Zhongjiu.com intends to take advantage of Qingqingke liquor to go public

    On the afternoon of April 13, a public announcement of a listed Baijiu company quickly stirred the circle of friends in the liquor industry.
Qinghai Huzhu Qingke Liquor Co., Ltd. (002646), which had already closed on the same day, issued a notice stating that the transaction is in the planning stage. The notice stated that Qinghai Huzhu Qingke Liquor Co., Ltd. plans to acquire the controlling stake of China National Liquor Industry Co., Ltd. by acquiring the equity of the old shareholder of China National Liquor Industry Co., Ltd. and subscribing to the newly registered capital of China National Liquor Industry Co., Ltd.
After the announcement was released, more details of the merger and acquisition were disclosed in sequence. According to rumors, the two sides have been in talks for six months, and the final acquisition price has been set at 150 million yuan. However, at around 5:00 pm on April 13th, Lai Jinyu, the founder and chairman of Zhongjiu.com, the most important alcohol e-commerce platform under Zhongjiu Liquor Industry, refuted the rumors about the transaction price in an interview with Huaxia Liquor News. "This announcement is only intentional, and the online acquisition price of 150 million yuan is very inaccurate.".
He also revealed to a reporter from Huaxia Wine News that in the past six months, Zhongjiu.com has indeed contacted several listed companies, and Qingqingke liquor is one of them. I hope everyone does not make deep speculations. Everything is subject to the official announcement of Qingqingke Liquor, a listed company on the Shenzhen Stock Exchange.
China Wine has been looking for a good opportunity to go public through mergers and acquisitions. Can it take the advantage of highland barley wine to achieve "curve listing" this time? With the advent of the Internet wave in the wine industry, what plans are being made for this acquisition of highland barley wine?
What is Zhongjiu.com plotting?
At the 92nd National Spring Sugar and Wine Fair held in Chengdu earlier, China National Liquor Network, which has been a startup for three years, repeatedly expressed the idea of "hoping to complete the listing through mergers and acquisitions" - so that early investors can find an opportunity and way to exit, and also reduce the operational risks of the company.
In recent years, the desire of alcoholic beverage e-commerce to accelerate the pursuit of capital has become increasingly strong. However, there are many practical problems with the three conventional listing methods: first, listing on the New Third Board and waiting for the opportunity to switch to another board, but A-share listing is too slow and may miss many opportunities; Next is going public in Hong Kong, but the P/E ratio is too low and not as good as the valuation; Finally, it was listed overseas, but due to the special attributes of alcohol, for example, when listed in the United States, it is not particularly recognized for alcoholic beverages. Western countries have not successfully purchased alcoholic beverages online, and when listed overseas, they are not very recognized for alcohol e-commerce.
The remaining domestic mergers and acquisitions for listing are highly praised by China National Liquor Network. After going public, financing becomes more convenient, which is conducive to the rapid development of enterprises and avoids queuing up for listing.
Article source: Huaxia Wine News
"Founders of multiple rounds of financing for enterprises are easily kidnapped by capital, especially overseas capital, which has very strict requirements for corporate profits and is very barbaric. Therefore, if Zhongjiu.com does well this year, it will adopt mergers and acquisitions to achieve indirect listing, which is this year's plan." Lai Jinyu said that Zhongjiu.com needs to quickly layout and vigorously open stores this year, which requires strong financial strength.
In addition to being used for scale expansion and store expansion in O2O, another important purpose of China National Liquor Network's listing is also to promote financial business through listing, providing financial services such as small loans to alcohol distributors.
In the selection of merger and acquisition partners, Lai Jinyu told a reporter from Huaxia Wine News that he hopes that the market value of the listed companies in the merger and acquisition cooperation will not be too large or too small. Otherwise, it will lead to a lack of sufficient dominant power in the company or be unfavorable for supporting the future large-scale market expansion of Zhongjiu.com. In the most ideal industry choice, he tends to favor listed companies in the beverage related industry that can generate synergies.
According to this view, Qingqing barley wine is undoubtedly the most ideal choice. When answering a question from a reporter from Huaxia Liquor News, Lai Jinyu indirectly acknowledged the acquisition of Qingqingke liquor, saying, "If conditions permit, it is not impossible. However, there is not only one listed liquor company interested in acquiring China National Liquor Network.".
However, a reporter from Huaxia Wine News also noticed that although it will eventually be acquired, Lai Jinyu is not prepared to give up running Zhongjiu.com. He has emphasized that if acquired, Zhongjiu.com still needs to retain its management rights, and Zhongjiu.com is more relying on capital. The entry of listed companies is a good thing for Zhongjiu.com itself. If capital can be leveraged, Zhongjiu.com will undoubtedly develop rapidly.
According to him, this year, Zhongjiu.com will lay out 1000 offline stores and achieve a sales revenue of 1 billion yuan.
Why get involved in the Internet?
Influenced by the continuous in-depth adjustment of the Baijiu industry, the performance of highland barley liquor, which intends to acquire shares of China Wine Network, was not ideal in 2014.
According to the 2014 performance report released by Qingqingke Liquor, the company achieved a revenue of 1.35 billion yuan last year, a year-on-year decrease of 5.76%, and a net profit attributable to shareholders of the listed company of 320 million yuan, a decrease of 15.20% compared to the same period last year. Last year, Qingqingke Liquor Company increased its marketing efforts and management expenses, resulting in a significant increase in expenses compared to the same period last year, leading to a further decline in performance.
In the period of industry adjustment, new ideas are surging. Baijiu giants such as Yanghe have tried to build their own Internet platforms, while highland barley wine has chosen to acquire mature e-commerce platforms. Why?
Maybe we can see one or two things from Lai Jinyu's speech: Chinese traditional Baijiu manufacturers' acquisition of liquor e-commerce is to enhance several values and opportunities for themselves: first, improve sales performance. With the help of Internet e-commerce, the sales of big liquor e-commerce are very rapid, and they can often achieve sales of 2 billion yuan from 200 million yuan in three years.
Secondly, expand the sales channels of traditional manufacturers. Lai Jinyu believes that the acquisition of some alcohol Internet companies, or strategic cooperation, can increase e-commerce channels for traditional alcohol merchants. Thirdly, achieve the transformation of traditional manufacturers. During the adjustment period of the liquor industry, some new models of online and offline combination are encouraged, which are also in step with the national strategy. The cooperation between manufacturers and the Internet is conducive to development.
Fourthly, distilleries should acquire alcohol e-commerce to enhance corporate value. Lai Jinyu believes that the sales of alcoholic beverages are very suitable for e-commerce. The repurchase rate of alcoholic beverages is very high. The profit margin of alcoholic products is quite good, and the average order value is also relatively high. E-commerce for alcoholic products can also be done very well.
"For manufacturers, if they are listed companies, their P/E ratio will be high. Because the traditional P/E ratio of manufacturers is 15 times, which is about 30 times higher, but e-commerce companies, such as Internet companies, are basically more than 100 times higher. If the listed companies of alcohol have Internet genes, the sales of e-commerce will exceed the sales of traditional channels. I believe this will still be a great help for the transformation of P/E ratio." Lai Jinyu said.
What will be the next step for Qingqingke Liquor's intention to acquire Zhongjiu.com?
On the morning of April 14th, a reporter from Huaxia Liquor News called Zhao Jie, the representative of Qingqingke Liquor Securities. Zhao Jie told the reporter that we had just come into contact with this matter and it is still under planning. All other matters are subject to the official announcement of the listed company.