In 2019, The First IPO Withdrawer Returned To The "Examination Room", "Condensed Milk King" Panda Milk And A Shares.

In 2019, the first domestic "condensed milk king" of IPO "withdrawal" - the Panda Dairy Group Limited by Share Ltd (hereinafter referred to as "Panda Dairy") returned to the IPO examination hall in March 6th.

On the day of March 6th, the Panda Dairy disclosed the updated prospectus on the official website of the SFC. It plans to visit the Shenzhen Stock Exchange's gem, issuing shares of not more than 31 million shares, and the sponsor is CITIC Securities.

It is worth mentioning that, prior to November 12, 2018, the new three board listed panda milk for the first time submitted to the SFC IPO application documents, intended to land on the main board of the Shanghai Stock Exchange. However, less than two months after the submission of the materials, Panda Dairy products applied to the SFC for withdrawal of application materials on 10 January 2019, becoming the first IPO to cancel the application in 2019.

In addition to changing the planned listing, the initial fund-raising amount for panda milk has shrunk by more than 10% compared to the previous one.

The latest prospectus shows that panda milk is expected to raise about 552 million yuan for Cangnan's annual production of 30 thousand tons of concentrated dairy products, Jiyang's two annual production of 20 thousand tons of concentrated dairy products, and 3 items of marketing and application center projects. Although the investment projects have not been changed, the amount of fund-raising has shrunk by about 11.03% compared to the previous 621 million yuan.

In the prospectus, panda milk is expected to expand the production capacity of condensed milk after the implementation of the project. Meanwhile, the company will add 5000 tons of cream and 5000 tons of cheese.

One year later, she returned to the examination room.

The "Panda" brand from Cangnan, Wenzhou, was founded in 1956. It is a time-honored enterprise with a history of 64 years. In 2010, it was named "Zhejiang time honored brand". Its main products are "panda card" series of sweet condensed milk, full fat sweetened condensed milk, condensed evaporated milk, whole milk, milk, Ma Su cheese, cheese bars, and cream.

According to the statistics of China Dairy Industry Association, its flagship product, "panda brand" condensed milk, was the second largest condensed milk brand in the domestic market after its sales scale was only inferior to nestle in 2018.

In addition, Panda Dairy has invested in new butter and cheese production lines in recent two years, and has introduced new products such as cream, Ma Su lira cheese and children cheese sticks.

Prospectus shows that the fragrance, the Mengniu Dairy industry, Danone dairy industry and golden monkeys are the customers of Panda Dairy products.

As the domestic "condensed milk king", panda milk opened the capital Road 5 years ago.

In June 16, 2015, the new third board of Panda Dairy was launched in October 11, 2016. After a year more than a year later, it submitted a listing guidance material to the Zhejiang Securities Regulatory Commission, and subsequently signed a cooperation agreement with CITIC to sign the company's initial public offering and listing. It formally launched the IPO process.

In November 12, 2018, Panda Dairy submitted IPO application documents to the SFC. In January 2, 2019, it received the examination feedback from the SFC. However, in January 8th, the board of directors of the Panda Dairy Board decided to terminate the IPO application.

At that time, Panda Dairy explained that "based on the needs of business development strategy, after careful study, the company decided to adjust the listing plan".

The feedback from the SFC is undoubtedly the key. It is not known whether Panda Dairy has answered the question of feedback completely.

However, the chief financial officer of a Zhejiang company pointed out that "the product structure of Panda Dairy is relatively single, and the concentration of customers is high. The rationality of its revenue, the authenticity of the cost, and whether the profit is consistent with the development trend of the industry may be a concern of regulators."

In October 25, 2019, Panda Dairy again launched a sprint to A shares, which submitted a listing guidance material to the Zhejiang Securities Regulatory Commission and has been accepted.

Why do we apply for IPO once again after a year's withdrawal of the application materials? Why do we change the proposed listing and the amount of proposed fundraising?

In March 9th, the economic report reporters on twenty-first Century called the Panda Dairy securities affairs department and sent an interview outline, but as of press time, no reply was received.

Signs of declining performance have shown

Introduction of Panda Dairy products, its concentrated dairy products processing, raw milk powder mainly imported from Fonterra New Zealand, white sugar mainly to Guangxi sugar net and sugar industry procurement.

At present, there are 3 production bases for panda milk in Cangnan, Shandong, Jiyang and Hainan in Zhejiang.

Analysis shows that in the 2016-2018 years and the first three quarters of 2019, the revenue of Panda Dairy products was about 409 million yuan, 534 million yuan, 602 million yuan and 409 million yuan respectively, and the corresponding net profit attributable to shareholders of the parent company was 85 million 534 thousand yuan, 86 million 912 thousand and 500 yuan, 94 million 752 thousand and 600 yuan, 40 million 48 thousand yuan respectively.

Although it is the second largest condensed milk brand in China, the performance of panda milk is slightly thinner.

In the 2016-2018 year, the annual average compound growth rate of Panda Dairy products reached 21.34%, and the revenue growth in 2017 exceeded 30%. However, the net profit in 2017 only increased by 1.6%, and in 2019, there was a downward trend.

It should be noted that in the first three quarters of 2019, the revenue of Panda Dairy products increased by 0.65% compared with the same period in 2018, but the net profit attributable to the shareholders of the parent company fell by 36.77%. Meanwhile, the net profit after deducting the net profit dropped from 58 million 25 thousand and 900 yuan in the same period in 2018 to 35 million 593 thousand and 300 yuan, down 38.66%.

In this regard, Panda Dairy is interpreted as "since the company launched new products since 2018, expanding the scale of fixed asset investment and expanding the size of the sales team, resulting in a significant increase in depreciation and sales costs of fixed assets, including manufacturing costs in the first three quarters increased by about 7 million 520 thousand yuan, and sales expenses increased by about 6 million 910 thousand yuan over the same period last year".

According to the prospectus, the first phase of the Shandong Jiyang phase of the Panda Dairy industry was put into operation in the second half of 2018. "In 2019, the new plant equipment and production technology in Shandong were in running in, resulting in a large loss in production, resulting in a decline in the gross profit margin of the company".

While the net asset yield of Panda Dairy products has continued to decline, it is also a dangerous signal.

In the 2016-2018 years and the first three quarters of 2019, the weighted average return on assets of panda milk belonging to the common shareholders of the company was 46.40%, 22.85%, 21.74% and 8.80% respectively.

In addition, the structure of Panda Dairy products is relatively simple, and has high dependence on the top five customers.

In 2016 -2018 and the first three quarters of 2019, the total revenue of the top five customers of Panda Dairy was 146 million yuan, 194 million yuan, 186 million yuan and 110 million yuan respectively, accounting for 35.64%, 36.29%, 30.98% and 27.08% of the current revenue.

In 2016-2017 years, Unilever (China) Co., Ltd. is the largest customer of panda milk, and its second largest customer in the 2016-2017 year of 603711.SH, a listed company in Zhejiang. It was promoted to its first largest customer in the first three quarters of 2018 and 2019.

In the 2016-2018 years and the first three quarters of 2019, the sales volume of Panda Dairy products to the fragrance sales accounted for 14.54%, 16.23%, 16.45% and 9.12% of the sales revenue of its concentrated dairy products.

"Panda milk is relatively small in volume, mainly concentrated in the East China market and Southern China market. The dependence on large customers is relatively high. These enterprises are relatively weak in risk resistance. The key to success in listing is the stability of their performance." in March 9th, a food industry analyst who declined to be named told the business reporter in twenty-first Century.

It is worth mentioning that Panda Dairy specifically mentions the potential risk of the outbreak. "The new coronavirus outbreak in early 2020, consumers may choose to stay away from crowds and reduce parties to minimize risk of infection. The operation of the catering industry is vulnerable to shocks, which will have a certain impact on the company's performance."

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