Text | Zhang Jiaru
"How much is a bottle of Feitian Moutai?" 2200 yuan", "cheaper, give a cost price" "Okay, 2650 yuan", this is a joke on the Internet recently, and it is also the epitome of the downward trend of Feitian Moutai's circulation price. Affected by this, Kweichow Moutai's share price fell below 1,600 yuan.
At the same time, Dong'e Ejiao, known as "Moutai in medicine", is another landscape. Dong'e Ejiao hit a record high in May, and the stock price is currently at a high level. At the close of trading on June 18, Dong'e Ejiao's share price was 68.74 yuan, with a total market value of 44.27 billion yuan.
The stock price performance of Dong'e Ejiao's explosion is related to the "blood return" of performance.
In 2019, due to the outbreak of channel inventory problems caused by frequent price increases, Dong'e Ejiao's performance was thunderous, with revenue plummeting by 59%, and a huge loss of 455 million yuan in net profit attributable to the parent company. Since then, the company has abandoned the price increase strategy, controlled shipments and stabilized terminal prices, cleaned up channel inventory, and laid the foundation for performance recovery.
From 2020 to 2023, Dong'e Ejiao's revenue and net profit attributable to the parent company will rise for 4 consecutive years. In 2023, Dong'e Ejiao will achieve operating income of 4.715 billion yuan, a year-on-year increase of 16.66%, and net profit attributable to the parent company of 1.151 billion yuan, a year-on-year increase of 47.55%.
Dong'e Ejiao's performance in the secondary market exploded, will its performance return to the peak and become a god again? Compared with the performance in 2018 before the thunderstorm, there is still a big gap in the scale of Dong'e Ejiao's performance in 2023. In 2018, Dong'e Ejiao's revenue was 7.338 billion yuan, and the net profit attributable to the parent company was 2.085 billion yuan.
It is worth noting that in recent years, the growth of Ejiao block, the core product of Dong'e Ejiao, has been sluggish, what will the company rely on in the future?
nutraceuticals to medicines
Dong'e Ejiao is the only listed company in the Ejiao category on the A-share main board. Before the performance thunderstorm in 2019, Dong'e Ejiao focused on health care products and light on medicines. For example, in the 2018 annual report, Dong'e Ejiao said that the company is in the pharmaceutical and health care industry, and the demand of the health care industry will continue to grow.
When elaborating on the main products, Dong'e Ejiao emphasizes the concept of "supplement". For example, the company's Ejiao (Ejiao block) is the first brand of nourishing and health preservation; Compound Ejiao paste is far ahead in the market of qi and blood supplements.
From 2009 to 2017, Dong'e Ejiao's performance and stock price soared, and it was heavily held by public funds and other institutions.
In 2018, Dong'e Ejiao suffered a storm of "boiled donkey skin" and suffered a great loss of vitality. In 2019, after the outbreak of the Quan Jian incident, the health care product industry was subject to high-intensity supervision. At the same time, there is more discussion about "buying health products is paying IQ tax". Dong'e Ejiao was affected, dealers' enthusiasm for hoarding declined, and the company's performance thundered and stepped down from the altar.
After the performance thunderstorm, Dong'e Ejiao made a series of adjustments, such as cleaning up channel inventory, gradually withdrawing from the low-margin donkey trading business, and adjusting product strategy. The most important action to lay the foundation for the performance growth of Dong'e Ejiao is the "two-wheel drive" strategy of medicine + consumer health.
Dong'e Ejiao's "two-wheel drive" strategy is related to the change of management.
Since 2022, China Resources, the major shareholder of Dong'e Ejiao, has taken full control of the company's operation and management, and the current management chairman Bai Xiaosong and president Cheng Jie are both from China Resources and have rich experience in OTC product development and marketing.
Compared with the 2018 annual report, in the 2023 annual report, Dong'e Ejiao no longer mentions the healthcare industry when it explains the industry situation, but instead uses traditional Chinese medicine and nourishing health, such as "the company is a leader in nourishing health and a model for the high-quality development of traditional Chinese medicine enterprises." ”
When introducing the products, Dong'e Ejiao added new drug attributes of the product, such as Ejiao (Ejiao block) won the first place in the "China Pharmaceutical Brand List and Value Ranking" for nine consecutive years; Compound Ejiao syrup, an exclusive variety of traditional Chinese medicine.
In Dong'e Ejiao's "two-wheel drive" strategy, compound Ejiao paste is the absolute protagonist, and this product is also the hero of Dong'e Ejiao's performance growth in the past two years, as well as the biggest driving force for future performance growth, and the management has high hopes for it.
In 2022, Dong'e Ejiao established a medical division, and in the second half of the year, the company launched a strategy of large varieties of compound Ejiao paste. In Dong'e Ejiao's product system, compound Ejiao paste is a traditional Chinese medicine product, and it is also a double-span drug, which is both OTC and prescription drug.
The special drug properties have made the compound Ejiao paste obtain the resource tilt of Dong'e Ejiao.
On the one hand, Dong'e Ejiao has expanded the new indications of compound Ejiao paste to verify the effect of compound Ejiao in improving cancer-related fatigue, improving sleep, treating ovarian syndrome and anemia during pregnancy, etc. On the other hand, the company has invested heavily in the marketing of compound Ejiao paste, such as advertising, IP building, packaging updates, etc., to promote sales growth.
At the same time, compound ejiao paste has also reaped policy dividends. In 2023, the medical insurance payment scope of compound ejiao paste will be abolished.
Complement females to complement males
With the blessing of Dong'e Ejiao resources and the east wind of policies, what is the performance of compound Ejiao paste? In the annual reports of previous years, Dong'e Ejiao did not disclose the detailed performance information of compound Ejiao paste and other products, and from the management's statement, it can be seen that the high growth of compound Ejiao paste can be seen.
On April 9, Cheng Jie, president of Dong'e Ejiao, said that compound Ejiao paste has grown at a high rate in the past two years, with sales exceeding 900 million yuan and 1.5 billion yuan in 2022 and 2023, respectively.
In 2023, Dong'e Ejiao's revenue will be 4.715 billion yuan, which shows that the revenue of compound Ejiao paste accounts for nearly one-third. This year, Dong'e Ejiao's revenue increased by 673 million yuan, while the sales of compound Ejiao paste increased by 600 million yuan.
Cheng Jie also said that compound ejiao paste maintained rapid growth in the first quarter of this year, and the company plans to achieve an annual revenue target of more than 2.5 billion yuan for this product, an increase of more than 1 billion yuan.
It can be seen that compound ejiao paste is not only the hero who saved the company's performance in the past two years, but also the power source of growth in the next few years. At the same time as the rapid growth of compound Ejiao paste, the Ejiao block, the largest single product of Dong'e Ejiao, has fallen into a growth bottleneck.
At the third quarter of 2023 performance briefing, Dong'e Ejiao introduced the revenue proportion of its products, and Ejiao blocks accounted for nearly 50%; Compound e-gum paste accounts for about nearly 30%. In terms of growth, the Ejiao block was basically flat, and the compound Ejiao paste increased by nearly 40%.
As a large single product accounting for 50% of revenue, the growth of Ejiao blocks is weak, and the logic of "price increase" has been falsified, which means that Dong'e Ejiao wants to return to 2018 and cannot pin its hopes on the growth of Ejiao blocks.
What is the growth target of Dong'e Ejiao for Ejiao blocks? Dong'e Ejiao is relatively calm and "Buddhist".
In February 2023, Dong'e Ejiao said that the proportion of Ejiao blocks contributing to the company's growth will further decline in the future, and the company will no longer rely too much on the growth of Ejiao blocks. Based on this, the supply of donkey skins will not be a key issue that will determine the company's development.
So, in addition to compound Ejiao paste, what other cards does Dong'e Ejiao have?
According to public information, Dong'e Ejiao will take "Peach Blossom Ji" Ejiao cake as the second largest growth point in future performance, and plans to build "Peach Blossom Ji" from a regional brand to a national leading brand of beauty snacks. In the first quarter of 2024, Peach Blossom Ejiao Cake increased by more than 40% over the same period.
In the past, Ejiao was considered to be exclusive to the elderly due to its blood tonic effect. As the post-80s and 90s generations have become the main consumer force, Dong'e Ejiao has promoted the effect of beauty care, which is an attempt to rejuvenate the brand. In the first half of 2023, the company also launched Ejiao instant powder.
In addition to providing nourishing products for female consumers, Dong'e Ejiao also targets male consumption.
In June 2023, Dong'e Ejiao held the "Royal Paddock 1619" brand launch conference, and its varieties include brain and kidney tonifying oral liquid, Guilu Erxian oral liquid, Hailong gum oral liquid and other products. Subsequently, the company will build a product portfolio matrix that strengthens the brain, tonifies the kidney + warms the kidney and yang, and warms the kidney and improves the essence.
From health care products to medicines, from women to men, Dong'e Ejiao's performance growth in recent years is not a repeat of the past price increase strategy, and the hidden danger of the price increase strategy has also disappeared, which may be the reason why the company's stock price has hit a record high.
It is worth noting that at present, there is still a big gap between the performance volume of Dong'e Ejiao and the peak, and in the case of sluggish growth of Ejiao blocks, in order to maintain high growth and high market value, Dong'e Ejiao also needs to create more large products such as compound Ejiao paste.
From the perspective of performance proportion, Ejiao blocks and compound Ejiao paste account for 80% of the revenue, and other products account for a small proportion. Whether Dong'e Ejiao can return to the top is worth paying attention to.