Author: pokeweed, title figure from: Vision China.
1 The worry behind the prospectus
Although Liangpinpu can only be regarded as a follower in the industry in terms of listing, according to the data disclosed in its prospectus, Liangpinpu has some confidence in the IPO.
According to the prospectus, the revenues of the good-quality shops from 2015 to the first half of 2018 were 3.14 billion, 4.28 billion, 5.42 billion, and 3.03 billion, respectively. Although the growth momentum is good from the perspective of revenue,Continue to move lower.
The corresponding profits from 2015 to 2018 were 32.32 million yuan, 67.29 million yuan, 113 million yuan, and 112 million yuan.
Although profits are also increasing, the average profit margin in the industry is 40.3%, and the profit margin of the good product shop has been hovering around 30%, which is not only much lower than the industry average, but also lower than Lai Yifen, Profit margins of enterprises such as Yanjinpuzi.
Also, The net profit margin of Liangpinpu as of 2018 is only about 2%.
The profit margin of Liangpinpu is not only lower than the industry average but also lower than competitors. There are two possibilities. One is that the revenue is low, the cost is too high, and the profit is diluted. The other is due to its own model.
First of all, from the perspective of revenue, the revenue of Liangpinpu in 2017 reached 5.424 billion, and the net red three squirrels’ revenue was 5.5 billion. Not only is it not low, this level is also the first in the industry.
The problem may be with costs.
First of all, the prospectus showed that the operating costs of Liangpinpu are constantly rising, from 2.1 billion, 2.8 billion, 3.8 billion, and 2.1 billion from 2015 to the first half of 2018, respectively.
Although the proportion of relatively large sales expenses has dropped from 22.83% to 18.75%, it seems that this is due to the continuous increase in revenue, not that sales investment has really decreased.
Specifically, from 2015 to the first half of 2018, the sales expenses of good-quality shops were 719 million yuan, 952 million yuan, 1.055 billion yuan, and 569 million yuan.
In addition, the prospectus shows that the profit margin of the Liangpinpu is also very volatile.
The good net profit of Liangpinpu in 2015 was 45.35 million yuan, compared with 2016It was 98.95 million yuan, a year-on-year increase of 118%, and by 2017 it had only increased by 14%. The fluctuation was not significant.
It is also important to mention that in terms of cost, The investment in research and development of the high-quality brand’s high-quality brands has been decreasing year by year.
According to the prospectus, the R & D expenses of the high-quality shops from 2015 to the first half of 2018 were 5.85 million, 58.35 million, 41.45 million, and 9.63 million, respectively. The proportion of the total revenue has been hovering around 1%, far less than Investment in sales.
As of June 30, 2018, there were a total of 128 R & D personnel at the Liangpinpu, of which only 18 were at the Product Resources R & D Center.
According to industry insiders, there is not much room for technological innovation in the snack industry itself. Most of these companies’ R & D personnel are engaged in product planning and packaging design.
The technological attributes of the industry are not high, and it is understandable that companies have invested in this area.
But one thing to note is that the R & D of the snack industry is mainly reflected in product planning and packaging design, while companies like Liangpinpu who want to build high-end brands continue to reduce their investment in this area. This approach is really puzzling.
2 Pros and Cons of OEM Model
The OEM model is simply The company outsources the manufacturing links in the traditional model, which can also be said to be “OEM” .
The biggest advantage of this model is that companies can lighten assets operations without heavy burdens.
This is mainly reflected in two points. The first point has the characteristics of the proportion of current assets in finance.
According to the prospectus of Liangpinpu, the current assets accounted for 79.5% in 2017. Although the figures for 2019 are not yet available, they should be similar to this level. The current assets of the other three squirrels are also very high. Around 80%.
The current assets of the Liangpinpu and the three squirrels are mainly OEM products from foundries. This reduces the investment of manufacturers in manufacturing and also gives companies that adopt this model.The industry has set a threshold and must achieve high turnover.
From the data, we can see that whether it is the three squirrels that have been listed or the good shops that are about to go on the market, the inventory ratio of snack companies using OEM models is very large. At this time, if the turnover rate is slow, the inventory will increase The more and more, because of the limited shelf life of food, the higher the turnover rate of good products, the higher the requirements.
The second point is the cost savings mentioned above .
Let’s make a comparison. The cost structure of a traditional food company can be divided into production, raw materials, manpower, R & D and sales.
After adopting the OEM model, Liangpinpu has eliminated the cost of production and procurement of raw materials, and the company can invest limited energy into R & D and production.
Since the technological innovation space of the snack industry is not high, after the food industry enterprises adopt the OEM model, their sales expenditure will naturally be greater than research and development expenditure.
But while this model brings various benefits to the enterprise, it also brings many risks to the enterprise.
The first is the above-mentioned high proportion of current assets and high turnover , which must be synchronized.
If the turnover rate of large current assets is low, it will affect the turnover of cash flow; if the proportion of liquid assets is small and the turnover is high, it may be sold out of stock. What enterprises should have, this also affects their revenue.
Second is the problem of product quality , and the good product shop also explained it in the prospectus.
The prospectus shows that Liangpinpu was fined 642,800 yuan by Hubei Food and Drug Administration on March 21, 2017 because the products processed by the supplier did not meet food safety standards.
But in the prospectus, Liangpinpu only mentioned this incident, which was punished for product quality problems. This is actually not the first time.
As early as the end of 2016, Liangpinpu was found by Sichuan Food and Drug Administration to be unqualified for its Sichuan subsidiary “Sichuan Liangpinpu”. Was named.
In February 2017, Liangpinpu was inspected for a cashew product produced by a supplier.The mold was detected as exceeding the standard and was punished by Hubei Food and Drug Administration.
In addition, the prospectus shows that Liangpinpu is still involved in multiple quality lawsuits, and there are some complaints about the quality of its products on some third-party complaint platforms.
Every indication is that the quality problem of the Liangpinpu products is not a case, but the crux of the problem may be the OEM model adopted by the Liangpinshop.
Because companies adopting this model, they usually cannot effectively control the quality of raw materials.
The Liangpinpu also mentioned this in the prospectus, “the company’s product quality is inevitably limited by the supply of raw materials for agricultural and sideline products, the production capacity of suppliers and other factors.”
In addition, Liangpinpu also indicated that it will further strengthen the management of the supply chain.
However, from the perspective of repeated penalties by regulators and consumer feedback, the product quality of Liangpinpu seems to be at a certain distance from the positioning of “high-end”.
3 The danger of the good shop
For a long time in the past, the domestic food industry has suffered from the supply side. Scattered, chaotic, and inefficient and other difficult diseases, Liangpinpu can stand out in this environment, indicating that its strategy has achieved staged success.
But in the face of a constantly changing market, not only are opportunities, but also challenges, in front of the good shops that have achieved staged victories.
The opportunities for good shops are mainly reflected in the two aspects of industry development and self-development .
First of all, China’s snack food industry has stood at an unprecedented high point .
According to public data, the output value of China’s snack food industry was 401.4 billion in 2010, reaching 919.1 billion in 2017, with a compound annual growth rate of 12.56%. By 2018, it has reached 1,029.7 billion, and it is expected to remain double-digit next year. The growth of the industry is expected to reach 2 trillion yuan.
Compared with the “trillion” scale development space, so far no company has achieved a revenue of more than 10 billion.
In addition, the growth prospects of consumer demand space are equally promising .
According to data from Euromonitor, the per capita consumption of snack food in the UK and the United States in 2018 was 8.3 times and 11.1 times that of China, respectively. Per capita consumption is also 6.9 and 2.8 times that of China, respectively.
From an industry perspective, the good-quality shop has undoubtedly hit the air.
Second, The good shop in the air outlet has also stood in the center of the air outlet . Established in 2010, Liangpin Shop has been squeezed into the industry No.1 (2017) from the unknown by virtue of its unique style.
In addition, the good-quality shop has also gainedStrong support .
In 2011, it received a Series A investment of 51 million yuan today, and subsequently received an investment from Gao Capital. According to the prospectus, Gaofeng Capital currently holds 13% of the shares, and Today Capital holds 33.75% of the shares.
Corresponding to several favorable factors, for the players in the good shop or snack food industry, the biggest danger may be only one-quality.
Just as everything Tesla builds on the Model series today, companies in the snack food industry are either optimistic about capital or recognized by consumers, all of which are based on products.
For food products, safety always comes first.