Source: Finance World Weekly (ID: cjtxzk) Author: Liu Suiping As of May 20, Fuling Zhacai closed at 27.77 yuan per share, down 3.51% from the previous trading day, with market value evaporating by about 800 million yuan. This is equivalent to the company losing 320 million packs of Wujiang Zhacai (80g, priced at 2.5 yuan) in one day. On the evening of May 19, Fuling Zhacai announced the completion of executive He Yunchuan's share reduction plan, which constituted illegal reduction due to exceeding the upper limit by 3,153 shares. Affected by this, as of May 20, Fuling Zhacai closed at 27.77 yuan per share, down 3.51% from the previous trading day, with market value evaporating by about 800 million yuan. This is equivalent to the company losing 320 million packs of Wujiang Zhacai (80g, priced at 2.5 yuan) in one day. Executive illegally reduces over 3,000 shares, claims misoperation Fuling Zhacai issued an announcement stating that it received an explanation and apology from Vice General Manager He Yunchuan regarding the illegal reduction of company shares due to misoperation. "Because he is busy with work, his securities account is managed by his spouse. Due to his spouse's insufficient understanding of the requirements for executive share reduction, she made an operational error and conducted the share sale transaction without He Yunchuan's knowledge." On April 2, due to personal capital needs, Fuling Zhacai disclosed that He Yunchuan planned to reduce 300,000 shares of the company through centralized bidding from April 25, 2019 to July 24, 2019, accounting for 0.038% of the company's total share capital and 23.64% of his holdings in Fuling Zhacai. The planned reduction did not exceed 25% of his total holdings in Fuling Zhacai. In fact, from May 15 to May 17, 2019, He Yunchuan reduced 303,153 shares of the company through the Shenzhen Stock Exchange's centralized bidding system, accounting for 0.038% of the company's total share capital, with an average transaction price of 29.43 yuan and a total transaction amount of 8.9232 million yuan. After the reduction, He Yunchuan held 965,800 shares of the company, accounting for 0.12% of the total share capital, all of which were unrestricted shares. In fact, since the end of 2017, the drama of shareholder reductions at Fuling Zhacai has been ongoing. On November 10, 2017, Director Zhao Ping reduced 136,800 shares at an average price of 17.56 yuan; Beijing First Construction Engineering Co., Ltd. reduced 2.25 million shares cumulatively in May 2018; Dongzhao Changtai reduced a total of 8.603 million shares in two phases, from August to October 2018 and from February to March 2019. According to rough statistics by Finance World Weekly, among the above reducing shareholders, Director Zhao Ping cashed out 2.4022 million yuan, Beijing First Construction Engineering Co., Ltd. cashed out 57.0457 million yuan, and Dongzhao Changtai cashed out a total of approximately 167 million yuan in two reductions. Among them, Dongzhao Changtai holds 51% equity in Beijing First Construction, and Beijing First Construction holds 100% equity in Beijing Construction Engineering First Construction Engineering Co., Ltd., making the three concerted actors. 9 price increases in 10 years, performance and stock price rise together In the secondary market, Fuling Zhacai has been called "Moutai among pickled vegetables," with performance and stock price soaring together. In the past few years, Fuling Zhacai has maintained rapid growth. In 2018, Fuling Zhacai achieved revenue of 1.914 billion yuan, an increase of 25.92% from 2017; net profit was 662 million yuan, a significant year-on-year increase of 59.78%. Among them, pickled vegetables achieved revenue of 1.628 billion yuan, accounting for 85.04% of total revenue, with a gross margin as high as 57.44%. The high revenue of Fuling Zhacai is not unrelated to its repeated price increases. In November last year, Fuling Zhacai stated that "to unify the national circulation product price system and prevent cross-regional sales to protect the interests of channel members," it announced a price increase of about 10% for seven products: 80g fresh and crispy vegetable shreds (national version, Beijing version), 80g original flavor vegetable slices, 80g fresh and refreshing vegetable cores, 80g fresh and crispy vegetable shreds bulk, 80g original flavor vegetable slices bulk, and 80g fresh and refreshing vegetable cores bulk. In fact, Fuling Zhacai has been on the path of price increases for many years. According to Zebra Consumption, from 2008 to 2018, Fuling Zhacai raised prices or effectively raised prices at least 9 times. Among the 9 price increases, 5 were related to rising raw material and labor costs, and the other 2 were due to product structure adjustments. Although Fuling Zhacai has never looked back on the road of price increases, this has not become an obstacle to sales. Fuling Zhacai's revenue increased from 705 million yuan in 2011 to 1.914 billion yuan, and net profit increased from 88.4045 million yuan to 662 million yuan, making it the "first stock of pickled vegetables." While performance continued to rise, Fuling Zhacai was also highly sought after in the secondary market, even being called "Moutai among pickled vegetables." In 2010, when Fuling Zhacai was listed, its issue price was 13.99 yuan. As of May 20, Fuling Zhacai closed at 27.77 yuan per share, up about 200% from the issue price, with a total market value of 21.9 billion yuan. Currently, Fuling Zhacai's classic pickled vegetable series "Wujiang" pickled vegetables, specification 60g, is priced at about 1.94 yuan per bag on Taobao, while the unit price of 80g pickled vegetables is close to 2.5 yuan. It is these few-yuan pickled vegetables that support Fuling Zhacai's market value of over ten billion yuan. Tips will be paid 400-2000 yuan once adopted. China FMCG + Internet Professional New Media Committed to FMCG manufacturers' transformation and upgrading and channel digital solutions