Caixin News August 26th (Reporter Wu Weiling) With the decrease in the proportion of high-gross-margin channels such as KA, Yanker Shop Food (002847.SZ) has improved its gross margin by extending upstream. At today's earnings conference in the afternoon, the board secretary Zhang Yang introduced that the company's self-owned quail egg cost has shown advantages compared to the market price.

Zhang Yang introduced that the quail breeding base built by the company has obtained antibiotic-free and edible certification. At present, the cost price of quail eggs from the self-owned quail breeding base is about 10 yuan/kg, which has significant advantages compared to the market price.

Extending from the processing of leisure snacks to the raw material end, the change in channel structure has resulted in a change in gross margin. The interim report shows that the company's gross margin is 32.53% in the first half of the year, a year-on-year decrease of 2.81 percentage points. The company's CFO Yang Feng explained at the earnings conference that due to changes in the channel structure, the proportion of direct-operated KA supermarkets and other high-gross-margin channels is decreasing, while the gross margin of snack volume and other channels is relatively low. However, the sales expenses of the snack volume channel are low, so the company's overall gross margin has decreased.

Specifically, from 2017 to the first half of this year, the proportion of direct-operated supermarkets in the company's revenue has decreased from 53.57% to 4.41%; including community group buying, hard discounts, and other distribution channels, the proportion has increased from 39.87% to 72% during the same period; in addition, the proportion of e-commerce channels has increased from 6.56% to 23.59%.

In terms of improving the gross margin, Yang Feng stated that first, the development of the seven major categories is driven by excellence and speed, further enhancing the 'economy of scale'; second, taking 'one step further upstream' on core products, the company has already laid out projects such as quail breeding, and the full powder processing of potatoes, under the premise of ensuring stable raw material quality, to further achieve cost leadership. Third, accelerating the development of intelligent manufacturing and digital transformation, continuous improvement in labor efficiency is being achieved.

It is worth mentioning that in the face of the relatively low gross margin and intense competition in the snack volume channel, the company's chairman and general manager Zhang Xuewu still made a positive outlook. Zhang Xuewu stated that the reason for the development of the new channel of snack volume is the improvement of channel efficiency, product cost-effectiveness, and real-time scenes, with direct connection to suppliers and consumers, high cost-effectiveness, close location to consumers, and certain development space.

"The company has established a deep strategic cooperation relationship with companies including Busy Snack, Zhao Yiming, and Snack Yiming, and the performance of the company will continue to grow with the increase in the number of stores," said Zhang Xuewu.

According to the financial report, in the first half of the year, Yanker Shop Food achieved a revenue of 2.459 billion yuan, a year-on-year increase of 29.84%; the net income attributable to the parent company was 0.319 billion yuan, a year-on-year increase of 30%; the non-recurring net income attributable to the parent company after deduction was 0.273 billion yuan, a year-on-year increase of 17.96%.