State Owned Assets Holdings Valuation Rose To 10 Billion Tiandi No.1 Will Be A "Add A Dish"?

"Now No. 1 food and Tiandi No. 1 are in (listing) counseling. Which one will go first in the future depends on which runs faster." On December 9, Chen Sheng, founder of Tiandi No.1 and his investors, interpreted the details of the company's recent financing of 316 million yuan for the first time.

Previously, Tiandi No.1 (832898) announced that it planned to issue no more than 12 million shares and raise no more than 316.6 million yuan to the poverty alleviation fund of central enterprises at the price of 26.30 yuan per share, which will be used to supplement working capital and optimize the financial structure of the company.

The 21st century economic reporter noted that, referring to the current stock price of tiandi-1 (20.39 yuan), the investment premium is close to 30%. After becoming a shareholder, the valuation of Tiandi No.1 will exceed 11 billion yuan, which is a leading level in the new third board capital market. Industry analysis shows that tiandi-1 is expected to accelerate its listing process by introducing central enterprise funds.

State owned capital shares

In October 2016, the fund was managed by the state owned enterprise group. As an important carrier for the central enterprises to serve the national poverty alleviation, the fund has 109 shareholders, covering all the central enterprises supervised by the state owned assets supervision and Administration Commission of the State Council and some of the central enterprises that the Ministry of Finance performs the duties of investor. The fund has raised 31.405 billion yuan in three phases, mainly investing in the development and utilization of resources in poor areas, the construction of industrial parks, and the development of new urbanization.

By the end of October this year, the poverty alleviation fund of central enterprises had completed 118 investment decision-making projects with an investment amount of 30.707 billion yuan. The accumulated social capital was about 260 billion yuan, which directly and indirectly promoted the employment of 550000 people. In 2018, the fund invested 800 million yuan to establish a pig breeding platform in poor areas in cooperation with muyuan food. At present, the industrial fund has invested more than 2.5 billion yuan in pig breeding. In addition, it also invested in JUNLEBAO, Yike food and other consumer projects.

Before that, the state investment fund had invested in Chen Sheng's No. 1 food, and the cooperation between the two sides can be said to have a long history.

"According to our research, Tiandi No.1 currently accounts for more than half of the vinegar beverage market, and has been laying out the external market, and its development potential is expected." Feng Yue, executive general manager of the investment team of venture capital of SDIC, believes that different from other drinks, Tiandi No.1 takes the lead in opening up vinegar beverage category, and there are no competing products of similar scale in the industry for the time being. On the whole, it has obvious first mover advantage and is a scarce and worthy investment target.

According to the data, from 2016 to 2019, the revenue of tiandi-1 was 1.401 billion yuan, 1.684 billion yuan, 2.112 billion yuan and 2.585 billion yuan respectively, and the net profits were 220 million yuan, 286 million yuan, 344 million yuan and 400 million yuan respectively. In the past five years, Tiandi No.1 has accumulated dividends of nearly 1.9 billion, more than 90% of the enterprises in the capital market.

But this year, due to the impact of the epidemic, retail and catering terminals around the country are basically closed, and tiandi-1 will inevitably not be affected. Data show that the company recorded revenue of 605 million yuan from January to June this year, a decrease of 21.01% compared with the same period of last year, and the net profit also decreased by 370.65% to 39 million yuan.

For the overall situation of this year's beverage business, Chen said, "better than originally expected.". He told the 21st century economic report that judging from the third quarter and the current market order situation, the beverage business as a whole "will have a decline, but the impact is estimated to be small".

"We have always been a stable company, which is very necessary. This can be reflected in the epidemic situation this year. The sales in February, March and April were greatly affected. At one time, the cash on the company's account was only more than 300 million yuan, but it began to recover after the second half of the year. Yesterday, I had 550 million yuan." For the state investment fund shares, Chen Sheng stressed that both sides are optimistic about the future development prospects, "Tiandi No. 1 is not poor money." He said.

Sprint for A-share IPO

As a native ethnic beverage enterprise, Tiandi No.1 was born in 1997, mainly engaged in the R & D, production and sales of vinegar drinks and other beverages. The company was listed on the new third board on August 20, 2015. With 23 years of intensive cultivation in the Guangdong market and the promotion strategy of "the fifth dish" of Chinese dining table, tiandi-1 currently sells nearly 1 billion cans a year, accounting for 40% of the national vinegar beverage market.

In recent years, news of Tiandi No.1 listing has been spread from time to time. Last year, the company was once expected to restructure with Huiyuan Juice (01886. HK), but failed in the end. In December 2019, Tiandi No.1 announced that it would terminate the listing guidance agreement with GF Securities, and GF Securities would no longer serve as the company's listing guidance agency.

People familiar with the matter told reporters that in the famous "snake swallowing elephant" acquisition, the state investment fund also participated, and once put in 1.5 billion yuan to participate, but the final plan was canceled due to technical reasons. "At that time, Huiyuan could say that it had searched all over the world for potential partners, including Danone, and finally chose tiandi-1. Unfortunately, it failed due to technical reasons." The people familiar with the matter said.

Although the marriage Huiyuan dream broken, but did not change the world No. 1 listing determination. On February 19 this year, Tiandi No.1 submitted to Guangdong securities regulatory bureau the listing guidance record of the selected layer and was accepted. The tutoring agency was CITIC Securities. In August this year, Tiandi No.1 announced that the company was receiving listing guidance from CITIC Securities Co., Ltd.

In mid November, Tiandi No.1 participated in the launching ceremony of the listing mobilization meeting. At the meeting, 10 enterprises, including Tiandi No.1, Yatu hi tech, Boying tewelding, Huayi sanitary ware, baodeli new material, Yingtong new material, Huaguan new material, Yinhu medical technology, Youju new material, public water service and so on, made their voices to all walks of life, announcing that they had officially embarked on the road of listing.

For the listing progress, Chen said in the "preparation.". From the current situation, tiandi-1 is more inclined to be listed in A-share market. "First, our scale is not very large. More institutional investors in the Hong Kong stock market will have an impact on the attention of small-scale enterprises.".

According to wind data, the overall domestic fruit vinegar Market in 2018 was 6.49 billion yuan, an increase of 14.38% compared with 2017, and the compound annual growth rate (CArG) from 2014 to 2018 was 13.05%. It is expected that in the next few years, with the upgrading of consumer consumption level and the promotion of health concept, fruit vinegar industry will usher in a good opportunity for development, and the market scale is expected to exceed 10 billion.

The reporter noticed that 96% of the company's income comes from vinegar beverage, which has been deeply cultivated in Guangdong market. Next, how to do large-scale and go out of Guangdong is a big problem for Chen Sheng. In this regard, Chen Sheng told our reporter that in recent years, tiandi-1 has begun to expand the market outside the province.

"At present, we have access to Hunan, Hubei, Jiangxi, Anhui, Henan, Guangxi and other provinces south of the Yangtze River." As for the expansion outside the province, he said that we should follow a steady style of work, "unlike some online celebrities, we have been growing steadily and making the market solid step by step.".

Chen Sheng frankly said that it was very difficult to develop the market outside the province, which was mainly affected by the local eating habits. "Consumer education is a very long process.". However, he believes that "the corner of Guangdong" and "one billion people have not drunk tiandi-1" can also explain the huge market development space in the future.

Zhang Dawei, an investment analyst in the food and beverage industry, said that since this year, the food and beverage industry has piled up IPOs, and leading beverage companies such as Nongfu Shanquan have been listed successfully. The industry valuation is at a historical high level. The main reason is that the food and beverage enterprises are sought after by funds due to their high performance certainty.

"Although tiandi-1 is a niche category that one billion people have never drunk, its performance capability and national brand attribute are still the targets of capital competition through focusing and deepening the market." Zhang Dawei believes that in this context, tiandi-1 landing A-share is a high probability event.