultry breeding, and the amount of hairy duckAt the same time as the increase in duck by-products, the consumer demand for duck by-products is relatively stable. When supply exceeds demand, prices will naturally fall.
The raw material prices of the company’s duck by-products have decreased since the fourth quarter of 2018.
Later, we judged that due to the impact of African swine fever, the price of pigs will be in the rising channel in the next 2-3 years or even longer.
As a result, the price of duck by-products is also expected to continue to fall.
In certain aspects, the government has lowered the increase in tax rates and started trials on April 1, 2019.
The Ministry of Finance announced that if the general taxpayer increased taxable sales or imported goods, the tax rate would be adjusted to 13% if the tax rate was originally applied to 16%; the tax rate would be adjusted to 9% if the tax rate was originally applied to 10%.
In addition, if the taxpayer purchases agricultural products, the original replacement rate of 10% is applicable, and the replacement rate is adjusted to 9%.
In this way, the difference between the original output tax and the input tax rate of the company is 6 ratios, and now it is 4 ratios, a difference of 2 ratios, which is equivalent to increasing the gross profit margin by 2 points and contributing to the company’s profit.
Earnings forecast and investment rating: Maintain “Buy” rating. We believe that Huang Shanghuang converted the company’s management mechanism, aggressive marketing, and a large number of blank domestic markets, with great room for future growth.
Although the amortization increase of short-term internal equity incentive expenses, the company has entered a track of higher growth.
Faced with the acceleration of store development progress and the acceleration of revenue growth, the company’s raw material costs have gradually increased and decreased.
We raise the company’s profit forecast, predicting that the company’s EPS for 2019/20/21 will be 0.
86 yuan, corresponding to PE for 2018/19/20 is 29.
10x, maintain “Buy” rating.
Risk reminder: the store development progress is not up to expectations; the single store revenue is reduced; the duck by-product prices are not up to expectations; market competition is intensified; food safety; capacity expansion is not up to expectations; the macroeconomic downturn.