Specuvestor make some pretty common sense and good point. I don't see why Wang Peng or any other interested party would not take this chance to buy up Dukang's remaining shares at depressed price.
On the fundamentals of Dukang though:
1. Dukang's performance this quarter is probably no surprise to industry watchers.
http://finance.eastmoney.com/news/1353,2...26080.html
Quote:去年以来,茅台、五粮液(行情 股吧 买卖点)、泸州老窖、洋河等一线白酒巨头纷纷将目光开始聚焦到100元到300元价位的市场上,随着布局的完成,这些巨头毫无疑问将投入更大的资金、更多的资源“砸”市场,将进一步增加市场竞争的激烈性和残酷性。
2. The Baijiu industry is facing restructuring and consolidation. There are probably like 1000+ Baijiu brands, big and small, in China right now, in 10 years, the number remaining would probably be much less.
3. What the Baijiu industry will look like in 10 years, no one knows, but it probably will not look as lucrative at it was in the last decade.
4. Dukang is still generating healthy positive cash flow last quarter, if the trend continue to this quarter, we are expecting to see increased sales volume and market share (due to increased advertisement and marketing), flat/declining revenue (due to price pressure).
5. This is a good position for any Baijiu brand to be in, having lots of cash to devote into marketing and brand building. Dukang has been aggressively building up their brand for the past few years. They are just ramping up their effort in the last quarter.
a.
http://www.dukang.com/index.aspx Just look at their list of activities over the past years. About 80% of company activity is a publicity campaign. And they seem to have some success.
b.
http://baike.9928.tv/baike/1112.html
Quote:五年之内我们更多的是关注于杜康品牌的打造和企业发展基础的夯实,因此公司每年都会把全部的利润拿出来为品牌建设做加法。每年至少要拿出销售额的15%进行广告投入,去年除去终端市场广告外的实际广告投入3000多万元,今年的投入将达到8000余万元,以后每年会翻番追加投入。
c. It is actually quite applaudable for the management to stick true to their strategy of marketing aggressively. Despite constant pressure from shareholders each year to distribute the profits back to them in the form of dividends.
5. Dukang is a high risk counter now, due to uncertainty of its future. It doesn't have a long brand name that stood the test of time. With no competitive moat, their excess profit will just be eroded slowly until they disappear completely. So if you are a risk adverse shareholder, definitely avoid this counter until their future is more clear.
(vested, hence bias)