Jiajia Food's profit fell 82% in the first half of the year, but employee compensation rose 32%

Jiajia Food Group Co.

However, if you observe the company's performance in the past three years, there is no major problem with the fundamentals of Jiajia Food

Many investors are eager to know whether Jiajia Foods' stock price drop is just a temporary cyclical adjustment, whether the company's operating conditions can support its stock price to rise again and "recover lost ground", and what new growth points for the company's profits in the future?

How can the product layout be better?

In fact, not only the condiments of Jiajia Foods, but also the stock prices of other companies on the same track have also suffered to varying degrees

Data show that in the first half of this year, Qianhe Flavor’s net profit fell by about 58% year-on-year, and its stock price fell from around 25 yuan per share in mid-August this year to about 16 yuan per share; About 82 yuan/share, down to about 30 yuan/share all the way; although Haitian Flavor's net profit in the first half of the year increased by about 3% year-on-year, its stock price performance was not very optimistic, from about 168 yuan/share at the beginning of the year, down to 90 yuan/share Yuan/share

This may explain to a certain extent that market funds are not optimistic about the overall expectations of the condiment industry

Jiajia Foods was established in 1996 and listed on the Shenzhen Stock Exchange in January 2012, and is known as "the first stock of soy sauce in China"

At present, the company has formed two major brands, one is "Jiajia", which is mainly condiments, including soy sauce, oyster sauce, cooking wine, mature vinegar,

Although the company has a wide range of products, the status of soy sauce is still very important.

It is worth noting, however, that reliance on soy sauce products is not unique to Jiajia Foods

Public information shows that in more mature markets, the proportion of compound condiments is higher.

The same is true of the product releases of peer companies.

However, with the continuous growth of China's condiment market, the market share of compound condiments will further increase

From the perspective of product strategy, at present, although the proportion of non-soy sauce products in Jiajia Food is relatively small, it has formed a relatively complete product matrix

What is the prospect of soy sauce research and development?

Regarding the domestic condiment market, some industry views say that the pattern of the condiment field is mainly "small commodities, big market".

If Jiajia Food can continue research and development in the field of soy sauce and enrich its product types, it will also be a major profit growth point in the future

Judging from the current research and development direction of Jiajia Foods, the salt-reduced soy sauce in the soy sauce category is worth noting

Judging from financial data, as of the first half of this year, Jiajia Food’s monetary capital was about 390 million yuan, down about 36% year-on-year, and R&D expenses were about 14.
65 million yuan, down about 27% year-on-year
.
It may be explained that in the first half of the year, Jiajia Food's financial situation constrained research and development
.
How the company's research and development efforts will be in 2021 still needs to be observed in the second half of the year
.

Can the "three expansions" strategy be broken?

From the current situation of the industry, direct selling and distribution are two common models
.
Compared with the dealer agency, the direct selling model reduces the problem of multiple markups in the middle, and can improve the company's gross profit margin to a certain extent.
There are two main types of direct selling: "supermarket sales" and "online sales"
.

For a long time, Jiajia Foods mainly adopts the dealer agency model, and the dealer sales adopt the settlement method of payment before delivery
.
In the first half of the year, the company's distribution model revenue was about 830 million yuan, and the direct sales model revenue was about 9.
8 million yuan.
The gap between the two is relatively large
.

The company stated in its semi-annual report: "The market competition in the fast-moving consumer goods industry intensified during the reporting period, and online platforms such as community group buying had a greater impact on traditional industries and traditional channels
.
" Many people in the industry believe that community group buying relying on the Internet is food retail.
industry development trend
.

Zhu Danpeng said that community group buying must be one of the new retail outlets in the future
.
Chinese consumers have already enjoyed the benefits, convenience, safety and efficient services brought by group buying in the entire community
.
There are also industry analysts who believe that if manufacturers actively transform to online and lay online direct sales channels, they may be able to avoid excessive encroachment of profits by third-party channels
.

Jiajia Foods responds to the impact of channel changes on performance with "three expansions", namely "expanding dealers, expanding channels, and expanding outlets", increasing investment in online channels such as community group purchases, and strengthening management and incentives for business personnel
.
In the first half of this year, the company's direct sales model has increased by about 60%, while the distribution model has fallen by 27%
.
The gross profit margin of "online direct sales" is about 45%, which is about 6% higher than the gross profit margin of 39% in 2020
.

In the next step, Jiajia Food may need to further balance the sales expenses of offline outlets to reduce costs
.
In the first half of the year, due to the increased investment in front-line market personnel, when the overall sales expenses fell, the company's employee compensation increased significantly, reaching about 39.
79 million yuan, accounting for about 44% of the sales expenses, an increase of about 32% year-on-year
.
The overall sales expenses were about 91.
18 million yuan, a year-on-year decrease of about 31%
.

For condiment manufacturers, the development of the food delivery industry has brought new opportunities.
By the end of 2020, the overall order volume of food delivery nationwide reached 17.
1 billion, a year-on-year increase of 7.
5%, and the transaction scale of the national food delivery market will reach 835.
2 billion yuan, a year-on-year increase.
14.
8%
.

It is worth mentioning that in the first half of this year, the gross profit margin of Jiajia Foods was about 23%, down about 26% year-on-year
.
In the future, if the company can seize the development opportunity of take-out, and deepen the development of KA (key customers), restaurants and other channels, it may be helpful for enterprises to control costs and improve gross profit margins
.

(Wang Zhuli)