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Performance of the snack sector further diverged.

Recently, Yanjinpuizi (002847.SZ) and Haoshangni (002582.SZ) successively announced their interim reports for this year, but their performance showed opposite trends.

Among them, Yanjinpuizi achieved operating income of 2.459 billion yuan in the first half of the year, a year-on-year increase of 29.84%, and net profit attributable to the parent was 319 million yuan, a year-on-year increase of 30%; Haoshangni achieved operating income of 816 million yuan, a year-on-year increase of 16.44%, but the net profit attributable to the parent was a loss of 36.23 million yuan, a year-on-year decrease of 98.73%.

From a long-term perspective, the performance gap between the two companies has gradually widened in the past two years. In particular, after Haoshangni divested its Baicaowei assets in 2020, its net profit has been in the red for many years and has gradually fallen behind.

The widening gap between the two companies is due to the overall differentiation of the snack industry. Looking at the snack companies that have announced their interim results, Three Squirrels (300783.SZ) has returned to the growth track, while Laiyifen (603777.SH) and Bestore (603719.SH) have seen their performance decline. With the rise of mass-market snacks, each company is once again facing the pressure of low gross profit margins, and the industry differentiation may intensify.

Snack food companies facing performance pressure

Haoshangni's semi-annual report shows that during the reporting period, the company achieved operating income of 816 million yuan, a year-on-year increase of 16.44%; the net profit attributable to the parent was a loss of 36.23 million yuan, a year-on-year decrease of 98.73%; the non-net profit was a loss of 36.31 million yuan, a year-on-year increase of 29.59%.

Regarding the decline in performance, the company stated that due to factors such as the macro environment, financial management income decreased year-on-year, resulting in a year-on-year decrease in net profit attributable to the parent.

In addition to the changes in financial management income, Haoshangni's own operating conditions are obviously a more concerned issue for the market. After all, since 2019, the company's non-net profit has been in the red for many consecutive years. In the first quarter of this year, the company's main performance data returned to positive, with revenue, net profit, and non-net profit all resuming year-on-year growth, but the performance in the second quarter declined again. Although the second quarter is the off-season for snack food sales, further analysis of Haoshangni's financial report shows that the company is still facing pressure from multiple parties. In the first half of the year, the company's cash flow from operating activities was also under obvious pressure, with a net inflow of 30.55 million yuan, a year-on-year decrease of 83.11%, a decrease of more than 80%.

What has attracted widespread attention in the market is that the reason behind Haoshangni's "increased revenue but not increased profits" in the first half of the year is the substantial increase in sales expenses. Analysts believe that the company's revenue growth is mainly driven by marketing, while the increase in sales expenses has eroded part of its profits.

According to the financial report, Haoshangni's sales expenses in the first half of the year were 186 million yuan, a year-on-year increase of 19.90%. Among them, business promotion expenses and platform commissions were 63.27 million yuan, an increase of about 12 million yuan from the previous year, a growth rate of 23.98%, mainly due to the increase in live broadcast promotion expenses. Haoshangni also specifically mentioned that the advertising expenses totaled 9.4612 million yuan, including 8.3405 million yuan for online advertising and 1.1207 million yuan for offline advertising.

In line with this, Haoshangni has vigorously developed live broadcast channels. In the company's omni-channel construction, it puts "live broadcast leads the way, online leadership" in the forefront. The company disclosed that in the first half of the year, Douyin Haoshangni brand achieved double-digit growth, and the new product peeled and pitted dates ranked first on the self-broadcast list, leading the company's business development.

However, judging from the overall data, although the e-commerce channel brought in 258 million yuan in revenue in the first half of the year, it fell by 2.37% year-on-year, which seems to be a case of "losing money to gain publicity."

Huaxin Securities stated in its analysis of Haoshangni's semi-annual report that the company's strategy for channel layout is: to take the lead in creating hot products through interest e-commerce channels online, quickly screen high-energy hot products for the company, and continuously increase the scale of online sales with the help of shelf e-commerce search traffic. Offline channels are based on exclusive stores to shape the brand image, and plans to focus on supermarkets and snack channels, pilot non-date products in snack channels to create a multi-category model, and build outlets in supermarket channels to increase profitability after the scale is established.

The rise of the mass-market snack market

Unlike Haoshangni, which is in the red, Yanjinpuzi's performance in the past two years has been soaring. In 2022 and 2023, Yanjinpuzi's revenue and net profit continued to grow by double or even triple digits. This year, with double-digit growth in revenue and net profit in the first quarter, Yanjinpuzi continued to maintain its growth momentum in the first half of the year, achieving growth of 29.84% and 30% respectively. However, compared with the growth of 56.64% and 90.69% in the same period last year, it has slowed down.

Yanjin Shop attributes its performance growth to the growth of multiple channels and categories. According to the interim report, in the first half of the year, the company focused on seven core categories: spicy snacks, deep-sea snacks, casual baked goods, potato snacks, konjac jelly pudding, egg snacks and dried fruits and nuts, and made every effort to polish the supply chain and upgrade product strength. In addition to the advantage of bulk packaging, the company also made every effort to develop quantitative packaging, small commodities and mass-market packaging products to meet consumers' snack needs in various scenarios.

The hypermarket snack market is currently very popular, and Yanjinpuizi started to develop snack hypermarkets as early as 2021, from relying on offline stores to mainly relying on new channels such as e-commerce and snack hypermarkets, supplemented by large supermarkets.

The reporter noticed that in the first half of the year, the company's revenue from distribution channels (including bulk, fixed-quantity packaging, circulation and other new retail channels and other channels) accounted for as high as 72%, a significant increase over the previous two years.

However, there are different opinions in the market about Yanjinpu's growth in recent years. Zhu Danpeng, a Chinese food industry analyst, told the 21st Century Business Herald reporter that "Yanjinpu has grown in the past two years by relying on the growth of snack mass-marketing, but the gold content is not high."

In fact, the snack mass-marketing track has attracted many players to enter. Take Haoshangni as an example. It has entered many snack mass-marketing and hard discount systems such as Snacks is Busy, Zhao Yiming, Haoshanglai, Snacks Youming, Dai Yonghong, Aotele, and Qiahuo Shop, covering more than 15,000 terminal outlets. In December last year, Haoshangni also announced that it and its wholly-owned subsidiary would invest a total of 700 million yuan to increase the capital of Snacks is Busy. After the capital increase was completed, it held a total of 6.64% of the equity of Snacks is Busy.

However, from the comparison of the performance of the two companies, Haoshangni has obviously not fully enjoyed the dividends of mass-market snacks. Analysts generally believe that although this track is popular, its low gross profit margin is also a major challenge, which considers the company's supply chain management capabilities.

The food team of China Securities Co., Ltd. analyzed and pointed out, "Considering that snack hypermarkets may have passed the period of exponential growth, existing brands may face more intense competition in the short term, which will put higher requirements on store operations. Snack manufacturers may benefit more." The team further stated that the biggest beneficiaries are small-category snack manufacturers, which have strong control over the supply chain and are more flexible in responding to changes in channels and traffic. At the same time, they have a relatively rich number of SKUs, and can achieve a "double click" by adding product expansion logic on top of store expansion logic.