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Highland barley wine company Tianyoude Wine(002646.SZ, share price 10.22 yuan, market value 4.926 billion yuan)It failed to continue its previous impressive performance.

On August 18, Tianyoude Liquor released its 2024 semi-annual report. In the first half of this year, the company's operating income was about 759 million yuan, an increase of 14.93% year-on-year; the net profit attributable to the parent company was about 79.62 million yuan, a decrease of 17.53% year-on-year. This is also the second consecutive half-year in which the company's revenue increased but its profit did not.

The reporter of "Daily Economic News: Jiangjinjiu" noticed that behind this is the company's high sales expenses all year round. Tianyoude Wine's performance has always been at the bottom among listed wine companies, but its sales expense ratio ranks high. Wind data shows that the company's sales expense ratio has long remained above 30%.

It is worth mentioning that the company launched an equity incentive plan last year, with revenue targets of 1.176 billion yuan, 1.372 billion yuan and 1.568 billion yuan from 2023 to 2025, respectively. Last year, the incentive targets were completed "just on the line". But now, with the Matthew effect in the liquor industry becoming more and more obvious, can the company achieve its goals?

Revenue increased in the first half of the year but profit did not, and net profit fell by 248% in the second quarter

The company is a highland barley wine enterprise in Northwest China. Its products are divided into highland barley liquor, other highland barley wine and wine. Among them, highland barley liquor is classified according to the range standard of retail price. The retail price below 100 yuan/500ml is mainly light bottle, Yongqinghe, star (red four-star) and other series of wines; the retail price above 100 yuan (including the original amount)/500ml is mainly star (red five-star), Fu, export type, virtue of man, virtue of family, virtue of country, virtue of heaven and other series of wines.

Image source: Screenshot of semi-annual report

In the first half of this year, the company's main business of highland barley liquor products grew steadily, achieving operating income of 639 million yuan, an increase of 8.49% year-on-year, accounting for 99% of total revenue. The operating income of other highland barley liquor and wine fell by 2.34% and 14.96% year-on-year respectively.

The company stated that during the reporting period, the company carried out five core channel tasks, including terminal shelf capture operations, single product weak area improvement plans, market order restoration, marketing basic work improvement, and customer relationship consolidation. The sales of products in the price range of 100 to 200 yuan per 500 ml have been significantly improved.

In the first half of the year, the company's highland barley wine products with a retail price of 100 yuan (inclusive)/500ml and above achieved operating income of 333 million yuan, a year-on-year increase of 12.6%; products with a retail price of less than 100 yuan/500ml achieved operating income of 306 million yuan, a year-on-year increase of 4.35%.

The stable growth of the company's main business is closely related to the company's series of measures on the market side. The company said that in the first half of this year, in terms of customer operations, on the basis of "famous wines entering famous companies" and "thousands of entrepreneurs please come in", it further innovated and created C-end contact activities such as "Qinghai-Tibet Self-Driving Tour" and "Cruise Tour" to continuously enhance customer stickiness. In terms of market layout, the national market layout is clearer. While consolidating the Qinghai base camp, it takes Gansu, Shanxi, Shaanxi and Henan as the strategic core, supplemented by the layout of key cities in East China, South China and North China, laying a solid foundation for long-term development.

The company performed well in markets outside the province. During the reporting period, the company achieved revenue of 504 million yuan in Qinghai Province, a year-on-year increase of 6.42%, and revenue of 240 million yuan outside Qinghai Province, a year-on-year increase of 35.34%.

The large-scale layout in the terminal corresponds to the continuous increase in sales expenses. In the first half of this year, the company's sales expenses were 158 million yuan, a year-on-year increase of 21.6%. According to the company's annual report last year, the sales period expense rate ranked high among listed liquor companies, reaching more than 30%. In addition, the company's gross profit margin also declined.

The company achieved revenue of 233 million yuan in the second quarter, a year-on-year decrease of 11.82%, and net profit attributable to shareholders of the parent company was -29 million yuan, a year-on-year decrease of 248.08%.

Can we achieve the annual target?

Tianyoude is the leader in Qinghai barley wine, but as of now, its best performance is still in 2013.

Now that the liquor industry has entered a new round of structural adjustments, the Matthew effect has become increasingly obvious. From the aforementioned companies' initiatives on the market side, it can be seen that in the face of fierce market competition, the companies have already taken action.

It is worth mentioning that at the end of last year, the company planned to stimulate the enthusiasm of senior executives and core backbones through equity incentives. The announcement shows that the grant price of restricted stocks in the equity incentive plan is 7.12 yuan per share. The number of restricted stocks to be granted to the incentive targets in this incentive plan is 9.46 million shares. The total number of incentive targets is 53, including directors, senior managers, and core management/technical/business personnel who are employed by the company (including subsidiaries, the same below) when the company announces this incentive plan.

According to its performance evaluation targets, from 2023 to 2025, its revenue targets are 1.176 billion yuan, 1.372 billion yuan and 1.568 billion yuan respectively, and the trigger values ​​are 1.130 billion yuan, 1.300 billion yuan and 1.500 billion yuan respectively. The sales restrictions will be lifted in three phases, and the proportion of lifting the sales restrictions in each phase will be 40%, 30% and 30% respectively.

According to the disclosed data, 55.32% of the above-mentioned revenue target for 2024 has been achieved in the first half of this year.

In a research report released in June, Huaxin Securities pointed out that as the company continues to expand its market by leveraging the rise of tourism and dining scenarios, its product strategies are gradually becoming clearer, and there is a high degree of certainty that subsequent equity incentive targets will be achieved.

In addition, Debon Securities also pointed out in a research report in May that the company's core products are expected to grow steadily in 2024, with operating income expected to be 1.44 billion yuan in 2024, a year-on-year increase of 18.6%.

If calculated based on the closing price of 10.22 yuan per share on August 16, the floating profit of the restricted shares to be granted to the incentive targets is nearly 30 million yuan. Can the company's equity incentive plan fully motivate the team in the future and help the company break through? The reporter of "Daily Economic News: Drinking" will continue to pay attention.

Daily Economic News