“Creamer” is going to be listed: dividends of 700 million a year, husband and wife share 92%

A few days ago, Zhou Dong Sang a song called “say no cry” and cried for thousands of fans. At the same time, he sang and laughed at an online black milk tea shop. Although the opening ceremony of this website’s new store in Shanghai was delayed more than ten days after the release of the new song, it did not affect the enthusiasm of the public. It was not only urged by netizens every day before the opening, but also repeatedly searched for a cup of milk tea after it was fried to a high price of 300 yuan.

It is obvious how hot the milk tea shop is. From the fragrance of “the cup can circle the earth” more than ten years ago, to the current milk tea shop which is all over the streets and alleys, the rise of milk tea industry makes upstream raw material suppliers earn a lot.

Recently, dairy industry giant Jiahe food submitted a prospectus to the Shanghai Stock Exchange to seek listing on the main board. Jiahe food raised a total of 565 million yuan, of which 365 million was used for “the construction of production base of 120000 tons of vegetable fat powder with an annual output of 120000 tons”, 117 million was used for the “2160 tons of freeze-dried coffee production project”, the remaining 52.745 million was used for the “new R & D center project”, and 29.4571 million was used for the “information system upgrading construction project”.

Restricted by raw material market, net profit fluctuates obviously.Vegetable fat powder is commonly known as milk essence. It uses glucose syrup, edible vegetable oil and milk powder as the main raw materials. Because of its similar taste to dairy products, it can significantly improve the alcohol thickness and smoothness of food and drinks. It has become a common ingredient in milk tea and coffee products. It is also often used in instant Cereals, cakes, biscuits and other leisure food. In addition, solid powder is easy to dissolve in water At present, it is widely used in milk tea, coffee and other industries.

Jiahe food’s main business is the R & D, production and sales of vegetable fat powder, coffee and other solid drinks.
From 2016 to 2018, the operating revenue of Jiahe food was 1.322 billion, 1.368 billion and 1.595 billion, respectively, with an annual compound growth rate of 9.8%. In the first quarter of 2019, the revenue of Jiahe food was 381 million. Generally, the first quarter, which coincides with the Spring Festival, is not the peak sales season of the food industry. Therefore, the revenue scale of Jiahe food in 2019 may continue to grow.

From the perspective of income structure, vegetable fat powder is the absolute main business of Jiahe food. From 2016 to 2018, it contributed 1.25 billion, 1.251 billion and 1.365 billion revenue respectively. However, the proportion of vegetable fat end sales in the total revenue was declining. From nearly 95% in 2016 to 86% in the first quarter of 2019, the sales of coffee and other solid drinks were gradually increasing, which was similar to that of Jiahe food The strategy of trying to develop downstream industry is related.

However, it is worth noting that although the income of Jiahe food has continued to grow in recent years, its net profit has fluctuated greatly. From 2016 to 2018, Jiahe food’s net profit attributable to its parent company was 253 million, 110 million and 130 million, showing a downward trend as a whole. In the first quarter of 2019, it increased slightly, with the net profit attributable to the parent company of 58.5973 million.

If we investigate the reasons, there are no more than upstream procurement and downstream sales.
The downstream of Jiahe food’s products are milk tea, coffee products and other industries. Its main customers include uni president, Xiangpiao, Wahaha, Unilever, torabika (Indonesia) and other food industry enterprises, as well as tea catering brands such as “coco Duke”, “85 ° C”, “aunt Shanghai” and “Guming”. From 2016 to 2018, the sales revenue of Jiahe food’s top five customers accounted for the total revenue The weight was 37.85%, 35.7% and 31.24%, respectively.

In fact, from the customer distribution of Jiahe food, we can get a glimpse of the development trend of milk tea industry. In 2016, uni president and Xiangpiao were the largest customers of Jiahe food, accounting for 25% of the total sales revenue. In the following years, the sales proportion of Zhaoyi commerce and trade in Shanghai gradually increased, and by the first quarter of 2019, it has become the largest customer of Jiahe food. According to Tianyan survey, Zhaoyi trade is just the “coco capital” It can be seen that the milk tea market is gradually shifting to the current adjustment of milk tea.

At the same time, as the main source of income, the price of vegetable fat powder sold by Jiahe food is on the rise as a whole, with the price of 9.82 yuan / kg in 2016 and 10.35 yuan / kg in the first quarter of 2019. Compared with 2016, the sales prices of coffee and solid drinks have also increased. Although the increase is not high, it is relatively stable.

If you look at the upstream procurement, you can probably find the reason for the obvious profit fluctuation. As mentioned above, the main raw materials of Jiahe food include glucose syrup, edible vegetable oil, milk powder, coffee beans, etc. in 2016-2018, the proportion of raw material cost in the main business cost was 91.56%, 91.83% and 90.03%, respectively. Such a high proportion also led to Jiahe food being very sensitive to the increase of raw material cost.

From the data in the prospectus, we can see that basically every 1% increase in the cost of raw materials will reduce the net profit by 0.6%.
As the sales price of products can not reflect the change of cost at any time, the cost of main business increased from 889 million to 1132 million from 2016 to 2018, with an increase of 27.33%, while the income of main business only increased from 1.32 billion to 1.588 billion, an increase of 20.3%, with a slightly larger gap.

Annual dividend of 700 million yuan, fund-raising is still seeking to expand production capacity
Jiahe food is also a family business. The actual controllers are Liu Xinrong and Tang Zhengqing, and the two are husband and wife.
Liu Xinrong and his spouse Tang Zhengqing directly hold 35.84% and 25.6% shares of Jiahe food. At the same time, they indirectly hold shares of Jiahe food by controlling wuseshui in Tibet and Heli in Ningbo. Generally speaking, they hold 91.79% of Jiahe shares. If the planned public offering of 4.01 million shares is completed, the two will control 82.61% of Jiahe food’s equity, and will remain the absolute actual controller with a high shareholding ratio.

It is worth mentioning that before planning to go public, Jiahe food first made three large-scale dividends. In 2016, it distributed 146 million cash dividends, and in 2017, it distributed 400 million yuan and 300 million yuan respectively. According to the shareholding ratio, Liu Xinrong and his spouse Tang Zhengqing separated 777 million yuan.

Although after two dividends in 2017, the undistributed profit of Jiahe food decreased from 714 million to 1146 million, but the company’s cash flow situation is still very abundant. As of the end of the first quarter of 2019, Jiahe food’s asset replication rate and current ratio were 20.22% and 3.47 respectively. The debt paying ability of Jiahe food is far stronger than that of Nanqiao food and Xiangpiao, and the cash flow of operating activities is also higher Net inflow has been maintained.

Now the reason for IPO may also be mentioned in the prospectus of Jiahe food, which may be just to broaden the financing channels.
After all, as mentioned above, the funds raised by Jiahe food are mainly planned to be used for the construction of a production base with an annual output of 120000 tons of vegetable fat powder and the project of an annual output of 2160 tons of freeze-dried coffee. However, the current capacity utilization rate of Jiahe food is not enough.

From 2016 to 2018, the capacity utilization rate of the end of vegetable fat was 82.58%, 78.77% and 102.39%, showing an overall upward trend. At the same time, the production and sales rate of vegetable fat end has been kept close to 100%. However, in the first quarter of 2019, the capacity utilization rate dropped to 98.46%, and at the same time, the production and sales rate decreased to 95.81%.
In contrast, the capacity utilization rate of instant coffee powder is lower.

From 2016 to 2018, the capacity utilization rate of instant coffee powder was only 5.68%, 11.83% and 31.38%, respectively. Meanwhile, from 2016 to 2018, the production and sales rates of coffee were only 93.68%, 87.5% and 92.37%, respectively. There was still a lot of room for capacity utilization. By the first quarter of 2019, the capacity utilization rate dropped to 8.46%, and the production and sales rate of coffee only increased to 226.73% due to the decline of production.

However, according to the prospectus, although freeze-dried coffee is still a special instant coffee, it is slightly different from ordinary instant coffee powder in technology.
Milk tea industry continues to be hot, the raw material manufacturers behind the natural rise, may really be able to make big business in small fat powder.