The self-proclaimed “Snack King” in China, Liangpin Puzi, saw a staggering 88.91% drop in net profit in the first half of this year. Despite continuously improving its business strategies, Liangpin Puzi has been unable to achieve satisfactory results in the face of the increasingly competitive market.
According to the unaudited performance forecast released by Liangpin Puzi for the first half of 2024, the company’s net profit for the first half of the year is expected to be between 21 million yuan and 30 million yuan, a decrease of 159.31 million yuan to 168.31 million yuan compared to the same period last year, representing a year-on-year decline of 84.15% to 88.91%.
Looking at the performance, Liangpin Puzi has been struggling with poor performance since 2022. Despite implementing significant price reductions in December 2023, the company’s performance did not improve as expected.
In a commentary article on August 9th, “Planet,” a prominent creator in the mainland China’s finance sector, pointed out that without good quality, frequent food safety issues, and relying solely on attractive packaging and celebrity endorsements, it is challenging for consumers to recognize Liangpin Puzi’s positioning as a high-end brand. Moreover, high marketing costs and expanding offline stores have also started to drag down Liangpin Puzi’s performance, leading to a lackluster performance in the capital market.
From 2020 to 2022, Liangpin Puzi found itself in a predicament of increasing revenue without increasing profits. During this period, the company’s revenue rose from 7.894 billion yuan to 9.49 billion yuan, while its net profit attributable to shareholders dropped from 344 million yuan to 335 million yuan. In 2023, Liangpin Puzi’s revenue began to decline, and this year’s interim performance forecast indicates that the company’s net profit attributable to shareholders of listed companies may decrease by over 80%.
In this context, Liangpin Puzi has started to face capital reductions.
In 2021, on the first anniversary of its listing, Liangpin Puzi’s initial restricted shares were released for sale, and Hillhouse Capital began the first round of reductions, subsequently completing three rounds of reductions, accumulating nearly 1 billion yuan in cash. Following this, Dayong Limited, under Today Capital, also reduced its holdings in Liangpin Puzi.
By the end of 2023, when Liangpin Puzi announced price reductions, the stock price was 21.32 yuan per share, evaporating 26 billion yuan in market value compared to the highest point of 86.52 yuan per share in July 2020. As of August 5, Liangpin Puzi’s stock price had fallen to only 11.02 yuan per share, with a market value of 44.19 billion yuan, dropping below the issuance price of 11.90 yuan per share.
Regarding this, a Tencent netizen commented: “Mainly because I don’t have money to spend.”
User “Bee” also remarked: “It’s too expensive, I can’t afford it.”
“Speechless” also shared: “I can’t remember the last time I bought snacks. Even if I see them, I don’t feel like buying. In today’s world, every penny counts.”
User “Forget the past, Fear no future” said: “It’s becoming increasingly difficult to earn money, so we can only tighten our belts.”
User “Dongdong” questioned: “Why is it that once a company goes public, all aspects of its performance decline, whereas its performance soared before going public?”