BeyondMeat was listed on Nasdaq on May 2, 2019. On IPO, the company opened at $46, an 84% premium over the issue price of $25; its stock price closed up 163% to $65.75, setting the best IPO performance on the first day since the financial crisis. As of the close of July 19, BeyondMeat (BYND)'s stock price has reached US$170.34, with full potential.
The US IPO market in 2019 was booming. In addition to star unicorns such as Uber and SpaceX, Luckin and Douyu, which are well-known in China, have also ringed the bell and listed on the US stock market. However, the above-mentioned celebrity companies with a total financing of nearly US$100 billion were stolen by BeyondMeat, an "unknown" artificial meat company. The latter's performance is simply the leader.
closed up to 159.07% as of the 10th, climbing from the issue price to $25 to $170.50, with a market value of $10.2 billion.
It may be more famous than you think. can be clearly seen from BeyondMeat's public information. Its personal investor list can be called a star-studded star, including Bill Gates ( Bill Gates ), global male god Leonardo DiCaprio (Leonardo DiCaprio), Coca-Cola Group CFO Kathy Waller, and Twitter's CFO Ned Segal.
, which can attract these investors, naturally has its unique features. The meat we usually use as food is composed of amino acids, fats, trace minerals, vitamins and water. In the view of Ethan Brown, founder of BeyondMeat, these things are not exclusive to animals, and the same elements can be found in plants. Under the influence of
consumption upgrade, people are no longer simply satisfied with the pursuit of food taste and vision, and health and environmental protection have become one of the needs.
BeyondMeat is not accidental to be recognized by consumers. Its production method is very gentle and more environmentally friendly. In the prospectus, the company claims to be able to reduce greenhouse gas emissions by 90%, water consumption by 99%, land demand by 93%, and energy demand by 46%. Health, environmental protection, and humanitarianism. By catering to the current market demand side, BeyondMeat was successfully launched and made a splash.
BeyongMeatStory
In the prospectus submitted to the U.S. Securities and Exchange Commission (SEC), there is something unique. A letter from founder Ethan Brown, which tells his experience at his own farm since he was a child.
I have to say that such feelings are worthy of appreciation, at least Bill Gates is willing to buy it for it. One of BeyondMeat's largest and earliest investors is Tyson Foods (a food giant with a market value of nearly $30 billion) which held a 5% stake in BeyondMeats in 2016, and later increased its stake to 6.52%.
However, earlier this year, Tyson Foods withdrew from the IPO. Analysts believe that if revenue grows as expected, other investors may also seek to cash out, because ongoing analysis shows that the stock may be a temporary trend and not try to combine long-term investments.
BeyondMeat sales growth space
According to the prospectus, BeyondMeat (BYND) sales increased from 3.98 million pounds in 2016 to 15.24 million pounds in 20018, an increase of nearly 3.8 times. Analysts believe this is driven by changes in consumer preferences, with more people turning to healthier meat alternatives, such as plant-based meat, for the purpose of getting health benefits and environmental protection.
According to a recent report by Nelson, annual sales of plant-based meat in the United States increased by 42% to $888 million between March 2016 and March 2019, while the increase in traditional meat was only 1%.
expects this trend to continue, and BYND expects to increase trading volume by more than 39 million pounds in the next two years, driven by increased sales of fresh meat. The report shows that due to the expected negative CAGR of frozen food in the United States of America from 2016 to 2021, BYND's frozen meat sales are expected to decline due to improved health benefits and quality.
is displayed based on public financial report data. BeyondMeat's revenue has grown rapidly in the past three years. It reached US$87.934 million in 2018, an increase of 1.7 times from last year.
market segment performance
From the snack channel , BeyondMeat sells its basic plant-based meat products through its snack partners, and its partners include Albertson , Kroger , Wigmans and Wholefoods, and other famous supermarkets in the United States. According to public financial report data, sales from retail channels accounted for 58% of total revenue in 2018.
analysts expect BeyondMeat's revenue will grow more than 3.6 times in the next two years, and may reach about US$185 million by 2020.
From the restaurant restaurant (R; F) , the company disclosed in its prospectus that it sells flagship products "Beyond Burger" and "Beyond Sausage" through approximately 12,000 restaurants and catering service outlets in the United States. Revenues in this category increased from $3.84 million in 2016 to $37.16 million in 2018. In 2018, R;F's sales accounted for 42% of total revenue.
It is estimated that without the influence of other uncontrollable risks, the sector's revenue will increase by more than 4.6 times in the next two years, reaching US$173 million by 2020.
BYND Operational Profit Deconstruction
BeyondMeat has been established since its establishment. There have been operating losses, but due to the increase in revenue base, operating profit margins have continued to improve.
Although it showed a loss in net profit performance, 's net loss in the previous quarter was US$6.6 million, compared with a net loss of US$5.7 million in the same period last year. , as per share, Beyond Meat lost 95 cents in quarterly losses compared to 98 cents per share in the same period last year. Not counting certain one-time items (not in accordance with GAAP), the company's adjusted loss per share was 14 cents, compared with 13 cents a year ago.
IPO was expected to achieve balance of revenue and expenditure in 2019, and its profitability will be nearly improved in 2020. This is mainly due to the sharp growth of the top line, and fixed costs have been absorbed by the steady growth of sales. It is expected that the operating profit margin in 2019 will be 0% and 1.2% in 2020, which will be significantly different from -31.8% in 2018.
issues worth noting
Reading BYND's prospectus is not difficult to find that unlike those real vegetarian burger companies, what BYND is promoting is to use their products as meat alternatives, not just as simple as vegetarian burgers. Therefore, the following problems arise: the taste of
is still different from that of real meat. It is reported that someone will simply cook the BYND vegetarian meat I bought from the supermarket. After detailed comparison, he said, "It is difficult to distinguish the feeling of eating the first bite, but when trying the second bite, you will find that it is still a significant difference from the real meat quality." This may result in continued investment not being rewarded as expected because it is not truly recognized by the carnivorous community.
has no moat. In fact, current science has several alternatives to animal meat, which will be continuously improved and applied to the market over time. BYND and its main competitor Impossible Foods both adopt a plant-based route. Although the latter has not yet been listed, Li Ka-shing , Temasek , etc. have raised US$300 million for the latter, which is more than six times that of BYND before its listing.
But so far, no company has made a meat product that perfectly replaces animal meat, and once there is a perfect alternative, everyone will follow suit because there is no obstacle to copying. Analysts have been searching for the US patent registration website for a long time, and BYND has only one patent and 20 patents to be decided.
After all, BeyondMeat only optimizes the combination of peas, beets and other vegetables, rather than modifying the plant's genes, which greatly increases the possibility of replicas being produced, and it is not impossible to be surpassed by later replicas.
fierce competition. 's temporary stock market explosion (or can last for a while because investors usually have irrational attributes) is just the tranquility before the storm, and big players have already brought their products into the market.
Tyson Foods (TSN) sold its 6.5% stake in BYND, one of the reasons is that TSN is also looking to develop its own range of alternative protein products.
It is reported that TSN has launched its first product: a meat product that mixes animal and plant-based proteins. In addition, other major players around the world such as Nestle (OTCPK: NSRGY) have also revealed that they are developing related products.
In fact, these large competitors are likely to come from behind. First of all, they already have a strong and mature distribution network, including decades of partnerships with large companies such as McDonald's (NYSE:MCD).
Although BYND has done the same excellently on the distribution network, it is far from comparable to TSN and Nestlé.
Secondly, the advantage of large-scale players is that their capital cost is lower. This means that even if the production costs are similar, BYND will need to pay its capital cost for pricing products above TSN.
Currently, BYND's gross profit margin is 20%, while TSN's gross profit margin is 12%. However, higher prices drive higher profit margins. As shown in the figure below.
According to the US Meat Food Price Survey, the unit price of a pound of "Beyond Burger" is almost twice that of grain-fed beef ($6.99/lb) and regular beef ($4.99/lb).
In order for BYND to gain more market share, the price of its burger must be close to the price of conventional or even organic beef in order to have a competitive advantage. However, based on the price of organic beef, BYND's gross profit margin will drop to -37%.
This means that in order to generate such competitiveness, BYND needs to increase the cost by 37% equal to organic beef and up to 55% equal to regular beef.
can reduce costs through investment in research and development and technological advancements, but this cannot be achieved overnight and may take several years.
Value Parse
You don’t need very professional knowledge to know that the price of $170 per share is expensive, but IPOs have known that I hope to restore a reasonable market price through DCF.
is shown in the following table. Assuming a reasonable stock price of $150, sales must reach $22 billion by 2030, and gross profit margin should be higher than competitors. WACC is assumed here to be 10%.
Looking at the multiples , assuming a fair EV/EBITDA multiple of 20 times, EBITDA should climb to $770 million by 2025 to justify the current $150 stock price.
But remember that even Nestlé currently does not have multiples of 20 times. In addition, it is also a very radical goal to achieve EBITDA of US$770 million within 6 years. This is only supported for theoretical derivation.
From the current price, still assumes that EV/EBITDA is 20 times, reaching the target income level in 8 years, and the EBITDA profit margin is 15%. In this case, revenues will need to grow by 56% per year over the next 8 years to justify the current market price.
even if other multiples, profit margins and years are assumed. BYND's revenue also needs to reach a rate of 40%-70% per year within 6-10 years.
Conjecture about BYND
So is it possible for BYND to be a niche player in the market only? IPOs knew earlier that this might be a good strategy because it ensures that BYND maintains high profits in relatively limited competition.
However, the market for meat replacement is too small. According to data surveys, it is estimated that the global meat replacement market size will only reach US$6.4 billion in 2023, even lower than the current market value of BYND 10 billion.
But some bank analysts predict that the market will rise by 100 billion to 140 billion by 2030. This data is for reference only.
This article is from IPO, known,
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