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After landing on the new third board, the performance of Coffee Wings (871216.OC) did not soar.

On June 28, Hunan Coffee Wing Brand Management Co., Ltd. (hereinafter referred to as "Coffee Wing") released its first annual report after listing the new third board. The company achieved revenue of 63.3987 million yuan in 2016, down 2.08% from the same period last year, with a net profit of-5.4655 million yuan. In 2015, the company made a profit of 9.505 million yuan in the same period. At the same time, the company's asset-liability ratio has risen to 97.82%.

It is worth noting that Coffee Wing's annual report reveals that if the time is delayed for another two days, the company will face delisting. In addition, during the disclosure period of the annual report, there were major changes in the company: the Chief Financial Officer resigned for personal reasons, and the Secretary and the accounting firm were also replaced. In this regard, the "China Business Daily" reporter called Coffee Wing and went to the interview letter, as of the press release, has not received a reply from the other party.

The late annual report "changed face"

According to the data, Coffee Wing, a curry brand that originated in Hunan, was listed on the new third board in March 2017. The company is positioned as a "coffee and light restaurant chain". At first, it mainly focused on the development around Changsha and began to expand greatly by joining the chain around 2013. By the end of 2016, the company had 17 direct stores and nearly 200 franchise stores.

However, the company's first annual report suffered a "change of face".

According to the annual report, Coffee Wing's revenue in 2016 was 63.3987 million yuan, down 2.08 percent from the same period last year, and the net profit was-5.4655 million yuan. In 2015, the company made a net profit of 9.505 million yuan.

In this regard, Coffee Wing explained that: on the one hand, brand franchise authorization has changed from commercial stores to more economical high-energy and light luxury stores, resulting in a decrease in franchise revenue; second, the rise in raw material prices, takeout and group buying and other reasons lead to a decline in gross profit margin; third, the development of new business and the infrastructure of business upgrading and other factors lead to an increase in costs and expenses.

Prior to this, the transfer of Coffee Wing's shares has been suspended since May 2 because it failed to disclose its annual report by April 30. If Coffee Wing fails to disclose its 2016 results by June 30, there is a risk of forced delisting. Fortunately, on June 28, Coffee Wings finally released its 2016 results to the public.

A reporter from China Business Daily noted that during this period, a number of senior executives of Coffee Wing have changed. On May 23, Jiang Xiying, the company's financial director, submitted his resignation report. On May 26, the company appointed ran Qingjiu as the secretary of the company's board of directors, and the person in charge of the company's information disclosure was changed from Ren Pengfei to ran Qingjiu. At the same time, Coffee Wing has changed accounting firms. On June 12, the company announced that it plans to hire Lianda accounting firm to replace Zhongtianyun accounting firm and be responsible for the audit of the company's annual financial report.

In addition, Coffee Wing's asset-liability ratio remains high. In 2016, the company's assets totaled 45.0332 million yuan, liabilities totaled 44.0517 million yuan, and the asset-liability ratio (consolidation) reached 97.82%. In 2015, the figure was 87.91%. Generally speaking, it is relatively normal for a company with a debt-to-asset ratio of 40% Murray and 60%. The asset-liability ratio is so high that companies will be affected when they borrow from banks. In addition, if the company is dominated by fixed assets and short-term liabilities, there may be a concentrated outbreak of liabilities and assets that cannot be realised. " Yan Keyang, director of the investment bank of Guohai Securities, said.

At the same time, in 2016, the company's net cash flow from operating activities was-23.9865 million yuan, compared with 26.2799 million yuan in the same period of the previous year. The specific reason is that the company received a decrease in cash for sales of goods in 2016, an increase in cash payments for purchases, and a significant decrease in other cash related to operations.

Shen Meng, executive director of Xiangsong Capital, said that negative cash flow means that the company's capital is decreasing and its assets are depreciating. May cause operating cash flow tension, once the capital chain is broken, it may cause enterprise difficulties.

The mode of rapid expansion remains to be tested

Yin Feng, chairman of Coffee Wing, has said publicly many times that he wants to build the company into a "Starbucks of China". At a news conference held during the company's bell ringing ceremony, Yin Feng said, "Starbucks is 46 years old, old and tired. It has been worrying about the coffee life of the Chinese people for more than ten years. Please give us some time to sharpen our wings. Take over."

In fact, Coffee Wing has accelerated its expansion in recent years by joining chains, with a net increase of 106 franchisees between 2014 and July 2016, according to public transfer brochures. At present, Coffee Wing has 17 direct stores and nearly 200 franchise stores, covering more than 130 cities across the country.

The franchise fee collected has become one of the main sources of revenue for the company. In 2015, the above income exceeded 24 million yuan. In 2016, the company's franchise fee income decreased to 21.6575 million yuan, accounting for 34.16% of revenue.

The decrease in franchise revenue is due to the fact that the franchise authorization of the company's brand has changed from commercial stores to more economical high-energy, light and luxury stores. The reporter learned that the types of offline stores in Coffee Wing are roughly divided into business wings in third-tier cities, mainly targeting mature business people; light and luxury wings in second-tier cities, with mainly post-80s women; and high-energy wings in first-and second-tier cities, targeting young people born in the 1980s and post-90s. In other words, the franchise stores of Coffee Wing are moving from third-tier cities to first-and second-tier cities.

Lu Shengzhen, a brand marketing expert, believes that if the company's store chain expands too quickly, it will not be able to fully grasp the goods in the store, retail operations, logistics and transportation, which may be a great hindrance to the brand plan of Coffee Wing. In addition, compared with Starbucks, the spending power of Coffee Wing's target customers is low, and its core competitiveness lies in localization.

It is worth noting that Coffee Wing did not choose to expand in direct stores. According to available data, a number of Coffee Wing's existing direct stores are at a loss. From January to July 2016, 12 of the company's 16 stores lost money, with a total loss of 6.8577 million yuan, according to the public transfer prospectus. One of the 16-year-old stores lost 4.575 million yuan.

"Coffee stores have high requirements for brand power and internal control. Coffee consumption does not belong to impulse consumption, and most consumers are more loyal to a certain brand of coffee. Therefore, the quality of coffee itself is very important. In addition, labor, rent and other cost pressure, the company's internal control capacity and financial strength directly affect the profitability of direct stores. " Said Liu Hui, chief consultant of Beijing Zhaoyi Retail Management Consulting Co., Ltd.

In addition, Coffee Wings is pushing the city's smart coffee maker. According to relevant media reports, the coffee machine, independently developed by Coffee Wing, can grind coffee in tens of seconds and also offers more than a dozen beverage options. The aim is to extend coffee from cafes to society.

However, Maxwell, Nestl é, Starbucks and others have all launched domestic or urban commercial coffee machines and competed in high-end market segments, which is a common way for most well-known international coffee brands to supplement their existing industrial businesses. Lu Shengzhen told reporters that the advantage of the intelligent coffee machine launched by Coffee Wing may be that the functional module is more suitable for the habits and consumption scenarios of domestic consumers. However, this is not a core competitive advantage and will soon be imitated. Moreover, compared with the grinding system of foreign brand machines, waterway components, constant temperature and pressure waterway control system, domestic brands are difficult to surpass for the time being.

At the same time, the reporter learned that the "coffee + meal" multi-point compound business model of Coffee Wing is facing fierce market competition.

In July 2016, Starbucks launched the "Huan Xin Food" project in some parts of China, launching 38 food items in 12 provinces, including Sichuan, Qinghai and Henan, according to a reporter from China Business Daily. Increase the proportion of food products in Starbucks stores. In addition, Starbucks announced that it will have 5000 stores in mainland China in 2021. At present, it has more than 2300 stores in mainland China. In other words, Starbucks will open at least 500 new stores in each of the next four years.

Lu Shengzhen believes that the "coffee + meal" model allows Coffee Wing to quickly cut into the market and find its own consumer groups. However, the professional threshold of this model is low, which has attracted many imitation competitors, and even Western fast food such as McDonald's and KFC have invested heavily to join the competition. "Coffee Wing urgently needs to optimize coffee star products and rely on coffee to enhance the impact of catering. In addition, instant products can also be launched to expand marketing channels. " He said.