Behind the Chinese milk powder, Feihe's internal worry and trapped

Author | Karong

Edit | Tang Fei

After 618, China Feihe (hereinafter referred to as "Feihe") released a "happy newspaper".

According to Feihe, the total sales of Feihe on the Douyin platform during the 618 period exceeded 8 million yuan, and the total number of live viewers exceeded 1.18 million. In the two live broadcasts on May 20 and June 9, Feihe's sales exceeded 1 million, and live sales on June 18 also reached 950,000.

Feihe's stock price trend this year. Picture source: wind

The stock price has risen at the same time as the rise of sales. According to statistics, from June 1st to June 20th, 2022, Feihe's stock price rose from HK $ 7.88/share to HK $ 8.57/share, an increase of 8.76%.

However, after all, the shopping festival is not normal. As soon as 618 passed, Feihe's stock price began to fall. On the five trading days last week, Feihe's stock price fell by about 5.2%. Although Yinqing may not be the normal performance of the capital market, the dilemma of Feihe's short -term data and unpredictable long -term growth is worth investor attention.

Flying cranes are difficult to "high flying"

Although Feihe is still the leader of the Chinese milk powder market, in the past two years, Feihe's core financial data is becoming more and more difficult to repeat the previous double -digit growth trend.

The financial report shows that in 2021, Feihe's revenue was 22.78 billion yuan, an increase of 22.5%year -on -year; net profit of home mother was 6.87 billion yuan, a year -on -year decrease of 7.6%. In the first half of 2021, the growth rate of Feihe's revenue and net profit could reach 32.58%and 35.84%.

Feihe falls into the trap of "increasing income and increasing increasing profit". The important reason is that its comprehensive gross profit margin has fallen. According to the financial report, in 2021, Feihe's gross profit margin was 70.28%, a year -on -year decrease of 2.2 percentage points.

In fact, the gross profit margin of Feihe's core products is not low. According to the financial report, in 2021, the gross profit margin of Feiheyou baby milk powder was as high as 72.4%. As a comparison, Australia's gross profit margin is only 50.4%.

But the problem is that the broader market of infant milk powder aimed at Feihe is touched. According to statistics from relevant departments in my country, by the end of 2021, the domestic population was 1.412 billion, and the domestic population was 10.62 million in 2021, with a population birth rate of 7.52 ‰.

According to data disclosed by Euromonitor, from 2017 to 2020, the growth rate of China's infant milk powder market continued to decline, from 10.72%in 2017 to 4.38%in 2020. This also means that the dividends in the Chinese infant milk powder market have become narrower.

However, 94.4%of Feihe's revenue comes from infant formula milk powder (data report data in 2021). Newborn decreases plus the overall growth rate of infant milk powder. It is not good news for Feihe.

The fierce competition, the more fiercely, Feihe needs to invest huge marketing to leverage the market. According to the financial report, in 2021, Feihe's sales and distribution costs were 6.729 billion yuan, an increase of 27.85%year -on -year. However, the growth rate of the revenue of Feihe Yingye Formula Milk Powder products was only 21.7%, and it did not match the growth rate of sales costs.

Feihe itself also realized that this field is about to be topped, and strives to lay out an incremental market represented by adult milk powder.

The field is indeed considered to have great potential. Data released by the China Economic Trend Research Institute of Economic Daily show that in the first half of 2022, the sales of Chinese adult milk powder e -commerce channels increased by 61.7%year -on -year.

However, the problem is that adult milk powder does not have the characteristics of high gross interest rates for infant milk powder. According to the financial report, in 2021, the gross profit margin of other dairy products represented by adult milk powder was only 28.4%, not only the record with the lowest gross profit margin of various business sectors, but also fell 10.1 percentage points year -on -year.

Because other businesses are difficult to "lie down" like infant milk powder, some investors choose to escape Feihe.

In the past five days (June 20th to 24th), Hong Kong and Shanghai HSBC has reduced its holdings of 23.722 million shares of Flying Cranes in China. Citibank has reduced its holdings of 12.8426 million shares.

Many dairy companies aim at Feihe

At the performance meeting in 2021, Cai Fangliang, president of Feihe, revealed that "As of the end of 2021, Feihe's market share was about 19.2%."

Based on the experience of other industries, if a market already has absolute giants and the market size ceiling is clearly visible, then the competition in the industry will come to an end, but this is not the case for infant formula milk powder markets.

In mid -2021, Chunhua Capital, holding Junlebao, revenue to His Mazad Johnson China at a price of 2.2 billion US dollars. Industry analysts believe that Junlebao will indirectly control Mead Johnson China through the bidding of investors, and then "add warehouse" milk powder market.

Photo source: Illi Announcement

In October 2021, Yili shares issued an announcement saying that it was planned to spend HK $ 6.245 billion in Australian Youyou's issued share capital.

On March 3 this year, Yili and Australia announced at the same time that Yili's full offer for all issues of Australian Youyou had successfully acquired. As of the deadline of the offer, the offer (Yili Zizi) holds or controls the Australian Youyou Dairy 953163623 shares, accounting for about 52.70%of the total shares of Australian Dairy.

Many dairy companies enter the milk powder market at this time. After collecting in recent years, the new national standard of milk powder in 2021 has been announced and will be implemented soon. Among the first batch of infant formula products that meet the new national standard of milk powder, Yili and Junle Bao were listed.

However, Feihe does not seem to care about these opponents. In 2020, Lei Youbin, chairman of Feihe, once said, "Our R & D is definitely the first in the world."

But in terms of financial reports, Feihe's research and development costs are not high. In 2021, Feihe's research and development costs were only 425 million yuan, and revenue accounted for 1.9%. In comparison, in 2021, Yili's research and development cost was 601 million yuan, an increase of 23.39%year -on -year.

Feihe lightly develops because it is because of high marketing to raise brand value, and consumers can consume consumers. However, with the release of the "new national standard" and the continuous pressure of competitors, Feihe will have to face the lack of core competitiveness of the core competitiveness caused by the products caused by light development and marketing.

How to win back capital confidence?

The Shanghai floats like a boat against the water, and retreats without entering.

Many dairy companies aimed at Feihe's main channel, and of course, Feihe could not be indifferent. In addition to the adult milk powder mentioned above, Feihe also aimed at the goat milk powder market.

In November 2021, the original ecological animal husbandry of Feihe issued an announcement saying that it was planned to acquire the milk goat farming facilities, goat milk production lines, and the land use rights of several farms at a price of 131 million yuan. It is understood that Shaanxi Green Energy is the largest milk goat breeding base in Asia.

Prior to July, Feihe also acquired all the equity of goat milk powder brand and lamb.

From the perspective of trends, the goat milk powder market does have a sign of taking off. According to the data disclosed by the Prospective Industry Research Institute, in 2021, the size of the Chinese goat milk powder market is 11.1 billion yuan. It is expected that in 2026, this number will reach about 20 billion yuan, and the proportion of the infant milk powder market will also increase from 6%. To 8%.

But the problem is that Dairy companies such as Yili have also seen the same market opportunities. At the Q3 financial report of 2021, Yili said that sheep milk protein may become a key element in the development of the industry in the future. Yili will invest in Australia and You will get more scarce resources for goat milk.

According to official information, in 2021, Australian Youyou's own brand formula goat milk powder sales were 3.348 billion yuan, an increase of 7.8%year -on -year. Since 2018, Australian Young's goat milk powder brand Jiabeite has occupied more than 60%of the total imports of Chinese infant formula formula for four consecutive years.

From this point of view, Yili in the goat milk powder market actually occupies a larger first -mover advantage. In the future, if Feihe wants to make a difference in the goat milk powder market, it is inevitable to compete with companies represented by Eli.

Since the specific business is difficult to become an enterprise's growth engine, in order to more quickly recover investors' confidence, Feihe has begun to spend money to "buy people's hearts."

When released in the first half of the 2021 financial report and the full annual financial report of 2021, Feihe announced the final dividend plan. According to statistics, the total dividend of two cumulative dividends here is about 3.5 billion yuan, and about 49.4%of these dividends are given to executives.

Picture source: financial report

In addition, Feihe also repurchased the company's shares on a big place. According to incomplete statistics, since the second half of 2021, Feihe has repurchased about twenty stocks.

Although the repurchase plan is frequently announced, the actual repurchase of Feihe is not high. It is reported that since the approval of the general resolution, Feihe has reached a total of 39.624 million shares as of the current year, accounting for 0.44%of the number of shares issued when the general resolution passed.

All in all, although Feihe is currently the head of the Chinese infant formula milk powder market, with the implementation of the "new national standard" and the continuous efforts of competitors, the future infant formula milk powder will largely go to the "technical flow flow. "The route, and this is what is currently lacking in Feihe.

If Feihe wants investors to see hope in the future, it may be difficult to achieve the goal by spending money to "buy people's hearts" alone.

*This article is based on public information, which is only used as information exchange, and does not constitute any investment suggestions

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