Author: Luan Li
Although market competition is intensifying, the enthusiasm of dairy companies for IPO is getting higher and higher.
According to the first financial reporter, there are nearly ten dairy companies lining up or claiming their intention to start listing, many of which are small and medium-sized dairy companies. In response to the next round of competition, the short-term profit story is easy to tell, and its long-term business prospects remain to be seen.
Dairy companies get together to start IPO
Since 2022, a number of domestic dairy companies have announced the launch of IPOs.
The reporter noticed that the largest one is the large-scale domestic raw milk enterprise Aoya Group Investment Holdings Co., Ltd. (hereinafter referred to as "Aoya Group"), which is preparing to be listed on the Hong Kong Stock Exchange.
According to the prospectus, Auya Group currently owns 10 large-scale farms in Shandong and Inner Mongolia provinces, and it is also the fifth largest raw milk supplier in China in terms of output in 2020.
From the performance point of view, the Auya Group's revenue from 2019 to 2021 was US$350 million, US$410 million, and US$520 million, with a compound annual growth rate of 21.9%; it plans to raise funds for the expansion of pasture groups and renovation of pastures. facilities, investment in new ranch facilities, etc.
However, it is the downstream small and medium-sized dairy companies that are more eager to go public. Since July this year, the Sichuan regional dairy company Jule Co., Ltd. and the Internet celebrity dairy company Adopt a Cow have successively announced their prospectuses.
Jule is also dubbed as a “difficult household” in the industry. In 2017, Jule submitted a prospectus to the China Securities Regulatory Commission and updated it again in August 2019 and June 2020, but it has not been approved.
Among them, in April 2020, Jule Co., Ltd. received a warning letter from the China Securities Regulatory Commission because the cashier of the branch company misappropriated the company's funds by a total of 95.778 million yuan and did not disclose it in the first application draft, and there were major defects in the internal control system. Jule has updated its prospectus for the fourth time in five years.
Another company that submitted a prospectus for adopting a cow has attracted much market attention. Different from the model of most dairy companies that “raise cows first and then sell milk”, adopting a cow starts from OEM production and online sales. Although With only a short 6-year history, its revenue and net profit in 2021 will exceed that of many established regional dairy companies.
In addition to the above-mentioned three companies that disclosed their prospectuses, many dairy companies have announced the progress of listing. For example, Knight Dairy is preparing to transfer from the New Third Board to the North Exchange; in February this year, Wen's shares disclosed on the investor interaction platform , the dairy subsidiary has completed the shareholding system reform, and the spin-off and listing work is progressing in an orderly manner; not long ago, Yipin Dairy also held an IPO strategy seminar; local dairy leaders such as Junlebao and Wandashan have also been rumored to be launched many times. Listing work.
However, from the outside world, due to the impact of the epidemic, there are also certain uncertainties in the domestic economy, and it is not a good time to go public at present.
Shen Meng, executive director of Chanson Capital, also told the First Financial Reporter that the dairy industry is a highly competitive industry, especially small and medium-sized enterprises have obvious demand for marketing investment. Therefore, under the pressure of their own cash flow, it is necessary to alleviate liquidity risks through listing financing.
It can also be seen from the use of raised funds that most of the above-mentioned dairy companies will use the raised funds to build new farms and production bases, and at the same time strengthen their own brands and marketing to cope with market competition.
Song Liang, an independent dairy analyst, also said that small and medium-sized dairy companies are so keen to go public, in addition to financing needs, they also do not rule out providing convenience for their investors and management to realize cash. The number of mergers and acquisitions between big and small is increasing, and it is not ruled out that some small and medium-sized dairy companies hope to standardize their operations through listing, so as to facilitate their acquisition in the future.
A good story to tell but can it last?
The performance of the above three dairy companies, especially the two downstream dairy companies, has grown significantly in recent years, but there are also hidden concerns.
Jule shares had problems such as slow growth in performance and single product and market.
From 2017 to 2019, Jule's revenue was about 700 million yuan, 790 million yuan and 850 million yuan respectively. Compared with the diversified product structure of large regional dairy companies, Jule's main income depends on "sour milk". The main milk-containing beverages accounted for 73% of total revenue in 2019, while sterilized milk and low-temperature products accounted for only 12.9% and 10.8%; and Jule’s business in Sichuan Province accounted for 98% of its total revenue.
However, in the latest prospectus, Jule's revenue has increased significantly in 2020 and 2021, especially in 2021, Jule's revenue is 1.42 billion yuan, a year-on-year increase of about 43%, and the revenue structure has also changed, including The proportion of revenue from milk beverages dropped to 51.7%, and fermented milk rose to 26.7%; the proportion of revenue from the main business of the Sichuan market also dropped from 98% in 2019 to 74.7% in 2021.
However, the reporter noticed that this change is related to Jule's acquisition of 55% of the shares of Heilongjiang Huifeng Dairy Co., Ltd. (hereinafter referred to as "Huifeng Dairy") in September 2020. The latter is mainly sold in the three eastern provinces, Shandong, Henan and other markets. Yogurt, Russian-style charcoal-fired yogurt and other products are geographically far away from the Sichuan market. However, in 2021, Huifeng Dairy will achieve a net profit of 27.846 million yuan, which will also drive Jule's Heiji Liao market revenue of 200 million yuan, accounting for 200 million yuan in total revenue. The ratio reached 14.14%.
However, in the use plan of the raised funds announced by Jule, it seems that there is no intention to make a big effort in the northern market. Of the 1.36 billion funds planned to be raised, about 33% of the funds will be used for the renovation of production bases in Wenjiang, Sichuan and Xinjin. Expansion, 24.9% is used for the Gulang County dairy farming base project, another 22% is used to supplement working capital, and 13.2% is used for the upgrading and construction of the marketing network center, etc. The focus is still on the Sichuan market.
Huifeng Dairy is not a strong regional dairy enterprise in the northern region. The announcement shows that Huifeng Dairy's production and operation sites and main equipment are leased from third parties, and there is still the risk of passive relocation in the future.
Another company, which has announced its prospectus and adopted a cow, is under pressure to increase revenue without increasing profits.
In terms of income, from 2019 to 2021, the income from adopting a cow will increase from 870 million yuan to 2.57 billion yuan, with an average annual compound growth rate of 72.3%. The income scale of adopting a cow in just 3 years has even exceeded some An established regional dairy company with decades of development.
Different from the offline-based business model of dairy companies in other regions, after adopting a cow, it started to develop online marketing. Therefore, in the income structure, its online sales in the past three years accounted for 62.3% of its main business income. , 77.5% and 77.7%.
However, marketing also means higher investment in branding and sales. From 2019 to 2021, the sales expenses for adopting a cow will be 190 million yuan, 300 million yuan and 480 million yuan, and the sales expense ratios will be 22.5% and 1.84 billion, respectively. % and 18.8%, and the growing marketing expenses have also eaten up most of the profits, coupled with the rising cost of raw materials, the gross profit margin of adopting a cow fell from 40.95% to 28.86% in the same period, while revenue increased significantly in 2021, The net profit of 140 million yuan was slightly lower than the same period in 2020.
In addition, with the growth of sales scale and the demand for listing, adopting a cow has to change the mode of OEM production and start to build more pastures and factories upstream.
In 2019, the product of adopting a cow was still produced by a third-party OEM. In October 2020, with the commissioning of the Linyi factory in Shandong, an own production capacity of about 12,000 tons (yogurt + pure milk) was formed that year, but the OEM production It is still as high as 114,000 tons, and the OEM-based situation will only be reversed in 2021.
It can also be seen from the fundraising plan for adopting a cow (1.85 billion yuan) that about half of the funds 980 million yuan will be used for the Haibozhige smart ranch construction project, and 520 million yuan will be used to support the brand building, marketing and promotion projects in the next three years. , 54.403 million yuan is used for information system upgrading and transformation projects, and the remaining 300 million yuan is used to supplement operating funds.
However, the industry believes that the yogurt and pure milk products that adopt a cow are very close to the products of the current mainstream dairy companies. With the intensification of market competition, major dairy companies have accelerated the speed of product innovation and gradually paid attention to e-commerce and new retail Waiting for the layout of new channels, this will also bring new pressure to adopting a cow.
In Song Liang's view, whether it is an Internet celebrity dairy company or a regional dairy company, if it can be successfully listed, it will help to strengthen its own supply chain and cope with market competition, but listing does not solve all problems.
At present, China's dairy market is in a state of staged saturation. Leading enterprises have obvious comprehensive advantages in products, brands, channels, etc., and the concentration will be further improved. However, some small and medium-sized dairy enterprises with backward production capacity, low enterprise management efficiency and lack of innovation will be gradually eliminated. Knocked out.