1. Company profile
Tsingtao Brewery is produced by Tsingtao Brewery Co., Ltd. (stock code: 600600). The company's predecessor is the state-owned Tsingtao Brewery, which was established in 1903 by the United Kingdom and Germany. Established by merchants as a joint venture, it is one of the earliest beer production enterprises. Official sponsor of the 2008 Beijing Olympic Games.
Tsingtao Brewery is exported to more than 100 countries and regions in the world, including the United States, Japan, Germany, France, Britain, Italy, Canada, Brazil, and Mexico.
Barth Report, an authoritative report on the global beer industry, ranks according to production volume, Tsingtao Brewery is the fifth largest beer manufacturer in the world.
Speaking of awards, Tsingtao Brewery is so many, here are a few.
In 1906, Tsingtao Brewery , which was only established for three years, won the gold medal at the Munich Beer Fair;
won the gold medal in the international competitions in Belgium, Singapore and Spain in 1991, 1993 and 1997;
In 2005 (first session) and 2008 (second session), he was selected as one of the “Top Ten World-Class Brands in China” published by the Financial Times in the United Kingdom for two consecutive terms.
Among the individual rankings in 2008, Tsingtao Brewery also included brand value, high-quality brands, products and services, and brand value overseas rankings.
In 2009, Tsingtao Brewery won Shanghai Stock Exchange "Corporate Governance Special Award-2009 Board of Directors Award" and won the "China's Most Admired Enterprise" award for the seventh time...
In December 2019, Tsingtao Brewery was selected as a model for the 2019 China Brand Power Festival 100 brands,Ranked 91st in the 100 list of the People's Daily "China Brand Development Index".
A Hong Kong official once said: “Foreigners usually have two ways to understand China, one is through Confucius, and the other is through Tsingtao Brewery.”
Obviously, a century-old Tsingtao beer that has experienced vicissitudes of life. , Has become an irreplaceable "Chinese cultural symbol."
Looks like Tsingtao Beer is great, right?
So, what kind of company is the famous Tsingtao Brewery ? Is it worth our investment?
We took this question to analyze this listed company, and found the answer after the analysis.
2. Industry analysis
Everyone knows a little about Moutai, and I must know some about the liquor industry. Although it is all alcohol, the beer industry is a different story.
1. Industry scale and growth rate
Here, industry scale mainly refers to the sales of the entire beer industry. The size (capacity) of the industry determines the ceiling of the enterprise in it.
We also know that sales = unit price * sales volume, so we can look at the size of the industry in terms of unit price and sales volume.
In terms of sales, according to Euromonitor statistics, my country's beer sales have been stable since 2016, and the per capita sales (legal age) are close to the level of Japan and South Korea.
Before 2013, my country's beer sales volume continued to grow. In 2013, the total sales volume exceeded 50 million kiloliters for the first time. In 2014, the industry sales volume fell for the first time, and continued to decline in the following years, with limited room for improvement in the future.
Why is the sales volume not going up? This may have something to do with people's healthy consumption philosophy. Now that the obese population is increasing rapidly, the aesthetic concept of "being thin for beauty" is popular, and beer as a "liquid bread" is rejected by people who are committed to losing weight.
And with the increase of chronic kidney disease, people with high blood pressure and high uric acid abstain from alcohol, which has become one of the reasons why consumers resist beer.
In terms of consumption expenditure, according to Euromonitor, my country's per capita beer consumption expenditure accounted for 0.13% in 2019, which is significantly lower than Japan's 0.67%, South Korea's 0.51%, and the United States' 0.41%.
Per capita beer consumption in China, Japan and South Korea is similar, while the disposable income of consumption in China has been greatly exceeded, indicating that the space for beer consumption in my country is expected to be further released.
Therefore, we can see that in terms of sales, affected by the epidemic, sales are expected to decline year-on-year in 2020, but in the long run, although China’s per capita beer consumption has limited room for improvement, due to various Big beer companies have adopted strategies of raising prices and optimizing their structure, and sales are expected to maintain a year-on-year growth trend. As shown in the figure, the growth rate of the beer industry has been between 0-10% in recent years.
So we can see that the beer industry is already in a mature stage, and the industry scale growth rate tends to slow down.
2. Industry competition pattern
So in a growing market, if and Tsingtao Brewery are the dominant one, can they sit back and relax?
Let's take a look at the competition in the industry.
Since 2013, my country’s beer industry has gradually formed an oligopoly structure (that is, the market is divided by several companies). CR3 (industry The top three concentration ratios, the same as CR5) exceed 60%. If the five leading companies including , Yanjing Beer and Carlsberg, the CR5 exceeds 75%, the industry concentration is relatively high.
It seems that China Resources Beer (00291.HK) has a slightly higher sales than Tsingtao Brewery.The competition is relatively stalemate, and it seems that no one is far ahead.
Because beer is very different from liquor, you probably don't drink beer at a business banquet. Those shirtless citizens who skewer in the open air in summer are very sensitive to the price of beer.
Originally, the unit price of beer is cheap. A bottle of beer may have a price increase of one or two cents, but a price increase of one or two dollars may be too much for ordinary people. Anyway, Tsingtao beer and snowflake are not so different, they drink almost the same.
If you can't raise the price too much, the quantity can't rise, and the competition within the industry is fierce, the life of beer companies will not be easy.
3. Business model
Let's analyze Tsingtao Brewery according to the unique business model of the three major beer industries.
1. Profit structure
China's beer industry has obvious characteristics of regional market separatism. Each company in the Chinese beer industry has an advantageous base market. From a national perspective, the industry presents the characteristics of a regional market pattern. The reason is that beer is currently limited by transportation distance.
This aspect is that the packaging (glass) is heavy, which causes high unit transportation costs. In the case of selling with a low price range of , it also faces the bottle-returning problem, which causes a bottleneck in the sales radius.
On the other hand is the requirement of freshness. The transportation radius of fresh beer (shelf life within 7 days) is obviously restricted, while cooked beer ( pasteurization) generally has a shelf life of 6-12 months In addition, pure draft beer extends the shelf life under the premise of ensuring the taste, but there is still a one-month shelf life index in the industry, which is an important reason that affects the transportation distance of the industry.
The high unit transportation cost and high preservation requirements will bring a risk, because we just said that the unit price of beer is low and the competition is fierce. It is not easy to increase the price by a large amount. Therefore, if the upstream raw material prices increase,May directly squeeze the profits of beer companies.
Here we can see two characteristics of the beer industry. One is that the cost is high and the gross profit is low; the other is that beer is perishable, so the turnover is fast, so the inventory turnover rate will be higher.
Let's take a look at the situation of Tsingtao Brewery.
Generally speaking, Tsingtao Brewery 's gross profit margin has been around 40% in recent years, which is barely up to standard. However, it can be seen from the figure that the gross profit margin of Tsingtao Brewery is compared with other beer companies. Even if the production scale of Tsingtao Brewery is much larger than other beer companies (with cost advantages), there is no gross profit margin. Too much advantage.
In other words, Tsingtao Beer is not sold more expensive than others, the price is similar or maybe even cheaper.
If the profit is not high, but it is OK to sell more. However, by comparison, the inventory turnover rate of Tsingtao Brewery is relatively fast, but the turnover is not the fastest. Speaking of it, there is no obvious advantage in turnover.
2. Product price band
price band is another important dimension for analyzing the beer pattern, presenting the Christmas tree structure as a whole. According to the conclusions of extensive grassroots research, the current high-end and ultra-high-end products (terminal price above RMB 10) in China’s beer industry account for only 10%, mid-to-high-end products (terminal price range from RMB 6-10) account for 20%, and mainstream price ranges ( Terminal prices 3-5 yuan) accounted for 55-60%, and basic low-end products (prices below 3 yuan) accounted for 10-15%.
Mid-to-high end (6-10 yuan) is the main upgrade price band in the future.
According to our country's "14th Five-Year Plan", the requirements for high-quality life are put forward, and consumption upgrades will become a major trend. Therefore, the price belt upward movement is also the only way.
People always want to drink clean and delicious beer.
According to the annual report of Tsingtao Brewery and the product system diagram of the five leading enterprises above, it can be seen that the main products of Tsingtao Brewery are in the mid-to-high-end price range. Therefore, the marketing strategy of Tsingtao Brewery is quite wise.
3. Sales model
The ready-to-drink and distribution channels each account for half. Because the beer industry involves multiple channels at the same time as drinking (catering and entertainment, etc.) and non-sending drinking (modern and traditional channels of circulation, etc.).
According to the research report, combined with the channel structure of each major producer, the beer industry sales and catering channels accounted for about 40%, entertainment and other channels for drinking accounted for about 10%, and the channels for drinking in total accounted for about 50% ; Distribution channels account for the remaining 50%, of which KA channels (large chain stores) account for about 10%, and traditional channels account for about 40%.
However, the proportion of Tsingtao Brewery in catering, night markets and other ready-to-drink (ready-drink) channels has reached 60%, which is higher than the industry average.
So we need to pay special attention to how the catering terminal sells beer and how it is divided.
The high dependence of the catering terminal determines that the terminal obtains high profits in the industry chain and obtains more than half of the profits. Since the terminal preemption of beer drinking (catering, KTV, night market, etc.) channels has become the front line of competition among beer producers, the bargaining power of producers, channels and terminals in the catering channel is basically dominated by the terminal, excluding producers and distributors In addition to paying for the lock shop and other expenses, the terminal can obtain more than half of the profits of the industry chain.
In the distribution channel, the markup rate of terminal is about 30%. The general distributor level gross profit rate is 10-15% (various manufacturers and various products may have certain differences),The business model still mainly relies on turnover efficiency (we just calculated above).
At this point, we can understand why Tsingtao Brewery 's gross profit margin is low? It is precisely because the proportion of catering terminals in the sales channel is high, and more profits need to be distributed to catering.
So, overall, the sales model of Tsingtao Brewery still has some problems.
Fourth, financial data
The business model is clear, let's look at the financial situation.
The return on net assets is very low, indicating that the profitability is not good and the return to investors is not high.
Net profit has declined in 2016, and has been steadily increasing in other years. According to the 2016 annual report, on the one hand, the beer industry is highly competitive, with overall overcapacity and negative sales growth; on the other hand, Tsingtao Brewery pays income tax to reduce profits. Based on the above factors, net profit declined in 2016.
According to the net profit growth rate of subsequent years, the situation in 2016 has improved in the future, but the beer industry has overcapacity and fierce competition has not yet fundamentally reversed.
The cash content of net profit is also relatively high, exceeding 100%. This is related to the individual who ultimately pays the bill in the beer industry. Eating Bawang Meal (free eating and drinking in a restaurant) usually appears in TV dramas or cartoons. In reality, very few people eat Bawang Meal. The payment for Tsingtao Beer can basically be recovered.
2. Industry status
If the industry status is measured by financial indicators, it is generally used to pay in advance-receivable in advance.
Tsingtao Brewery ’s total index value is positive,Moreover, the relatively large amount indicates that Tsingtao Brewery can occupy upstream and downstream capital, which reflects the leading industry position of Tsingtao Brewery .
Tsingtao Brewery 's solvency is relatively strong, and the debt-to-asset ratio is 40%-50%, which meets the standard. Explain that Tsingtao Brewery has a certain degree of financial strength, and there is little financial pressure.
As can be seen from the chart, Tsingtao Brewery 's quasi-monetary funds-the amount of interest-bearing liabilities is very large, so there is no short-term debt repayment risk.
In the past five years, Tsingtao Brewery 's dividend, profit or interest payment cash payment ratio to the net cash flow from operating activities is not high overall, in 2018 and 2019 It's less than 20%. Students want to expect Tsingtao Brewery to pay a large dividend, which is more difficult.
5. Risk warning
In our analysis just now, we have found many problems with Tsingtao Brewery . Now to summarize.
First of all, the beer industry is not a good track.
On the one hand, in the industry analysis, the sales volume of the beer industry remains stable, and it is not easy to grow, and consumers are more price-sensitive, making it not easy to raise prices. If upstream costs increase, it may also affect the beer companies’ profit.
On the other hand, the competition in the beer industry is very fierce, with great regional differences, and each other's land is king, but for consumers, which beer to drink does not have a large conversion cost. Therefore, the beer industry is not an ideal investment track.
Second, there is a problem with the sales model.
In the analysis of our business model, the sales model of Tsingtao Brewery is more focused on catering terminals. The strength of the catering terminal will cause the gross profit margin of Tsingtao Brewery to be in a relatively low position in the industry.
And this year's epidemic has caused a great impact on catering, and the impact on Tsingtao Brewery may be even greater. This shows that the management is not too forward-looking about the layout of sales channels.
Finally, investors do not make money.
here is reflected in low dividends and low ROE. These two indicators are indeed not very attractive, indicating that investors bought Tsingtao Brewery , the income is not high, and the investment value is not significant.
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