The signs of bottoming out are too obvious! The predicament was successfully reversed, and the absolute leader of the industry returned

In the recent Tongrentang article, "Value Office" gave everyone a break about the power of the brand, in general, although there are a variety of many brands in China, but most of these brands are relying on channel advantages and scale effects in the competition to win the result, the real brand power (that is, the ability to continue to raise prices, compared with other similar products have a large premium ability) is actually very few.

This kind of highly branded products are often related to long-term precipitation and cultural inheritance, such as high-end liquor, branded Chinese medicine and branded cigarettes, inheritance catering...

Among the brand traditional Chinese medicines, the most well-known and widely used by the terminal people is ejiao that replenishes qi and blood. In 2021, the terminal sales of ejiao in China's urban physical pharmacies reached 5.14 billion, and this is only the pharmacy channel, if you count hospitals, Internet channels and messy ejiao derivatives, in fact, the market of ejiao is larger than many people think.

01. The return of the difficult situation is still the leader

As we all know, the problem of Dongea Ejiao is that from 2012 to 2017, the price was raised too sharply and too frequently (at least once a year, and most of them were large price increases, and the highest single price increase was 53%), resulting in the loss of many customers, and the goods were piled up in the channel, and they were not sold at all.

This is reflected in the financial report, that is, the accounts receivable in 2016-2018 rose rapidly, and the revenue and profit were fake, because the goods were not sold, and these profits were all receivables.

In 2019, the thick-eyed ejiao "thunder", this thunder explosion is real thunder, after a long period of destocking, changing management, changing shareholders, by the second half of 2020, the channel's inventory was basically cleaned up, and the company began to re-ship to the channel.

From the perspective of OTC drugs, the reasonable inventory level of channels in the industry should be about 2 months, and the current channel inventory of Ejiao is 2-3 months, which is at a very healthy level, indicating that the company's current operating conditions are very benign. Looking at the company's balance sheet, accounts receivable are also at a reasonable level, accounting for about 30% of revenue in the first half of 2022, and cash on the books has reached a record high.

Although the perforance level is still far from the historical peak of 2018, it is indeed the best year in recent years in terms of asset benign situation, and the valuation of ejiao by the market is also estimated based on the current performance, so the current ejiao is worth retracking.

As we said earlier, Ejiao 2019-2021 has experienced a long three-year destocking process, during which the head office did not deliver to the channel, the boss fell, and a group of younger brothers have stepped up their efforts to push their own Ejiao, such as Tongrentang, Fupai, and the channel brand of Da Forest Pharmacy Dongcheng Ejiao...

However, the ejiao market did not appear in the mobile phone market "Huawei falls, millet eats", but Dong'a fell, no one was full, no brand has the brand power of Dong'a, to undertake the market that Dong'a let out of the momentary loss. In the ejiao market in 2021, Dong'a accounted for more than 60% of the market share; followed by the cheapest Fupai, accounting for about 15%; Third, Tongrentang and Taiji Group each account for about 10%.

According to the investigation of some distributors by "Value Office", although the profit of agent Dong Ejiao is not as good as that of miscellaneous brands such as Fu brand (we can now go to pharmacies and find that many pharmacies put miscellaneous brands of Ejiao at the door for profit), but Dong Ejiao shipments are better than other brands, the repurchase rate is higher, and things are better sold.

This also shows from the side that the brand power of Dongea Ejiao is strong, in exchange for the general consumer goods market, such as milk, beverages, snacks, etc., if which brand has not made any big moves in three years, and the channel business does not make too much money, it may have long been killed by competitors and forgotten by consumers.

However, from the perspective of industry insiders, Dong'a's ejiao is indeed the best, high brightness, less fishy smell, other brands can not be compared, if you go to the traditional Chinese medicine hospital to see a doctor, the hospital to prescribe the prescription is definitely Dong'a.

02. Brand new ejiao

Friends who know more about ejiao in the past should be able to feel that the current ejiao is completely different from before.

In the past, ejiao, the marketing strategy was "four big", that is, big store, big advertising, big visit, big terminal, our most intuitive impression of ejiao is that pharmacy personnel bring a big pot to boil ejiao cake at the door of the pharmacy, but now, this marketing strategy that only takes the terminal store as the gripper can not actually meet the current marketing needs.

Now the marketing is more and more showing a trend of thousands of people and thousands of faces, fragmented, do not do online only offline can not live at all, only do online do not do offline can not live, must be grasped with both hands, both hands must be hard, online Taobao, Jingdong, Douyin, Kuaishou, Xiaohongshu, offline supermarkets, pharmacies, hospitals, elevators...

Through the recent changes of ejiao, it is not difficult to find that ejiao is the most "modern-minded" brand in the field of ejiao of all domestic traditional Chinese medicine, including ejiao. When other competitors only know to use traditional methods to tell customers to sell products through boiled ejiao cakes, Dong'a is engaged in live broadcasting, private domain traffic platform, and strategic cooperation with JD Health, with the help of JD big data platform for data mining, to promote its own digital marketing transformation.

This may be related to the fact that Ejiao was acquired by China Resources and changed the management (China Resources' OTC does very well, such as 999 Cold Ling, 999 Dermatitis Ping, Sanjiu Gastric Tai Granules, etc., are all well-known OTC star products).

In 2021, Ejiao's online channel achieved sales of more than 500 million yuan, accounting for 10% of sales revenue from 10% to 14%, of which self-operated business exceeded 200 million yuan. In the first half of this year, Ejiao's online business accounted for nearly 20%. According to the company's plan, the proportion of online revenue is expected to reach 30% in the future, and products such as Peach Blossom Ji Ejiao Cake, which are more popular with young people, should account for 50% of online revenue.

The company hopes to grow steadily offline in the future, grasp traditional customer groups, and at the same time catch young people in online business, achieve faster growth, transform ejiao from the attributes of partial drugs to "fast-moving consumer goods", expand the varieties from traditional ejiao blocks, compound ejiao oral liquid, ejiao cake three major pieces to ready-to-eat ejiao powder and other new varieties, trying to drive the company's performance growth through the growth of "ejiao +" new varieties with less ejiao, better taste, easier acceptance by young people and higher gross margin, instead of relying on ejiao blocks to raise prices before.

Speaking of this, the director interjected extra, why is the "Ejiao +" gross profit higher? Let's take an example, the picture below is a Ejiao + product sold well on Jingdong Ejiao, the price is about 70 yuan a box, 12 oral liquids, it seems that the unit price is not high, but a bottle of oral liquid may not actually have much Ejiao, just like Moutai in Moutai ice cream, a bottle of Moutai 3000 yuan, a box of Moutai ice cream 60 yuan, but a box of ice cream will only use one or two milliliters of Moutai, equivalent to a bottle of Moutai wine can make two or three hundred boxes of ice cream, so finally calculate down, In fact, the profit of Moutai ice cream will be higher than that of Moutai, and the final profit of "Ejiao+" products will be higher than that of pure ejiao block.

However, the company's "Ejiao+" strategy is still short in time, and the performance is not yet obvious, which can be left for later.

However, whether the "Ejiao +" product can be out of the circle and whether it can be sold well determines how far Ejiao can go in the end. After all, ejiao is not Moutai, the donkey skin behind ejiao is really more expensive and scarce, and the technical difficulties and pain points of the donkey breeding industry have never been broken through and solved, facing the uncertainty of raw materials, it is easy to hit the ceiling by selling ejiao blocks alone.

03. Finally

According to the company's situation in the first three quarters, it should not be difficult to achieve 4 billion revenue this year, and if you are lucky, you can also do 4.4-4.5 billion. Although there is still a gap from the peak of more than 7 billion, the company is currently the best in recent years from the perspective of cash flow and balance sheet, and the current valuation is also based on the current performance, light travel, through the performance low, fully embrace digitalization, with a strong brand moat of Ejiao, it is still worth seeing, as for how far it can go in the future, it depends on how far "Ejiao +" products can go.