The Industry Dilemma Of The First Red Star Meiling IPO In The 10 Billion Yuan Market

Recently, red star Meiling announced that it would return to the capital market track, plan to land on the gem to raise 314 million yuan, and lay out the second phase of Hongxing Meiling dairy goat industrialization, Hongxing Meiling Yongqing dairy goat breeding Park, marketing network, and supplementary working capital.

In April 2018, red star Meiling delisted from the new third board. In June 2019, it moved to the A-share market. After a round of inquiry, it suspended the listing audit. This time, the Red Star Meiling once again hit the first share of goat milk in the capital market.

It is common for goat milk enterprises to rush for IPO. According to the statistics of the 21st century economic report, in the past two years, many goat milk enterprises, such as Meilu shares, Heshi dairy and Yipin dairy, have been preparing for the capital market, but none of them have come into operation. In February this year, Meilu shares, which have been queuing for nearly half a year, were terminated from the examination.

At present, goat milk enterprises are still in the IPO track, and only red star Meiling is breaking through the barrier. At present, there is no A-share listed companies in the industry, which also shows the difficulties of enterprises breaking through.

Recently, red star Meiling announced to return to the capital market track. Visual China

Market pattern of "Red Sea"

Industry analysis points out that, from the case of frequent failures in the listing of goat milk enterprises, the problems such as small scale of enterprises, insufficient brand support, difficult to survive advantages in market competition, lack of sales channels, and prominent product quality and safety are the common difficulties faced by goat milk enterprises when they go public.

Taking Hongxing Meiling, which is still on the market, as an example, its main business is the research and development, production and sales of goat milk products, including infant formula milk powder, children's and adult milk powder, etc.

During the reporting period from 2018 to 2020, the company realized operating revenue of 314 million yuan, 342 million yuan and 363 million yuan respectively, and the growth rates of revenue in each period were 20.26%, 8.66% and 6.14%, respectively. During the same period, the net profit after deduction of non attributable parent was 41.4421 million yuan, 42.8761 million yuan and 56.8905 million yuan respectively. In terms of volume, red star Meiling meets the listing financial requirements of gem, but its revenue and market scale in goat milk industry are still small and medium-sized brands.

It is said that Yipin dairy, which is expected to be listed, has a sales volume of nearly 2 billion yuan in 2020, and its goat milk powder market represented by Yipin beikangxi accounts for 60% of the total sales, which is known as the first brand of domestic goat milk powder sales.

Meilu shares, which has just been terminated from examination, said it would build the IPO "second brand of goat milk powder". According to its prospectus, the revenue from 2017 to 2019 will be 306 million yuan, 309 million yuan and 356 million yuan respectively, and the net profit attributable to the parent is 76.2955 million yuan, 46.9146 million yuan and 82.6538 million yuan respectively.

In terms of the revenue scale of the first and second brands in the industry, small business scale, fierce market competition and weak growth have become the common problems faced by goat milk enterprises.

In the Shaanxi market where red star Meiling is located, in 2017, there were 28 goat dairy products manufacturers, among which 19 enterprises produced infant formula milk powder. The annual output of goat milk powder reached 60000 tons and the sales volume was only about 3 billion yuan.

Red Star Meiling said that at present, the total capacity utilization rate of Shaanxi Province's goat dairy processing enterprises is obviously insufficient, and it is still in idle state, which reflects the deep-seated problems of unbalanced development between the upstream industrial chain of dairy goat breeding, breeding, milk source base construction and the production, processing and consumption market of goat dairy products, and the instability of industry development is increasing.

From the perspective of the development of China's goat milk industry, the overall concentration of the industry is also low. As of April 30, 2019, 47 domestic goat milk processing enterprises have obtained registration certificates, mainly concentrated in Shaanxi, Heilongjiang, Tianjin and other provinces and cities, and Shaanxi Province has gathered more than 1 / 3 of the enterprises in the industry.

There are many domestic dairy processing enterprises, but the brands are scattered and most of them are not well-known, showing the characteristics of "small and scattered". Although foreign sheep and dairy products processing enterprises have a high market share, they do not occupy the leading position.

At the same time, domestic large-scale dairy production enterprises with strong capital, technology and channel advantages also began to participate in the competition of goat dairy industry. It is understood that in addition to the small and medium-sized brand competition in the goat milk market, large dairy enterprises such as Mengniu Yashili, Wandashan Dairy, Feihe dairy, Shengyuan dairy, Yili shares and other large dairy enterprises have also joined the goat milk track, and are rapidly launching the brand of goat milk powder.

Difficult to break the sales

In terms of industry development, China's goat dairy industry has experienced three periods in recent ten years. Before 2007, it was a period of natural growth, which was in a slow and disordered natural development. After the "melamine" event in 2008, the goat milk industry was gradually known by people. In 2015, the total number of dairy goats in China reached 6.4302 million, and the goat dairy market gradually expanded.

After the qualification review and adjustment of infant formula milk powder in 2016, the industry entered a stable period again in 2017. In 2020, the market scale of infant formula goat milk powder will reach 10 billion yuan.

Only this 10 billion yuan market has gathered dozens of enterprises at home and abroad to participate in the competition. The industry has already fallen into the Red Sea market, products tend to be homogenized, and a market-oriented sales pattern has been formed. Whoever has mastered the market channels will be able to break the situation.

The small and medium-sized pattern of goat milk enterprises makes many industry enterprises have to adopt the sales mode of distribution oriented, and the distributors even dominate the sales discourse power of the whole enterprise. In the prospectus, red star Meiling even faced the embarrassing situation that the first distributor turned into a competitor.

In 2018, Wuxi shede biological ranked first among red star Meiling customers, with an annual sales volume of 86.3852 million yuan, accounting for 27.48% of the current sales of Red Star Meiling.

In September 2018, Xu Changcheng, the father of the spouse of Wang shuangshuangshuang, the actual controller of shede biology, invested in Shaanxi Shengtang dairy industry with a shareholding ratio of 34%. He became the controlling shareholder and actual controller of Shengtang dairy industry. He wanted to transform the distribution of goat milk powder into the integration of production and distribution in order to maximize profits. In August of the same year, the new intelligent and transparent factory of Shengtang dairy was officially put into operation, which directly became the industry competitor of Red Star Meiling.

At the beginning of 2019, red star Meiling had to choose to terminate the cooperation with the dealers who had cooperated for five years, and the company lost one third of the market share.

Red Star Meiling said that although no longer cooperate, due to the substantial competition between the two sides at the purchasing and sales ends, if Shengtang dairy relies on the inherent sales channel advantages of Xu Changcheng, there is an adverse risk of seizing the company's market share and affecting the company's performance.

In 2018 and 2019, red star Meiling has no major customers with sales of nearly 100 million yuan. In two years, its largest customer has become Nanning aoliyuan. The sales volume of each period is only 22.5539 million yuan and 20.9111 million yuan, accounting for 6.60% and 5.76% respectively.

Nevertheless, red star Meiling still indicated in the prospectus that the company is facing the risk of high customer concentration.

During the reporting period, the total sales of the top five customers accounted for 44.36%, 25.11% and 22.93% of the current revenue respectively. If the company's important customers lose or demand changes in the future, it will have a great impact on the company's income and profit level.

On the other hand, the company still relies on distributors to develop its distribution network. During each period of the report period, the company's main business income accounted for more than 90% of its revenue by way of distribution.

At present, the company has nearly 300 distributors, covering 31 provinces in China. However, the increase in the number of small and medium-sized distributors has once again increased the difficulty in the management of the company's distribution network. If the dealers have poor management, or have disputes with the company, and the cooperation relationship is terminated, the sales of the company's products in the distribution area may decline, Thus, it has a certain impact on the company's performance.

In fact, the distributor led sales channel has brought pressure on the operation of Red Star Meiling.

During the reporting period, the company had to increase the inventory to cope with the sales dilemma. In each period of the report period, the book value of the company's inventory was 130 million yuan, 176 million yuan and 163 million yuan respectively, accounting for 66.39%, 67.13% and 55.02% of the current assets of the same period, respectively. The inventory turnover rate of the company in the same period was 2.32, 1.38 and 1.28, which continued to decrease.

The company frankly said that if the company can not effectively manage inventory in the future, the larger inventory size may affect the company's capital turnover speed and cash flow of operating activities, and reduce the efficiency of capital operation.

Difficult problem of capacity digestion

Red Sea market competition, along with difficult to expand sales channels, red star Meiling, like goat milk enterprises in Shaanxi Province, is faced with insufficient capacity utilization and part of its capacity is idle.

During the reporting period, the design capacity of Hongxing Meiling was 4320 tons per year, but the capacity utilization rates of each period were 78.68%, 74.07% and 81.38%, and the production and sales rates were 98.51%, 96.60% and 97.10%, respectively.

In this fund-raising plan, after the completion of "milk goat industrialization phase II construction", the company will increase the annual production capacity of 10000 tons of goat milk powder, including 6666.67 tons of infant formula milk powder and 3333.33 tons of blended goat milk powder.

Red Star Meiling said that after the completion of the project, the company's production capacity will be greatly increased, and the company is facing greater market sales risks.

If the competition pattern of the industry changes greatly, or the market environment changes unfavourably in the future, or the development of the target market can not reach the established goal, the income of the project invested by raising funds may not reach the expected goal.

How to digest the new huge capacity, the company thinks that the existing marketing network is difficult to meet the needs of rapid development, and needs to realize the scale of marketing network.

In the project of raising funds, red star Meiling plans to use 70 million yuan to construct channels through advertising on authoritative media platform, differential advantage publicity, annual key event marketing and channel construction. Among them, 39 million yuan will be spent on advertising in CCTV and local TV stations, 3 million yuan will be invested in differential publicity such as news, new media, mother and baby platform, and 10.02 million yuan will be invested to participate in annual key event activities of tmall and Jingdong.

In each period of the report period, the sales expenses of Red Star Meiling were 27.4677 million yuan, 44.3102 million yuan and 43.5777 million yuan respectively. In the plan of raising funds, the company plans to invest 39 million yuan in advertising expenses to TV stations. The company hopes to place its sales on traditional advertising marketing. Investors question whether Red Star Meiling can break the sales situation.

The 21st century economic report survey found that not only the Red Star Meiling, but also all of the above-mentioned goat milk enterprises are rapidly expanding production capacity and seizing the market. Meilu Co., Ltd. alone plans to raise about 383 million yuan for the construction of production lines with an annual output of 10000 tons of infant formula powder, milk powder and oiling whey ingredient powder, the construction of nutrition and health research and development center, brand promotion and channel construction.

With the same industry, homogeneous products, the same expansion of production and the same sales strategy, goat milk enterprises are facing more fierce competition in the Red Sea.

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