Dukang Distillers Holdings

[yawnyawn]

I understand that even Wuliangye and Kweichow Moutai, 2 of the biggiest players in the Baijiu industry in China have been paying dividend at 5.15% and 4.49% respectively.

I wonder why Dukang is not paying a dividend despite having a big cash hoard?

[megabull88]

They might not take it private by themselves. Their big boss might. Who is the boss?

Blow RMB 660 million on more capex, A&P and keep very high inventory. They said no more cash.

"White knight" comes along, and saves the company by paying cheap and delisting it. Maybe not in the next 3 quarters. 2015 and 2016 when things are tougher. The price might drift lower and lower. By the look of things, the Chinese government really spring cleaning. All vices are going to get hit. Eat, drink, woman and gambling are all affected.

[rogerwilco]

So far the approach seems to either target the top or go much lower..

http://www.bloomberg.com/news/print/2014...bites.html

Diageo Targets China Businessmen as Xi’s Austerity Drive Bites
By Bloomberg News - Feb 17, 2014
Diageo Plc (DGE), the world’s biggest distiller, is targeting wealthy Chinese businessmen to boost sales at its local white-liquor unit as an austerity drive by President Xi Jinping dries up government orders.

Sichuan Swellfun Co., the Diageo unit making the white spirit called baijiu, will focus on selling more to walk-in customers and online buyers, James Rice, Swellfun’s managing director, said in an interview. He said the distiller also plans to expand its product line to attract retail consumers.

Xi’s crackdown on extravagant spending by government officials has hurt sales by domestic and foreign liquor makers including Kweichow Moutai Co. and Paris-based Pernod Ricard SA. (RI) Six of the 14 white-liquor makers listed in China are set to report losses or lower profit for 2013, according to company forecasts compiled by Bloomberg News. Swellfun may report a loss of at least 124 million yuan ($20 million) in 2013, the company said in a Jan. 20 statement.

“Before Xi Jinping, anybody could sell baijiu because the consumption demand was huge,” Rice said in a phone interview from Chengdu on Feb. 14. “Now, you have to be at the right price, you have to sell the right way and you have to go find your consumer.”

Before the crackdown, about half of industrywide sales of white spirit priced above 500 yuan went to the government, state-related enterprises and companies, Rice forecast. Overall baijiu prices have dropped 50 percent in the last year, he said.

Diageo, the maker of Smirnoff vodka and Johnnie Walker Scotch whisky, plans to sell a 68,000-yuan limited-edition white liquor and offer more products priced above 2,000 yuan this year as it caters to affluent worth customers, Rice said.

Social Media

Swellfun is advertising on Weibo, China’s version of Twitter, and other social media as it targets successful male entrepreneurs between the ages of 35 to 55.

“Mercedes, Louis Vuitton and Land Rover, they still sell,” Rice said. “There is still a consumer there for high quality products in China, and we want to be right there.”

To target more mass-market buyers, the company also introduced cheaper products such as a 98 yuan white spirit under a different brand, he said.

An escalation in Xi’s frugality drive crimped high-end spending over the Chinese New Year holiday, analysts at Bank of America Merrill Lynch said in a Feb. 7 report.

High-end gift buying took a hit in the first four days of the period, with sales of expensive alcoholic drinks falling about 70 percent in some supermarkets in Fuzhou, eastern China, according to the report, which cited the Ministry of Commerce. Revenue at upscale restaurants in northern Heilongjiang province dropped 20 percent, it said.

Reassigned Team

Swellfun reassigned a sales team formerly catering mostly to state and state-related entities to focus on online purchases and selling to retail outlets such as Wal-Mart Stores Inc. (WMT)’s hypermarkets, Rice said.

Liquor companies from Kweichow Moutai, the world’s largest baijiu maker, to Pernod have also adjusted. Moutai will start a new marketing company to serve retail buyers instead of relying on government sales, China Daily reported Feb. 6, citing Chairman Yuan Renguo.

Pernod, Europe’s second-biggest distiller, cut its forecast for full-year global profit growth last week, citing declines in China. The maker of Absolut vodka and Chivas Regal whisky said Feb. 13 sales in China fell 18 percent in the first half of its fiscal year.

Remy Cointreau SA (RCO), which sells Cointreau and Mount Gay rum, said Jan. 21 it expected the Chinese New Year period to offer no relief amid declining sales in Asia.

An estimated 98 percent of China’s sales of spirits, which include vodka and whiskey, were made up of baijiu in 2012, according to industry researcher Euromonitor International.

To contact Bloomberg News staff for this story: Liza Lin in Shanghai at llin15@bloomberg.net

To contact the editor responsible for this story: Stephanie Wong at swong139@bloomberg.net

[charlesgee]

Wang Peng & gang have taken over Dukang. It all seems so familiar compared to what happened to Synear. There was a plant relocation & revenue was hit by some news. After that S&D and admin expenses were used to hold down EPS all the way. When share price drop like mad, management increase their shares to 50-60%. After that they offer to delist company for a cheap price all to themselves.

Substantial shareholders should hold share price up & quickly put a reliable person on board of directors to prevent management tricks.

[Wildreamz]

Dukang has recently revamped their 3 year old website: http://www.dukang.com/Index.html

Dukang will also try to improve the current supply chain to cut cost by by-passing the middlemen:
http://finance.sina.com.cn/roll/20140327...4582.shtml

　洛阳杜康销售有限公司总经理苗国军说，2014年，杜康会在供应链管理上寻求竞争力提升，通过对社会资源的整合，把供应商、仓库、配送中心和渠道商等有效地组织起来，减少运营成本，促进企业高效发展。

　　

　　打造供应链管理新模式

　　苗国军给记者描绘了杜康的一个新模式，杜康搭建一个网络销售平台，消费者在平台上在线下单，然后由第三方负责把商品配送到位，没有了层层中间环节。

[investor101]

Many PRCs think such a move is shrewd and smart, and not as dishonest. While there are some honest PRC businessmen, a critical mass of them are not.

I always wonder how much money do Singaporeans need to lose before they wake up and realize the dangers of investing in S-chips.

Wang Peng & gang have taken over Dukang. It all seems so familiar compared to what happened to Synear. There was a plant relocation & revenue was hit by some news. After that S&D and admin expenses were used to hold down EPS all the way. When share price drop like mad, management increase their shares to 50-60%. After that they offer to delist company for a cheap price all to themselves.

Substantial shareholders should hold share price up & quickly put a reliable person on board of directors to prevent management tricks.

[kye_lin]

Dukang.. profit guidance issued...
Going to be like this for this year for every quarter..... at least...
Price still go up..
Invisible hands pumping up.... for dumping later??

[touzi]

3Q result.

http://infopub.sgx.com/FileOpen/DK_3Q201...eID=296684

Cash reduced from 664 Mil at the end of Q2 to 549 Mil. Looks like they have used the 100 Mil bank loan taken up in Q2.

[greentea]

No longer setting up a Taiwan office, but already spent 6.3 million yuan...

http://businesstimes.com.sg/companies-ma...wan-office

Dukang Distillers drops plan to set up Taiwan office
By Cai Haoxiang haoxiang@sph.com.sg @HaoxiangCaiBT
26 Dec 6:03 PM
LIQUOR maker Dukang Distillers Holdings says it will not proceed with the setting up of an office in Taiwan. It had previously allocated 9.1 million yuan (S$1.96 million) raised from Taiwan Depositary Receipts to establish a Taiwan office, and had already spent 6.3 million yuan...

[sykn]

The answer is " a lot"; I am one of those dummies who refused to admit the secular change in the business (Buffet's terminology) caused by their Government, and doggedly believed that they would innovate their way out of the mess. Lost a lot of money, but got out eventually; share price still dropping after I sold out. This is a classic case study for those interested; I've learnt my lesson from this S-chip. Hope my fellow VBs won't have suffer a similar fate too often.

Many PRCs think such a move is shrewd and smart, and not as dishonest. While there are some honest PRC businessmen, a critical mass of them are not.

I always wonder how much money do Singaporeans need to lose before they wake up and realize the dangers of investing in S-chips.

Wang Peng & gang have taken over Dukang. It all seems so familiar compared to what happened to Synear. There was a plant relocation & revenue was hit by some news. After that S&D and admin expenses were used to hold down EPS all the way. When share price drop like mad, management increase their shares to 50-60%. After that they offer to delist company for a cheap price all to themselves.

Substantial shareholders should hold share price up & quickly put a reliable person on board of directors to prevent management tricks.