“Buy, buy, buy” can’t save Sanfu outdoor

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Source: Finance Mowgli

The recent cooling of the cold wave has not reduced the future heat of the outdoor camping industry.

On November 21, the Ministry of Culture and Tourism and other departments issued the “Guiding Opinions on Promoting the Healthy and Orderly Development of Camping Tourism and Leisure” (hereinafter referred to as “Opinions”) to continue to promote the development of the camping industry.

On the day the “Opinions” was released, the outdoor camping sector rose by 1.92%, and many stocks in the sector followed suit: sector leaders Yangmu Gaodi (603908.SH), Sanfu Outdoor (002780.SZ) raised their daily limit, and Pathfinder (300005. SZ), Xinghua New Materials (301077.SZ) also rose by 4%.

Last week, the outdoor camping sector continued to rise, with a cumulative increase of 4.27% in 5 trading days, and individual stocks in the sector followed suit. Mu Gaodi rose 3.38% cumulatively, and Sanfu Outdoor cumulatively rose 4.14%.

Unlike Mugaodi, which focuses on camping equipment, Sanfu Outdoor has entered the outdoor field as a platform provider very early. The agency brand not only sets foot in camping equipment, but also includes outdoor hiking, cycling, mountaineering and other pan-outdoor sports fields.

On November 24, Sanfu Outdoor issued an announcement saying that the company paid 24.9 million yuan in cash to acquire Shanghai Flying Frog, and won the exclusive agency right of the Italian high-end hiking shoe brand CRISPI in China.

Last year, Sanfo Outdoor completed the acquisition of Swiss high-end sports equipment brand X-BIONIC, accelerating the process of brand high-end.

However, Sanfu Outdoor, which started the “buy, buy, buy” model, is not trying to expand its business tentacles because of its gratifying performance, but hopes to boost its recent unremarkable performance through short-term acquisitions.

In 1997, with the opening of the first store outside the East Gate of Peking University, Sanfu Outdoor officially stepped into the outdoor field.

Today, Sanfu Outdoor has the agency sales rights in China for many well-known outdoor brands such as THE NORTH FACE, JACK WOLFSIKIN, Klattermusen, Reusch, MYSTERY RANCH, DANNER, LA SPORTIVA, Lizard, and Julbo.

The first batch of Chinese outdoor players also got to know the popular Arc’teryx (ARC’TERYX) in the store of Sanfu Outdoor.

However, since its listing, the performance of Sanfu Outdoor has not increased but decreased.

According to the annual reports of Sanfu Outdoor over the years, from 2015 to 2017, the revenue growth rate of Sanfu Outdoor was 12.37%, 7.84% and -0.53%; the growth rate of net profit was 10.6%, 14.84% and -136.49%.

In addition to the fact that the sales of agency brands have not been able to break the circle, Sanfu’s own SANFO PLUS has also been tepid.

It is difficult for private brands to start, which made Zhang Heng, the founder of Sanfu Outdoor, think of the short, flat and quick “buy, buy, buy”.

In 2018, Zhang Heng met X-BIONIC.

Zhang Heng felt that he had missed Arc’teryx and could not miss X-BIONIC again.

Thus, a “gamble” began.

According to the previous announcement of Sanfu Outdoor, in order to complete the acquisition of X-BIONIC, the total consideration paid by Sanfu Outdoor to X-BIONIC AG and X-Technology Swiss GmbH is 10,294,666 Swiss francs, or about RMB 78.83 million.

After completing the acquisition of the X-BIONIC brand in 2021, Sanfu Outdoor has increased the layout of the brand’s offline stores.

According to the investor relations activity records of Sanfu Outdoor on November 17, before opening the X-BIONIC brand flagship store, the company has opened X-BIONIC brand stores in Beijing Century Jinyuan and Nanjing Deji; in Beijing Xishan and Nanshan Ski Resorts , Chongli Wanlong, Fulong Ski Resort, Jilin Beidahu, Songhua Lake Ski Resort, and Chengdu Sunac Snow World have opened 7 ski resort stores.

X-BIONIC has become the “signature” of Sanfu Outdoor.

Is X-BIONIC really so powerful?

According to the official website of X-BIONIC, this Swiss outdoor brand, which was born in 1998, creatively applies bionics technology to the field of clothing. Its functional clothing can convert sweat into energy, thereby greatly improving the wearer’s sports performance.

At present, ski teams from more than 20 countries choose X-BIONIC as their training and competition equipment, and X-BIONIC has also become the official functional underwear and ski socks supplier of the Chinese delegation to the 2022 Beijing Winter Olympics.

In the Tmall flagship store of X-BIONIC, Caijing Wuji found that the brand’s products cover a variety of outdoor sports scenes such as winter sports, running, cycling, cross-country, and motorcycle sports.

What makes X-BIONIC out of the circle the most is that the brand is also a supplier of Swiss and French special forces, and even Russian President Vladimir Putin wears it.

However, this “black technology” brand did not significantly improve the performance of Sanfu Outdoor.

The report for the first three quarters of 2022 shows that Sanfu Outdoor achieved revenue of 361.1 million yuan, a year-on-year increase of 3.99%, but net profit decreased by 34.08 million yuan, a year-on-year decrease of 110.86%.

The effect of “buy, buy, buy” is not good, and the stock price performance of Sanfu Outdoor is also unsatisfactory.

As of the noon market break on December 5, the stock price of Sanfu Outdoor closed at 12.42 yuan per share. Compared with the year’s high of 22 yuan per share, the stock price fell by 43.59%. Compared with the historical high of 63.01 yuan per share, the stock price fell by more than 80%.

Before starting the “buy, buy, buy” mode, Sanfu Outdoor started to expand other businesses.

According to the financial report, in addition to the operation of its own brand, the main business of Sanfu Outdoor also includes organizing outdoor activities, team building, design, construction and operation of comprehensive quality education projects for teenagers and parents.

The business of Sanfu Outdoor is not complicated.

How much revenue does the outdoor activity business bring to Sanfu Outdoor?

The semi-annual report shows that Sanfu Outdoor’s outdoor products achieved revenue of 219.3 million yuan, accounting for 92.53% of the revenue; outdoor services achieved revenue of 17.27 million yuan, accounting for only 7.29% of the revenue.

According to the 2020 and 2021 financial reports of Sanfu Outdoor, the outdoor service business achieved revenue of 47.69 million yuan and 64.32 million yuan, accounting for 10.20% and 11.58% of the revenue.

According to previous media reports, in 2018, Sanfu Outdoor acquired 77% of the equity of Shanghai Xile and began to operate the “Squirrel Tribe” parent-child park. However, after taking over, the number of tourists to the project has dropped significantly due to the impact of the epidemic. In 2021, the annual number of tourists to the three-place project has dropped to 608,800.

The outdoor service business not only did not bring new performance growth poles to Sanfu Outdoor, but dragged down the overall performance.

In addition, Sanfu Outdoor, which started as a store, cannot get rid of offline “dependence”.

According to the semi-annual report, as of the first half of the year, Sanfu Outdoor has opened a total of 47 offline stores in 18 cities across the country, including Beijing, Shanghai, Nanjing, Hangzhou, and Chengdu.

In the first half of the year, the 47 offline stores provided Sanfu Outdoor with a total revenue of 116 million yuan, accounting for 48.98% of the revenue. Nearly half of Sanfu Outdoor’s revenue came from offline.

For the business risks of outdoor service business and offline stores, Sanfu Outdoor also generously admitted in the financial report.

The most incredible thing is that Sanfu Outdoor also has a mask business.

According to the financial report, since 2020, Jiangsu Sanfu Outdoor, a subsidiary of Sanfu Outdoor, has started the mask business.

From 2020 to the first half of this year, Sanfu’s outdoor mask business achieved revenues of 43.55 million yuan, 9.9 million yuan, and 420,600 yuan, accounting for 9.32%, 1.78%, and 0.18% of the revenue. Outdoors did not “rub” well.

Compared with Sanfu Outdoor, the business of Mu Gaodi, the leader in the outdoor camping sector, is quite focused.

According to Mu Gaodi’s financial reports in recent years, from 2019 to 2021, the revenue of outdoor products accounted for 99.6%, 99.87% and 99.81% respectively.

Focusing on the popular “exquisite camping” concept in the past two years, Mogaodi not only launched exquisite camping, exquisite hiking, and exquisite picnic series products, but also included home camping, travel and business trips and other scenarios into its own products.

In addition, in order to cater to young people’s love for camping, Mu Gaodi also launched joint products with LINE FRIENDS, Swaying Camp 2, PANDER, and RED DESIGN.

All actions revolve around “outdoor products”.

With business focus and proper marketing, Mu Gaodi’s revenue is quite stable.

According to the financial report, Mugaodi achieved revenue of 327.4 million yuan, 539.9 million yuan, and 290.7 million yuan in Q1-Q3 of 2022 respectively. The financial report for the third quarter shows that Mugaodi’s revenue was 1.158 billion yuan, a year-on-year growth rate of 59.96%.

The performance of Sanfu Outdoor in Q1-Q3 in 2022 is 131.3 million yuan, 105.6 million yuan, and 124.2 million yuan respectively.

The gap between the two is getting bigger and bigger.

Spending more than 100 million yuan to acquire X-BONIC and CRISPI fully reflects Sanfu’s determination to become a high-end outdoor company, but does it really work?

Caijing Wuji believes that there are three reasons why Sanfu’s outdoor road is long and difficult, and his future is difficult and dangerous.

One, marketing.

Arc’teryx wins in marketing and brand positioning. On the content planting platform, Arc’teryx has more than 70,000 notes, while searching for X-BIONIC only has 700 notes. The recognition of X-BIONIC and CRISPI is only limited in the circle. How to create more consumer demand is something that Sanfu Outdoor Marketing Department urgently needs to consider.

Second, the price.

Both are European high-end outdoor brands, X-BIONIC and CRISPI are expensive. One’s main product is functional underwear, and the other is Italian handmade hiking boots. Although the circle has a high degree of recognition for both, However, excessive pricing and slightly low social attributes make it difficult for them to become the first choice of consumers.

Third, “offline dependence”.

The financial report shows that nearly half of Sanfu Outdoor’s revenue still comes from offline. Especially after the completion of the acquisition of X-BIONIC, the trend of store openings has not declined but increased.

However, the asset-heavy business strategy of offline stores will greatly drag down Sanfu’s cash flow.

According to the Q3 financial report of Sanfu Outdoor, the inventory of Sanfu Outdoor in the first three quarters was as high as 319 million yuan, far higher than the monetary capital of 58.9017 million yuan, and the inventory was serious; the cash flow generated by operations was -42.151 million yuan, a year-on-year decrease of 81.51%, and the performance was obvious. under pressure.

How to rapidly expand the proportion of online revenue and reduce the pressure of offline operations is an urgent task for Sanfu Outdoor.

In addition, with the concept of “exquisite camping”, how long can Sanfu stay outdoors?

The English word for “camping” is camping. In most contexts, camping is a part of rest in conjunction with other outdoor activities, such as hiking, mountain climbing, rock climbing, etc.

In recent years, “exquisite camping”, which has become popular in China, corresponds to the word glamping in English. Glamping is a combination of “Glamorous” and “Camping”.

Glamping puts more emphasis on “traveling lightly”. For example, three or five friends meet and go directly to the campsite, with only a small amount of food and equipment. The camping cycle is short and more social.

This is very similar to the annual hunting activities of princes and nobles in many European and American historical dramas.

The epidemic lockdown and social needs have pushed up the concept of “exquisite camping”.

According to the “2021-2022 China Camping Economy Industry Status and Consumer Behavior Data Research Report”, the core camping market in China will reach 74.75 billion yuan in 2021, driving the upstream and downstream markets to 381.23 billion yuan. It is estimated that in 2024, China’s camping will drive the market size will exceed one trillion yuan.

Outdoor camping, which seems to have a bright market prospect, may not be as “sweet” as it is now with the loosening of epidemic policies and the return of cross-border travel.

Outdoor camping is a big cake, it is not easy for Sanfu to eat well outdoors.

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