Guan Guan Real Estate Network During the AFC Champions League final on November 9, 2013, Xu Jiayin was planning a big business gamble.
Evergrande is good at playing marketing cards, and the promotion of Evergrande Ice Spring is absolutely phenomenal. The Guangzhou Evergrande team quietly put on new uniforms with the "Hengda Ice Spring" advertisement, paired with TV commercials that were broadcast in rotation, and a background billboard on the stage background of the post-match celebration banquet. This new business line was born.
Few outsiders know what remedies the Evergrande team will have if they ultimately lose. But in the 58th minute, Muriqi assisted Exxon to score a goal alone, and the broadcast focused on the moment of the goal. The latter's chest became the most watched advertising spot in Asia.
Guangzhou Evergrande eliminated FC Seoul to win the championship with its away goal advantage. This is the first time since the professionalization of Chinese football that a Chinese club has stood on the highest podium of Asian club competitions. Afraid of Korea? Anger and anxiety are gone. The enthusiasm of people across the country was ignited, making Evergrande the most successful brand exposure in its history.
"Sales in 2014 were 10 billion yuan and reached 30 billion yuan in 2016." Xu Jiayin cheered and declared that the company's mineral water business will achieve annual sales of 15 million tons within 10 years. In his imagination, Evergrande Ice Spring is expected to be built into another 100 billion platform in addition to the main real estate business.
But what happened later is known to everyone. Evergrande Ice Spring prospered and declined after paying a high price. Under the plight of losses, the business line was hastily sold after three years of operation.
But now, Evergrande Ice Spring is back, in an extremely low-key form.
At the performance meeting held at the end of March this year, when Evergrande management introduced its eight major business platforms, Evergrande Ice Spring was clearly on the list without any notice. In 2016, the company packaged and sold its fast-moving consumer goods business, including Grain and Oil Group Company, Dairy Group Company and Mineral Water Group, but now it has bought back and controls 49% of the shares.
According to the current plan, Evergrande’s eight major businesses will “implement our digital technology into a data closed loop and provide us with a brand new service ecosystem.” Evergrande Ice Spring is considered the latest piece of the puzzle in the group’s “data closed loop”.
Looking back at this story of the return of Hepu Zhu. It entered the fast-moving consumer goods market with high profile in 2013-2014, and then hurriedly sold and repurchased it. Is it really that careless? Where the gray line is hidden, we can see that the three buyers were inextricably linked to Evergrande.
Go high and fight quickly
At present, every time Evergrande is determined to develop a new business, it always bets large sums of money, quickly piece together the business territory through mergers and acquisitions, and pursues rapid development. The company pursues the rapid realization of results and has greater profit prospects from the perspective of capital value. For a company like Evergrande that emphasizes high turnover, it hopes that its contact with capital hot money will also be high turnover.
So the day after the AFC Champions League final, Evergrande officially launched the Evergrande Ice Spring brand, and then launched an overwhelming advertising campaign. For about 20 days from November 9 to November 30, 2013, Evergrande Ice Spring spent as much as 1.3 billion yuan on marketing. The advertising covered three CCTV channels and 60 TV stations in 30 cities across the country during prime time.
Evergrande Bingquan’s sales channels have also been rapidly expanded. It is reported that the products have been distributed to as many as 200,000 channel terminals within a month, and the ultimate goal is 2 million.
By January 12, 2014, Evergrande Bingquan held a national partner conference and ordering meeting. It is said that at least 3,000 dealers have grabbed the agency rights of Evergrande Bingquan, and the national contract amount reached 5.8 billion. . According to management at the time, Evergrande Mineral Water Group had 363 sales companies, including 31 provincial sales companies and 332 municipal sales companies.
"Dealers sell Evergrande Ice Spring, and the dealers don't have to pay a penny for offline advertising." Xu Jiayin announced that he would pay all the dealers' offline advertising investment.
At the same time, Evergrande Bingquan has attracted a large number of terminal business salesmen through high basic salaries. The stores they run, no matter convenience stores, grocery stores, small supermarkets or canteens, are said to offer free duitou (duitou refers to the display of goods in supermarkets), free plaques, and promise generous profit margins. At that time, the price of Evergrande Ice Spring was 4.5 yuan/bottle for 500 ml.
In fact, the entire production line of Evergrande Ice Spring was laid out in a very short time.
It is understood that Evergrande only signed a cooperation agreement with Jilin Baishan City in September 2013. The former will invest 10 billion yuan to develop tens of millions of yuan in Baishan City and its jurisdictions Jingyu County and Fusong County. tons of mid- to high-end mineral water projects.
As a further plan, Evergrande immediately acquired two local water plants with an annual output of 400,000 tons and 800,000 tons and began reconstruction work. In October, the brand name "Hengda Ice Spring" was officially decided, and Yang Huafeng of China Railway Materials Wuhan Co., Ltd. joined the company.
In November, Evergrande welcomed Zhang Hua, who previously worked for Pepsi-Cola and Nongfu Spring, to join.
In July 2015, Evergrande Bingquan announced its listing plan and submitted a listing application to the New Third Board. The public transfer instructions show that Evergrande Changbaishan Mineral Water Co., Ltd., the listed entity of Evergrande Bingquan, had operating income of 34.8 million yuan, 968 million yuan and 284 million yuan respectively in 2013, 2014 and January to May 2015. The company's net profits were a loss of 550 million yuan, a loss of 2.839 billion yuan and a loss of 550 million yuan respectively.
"In order for its natural mineral water to quickly occupy the fast-moving consumer goods market, the company has invested heavily in the early stage, including marketing expenses including advertising and the increased labor costs of introducing a sales team." Evergrande Ice Quan said.
During this period, the company's production lines were extended to Antu County, Yanbian Prefecture, and the company's employees expanded from about 1,000 to 8,397, including 5,048 sales staff, accounting for 60.12%.
On the other hand, the development of Evergrande Grain and Oil and Evergrande Dairy generally follow the same path.
In August 2014, Evergrande Cereals and Oils recreated the Bingquan route and made its debut through the AFC Champions League. According to reports, it acquired a number of small oil and fat factories in Heilongjiang, Jilin, Inner Mongolia and other places in the early stage for renovation. According to the group, it invested nearly 7 billion yuan to build and acquire 22 production bases.
On September 1, Evergrande Grain and Oil held a national ordering meeting in the Aershan Prairie of Inner Mongolia. 3,500 dealers flew to Ulanhot on about 32 charter flights. According to reports, the order amount at this trade fair was as high as 11.9 billion yuan. In the same month, Evergrande acquired New Zealand's Kawasaki Dairy to establish Evergrande Dairy.
The excessive investment in publicity and distribution created a financial gap. Evergrande Bingquan proposed to terminate its listing two months after submitting the review. Subsequently, Evergrande, which was under pressure from transformation, conducted internal reorganization and mergers of FMCG businesses such as mineral water, grain and oil, and dairy, and completed the sale a year later.
Sell or delist
Evergrande chose to spin off its fast-moving consumer goods business in September 2016.
Including the mineral water business, which was sold for 1.8 billion yuan, and the buyer was Shenzhen Sanwei Turin Auto Sales and Service Co., Ltd. and Lipu (Hong Kong) Limited; the grain and oil business was sold for 600 million yuan, and the buyer was Shenzhen Lailailai Industrial Co., Ltd.; the dairy industry was acquired by Shenzhen Mingsheng Turin Trading Co., Ltd. and Sunlight Property Management Limited at a price of 300 million yuan.
Among them, Shenzhen Sanwei Turin Automobile Sales and Service Co., Ltd. has natural person Zhang Qingmei as the sole shareholder and Wang Zhongjun as the general manager. The company was also one of the legal person shareholders of Shenzhen Judan Industrial Development Co., Ltd. at the time . Judan Industrial is controlled by Shenzhen Cuilin Investment Holding Group Co., Ltd.
Shenzhen Lailailai Industrial Co., Ltd. was formerly known as Shenzhen Xinnuoton Trading Co., Ltd. Its major shareholder, general manager and executive director Wang Haji also serves as the director of Shenzhen Cuilin Real Estate Development Co., Ltd.
Shenzhen Mingsheng Turin Trading Co., Ltd., which undertakes the dairy business, has recently become well-known. It invested 1.8 billion Hong Kong dollars in March to participate in the strategic investment of Evergrande RV Bao, making it the top 5 One of the war investment parties. The company's major shareholder Wang Weimin is the former chairman of Shenzhen Qianhai Jianrong Fund Management Co., Ltd.
According to public information, Qianhai Jianrong was formerly the capital department of Shenzhen Construction Engineering Co., Ltd., and the fund The guarantor and forward acquirer of the product is Shenzhen Construction Engineering Co., Ltd., its actual controller Wang Zhongming.
People who are familiar with Evergrande should know that Wang Zhongming is the chairman of Cuilin Investment Group. At that time, he was the vice president of Evergrande Real Estate Group and was responsible for the Shenzhen regional affairs of Evergrande Real Estate Group.
In addition, Cuilin Group has also previously participated in the strategic investment of RVB and the customized allotment of Evergrande Automobile, investing HK$630 million and holding 0.386% of the shares respectively, and investing HK$5 billion and holding 1.875% of the shares respectively. .
In general, the buyer of Evergrande’s fast-moving consumer goods business has an inextricable relationship with Evergrande. Perhaps this transaction is not a simple sale.
If we regard it as a strategic move. It is not difficult to understand why after Evergrande sold its mineral water group, dairy group, and grain and oil group, most of the senior management teams of these businesses did not change. At the same time, the acquiring party can still use Evergrande-related trademarks for 5 years until it is now repurchased by Evergrande.
The end of 2016 to 2017 was a turning point in the development of Evergrande Group. In 2017, after completing the sale of its three major fast-moving consumer goods businesses, Evergrande took the initiative to step on the brakes and initiate strategic transformation. Xu Jiayin announced that he would be the "profit king".
The external environment at that time was that the real estate market, which had experienced explosive growth for several years, began to enter a downward cycle in 2017. The tightening financing environment and increasing costs were eroding the profits of every real estate company. .
It was also during this period that Evergrande decided to adjust its financing structure and use equity financing to replace perpetual bonds, and introduced three rounds of strategic investments worth 130 billion yuan. Since then, equity financing has become one of Evergrande’s most important financing channels.
Xu Jiayin said that in terms of development model, the company must transform from "scale-based" to "scale + efficiency" model, and in terms of business model, it must change from high debt, high leverage, high turnover, low cost. The "three highs and one low" model has changed to the "three lows and one high" model of low debt, low leverage, low cost and high turnover.
In order to achieve the goal of backdooring the real estate, Evergrande has deeply tied up with dozens of strategic investors, and there must be no deviation in sales growth, carry-over profit performance, etc. Subsequently, the fast-moving consumer goods business, which was loss-making and not closely related to the main real estate business, became the target of being temporarily abandoned.
A drunkard's intention
In fact, the FMCG business is not a bad business.
Eight years ago, Evergrande’s logic was to focus on the popular Guangzhou Evergrande team and promote fast-moving consumer goods such as bottled water, grain and oil, milk powder and dairy products that are closely related to people’s lives through sports marketing, and increase the Evergrande brand Exposure, with the ultimate mission being to drive home sales.
In addition, the fast-moving consumer goods industry with smooth capital flows, especially the high-end bottled water business with extremely high profit margins, will help alleviate the cash flow dilemma of the group's main real estate development business.
Eight years later, the importance of FMCG as a breakthrough for real estate companies to develop their community resources is self-evident. Community fresh food, community group buying, and fast-moving consumer goods are all the focus.
With millions of homeowners in thousands of communities, why should real estate companies lose resources that they can firmly control through property management to Alibaba, JD.com, Meituan and other Internet companies? This is the blue ocean that major real estate developers see.
The Evergrande Preferred Mall APP has been launched at the end of 2019. It currently sells Evergrande Bingquan, Evergrande Cereals and Oils, Evergrande Dairy, Evergrande Oli (imported meat), and Evergrande Agriculture and Animal Husbandry. and other products.
It is an indisputable fact that the real estate industry is weak, and the situation is even worse than in 2017, 2018, and even 2019. Returning to the main business is not feasible, and finding new business directions is the only way to go.
Evergrande’s latest diversified development plan is to divide its business into eight major industrial platforms, including Evergrande Real Estate, Evergrande New Energy Vehicles, Evergrande Property, Hengteng Network, RV Group, Evergrande Big Children's World, Evergrande Health Industry, and the three-in-one Evergrande Ice Spring.
According to the latest plan, Evergrande will build Evergrande Ice Spring into China’s No. 1 water brand and China’s No. 1 health, grain and oil brand. It is said that Evergrande has developed 14 series and over 50 products in three directions: mineral water, grain and oil, and dairy.
The more pressing issue is that Evergrande plans to spin off all eight major business platforms and list them. RVB, Evergrande Children’s World, and Evergrande Ice Spring, which have not yet been included in the listing platform, have relevant plans. .
For Evergrande, the story of being the leading real estate company with annual sales of 750 billion yuan is no longer compelling enough. How to attract more investment and achieve the goal of reducing debt? Then tell a new story. So far, Evergrande has raised tens of billions of Hong Kong dollars in funds from investors through its three major business segments: Evergrande Automobile, Evergrande Property, and RV Group, and has achieved the goal of reducing its debt ratio through spin-offs and divestitures.
In fact, with the help of rounds of investment and allotment financing, Evergrande raised nearly HK$88.8 billion in equity on several major platforms last year. According to reports, Evergrande used its own funds to repay the principal and interest of overseas debts of HK$59.1 billion without issuing a single foreign debt last year.
Every thing has its historical mission in every period. Evergrande has exposed too many problems in its eagerness to achieve success in its diversified business. At present, there are objections from the outside world to Evergrande's slogan-like approach to diversifying its business. This is especially reflected in the comparison between Evergrande Automobile's business and stock price.
But Evergrande Ice Spring’s road to listing is not far away. On December 2 last year, Evergrande Property successfully rang the bell on the Hong Kong Stock Exchange in less than four months after introducing investors; the listing of RV Bao is planned within this year.
Not to mention those ambitious goals of deeply exploring community resources, data closed loops, etc., Evergrande Bingquan’s short-term mission is to estimate a higher valuation, and provide Evergrande Group with a limited number of real estate debt issuances before and after the IPO. In this case, provide an additional funding channel.
For now, after Evergrande attracts funds with its diversified business, it has to give an explanation to the capital side, at least which will be reflected in the stock price. Evergrande also needs money from them. The higher the stock price, the more they can provide.
This article comes from Guandian Real Estate Network