Group 1 - The chairman of Baiguoyuan, Yu Huiyong, addressed concerns about high fruit prices, stating that while there are complaints about the cost, the company has millions of members and high-quality fruit remains in demand [1][3] - Yu emphasized that Baiguoyuan focuses on educating consumers rather than catering to their lack of knowledge about pricing, asserting that consumers should have the choice based on informed decisions [3] - The company is committed to optimizing costs to potentially lower prices for customers, but it will not compromise on quality [3] Group 2 - Baiguoyuan, officially known as Shenzhen Baiguoyuan Industrial (Group) Co., Ltd., was established in 2001 in Shenzhen and operates as a large-scale chain enterprise involved in various aspects of the fruit industry, including procurement, logistics, and retail [4]

股份發行人及根據《上市規則》第十九B章上市的香港預託證券發行人的證券變動月報表 致：香港交易及結算所有限公司 公司名稱: 深圳百果園實業（集團）股份有限公司 呈交日期: 2025年8月1日 I. 法定/註冊股本變動 | 1. 股份分類 | 普通股 | 股份類別 | 其他類別 (請註明) | | 於香港聯交所上市 (註1) | | 否 | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 證券代號 (如上市) | N/A | 說明 | 非上市股份 | | | | | | | | | 法定/註冊股份數目 | | 面值 | | | 法定/註冊股本 | | | 上月底結存 | | | 85,448,554 RMB | | | 1 RMB | | 85,448,554 | | 增加 / 減少 (-) | | | 0 | | | RMB | | 0 | | 本月底結存 | | | 85,448,554 RMB | | | 1 RMB | | 85,448,554 | | 2. 股份分類 | 普通股 | 股份類別 | H | | 於香港聯交所上市 (註1 ...

Core Insights - The "2024 Commercial Franchise TOP 300" list was released by the China Chain Store & Franchise Association (CCFA), showcasing the annual development trends in the franchise sector [1] - The list includes 300 companies across 25 sub-sectors, with a total of 830,000 stores, reflecting a 30.73% increase from the previous year's 630,000 stores [1] - The distribution of sectors shows that the restaurant industry remains stable at 33.67%, retail slightly decreased to 40.00%, and the service industry increased to 26.33% [1] Industry Overview - The 2024 TOP 300 includes 101 restaurant companies, 120 retail companies, and 79 service companies, indicating a slight adjustment in consumer demand structure [1] - The number of franchise brands with over 10,000 stores increased from 9 in 2023 to 18 in 2024, highlighting the growing influence of leading brands in the market [1] - A total of 71 new franchise brands were added to the list, with 34 in the restaurant sector, 26 in services, and 11 in retail, demonstrating the sector's ongoing attractiveness [1] Event Insights - The 65th China Franchise Exhibition will be held from August 8-10 in Shanghai, focusing on the analysis of the TOP 300 list and featuring over 100 quality brands from various sectors [2] - The exhibition will include forums and workshops aimed at exploring growth strategies and promoting sustainable development in the franchise industry [2] - The CCFA Franchise Committee, established in 2015, has grown to include 69 member companies, advocating for the interests of various franchise sectors and promoting industry self-regulation [2]

Core Viewpoint - The strategic transformation of the domestic fruit retail leader, Baiguoyuan, is showing initial positive results, with key operational data indicating a new growth cycle is beginning [1][2][3] Group 1: Strategic Transformation - Baiguoyuan's strategic transformation is driven by the dual trends of consumption upgrading and downgrading in the domestic market, leading to increased consumer demand for "high quality" and "high cost-performance" fruits [1][2] - The "High Quality and Cost-Performance Reputation Campaign" is a core initiative, featuring monthly promotions of selected high-value fruits to enhance customer loyalty and drive foot traffic [2][3] Group 2: Operational Performance - The "Good Fruit Reward" campaign has led to significant sales increases, with the first phase seeing a 234% increase in sales of kiwifruit priced at 5.9 yuan each, and the second phase achieving nearly 2,800 tons of sales for autumn pears, setting a five-year record [3][4] - Overall customer traffic has increased by 1,078% year-on-year, indicating successful validation of the company's strategic positioning [3] Group 3: Profitability and Supply Chain - The strategic focus on high-quality and cost-effective products is expected to optimize Baiguoyuan's profit structure, enhancing overall profitability and operational efficiency [4][5] - The company has established a global supply chain network, collaborating with over 800 direct sourcing bases across 26 countries, which strengthens its brand barrier and supports long-term value creation [6] Group 4: Store Optimization and Future Growth - Baiguoyuan has closed 966 underperforming stores to concentrate resources on more profitable locations, improving overall operational efficiency [7][8] - The company is set to restart its expansion in 2026, with expectations of revenue recovery and accelerated growth driven by improved product structure and customer traffic [7][8]

Company Overview - Shenzhen Baiguoyuan Industrial (Group) Co., Ltd. was established in 2001 and is a large chain enterprise integrating fruit procurement, planting support, post-harvest preservation, logistics and warehousing, standard grading, marketing expansion, brand operation, retail, information technology, financial capital, and research education [2]. Financial Performance - As of December 31, 2024, Baiguoyuan Group reported total operating revenue of 10.273 billion yuan, a year-on-year decrease of 9.81% [1] - The company recorded a net profit attributable to shareholders of -386 million yuan, a year-on-year decrease of 206.72% [1] - The gross profit margin stood at 7.44%, while the asset-liability ratio was 64.06% [1] Stock Performance - As of July 7, the stock price of Baiguoyuan Group closed at 2.32 HKD per share, an increase of 13.73% with a trading volume of 19.5035 million shares and a turnover of 44.7158 million HKD, showing a volatility of 19.61% [1] - Over the past month, the cumulative increase in Baiguoyuan Group's stock price was 2.87%, and since the beginning of the year, it has risen by 45.18%, outperforming the Hang Seng Index by 19.22% [1] Valuation Metrics - Currently, there are no institutional investment rating recommendations for Baiguoyuan Group [1] - The average price-to-earnings (P/E) ratio for the food and beverage industry is 23.8 times, with a median of 9.43 times [1] - Baiguoyuan Group's P/E ratio is -7.53 times, ranking 74th in the industry [1]

Company Overview - The company is the largest fruit retail operator in China, ranking No. 1 in sales of fruit chain stores for eleven consecutive years (2014-2024) [6]. - The company operates primarily from its headquarters located in Shenzhen, Guangdong Province, China [29]. - The company has a stock code of 2411 and its website is www.pagoda.com.cn [31]. - The company has established several wholly-owned subsidiaries, including Baiguo Technology and Baixin Investment [36]. - The principal banks associated with the company include Shanghai Pudong Development Bank and China CITIC Bank [31]. Financial Performance - The Group recorded a loss of RMB 399,788,000 for the year ended December 31, 2024, compared to a profit of RMB 339,992,000 in 2023 [200]. - The Group's total revenue decreased by approximately 9.8% from RMB 11,390.6 million in 2023 to RMB 10,273.3 million in 2024 [151]. - The Group's gross profit decreased by approximately 41.9% from RMB 1,314.8 million for the year ended December 31, 2023, to RMB 764.4 million for the year ended December 31, 2024 [164]. - The net loss for the year ended December 31, 2024, was approximately RMB 399.8 million, compared to a net profit of approximately RMB 340.0 million for the year ended December 31, 2023 [190]. - The Group's operating loss increased from RMB 341.5 million in 2023 to RMB 391.5 million in 2024 [146]. - Revenue from sales of fruits and other food products accounted for approximately 97.2% and 97.5% of total revenue for the years ended December 31, 2023 and 2024, respectively [151]. - The Group's finance income increased from RMB 40.9 million in 2023 to RMB 44.1 million in 2024 [146]. - The Group's finance costs rose by approximately 31.9% from RMB 75.8 million in 2023 to RMB 100.0 million in 2024, primarily due to increased bank borrowings [182]. Market Expansion and Strategy - The company aims to build a nationwide community-based fruit specialty retail network with store-as-warehouse and OMO features [8]. - The company plans to continue diversifying product categories and expanding customer channels both domestically and internationally [10]. - The company is expanding its market presence by entering three new provinces in China, aiming to increase its market share by 10% in these regions [44]. - The Group plans to build a diversified business system with retail as the core, 2B business as a growth engine, and category brands as a long-term moat [60]. - The Group aims to enhance store profitability by optimizing the retail network layout, resulting in a decrease in the number of retail stores [58]. Product Development and Innovation - The company introduced 46 self-owned Excellent fruit brands, with their sales accounting for 14.7% of total retail sales in 2024 [10]. - New product development includes the introduction of a line of organic food products, expected to contribute an additional HK$300 million in revenue [46]. - The company plans to create a cost-effective product matrix centered around the "best fruit for you" series, aiming to attract more customers and meet diverse consumer needs [135][138]. - The introduction of a simplified grading system for fruits enhances consumer recognition of high-quality products while offering more cost-effective options [113]. - The focus on product innovation will include introducing unique products and ensuring compliance with the highest food safety standards in the fruit industry [139][142]. Operational Efficiency and Cost Management - The company focused on optimizing store layout and enhancing franchisee support systems to improve operational efficiency and profitability [9]. - The Group's strategy focuses on optimizing cost structure and improving operational efficiency through digital intelligence applications [75]. - A strategic acquisition of a local supply chain company is underway, which is anticipated to enhance operational efficiency and reduce costs by 15% [43]. - The company plans to invest HK$50 million in technology upgrades to improve its online and offline integration model, enhancing customer experience [45]. Consumer Trends and Marketing - The company has captured the trend of healthier gift consumption, focusing on major festivals for sales growth [9]. - The consumption scenarios for fruit gift-giving are expanding rapidly, providing stable growth momentum for fruit consumption [70]. - User data indicates a growth in active users, reaching 2 million, which is a 25% increase compared to the previous year [43]. - The cumulative number of live streaming views on Douyin reached 190 million, representing a year-on-year growth of approximately 449.0% compared to 2023 [99]. Challenges and Future Outlook - The national fresh fruit consumer price index (CPI) for 2024 decreased by approximately 3.5% compared to 2023, indicating weak end-consumer demand [69]. - The Group's new strategy for 2024 focuses on becoming an "Expert and Leader in High-quality and Cost-effective Fruit Industry," which includes store refurbishments and marketing campaigns [188]. - The Group's expenses increased in 2024 due to the implementation of the new strategy and related activities [188]. - The company provided a positive outlook for the next fiscal year, projecting a revenue growth of 20% driven by new product launches and market expansion strategies [45].

Core Insights - The fruit industry in 2024 is experiencing a dual trend of consumption downgrade and upgrade, with domestic demand softening while the imported fruit market expands [1] - The leading fruit retailer, Baiguoyuan, reported a GMV of 12.71 billion yuan and revenue of 10.27 billion yuan in 2024, reflecting a year-on-year decline of 9.8% [1] - The company is transitioning towards high-quality development amidst a challenging macroeconomic environment, focusing on strategic store closures and channel optimization [1][2] Revenue Performance - Revenue decline is attributed to a weak macro consumption environment and strategic store closures aimed at optimizing high-rent locations [1] - In H1 2024, revenue fell by 11%, while H2 showed a reduced decline of 8%, indicating the effectiveness of the company's strategic adjustments [1][2] Profitability Analysis - The profit decline is a result of short-term discounts aimed at enhancing long-term customer loyalty, with gross margin decreasing from 11.5% in 2023 to 7.4% in 2024 [2] - Sales expenses increased by 1.2 billion yuan (+26%), reflecting the company's investment in brand building and customer retention [2] Business Segments - The To B segment (direct sales of fruits and other foods) achieved a revenue of 1.256 billion yuan, a year-on-year increase of 22%, while the To C segment saw a revenue decline of 12.95% [4] - The company launched a dual strategy of "high quality and high cost performance," successfully introducing 46 proprietary fruit brands, with significant sales growth in specific products [5] Membership and Online Growth - Membership numbers exceeded 9.074 million, a year-on-year increase of approximately 8.1%, with strong online growth reflected in the usage of WeChat mini-programs [6] - Online orders accounted for about 25.2% of total orders, showcasing the company's robust online sales capabilities [6] Cash Flow and Financial Health - As of December 31, 2024, Baiguoyuan held cash and cash equivalents totaling 2.34 billion yuan, with a healthy operating cash flow of 160 million yuan [8] - The company has maintained stable inventory turnover days, indicating effective management of receivables and payables [8][9] Operational Efficiency - The company closed underperforming stores, focusing resources on high-performing locations, which improved overall operational efficiency [9] - The introduction of the "1212" category operation strategy enhanced product turnover and reduced inventory backlog, further improving cash flow [9][10] Future Outlook - Despite short-term performance pressures, Baiguoyuan's core operational metrics indicate resilience, with expectations for gradual performance recovery and long-term value enhancement [10]

Core Insights - The article emphasizes the strategic transformation of companies like Luckin Coffee and Baiguoyuan, focusing on the importance of "shrinking to grow" and enhancing core business profitability [1][2] Financial Performance - Baiguoyuan reported a GMV of 12.7 billion yuan and total revenue of 10.27 billion yuan for 2024, with a gross profit of 760 million yuan and a net loss of 386 million yuan [1] - The decline in revenue was primarily due to a reduction in store numbers, with same-store sales experiencing a double-digit decline in the first half of the year, but stabilizing in the second half [1][2] Strategic Focus - Baiguoyuan is implementing a "1212" category operation strategy starting August 2024, focusing on high-quality and cost-effective products to enhance customer retention and brand perception [3] - The strategy includes a unified pricing model for essential products, promotion of high-value seasonal fruits, and the introduction of a monthly featured product to attract customers [3] Product and Market Expansion - The company is diversifying its product offerings by introducing creative fruit gift packages, which led to a 21% increase in same-store sales during the 2025 Spring Festival [4] - The "Good Fruit Reward" initiative saw a significant increase in customer visits and sales, with total customer visits up by 534.1% and sales up by 388.4% [5] Operational Efficiency - Baiguoyuan is optimizing its store structure by closing underperforming locations and focusing on enhancing the efficiency of high-performing stores [6] - The company is leveraging technology to improve operational efficiency, including the implementation of digital systems for inventory and sales processes [6][7] Business Development - The To B segment of Baiguoyuan's business grew from 1.03 billion yuan to 1.25 billion yuan, reflecting a 22% year-on-year increase despite market challenges [8] - The company is also exploring international markets, establishing partnerships with suppliers in Thailand and New Zealand, and expanding its product offerings for export [8] Future Outlook - Baiguoyuan aims to continue its focus on single product strategies, brand development, and global supply chain expansion to unlock further growth opportunities [9] - The company's business model, centered around community stores and quality products, is expected to sustain its long-term value despite short-term challenges [10][11] Strategic Combination - The combination of focusing on high-quality products, optimizing store operations, and expanding into B2B and international markets is expected to drive Baiguoyuan's high-quality development and enhance its performance and valuation in the long run [12]

Financial Performance - Revenue decreased by approximately 9.8% from RMB 11,390.6 million in 2023 to RMB 10,273.3 million in 2024[13] - Gross profit fell by about 41.9% from RMB 1,314.8 million in 2023 to RMB 764.4 million in 2024[13] - The company recorded a loss attributable to owners of RMB 386.0 million in 2024, compared to a profit of RMB 361.7 million in 2023, representing a change of 206.7%[13] - Total retail sales amounted to RMB 12,703.3 million in 2024, down from RMB 14,171.3 million in 2023[6] - Revenue from franchise stores decreased from RMB 8,499.8 million in 2023 to RMB 7,396.3 million in 2024, representing a decline of approximately 12.9%[38] - The company reported a pre-tax loss of RMB 391.5 million for the year ending December 31, 2024, compared to a pre-tax profit of RMB 381.0 million for the year ending December 31, 2023[50] - The net loss for the year ending December 31, 2024, was approximately RMB 399.8 million, compared to a net profit of approximately RMB 340.0 million for the year ending December 31, 2023, resulting in a net loss margin of 3.89%[52] Membership and Customer Metrics - Membership increased to 90,743 thousand in 2024, up from 83,905 thousand in 2023[6] - The number of paid members decreased from 1,171 thousand in 2023 to 854 thousand in 2024[6] - The total number of members across all distribution channels exceeded 90.74 million, representing an 8.1% year-on-year growth, while paid membership decreased by approximately 27.1% to about 850,000[21] Store Operations - The company managed 4,039 franchise stores in 2024, down from 4,818 in 2023[5] - The total number of stores decreased from 6,093 in 2023 to 5,127 in 2024[5] - As of December 31, 2024, the company has a total of 5,127 retail stores, a decrease of approximately 15.9% from 6,093 stores as of December 31, 2023[16] Product and Sales Performance - The sales revenue from franchise stores managed by the company reached RMB 7,388.0 million, accounting for 99.4% of total sales, while self-operated stores contributed RMB 40.6 million, or 0.5%[18] - The company launched six seasonal products, achieving a total sales increase of approximately 388.4% year-on-year, significantly boosting new customer acquisition and member repurchase rates[19] - Direct sales revenue from fruits and other foods increased by approximately 21.7% to RMB 1,255.7 million, with overseas direct sales growing by about 18.0% compared to 2023[22] - The sales revenue of premium and A-grade fruits accounted for approximately 62.8% of the total retail sales at the company's stores for the year ending December 31, 2024[24] Financial Position and Cash Flow - As of December 31, 2024, the company's net asset value was RMB 2,810.3 million, down from RMB 3,337.1 million in 2023[57] - The company raised approximately HKD 474.0 million from its global offering and listing in the first quarter of 2023[56] - The net cash inflow from operating activities increased to RMB 164.6 million for the year ended December 31, 2024, compared to a net cash outflow of RMB 48.5 million for the year ended December 31, 2023[68] - The net cash used in investing activities was RMB 760.2 million for the year ended December 31, 2024, primarily due to payments for property, plant, and equipment related to a new office building in Shenzhen[68] Expenses and Cost Management - Sales expenses increased by approximately 25.5% from RMB 482.0 million for the year ending December 31, 2023, to RMB 605.1 million for the year ending December 31, 2024, driven by the execution of a new strategy aimed at enhancing brand recognition[44] - Management expenses rose by about 5.1% from RMB 313.5 million for the year ending December 31, 2023, to RMB 329.6 million for the year ending December 31, 2024, mainly due to the implementation of a share incentive plan[45] - Financial costs increased to RMB 104,744 in 2024 from RMB 80,502 in 2023[100] Strategic Initiatives - The company initiated a category operation system upgrade in August 2024, focusing on optimizing product combinations based on consumer behavior data[19] - The company aims to enhance market competitiveness through advanced agricultural technology and product differentiation strategies[32] - The company plans to enhance retail store operational efficiency and increase marketing resources to improve brand recognition and store profitability[30] Market and Industry Trends - The import fruit market grew by approximately 6.0% in 2024, reaching a total of about USD 19.45 billion[10] - Collaborations with tea beverage companies and the health industry are being pursued to meet diverse fruit consumption needs and expand market presence[31] Shareholder and Governance - The company plans to pay a final dividend of RMB 0.0065 per share, totaling approximately RMB 10.0 million for the year[7] - The audit committee has reviewed the accounting principles and practices adopted by the group, confirming compliance with applicable accounting standards[116] - The company expresses gratitude to shareholders, management, employees, business partners, and customers for their support and contributions[122]

Summary of Conference Call Company and Industry - The conference call pertains to a company in the fruit retail industry, specifically focusing on a leading fruit brand known as "白果园" (Bai Guo Yuan) [7][8]. Core Points and Arguments 1. **Profit Recovery Timeline**: The company expects net profit to gradually recover in the second half of 2025, driven by sales growth and margin recovery. Cost management initiatives are also anticipated to stabilize expenses over the long term [1]. 2. **Market Focus**: The primary focus for the company in the coming years is to regain market share and improve sales performance, with positive application data indicating a strengthening user sentiment [2]. 3. **Shareholder Actions**: There is a concern regarding original shareholders' potential sell-off due to fund expirations. However, the company believes that the majority of long-term shareholders remain stable and do not have immediate plans to reduce their holdings [3][4]. 4. **Management Stability**: The company reassures stakeholders that the management team remains stable despite some share reductions by executives, which are attributed to external pressures rather than personal decisions [4]. 5. **Share Buyback Initiatives**: The company has initiated share buybacks to stabilize the stock price during a period of low market performance, with plans to continue these actions at appropriate times [5]. 6. **Long-term Investment Value**: The company is positioned as a leader in the fruit industry, benefiting from a well-integrated supply chain and economies of scale. This strategic positioning is expected to yield significant long-term growth [6][7]. 7. **Market Positioning**: The company emphasizes its unique market positioning, focusing on community-based retail and high-frequency consumption patterns, which differentiates it from larger competitors like Sam's Club and Costco [10][11]. 8. **Product Differentiation**: The company has established exclusive relationships with high-quality suppliers, allowing it to offer differentiated products that enhance customer loyalty and purchasing quality [12]. Other Important but Overlooked Content 1. **Pressure on Margins**: The company anticipates ongoing pressure on gross margins and profitability in the short term, particularly through the second half of the current year and into the first half of next year [9][14]. 2. **Consumer Behavior Insights**: The company recognizes the diverse consumer needs in the fruit market, suggesting that there are still significant opportunities to capture unmet demand, particularly in smaller household packaging [11]. 3. **Investor Engagement**: The company encourages ongoing communication with investors and stakeholders, indicating a commitment to transparency and responsiveness to market conditions [14][15].