Debut Of China Made Milk Powder, China'S Flying Crane Market Value Exceeds 66 Billion

A few days ago, the first brand of China made infant formula milk powder was officially listed on the stock exchange's main board. With the sound of the Gong, the flying crane opened at HK $7.27, hitting 7.51 Hong Kong dollars in its intraday high. As of press release, feinhe dropped slightly by 0.8%. In the downturn of the Hang Seng Index of nearly 2%, feinhe only slightly declined, reflecting the market's recognition of the company's fundamentals and potential for future development.

According to relevant media, Feipu's listing price is priced at the lower limit of the guidance price range, that is, HK $7.5. On the eve of listing, investors showed enthusiasm for flying crane, and the international placement was over 12.14 times the number of subscriptions. At present, the company's dynamic PE is about 20 times lower than that of Yili and Mengniu Dairy industry, which has certain attraction.

Flying crane was founded in 1962, one of the earliest milk powder enterprises in China. According to the retail sales value in 2018, it is also the largest group of infant formula milk powder in China, with a market share of 15.6%.

Flying crane mainly produces and sells all kinds of infant formula milk products, and sells a variety of adult milk powder, liquid milk products, goat milk, infant formula milk powder and bean powder, etc. the main brands include star flying sails, and so on. In early 2018, the company expanded its business to retail healthcare through the acquisition of Vitamin World.

After 57 years of development, flying crane has formed a strong brand effect and channel advantage. The prospectus shows that the company has formed a nationwide offline and online channel, and has 1228 distributors, working with 668 retailers and 109 thousand retail outlets. Online is sold directly through Tmall, Jingdong and suning.com. Among them, to sell mainly to dealers, dealers usually need to pay the goods before delivery, Feida has strong voice in the channel.

Over the past few years, the performance of flying crane has increased rapidly. In the 2016-2018 years, the income was 3 billion 724 million yuan, 5 billion 887 million yuan and 10 billion 392 million yuan respectively, with a compound annual growth rate of 67%. Gross margins were 54.6%, 64.4% and 68.1%, respectively, showing an increase year by year. Net profit reached 406 million, 1 billion 160 million and 2 billion 242 million yuan, with a compound annual growth rate of 135%. In the first half of this year, the income and net profit of flying crane continued to maintain a strong trend, and revenue grew by 59% over the same period last year. The net profit of the net profit after the deduction was 72%, which was far ahead of peers.

Since 2015, flying crane has shifted its focus to high-end products, streamlined product mix and terminated low-end products, which coincides with the high-end trend of the milk powder industry. This is also the main reason for the performance growth of Feihe in the past three years.

Looking ahead, flying crane still has considerable potential for growth in infant formula industry. According to the report of frost Sullivan, the composite growth rate of high-end milk powder is predicted to be 16.6% in the next five years, and that of super high-end milk powder is 16.9%. By 2023, the share of market share will increase to about 58.3% and 26.4% respectively, and ASP will be further upgraded.

The brand of domestic milk powder is rising under the support of policy. The implementation of infant formula registration system accelerates industry reshuffle, market share concentrates on leading enterprises, and the sinking ability of domestic brands is better than foreign brands, all of which bring good opportunities for flying crane development. After listing, flying crane will get more convenient and diversified financing channels, and follow-up expansion is worth looking forward to.