Panda Dairy IPO Submitted To The Registration Regulatory Feedback Of 5 Major Opinions, Food Safety And Big Customer Dependence Became The Focus Of Attention

China's "king of condensed milk" Panda Dairy Group Co., Ltd. (hereinafter referred to as "Panda Dairy"), which successfully launched the meeting on August 4, will be listed on the Shenzhen Stock Exchange's gem.

"Panda" brand, founded in 1956, is an old brand enterprise with a history of 64 years. In 2010, it was rated as "Zhejiang time honored brand". Its main products are "panda brand" series of modulated sweet condensed milk, whole fat sweetened condensed milk, prepared light condensed milk, whole fat light condensed milk, masurila cheese, children's cheese stick, cream, etc., and Xiangpiao, Mengniu Dairy and Danone milk Industry, golden monkey, etc. have business cooperation.

On September 7, Panda Dairy replied to the Shenzhen Stock Exchange's feedback letter on its issuance and registration, focusing on the distribution mechanism of rights and obligations between the company and Nakayama Hongchang on food quality issues during the processing of Jiangzhong monkey mushroom condensed milk seasoning package entrusted by the company, changes in the main product concentrated dairy products and main customers Xiangpiao, and changes in the transfer of state-owned shares in the historical evolution There are five problems, such as the determination of the joint actual controller, the large fluctuation of the company's natural gas consumption.

According to the official website of Shenzhen Stock Exchange, Panda Dairy products were submitted for registration on August 12 after passing the meeting of the municipal Party Committee on August 4, but no registration results have been obtained. In this regard, on September 7, a person from Panda Dairy Securities Affairs Department replied, "the registration results have to wait for the notice of the CSRC.".

Food safety bears the brunt

According to the statistics of China Dairy Industry Association, "panda brand" condensed milk, the flagship product of Panda Dairy, is the second largest condensed milk brand in the domestic market after nestle in 2018.

From the perspective of the capital market process, Panda Dairy was listed on the new third board on June 16, 2015. More than a year later, it submitted the listing guidance and filing materials to Zhejiang securities regulatory bureau to start the IPO process.

On November 12, 2018, Panda Dairy disclosed the IPO application documents and planned to log on the main board of Shanghai Stock Exchange. However, less than two months after the submission of the materials, Panda Dairy applied to withdraw the application materials, becoming the first IPO "cancellation" enterprise in 2019. Until March 6, 2019, Panda Dairy returned to the IPO examination room and planned to land on the gem of Shenzhen Stock Exchange.

In the above feedback opinions of Shenzhen Stock Exchange, the first concern is whether there is potential food quality dispute when Panda Dairy is entrusted to process Jiangzhong monkey mushroom condensed milk seasoning package.

According to the prospectus on August 12, the "entrusted processing agreement" signed between Panda Dairy and Zhongshan Hongchang, Zhongshan Hongchang entrusted Panda Dairy to produce and process Jiangzhong monkey mushroom condensed milk seasoning package. The contract is valid from September 18, 2019 to December 31, 2020. The specific product quantity is subject to the order. Panda Dairy will deliver products to Jiangzhong dietotherapy according to the order.

In terms of the amount of money, in 2019, Panda Dairy sold Jiangzhong monkey mushroom condensed milk seasoning bag series products to Jiangzhong dietotherapy and Zhongshan Hongchang, respectively, with the amount of 1966500 yuan and 1233800 yuan.

In response, Panda Dairy replied to the Shenzhen stock exchange that on August 20, 2020, Jiangzhong dietotherapy has issued a "confirmation letter", confirming that since January 1, 2017, there is no dispute or potential dispute between Jiangzhong diet therapy, Zhongshan Hongchang and Panda Dairy, including food safety and food quality. On the same day, Zhongshan Hongchang issued the confirmation letter, confirming that since January 1, 2017, there is no dispute or potential dispute between Zhongshan Hongchang, Panda Dairy and Jiangzhong food therapy, including food safety and food quality.

In addition, Panda Dairy stressed that "the company has agreed with Zhongshan Hongchang that in case of quality problems attributable to panda milk, Panda Dairy shall be responsible for the losses arising therefrom.".

Big customer Xiangpiao loses money

Xiangpiao, a listed company "deeply bound" with Panda Dairy products, is also one of the focuses of the regulatory authorities.

For Panda Dairy products, it can be said that success is also fragrant, or failure is fragrant.

According to the prospectus, from 2017 to 2019, Xiangpiao has always been the main customer of Panda Dairy products (except for the second largest customer in 2017, all other years are the first customer). The amount of sweet condensed milk sold by Panda Dairy products to them was 58.75 million yuan, 74.21 million yuan and 53.87 million yuan, accounting for 16.23%, 16.45% and 12.44% of the company's sales revenue of concentrated dairy products, respectively.

At the same time, at the end of each reporting period, Xiangpiao was the client corresponding to the top five detailed accounts receivable items of Panda Dairy Products: the amount receivable was 12.6954 million yuan, 16.1204 million yuan and 7.0729 million yuan, accounting for 54.71%, 43.88% and 19.18% of the balance of accounts receivable at the end of the period.

On this basis, the Shenzhen stock exchange requires Panda Dairy to further disclose the list of the top five customers from January to June 2020, explaining the reason why Xiangpiao did not appear again among the top five detailed accounts receivable customers at the end of the first half of this year. Explain and disclose whether there is a risk from the sharp decrease of sales revenue of Xiangpiao this year and in the future.

According to the reply information of Panda Dairy, from January to June 2020, Shanghai Shengxin sugar wine food Co., Ltd. will replace Xiangpiao as the first customer, and Xiangpiao will fall second. At the same time, Shanghai LECHU Food Co., Ltd., Rongbang food store in Shiqi District of Zhongshan City, and Mengniu Dairy (Group) Co., Ltd. of Inner Mongolia are ranked as the third, fourth and fifth customers respectively 。

"Since 2018, the company has set up a cheese division to continuously increase the investment in R & D and sales of cheese products. In 2020, the company's cheese distributor Shanghai LECHU Food Co., Ltd. has become the top five customers of the company's concentrated dairy products. Affected by the Xinguan epidemic, the sales scale of the company's distribution channels decreased from January to June 2020, and the proportion of the sales amount of the direct customer Mengniu Dairy increased, becoming the top five customers of the company's concentrated dairy products, "Panda Dairy further explained.

According to the data, from January to June 2020, the total sales of Panda Dairy products to Xiangpiao was 10.0688 million yuan, the sales return was 9.9599 million yuan, and the balance of accounts receivable was 123 thousand yuan. The proportion of payment received in the current period was as high as 98.92%.

However, since the first half of this year, Xiangpiao, as the most important customer of Panda Dairy products, has performed very poorly and suffered a large amount of losses.

Xiangpiao's net profit decreased by 26.43 billion yuan to 86.4 billion yuan. In the second quarter, although the loss narrowed, the loss still reached 63.88 million yuan.

The big customers can't make ends meet, which is obviously likely to affect the closely related Panda Dairy's performance in the same year.

The Shenzhen Stock Exchange also explicitly required Panda Dairy products to disclose whether there is a risk of significant decline in sales revenue of Xiangpiao in 2020 and in the future in the letter of implementation of feedback opinions on the above registration link.

"The company mainly sells sweet condensed milk to Xiangpiao, which is used for brewing milk tea products. It belongs to hot drinks, and the product sales are mainly concentrated in the first and fourth quarters of each year. Therefore, according to Xiangpiao's purchase and production plan, it mainly purchases sweet condensed milk from the company in the third and fourth seasons, with obvious seasonality. " Panda Dairy said that in the next August to October, Xiangpiao's planned purchase amount of the company was 7.9646 million yuan, 8.4956 million yuan and 10.6195 million yuan respectively, both increasing year-on-year. There is no risk that the sales revenue from Xiangpiao will drop sharply in 2020.

However, even though Panda Dairy said that Xiangpiao's loss would not be transmitted to Panda Dairy for the time being and bring operational pressure, some food industry analysts still expressed concern about its dependence on big customers.

"Relatively speaking, Panda Dairy has a high dependence on big customers. If the customer structure is further improved, the enterprise's ability to resist risks can be strengthened." A person in the food industry pointed out that once Xiangpiao's business data continues to deteriorate in the future, the sales of Panda Dairy products, which are deeply dependent on Xiangpiao, will be directly affected.

Earlier, it was also admitted in the IPO prospectus of Panda Dairy that if Xiangpiao's own business situation changes in the future or Xiangpiao chooses other condensed milk products suppliers, resulting in the reduction of purchase amount from the company, it will have an adverse impact on the company's production and operation.

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