popeyearcadegame| Behind the Blue Moon Mother's Day marketing controversy: Last year, sales expenses exceeded 3 billion yuan, and performance was weak and production capacity expansion slowed down.

With Mother's Day approaching, Blue Moon Group's elevator advertisement has sparked controversy. On May 6, the Blue Moon advertisement used the words "Mom, you use it first" and "make Mom's laundry easier, more labor-saving, and more worry-free." this caused discomfort among some netizens and was accused of having a strong stereotype.

On May 7, the Blue Moon officially responded, "Review."PopeyearcadegameThe original intention of us to do this is out of love and respect for our mother. "it's just that this love is not accurately expressed in our creation, which leads to a heated discussion among netizens."

The author noticed that behind the "rollover" of holiday marketing, Blue Moon's marketing promotion actions were frequent in recent years, resulting in a sharp rise in sales costs. The sales cost of Blue Moon is still HK $2 billion in 2020 and more than HK $3 billion by 2023.

The rapid growth of sales expenses has gobbled up the profit margin. Since the listing of Hong Kong stocks at the end of 2020, Blue Moon's performance has rapidly "changed its face", and its attributable net profit has declined for three consecutive years. Blue Moon just disclosed the 2023 financial results show that the company's net profit year-on-year nearly halved.

The author also found that Blue Moon is highly dependent on clothing cleaning care products, but the growth of the main business is weak. Blue Moon raised at the time of the listing, most of the money for capacity expansion has not been put into use, but there is not much money left for marketing.

The performance "changed" after the listing, and the sales fee exceeded 3 billion last year.

Blessed by Hillhouse Capital and other well-known investment institutions, Blue Moon successfully listed in Hong Kong at the end of 2020, with a total market capitalization of more than HK $90 billion at one point. Since then, Blue Moon's shares have fallen endlessly, and as of May 8 this year, the total market capitalization has fallen to about HK $12.2 billion, down more than 80% from its high point.

While the market capitalization has fallen, Blue Moon's performance has also continued to decline. In fact, in 2020, when we landed in the capital market, it was already the highlight moment of the blue moon. At that time, Blue Moon achieved revenue of 69.Popeyearcadegame.9.6 billion Hong Kong dollars, with a net profit of 13.Popeyearcadegame. 900 million Hong Kong dollars The net profit is the highest level of public performance of Blue Moon.

After the completion of the listing, Blue Moon's performance began to "change face". In 2021 and 2022, Blue Moon's performance showed a situation of "increasing income without increasing profits". In the current period, revenue was HK $7.597 billion and HK $7.947 billion, up 8.59% and 4.60% respectively over the same period last year.PopeyearcadegameThe attributable net profit was HK $1.014 billion and HK $611 million respectively, down 22.53% and 39.73% respectively from the same period last year.

On April 26 this year, Blue Moon disclosed its 2023 annual report that the company had achieved a "double drop" in revenue and net profit. Of this total, revenue was HK $7.324 billion, down 7.84 per cent from a year earlier, while net profit attributable to it was HK $325 million, down 46.79 per cent from a year earlier. From this, it can be calculated that revenue in 2023 will increase by 4.69% over 2020.

Blue Moon's revenue growth is relatively small, but operating costs have increased significantly, mainly due to the increase in sales expenses. From 2020 to 2023, Blue Moon's sales costs were HK $2.017 billion, HK $2.392 billion, HK $2.651 billion and HK $3.244 billion, respectively. Compared with 2020, the cost of sales in 2023 increased by 60.83%.

In the 2023 financial report, Blue Moon explained the increase in sales costs, mainly due to the increase in promotion through different sales channels, multimedia, omni-channel and consumer education to increase the coverage of different sales and distribution channels and new products.

In addition, the administrative cost of Blue Moon has also increased significantly. In 2023, its administrative cost was HK $1.114 billion, an increase of 35.52 per cent over 2020.

On the one hand, revenue growth is slowing down or even negative growth, on the other hand, operating costs continue to increase, Blue Moon's profitability has declined significantly. Blue Moon's return on equity (ROE) fell from 18.10 per cent in 2020 to 3.03 per cent in 2023.

Capacity expansion and fund-raising are idle and rely heavily on a single business

After consulting the Blue Moon's financial results over the years, the author found that Blue Moon slowed down the pace of capacity expansion. When it went public in 2020, Blue Moon raised funds to invest in four major projects, namely, business expansion (including capacity expansion, etc.), brand awareness (i.e. sales investment), operating funds and R & D funds.

Of this total, the net income from the business expansion plan project amounted to HK $3.918 billion. The project is used to purchase equipment and machines to expand production capacity and to develop laundry services. By the end of 2023, three years after the listing, the project still had HK $3.38 billion on its books.

The investment in sales is used to increase brand awareness, further strengthen the sales and distribution network, and increase product penetration. The net amount of funds raised by the project reached 5.766 billion Hong Kong dollars, the highest of the four major projects. The project will cost HK $1.119 billion in 2021, HK $1.059 billion in 2022 and HK $1.927 billion in 2023. At the end of 2023, the remaining HK $1.661 billion of the project was unspent.

Blue Moon said in its financial report that the expansion and upgrading of many of the Group's production bases were still in progress at the end of 2023. All funds for business expansion (including capacity expansion) will be used by the end of 2025.

Under the plan, Blue Moon will use the remaining funds over the next two years. In the past three years, the above business expansion projects have spent only HK $538 million, and it remains to be seen how to use up HK $3.38 billion in the next two years.

The author noticed that behind Blue Moon's slowing pace of expansion, the company's product sales were unsatisfactory. According to the financial report, Blue Moon has three major business sectors, among which laundry detergent as the representative of clothing cleaning care products contribute the main source of income. In the past three years, the sales revenue of clothing cleaning and care products has accounted for more than 80%.

From 2021 to 2023, the sales revenue of clothing cleaning care products was HK $6.457 billion, HK $6.821 billion and HK $6.501 billion respectively, representing year-on-year increases of 8.59%, 4.60% and-7.84%, respectively. The decline in income in 2023 was explained by the devaluation of the renminbi, which led to a decline in income denominated in Hong Kong dollars and remained stable compared with 2022 in RMB terms.

Sales of personal cleaning care products and household cleaning care products being cultivated by Blue Moon are still small and declined last year. In 2023, sales in these two business segments were HK $447 million and HK $376 million respectively, down 27.8 per cent and 25.8 per cent respectively from a year earlier. In this regard, Blue Moon explained that the demand for disinfection products fell after the epidemic.

Behind the "rollover" of Mother's Day marketing, Blue Moon's sales expenses continue to rise, greatly squeezing profit margins. Of the funds raised at the time of listing, there are not many projects left for sale, but there is still a lot of spare money for business expansion. This reflects the weak growth of the company's performance and the slowing pace of production capacity expansion.