text / Produced by A-share channel
/ Node Finance
On June 28, 2018, Singaporean Chinese Guo Kongfeng attended the groundbreaking ceremony of the Wilhai Kerry (Fuyu) Modern Agricultural Industrial Park and obtained the foreigner's permanent residence ID card issued by Qiqihar City . At the scene, the old man, who was nearly 70 years old, could not hide his joy and said excitedly: "I am a real Chinese now!"
Foreigner permanent residence ID card is also called the "Chinese Green Card". The reason why Guo Kongfeng was able to obtain this extremely valuable residence certificate is due to his special identity as an overseas Chinese businessman - Chairman of Yihai Kerry Group , Chairman and CEO of Fengyi International Group. And Wilmar Group has a more eye-catching tag, that is, the parent company of the grain and oil giant , Golden Dragon Fish .
For Boss Guo, getting a green card means that he has more convenience for travel and travel in China, but the deeper significance is that while solving the dispute over his nationality, the green card also transforms Jinlongyu from a pure Southeast Asian company into an authentic domestic enterprise, clearing the obstacles for the latter on the road to A-shares.
On October 15, Wilhai Kerry Golden Dragon Fish Grain and Oil Food Co., Ltd. (hereinafter referred to as Golden Dragon Fish) landed on the Shenzhen Stock Exchange GEM with the halo of "the largest IPO in the history of the GEM". The closing day was 56.00 yuan per share, up 117.90%, with a total market value of 303.6 billion yuan, ranking third in the GEM. The stock price then narrowed rapidly, and as of the closing on the 27th, it was 44.53 yuan per share, with a total market value of 245.598 billion yuan.
Like "Sauce Maple" Haitian Flavor Industry and "Shuimao" Nongfu Spring, Golden Dragon Fish has always been called "Moutai in Oil". With its share of half of China's grain and oil market, it can be said to be a well-deserved "oil dominant" in China. Now that the listing boots have been successfully implemented, the capital market has also given them more expectations.
So, can Jinlongyu really write the myth of making wealth in A-shares again like Kweichow Moutai ? Will the 300 billion market value become a "dragon gate" that Golden Dragon Fish will be difficult to leap through in the future? All this is hard to say.
/ 01 /
The dispute over the position
"open conspiracy" of foreign companies and families
For the majority of Chinese consumers, the name of Wilmar Kerry may be relatively unfamiliar, but its brand Golden Dragon Fish is a household name, and it has long dominated CCTV's prime time and has frequently appeared on the dining tables of thousands of households. In addition to Golden Dragon Fish, this company also has well-known Chinese brands such as Ouli Weilan, Orchid Flower, Xiangmanyuan, and Lai Jade Princess.
Products of Wilmar Kerry Golden Dragon Fish (official website)
However, it is such a grain and oil giant that has been deeply rooted in the Chinese market for more than 30 years and has a strong local flavor. It is actually a company that is absolutely controlled by foreign capital. According to the prospectus, the controlling shareholder of Jinlongyu is Bathos, who holds 99.99% of the former shares, and Singapore listed company Fengyi International indirectly holds 100% of the equity of Bathos.
Further unveil the veil of equity We found that the real helm behind Wilmar Kerry is actually the richest man in Malaysia, Kuo Henian and his family. The article mentioned at the beginning of the article is Guo Henian's nephew. What many people don’t know is that the Shangri-La Hotel Group, Beijing International Trade Center, etc. that we are familiar with all come from the Guo family.
prospectus shows that from 2017 to 2019, Jinlongyu's revenue was 150.766 billion yuan, 160.773 billion yuan and 170.743 billion yuan respectively. In contrast, Kweichow Moutai 's revenue in 2019 was 88.854 billion yuan, Mengniu Dairy 's revenue was 79.164 billion yuan, and Yili 's revenue was 90.223 billion yuan. In other words, from the perspective of revenue alone, Golden Dragon Fish is equivalent to the sum of two Kweichow Moutai or Mengniu and Yili.
Data source: Prospectus, Node Investment Research Institute
It can be seen that as a company under the Guo family, the purpose of Jinlongyu to enter the A-share market is not just to obtain development funds, but to seek a "famous title" and truly get rid of the label of "foreign capital merchants" and let its own brand find a sense of belonging and security in mainland China.
For a long time, "rice, flour and oil" as the most basic livelihood guarantee has been valued by all countries. For China, with a population of more than 1.4 billion, the grain and oil industry has been included in the national strategy. Golden Dragon Fish is in an absolute oligarchy in China, with a market share of nearly 40%, but its special foreign capital identity has brought many uncertainties to it.
According to public information, the vice chairman and chief operating officer of Wilmar Group Mu Yankui had previously bluntly stated that the main purpose of Golden Dragon Fish to go public in China is not to raise funds, but to become a "Chinese company" after listing and gain the opportunity to compete equally with domestic grain and oil companies.
In fact, as early as 2009, Fengyi International tried to split its business in China and seek to log in to the A-share market, but for various reasons, the plan ended up in the end. Today, 10 years later, Wilmar Kerry finally rang the bell of listing and bypassed the A-share main board market and headed straight to the GEM. It can be seen that it is also aiming at relatively loose access conditions.
/ 02 /
Low gross profit margin
The "hard" business of grain and oil oligopolies
The so-called "food is the most important thing for people" occupies nearly 40% of China's market share, and the scale of the Golden Dragon Fish is naturally not to be underestimated. prospectus shows that the company's operating income in 2019 was 170.743 billion yuan, which is approximately twice that of Moutai and 7 times that of Haitian Soy Sauce in the same period.
But even so, Jinlongyu is still doing a hard business. Compared with its impressive operating income, the company's net profit during the reporting period was only 5.284 billion yuan, 5.517 billion yuan and 5.564 billion yuan. You should know that in 2019, of the 488.854 billion yuan revenue of Kweichow Moutai, of which the net profit was as high as 41.206 billion yuan, nearly half of it; and the soy sauce giant Haitian Flavor Industry also obtained a profit of 5.3 billion yuan from the 19.8 billion yuan revenue.
Data source: Prospectus, Node Investment Research Institute
In the final analysis, Jinlongyu's gross profit margin is too low. Judging from the prospectus, from 2016 to 2019, the company's gross profit margin was 11.07%, 8.42%, 10.21% and 11.40%, respectively, which is lower than the peers of Xiwang Food (32.84%) and Keming Noodle Industry (24.59%) of the same listed companies. Its future profitability has also been questioned.
Data source: Prospectus, Node Investment Research Institute
In terms of product types, Jinlongyu mainly includes kitchen food (mainly rice, noodles, oil) and feed raw materials (by-products such as soybean meal, soybean peel, rice bran and other by-products); in addition, the company has expanded its oil and fat technology business with its own processing technology. This type of product mainly processes palm oil and other oils into fatty acids, soap pellets, glycerin and other chemical products.
In terms of product structure, 63.9% of the company's revenue in 2019 was contributed by kitchen food, and feed and technology businesses accounted for 35.8%. As basic necessities for residents' lives, rice, noodles and oil have always had limited room for price increase. Whether it is Jinlongyu or its rival COFCO Group , its profit method is mainly to win by market size rather than single product profit.
But at the same time, soybeans, wheat, rice, etc. will fluctuate greatly due to changes in the market environment. Natural disasters, policy regulation, trade frictions, etc. may cause a sharp increase in the cost of Golden Dragon Fish raw materials, which in turn affects the company's profitability. Taking soybean, the most important raw material for golden dragon fish, as an example, due to the impact of the epidemic and international relations, domestic soybeans have increased sharply since the beginning of this year, and have been in an upward trend in the first half of the year. In March, it hit a record high, with an increase of more than 20% at one point.
prospectus shows that in 2017, 2018 and 2019, the proportion of raw material costs of Jinlongyu products to the main business costs was 88.99%, 89.08% and 87.82%, respectively, accounting for a very high proportion. This heavy asset management model that relies heavily on upstream raw materials destined to be at a low level in the industry.
Data source: Prospectus, Node Investment Research Institute
And, unlike liquor and soy sauce, grain, oil, rice and flour are related to the people's livelihood. From the national strategic perspective, in order to maintain food security and stability, large and frequent price increases are naturally not allowed.Historical information shows that as early as the end of 2010, the National Development and Reform Commission held a symposium to limit the price increase of edible oil companies such as Golden Dragon Fish.
Due to the particularity of the industry, if Jinlongyu wants to make a breakthrough in profit, it must change its business ideas and continuously broaden its product boundaries. To this end, it targets the condiment market with higher gross profits. In 2015, the company introduced the Taiwan time-honored soy sauce brand "Maozhuang", and the Wanzhuang soy sauce product was officially launched in October 2019. In the same year, Jinlongyu also acquired Shanxi Liangfen Vinegar Industry Co., Ltd., and its condiment business was very obvious.
, however, even if the gross profit of seasonings is much higher, as a grain and oil giant of hundreds of billions of yuan, Jinlongyu's profits still rely on rice, noodles and oil to drive, and at present, this space has reached its peak.
/ 03 /
Growth peaked
Where is the 100 billion giant swimming?
Guojin Securities research report shows that in 2019, the market share of golden dragon fish in small-packaged food oil, rice and flour was 38.4%, 18.4%, and 26.7%, respectively, all of which were ranked first in the market.
But it is worth noting that from 2017 to 2019, the compound growth rates of the above three business segments of Jinlongyu were only 4.55%, 1.92% and 2.32% respectively. The market growth has been extremely slow, and oligopoly has entered a bottleneck. Jinlongyu's future growth is heartbreaking.
From the perspective of revenue growth rate, during the reporting period, Jinlongyu's revenue growth rates were 12.94%, 10.82% and 2.20% respectively; the year-on-year growth rates of net profit during the same period were 518.88%, 4.42% and 0.85% respectively. It can be seen that Jinlongyu's revenue and profit growth rate have both declined seriously in recent years, especially in 2019, it has almost entered a state of "stagnation".
Data source: Prospectus, Node Investment Research Institute
It should be pointed out that in the first half of this year, Jinlongyu's operating income increased by 10.53% year-on-year and net profit increased by 99.57% year-on-year, which was quite eye-catching. However, this is mainly due to the weakening of the impact of African swine fever, which led to an increase in its feed raw material sales. At the same time, the new crown epidemic has brought about an increase in sales of small-package products, but these are obviously not sustainable.
comprehensively, despite its huge scale advantages, the growth rate of revenue and net profit has continued to slow down. Looking at the entire grain and oil industry, the ceiling of its growth rate has also reached its peak. With China's population growth slowing down, living standards steadily increasing, and grain and oil demand is approaching saturation, Jinlongyu, which mainly provides basic grain and oil products, will inevitably face a passive situation where the market is difficult to expand.
In addition, due to the change in residents' consumption concepts, low sugar, low salt and low fat are increasingly recognized by consumers, and a new dietary trend has been formed. The main business of Golden Dragon Fish is cooking oil. Under this circumstance, it is obviously more difficult for Golden Dragon Fish to gain more market share.
According to the "Analysis of the Supply and Demand Situation of China's Agricultural Products" released by the Ministry of Rural Agriculture, in recent years, my country's edible oil production has slowly increased but sales have shown a downward trend. In 2018/2019, my country's edible oil sales were 33.38 million tons, while in 2019/2020, my country's edible oil sales had declined to 32.89 million tons.
In addition to cooking oil, the rice and flour business that Jinlongyu is engaged in is also becoming saturated. From 2010 to 2019, domestic rice consumption has been stable at the level of 140 million to 145 million tons, and has not seen a long-term increase; in terms of flour consumption, it increased from 67.4 million tons in 2015 to 68.8 million tons in 2019, with a compound annual growth rate of only 0.5%, and the growth rate is also very slow.
On the one hand, the traditional rice, flour and oil business market has reached the ceiling; on the other hand, the new business field of seasoning is already the giant , and there is still a lot of room for improvement if the 100 billion giant Golden Dragon Fish wants to "swim" in the ocean of A-shares without any obstacles.
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