Dairy companies focus on IPO for breakthrough

The enthusiasm of dairy companies for listing has been activated again this year

Industry insiders believe that under the encirclement and suppression of domestic dairy giants, emerging brands and regional dairy companies must seek capital support to cope with the complex competitive environment

What is the reason for the IPO of dairy companies?

In fact, this is not the first wave of listing boom for dairy companies

According to Song Liang, a dairy analyst, 2013-2016 was the golden period of capital for the dairy market.

According to Hou Junwei, a dairy marketing expert, there are three main reasons: First, it is influenced by the state's policy of encouraging private enterprises to go public; second, the ability of dairy companies to resist risks has declined during the epidemic; third, the competition in the domestic dairy market is very fierce.

Song Liang believes that in addition to raising funds and resisting risks, there are two reasons for dairy companies to get together and go public: one is to establish an equity incentive mechanism so that the management can cash in in the future; the other is to further increase the supply system to further improve the company's strength

Faced with the pressure of leading dairy companies, it is the only way for emerging brands and regional dairy companies to stabilize their fundamentals through listing and financing

Sunshine Dairy’s IPO raised 669 million yuan, which were respectively invested in the Jiangxi base dairy product expansion and testing R&D upgrade project, the Anhui base dairy product phase II construction project, marketing channel construction and brand promotion projects

Jule shares are also seeking to raise funds and expand production.

Relying on the rise of e-commerce, Adopt a Cow plans to raise 1.

The Aoya Group, which is listed in Hong Kong, plans to raise funds through the IPO for the expansion of the ranch group, the reconstruction of ranch facilities, and the investment in new ranch facilities

Some dairy companies have suffered multiple failures

However, while getting together for IPOs, many dairy companies are facing serious problems themselves

　　The asset-liability ratio of Knight Dairy continued to rise, and the overall debt level was higher than that of comparable listed companies in the same industry

　　The difficulty of going public has even caused several companies to end their bleak IPO road

　　Red Star Meiling, who began to receive IPO counseling as early as 2017, has not successfully attended the meeting this year

　　At the beginning of July, the third IPO of Meilu Bio, which claimed to be the "second brand of goat milk powder", was also terminated

　　I have to admit that there are indeed some problems in the development of the above two companies
.
Although Red Star Meiling has been established for nearly 20 years, its net profit during the reporting period is only about 50 million yuan; Meilu Bio's net profit is also stable at about 80 million yuan all year round, and its main self-produced infant formula milk powder operating income The overall trend is declining
.

　　However, there are also dairy companies that have failed to go public once again sprinting into the capital market, such as Jule Co.
, Ltd.
, which started the journey of three IPOs this year
.
However, the company also has the problem that its regional strength is too strong and its performance scale is at the bottom of similar competitors.
There is still a question mark on whether it can succeed in the three wars
.

Listing is not a "one-size-fits-all drug"

　　Judging from the disclosed prospectus, these dairy companies on the IPO road have all delivered very "beautiful" performance, but the road to listing is not smooth, and the problems exposed are equally prominent and similar
.
Compared with large dairy enterprises, regional dairy enterprises are facing greater difficulties
.
The increase in the market concentration of dairy products, the expansion of large dairy companies across the country, the competition among regional dairy companies and the impact of imported dairy products have all squeezed the living space of regional dairy companies
.

　　In addition, the current development of many regional dairy enterprises is still relatively slow, and the overall scale is relatively small
.
In terms of revenue in 2021, among the regional dairy companies, except for Wandashan, the revenue is basically hovering around 1 billion yuan
.
In order to seek further development, choosing to go public is undoubtedly a faster way
.
However, after listing, there are still many risks.
For regional dairy companies, listing is not a "safe haven"
.

　　In Hou Junwei's view, regional dairy companies represented by Sunshine Dairy are still facing enormous pressure after listing, and listing will not change the problem of regional concentration
.
For example, the core advantages of the listed Sanyuan shares are still in Beijing, the base of Bright Dairy is in Shanghai, and the core advantages of New Dairy are in Sichuan
.

　　Under the siege of dairy giants such as Yili and Mengniu, there are still many challenges for regional dairy enterprises to face in the future
.
Hou Junwei believes that after the listing, these dairy companies will still face challenges from four aspects: products, channels, marketing and promotion, and lack of talent.
The core is to establish barriers to their own products
.
If SMEs cannot create a strong differentiation advantage in products, they will lose their advantage in the competition with Yili and Mengniu
.

　　From the prospectus, the R&D investment costs of these dairy companies are generally not high
.
In the past two years, the R&D investment in adopting a cow accounted for 0.
04% and 0.
27% of the operating income; in 2021, the R&D expense ratio of Jule will be 0.
44%, and the cost is only 6.
2813 million yuan
.

　　Dairy experts believe that in the post-epidemic era, consumers' health concept has improved, and the nutritional value of dairy products has been valued
.
Under the situation of Hengqiang, the leading dairy industry, cutting-edge brands and regional dairy companies need to take advantage of the subdivision track, seek capital assistance in listing, and conduct differentiated layouts in order to seek a place in the competition
.

　　(Comprehensive arrangement by Yang Xiaojing)

"China Food News" (July 19, 2022 Edition 04)

　　(Editor-in-charge: Yang Xiaojing)