Chen Xiaojing's old tree really sprouted new buds. The 40-year-old Lotus MSG suddenly caught the wave of domestic brand enthusiasm in 2023, making itself popular again. Since its listing in 1998, Lotus MSG has experienced many hardships. With a severe external market and internal turmoil, it changed owners several times, finally gaining new life through restructuring. In 2023, Lotus Health, the parent company of Lotus MSG, driven by its MSG main business, is expected to achieve net profit attributable to the parent of 120 million to 150 million yuan. The "King of MSG" seems to have seen its former glory.
Performance expected to increase by 200%, Lotus Health finally can hold its head high. On January 10, the company disclosed a gratifying 2023 annual performance forecast: for that year, the company is expected to achieve net profit attributable to the parent of 120 million to 150 million yuan, a year-on-year increase of 159.92% to 224.91%; non-net profit after deducting non-recurring gains and losses is 115 million to 135 million yuan, a year-on-year increase of 84.40% to 116.47%. The company summarized that the reasons for performance growth are the implementation of the brand revitalization strategy, optimization of the marketing network, and strengthening of market promotion and sales work, which jointly promoted a high growth rate in product sales. Stimulated by this positive news, the stock price of Lotus Health (600186.SH) reversed its multi-day decline. Yesterday, it opened higher and rose more than 5% during the session, closing at 5.56 yuan per share, up 3.48%, with market value returning to over 10 billion yuan.
Lotus Health started with MSG, and now MSG is still the company's absolute revenue mainstay. Data shows that in the first three quarters of 2023, the company's MSG and other amino acid seasonings achieved revenue of 1.223 billion yuan, a year-on-year increase of 26.12%; chicken essence and other compound seasonings revenue was 195 million yuan, a year-on-year increase of 30.55%; flour and flour products revenue was 76 million yuan, a year-on-year decrease of 48.19%. From January to September, the company achieved cumulative operating revenue of 1.614 billion yuan, a year-on-year increase of 22.77%. On the channel side, product sales still mainly rely on offline, selling products to more than 70 countries and regions nationwide and worldwide through more than 2,700 distributors and over 10,000 merchants. Currently, Lotus Health is also developing its self-operated online channels, selling its MSG and other seasonings through live streaming. In the first three quarters of 2023, the company's self-operated online channels achieved revenue of 42.6601 million yuan, a year-on-year increase of 282.00%, far higher than the offline revenue growth level in the same period. After September last year, Lotus MSG quickly became popular through a series of online events, and it is expected that annual online revenue will further increase significantly.
At 40, it becomes popular again. Lotus Health, formerly known as Lotus MSG, is an old MSG brand with a 40-year history. Looking back 20 years, Lotus MSG was almost household name; it was the finishing touch for Chinese housewives in cooking. Data shows that from the establishment of its predecessor, Zhoukou Area MSG Factory, in 1983, to 1997, 15 years later, Lotus MSG's annual output rose from 400 tons to 120,000 tons, and annual output value increased from 9.45 million yuan to 2.23 billion yuan. The company's single MSG product ranked first globally, with a domestic market share of over 40%, truly the "King of MSG". In 1998, Lotus MSG was listed on the main board of the Shanghai Stock Exchange, becoming the "first MSG stock in China". However, at some point, rumors about "MSG causing cancer" began to spread, and compound seasonings such as chicken essence quickly replaced MSG's position in Chinese kitchens, and Lotus MSG fell into obscurity. In 2002, Lotus MSG's years of high growth ended, with net profit plummeting 86.71% that year, and the next year it directly lost 145 million yuan. In the following decade, although Lotus MSG struggled to support itself with MSG products, it was always difficult to reproduce its former glory. Until 2023, a huge windfall came, and Lotus MSG seized the opportunity to become popular again with the domestic brand enthusiasm. Not only did it attract a large number of users to place orders in the live broadcast room in the short term, but more importantly, the company used this to eliminate the public's misunderstanding of MSG and "rehabilitate" the brand. Especially after the Huaxizi 79-yuan eyebrow pencil incident, Lotus MSG launched a set meal of 79 yuan for 5.5 jin of MSG overnight, directly pushing the brand to the hot search again. The company's official live broadcast room, which often had only single-digit users, suddenly had tens of thousands of people flooding in, and the host was so excited that tears fell on the spot. Currently, Lotus's Douyin official flagship store has over 700,000 followers, and the old packaging 100g Lotus MSG combo has sold over 1.6 million orders.
Crossing boundaries in place. The decline of Lotus MSG cannot be entirely attributed to external factors. Internal turmoil made the company's situation worse in the market downturn. During this period, the company changed owners several times, exacerbating its precarious state. Due to debt disputes between Lotus Group and Henan Agricultural Development, in 2009, Lotus Group transferred 54 million shares of the listed company to Henan Agricultural Development as compensation, losing control of Lotus MSG. In 2014, Lotus MSG welcomed a new owner. "Capital player" Xia Jiantong and his Ruikang Group rushed in and gained control of the listed company. Xia Jiantong, with many halos such as "Harvard PhD," "genius youth," and "capital tycoon," made investors of Lotus MSG have high hopes for him. At that time, Xia Jiantong indeed painted a beautiful pie for Lotus MSG. In 2016, he renamed the company "Lotus Health" and changed the company logo from a budding flower to a blooming seven-petal colorful lotus, expressing the seven major business sectors the company would enter in the future, including smart agriculture, innovative finance, and big health. The genius Xia Jiantong failed to save Lotus Health; instead, he made the company sink deeper into the quagmire of performance. Due to losses for two consecutive years, the company was subject to delisting risk warning in 2019. Xia Jiantong was arrested for suspected crimes of damaging the interests of listed companies, and the "Ruikang System," which once created the myth of taking over three listed companies in three years, collapsed; that is a later story. In 2019, Lotus Health implemented restructuring, and Li Houwen, a big player in private AMC, led his "Guohou System" to take over indirectly, becoming the new owner of the company. While stabilizing the traditional seasoning main business, Li Houwen vigorously promoted Lotus Health to implement business transformation. In March last year, the company planned to acquire no less than 20% equity of Hangzhou Golden Antelope, the operator of Self-Hot Pot, with a transaction price of 300 million to 600 million yuan. However, half a year later, the investment was terminated because the two parties could not reach a consensus on the acquisition. If investing in Self-Hot Pot still had some connection to the seasoning main business, then Lotus Health's sudden entry into AI computing power leasing business is a pure jump in place. Without qualifications, experience, talent, equipment, and even a large funding gap. In June last year, after Lotus Health established a subsidiary, Lotus Science and Technology Innovation, it kept releasing signals to the outside world, driving the company's stock price to soar. For this, the company was issued a warning letter by the regulatory authorities and took administrative supervision measures. The company originally planned to invest 693 million yuan to purchase servers needed for the computing power business layout. As of the end of 2023, the actual payment for goods and delivered equipment were still very few.