In 2022, the "outlet" of new tea drinks has passed, but other enterprises in the supply chain have ushered in "spring". Following Jiahe Food and Dexin Food, at the end of September this year, Suzhou Fresh Beverage Co., Ltd. (hereinafter referred to as "Fresh Beverage"), a new tea supplier, issued its initial public offering prospectus, planning to impact the listing.
Titanium Media APP noted that under the favorable benefits of the industry, the performance of fresh drinks has increased rapidly in previous years. However, since the beginning of this year, with the cooling of the entire industry, the company's performance and gross profit margin have declined significantly, and the capacity utilization rate has almost been "cut in half".
Compared with companies in the same industry, the competitive advantage of fresh drinks is not very prominent. So, in the face of fierce industry competition, how should the company achieve breakthroughs in the future?
Indicators continued to decline
According to public information, as a raw material supplier of new tea comprehensive solutions, fresh beverages are mainly engaged in the research and development, production and sales of beverages, taste particles, jams and direct drinks, which are an important part of the new tea beverage supply chain. At present, the company has established long-term cooperative relations with new tea beverage enterprises such as Michelle Ice City, Shuyiyao Xiancao, CoCo Duke, Gu Ming, Hushang Auntie, 7 Fentian, Lele Tea, and new retail enterprises such as Luckin Coffee and Hema Xiansheng.
In September this year, Fresh Beverages submitted a prospectus. But Titanium Media APP noted that the company's financial data was only updated to the first quarter of this year. According to the prospectus, from 2019 to 2021, the operating income of fresh beverages was 787 million yuan, 812 million yuan and 1.064 billion yuan, and the net profit attributable to the parent was 128 million yuan, 179 million yuan and 188 million yuan, respectively, and the company's operating income and net profit increased steadily. However, in the first quarter of this year, the company's operating income was 201 million yuan, and the net profit attributable to the parent was only 15.2101 million yuan, and there was a risk of decline in this year's performance.
Fresh Beverage explained that the company was mainly affected by the outbreak of the regional new crown epidemic, in order to cooperate with the epidemic prevention and control policy, the company's production was suspended in stages, and the supply and marketing logistics were blocked, coupled with the regional epidemic lockdown policy, which caused some of the company's customers to close business and terminal consumption declined, as well as the company's taste granular product sales price decline and other comprehensive factors led to a decline in the company's performance.
According to the prospectus, fresh beverage products are currently divided into beverages, taste particles, jams, direct drinks and others. Among them, the sales volume of granular products reached 317 million in 2020, accounting for 39.34% of the total revenue. In 2021, its revenue was 351 million, accounting for 33.39% of its total revenue. In the first quarter of this year, the revenue of fresh drink pellets was only 52.7591 million, accounting for 26.55% of the total revenue, which fell significantly.
In addition, from 2019 to 2021 and the first quarter of this year, the comprehensive gross profit margin of fresh beverages was 36.84%, 42.31%, 33.64% and 24.5%, respectively, showing a certain downward trend since 2021.
At the same time, the production capacity of fresh drinks is also decreasing year by year, with 93.59%, 72.84%, 79.24% and 59.73% respectively during the reporting period. It is understood that in this IPO, fresh drinks plan to raise about 450 million yuan, which will be used for the construction project of Tianjin production base, the construction project of Guangdong Zhaoqing production base and supplementary working capital. But as can be seen from the data, the company's current capacity utilization rate is only about half, far from saturated. In this regard, the titanium media APP asked the company what is the opportunity to choose the current time point to raise funds and expand production? Is there a risk of insufficient capacity digestion in the future? But as of press time, the other party has not replied.
In addition, it is worth noting that fresh drinks raise funds on the one hand, and large dividends on the other hand. Data show that in 2021 alone, fresh drinks made a number of large cash distributions in May, July and December, and the total dividend from 2019 to 2021 was as high as 504 million yuan, equivalent to the total net profit in the same period.
From the perspective of equity structure, the actual controllers of fresh drinks, Huang Guohuang and Lin Liling, are husband and wife, and the two together control 87.1% of the shares of fresh drinks, and their shareholding ratio is highly concentrated, which means that hundreds of millions of yuan in cash dividends of fresh drinks almost all fall into the pockets of the actual controller couple.
The advantage in the industry is not outstanding
In fact, for the suppliers of new tea drinks, although they have grown rapidly in recent years by riding the "east wind" of the industry, it is not easy to continue to make money on the "outlet". Like the competition of new tea brands, for suppliers, there are also problems such as serious homogenization and insufficient innovation ability.
In the prospectus, similar companies of fresh drinks include listed companies such as Jiahe Food, Dexin Food and Tianye Shares, so how competitive is the company compared to similar companies?
According to the data, the main products of Dexin Food include beverage thick syrup, flavored syrup, beverage small ingredients, etc.; The products of Tianye Co., Ltd. are mainly raw fruit juice, quick-frozen fruits and vegetables, fresh fruits, etc., which belong to raw juice enterprises. Jiahe Food is mainly engaged in the research and development, production and sales of vegetable fat powder, coffee and other solid beverages.
From the perspective of performance scale, from 2019 to 2021, Dexin Food achieved operating income of 393 million yuan, 357 million yuan and 529 million yuan, net profit of 81.9854 million yuan, 67.4886 million yuan and 95.8051 million yuan respectively; during the same period, the revenue of Tianye shares was 290 million yuan, 266 million yuan and 459 million yuan, respectively; the net profit attributable to the parent was about 24.32 million yuan, 21 million yuan and 65.17 million yuan, respectively; The operating income of Jiahe Food was 1.836 billion yuan, 1.874 billion yuan and 2.399 billion yuan, and the net profit attributable to the parent was 272 million yuan, 216 million yuan and 150 million yuan respectively. It can be seen that in addition to Jiahe Food, the performance scale of fresh drinks is higher than that of the other two.
From the perspective of earning power, the gross profit margin of fresh drinks is higher than the average of comparable companies, but from the perspective of gross profit margin trends, fresh beverages have the largest decline in gross profit margin this year.
At present, there are many players on the new tea drinking track, and as the market growth rate slows down in stages, the competition between companies is bound to enter a white-hot state. Therefore, for fresh drinks, it is imperative to strengthen investment in research and development and develop new explosive products. However, from the perspective of R&D investment, the R&D expense rate of several companies is very different, and the advantages of fresh drinks in innovation are not obvious.
In addition, the titanium media APP noted that as of March 31 this year, the total number of employees of fresh drinks was 987. However, there are only 53 R&D personnel, accounting for 5.37% of the total number. Therefore, in the risk warning, Fresh Drinks said that the company may face the risk of insufficient R&D technicians. Fresh Beverage also said that in the future development process, if the company's important R&D technical personnel are lost in large numbers and the company fails to find a suitable replacement, or the construction of the company's R&D talent team lags behind the company's business development needs, it may weaken the company's competitiveness and adversely affect the company's product research and development, technological innovation and future production and operation.
How will it break through in the future
For fresh drinks, in addition to facing competition in the same industry in the future, in the context of industry upgrading, the company's customers will accidentally become "opponents".
In order to strengthen competitiveness and reduce the risk of fluctuations in raw materials, some new tea drink head brands have now begun to get involved in the source fruit planting industry, and even layout the field of production and manufacturing, "taking the road of suppliers, leaving suppliers with nowhere to go". It can be said that the construction of the entire industrial chain and the mutual penetration and integration of upstream and downstream enterprises in the industry are the trends of the entire industry in the future.
For example, taking Heytea as an example, its hundreds of acres of perfume lemon production bases in Zhanjiang and Jiangmen, Guangdong, are now in operation. In August last year, Michelle Ice City extended its tentacles directly upstream and established Chongqing Xuewang Agricultural Co., Ltd. to lay out the upstream production and processing industry.
Titanium media APP noted that among the top five customers of fresh drinks, the first largest customer is called "Shangdao Smart Supply Chain Co., Ltd.", and from the enterprise inspection data, the company is wholly owned by Michelle Ice City. Since 2021, Michelle Ice City has become the largest customer of fresh drinks, bringing 165 million yuan in revenue to fresh drinks that year, accounting for 15.66%. In the first quarter of this year, the proportion of Michelle Ice City's revenue was still increasing, with revenue of 50.1813 million, accounting for 25.25% of the total revenue. It can be seen that once Michelle Ice City reduces the procurement of raw materials due to strengthening the construction of the industrial chain, it will have a direct impact on the performance of fresh drinks.
IPG China Chief Economist Bai Wenxi told Titanium Media APP that although the performance growth of new tea suppliers is sustainable in the long run, in the short term, due to the impact of the epidemic and sluggish consumption, it may experience a long downturn. In the context of the cooling industry, the breakthrough point for suppliers is to diversify their product lines and markets to open up new sources of revenue growth.
That is to say, at present, suppliers may be able to refer to the development strategy of new tea drinks and spread to the downstream of the industry. For fresh drinks, it began to lay out downstream direct drink products from 2020. The data shows that in 2020, 2021 and January-March this year, the company's direct drink products achieved sales revenue of 581,600 yuan, 27,126,600 yuan and 12,492,300 yuan, respectively, accounting for 0.07%, 2.57% and 6.29% of the main business income in the corresponding period. It can be seen that the company's direct drink drinks have grown rapidly, but the overall performance scale is very small.
In addition, shifting positions and laying out overseas markets has also become an innovation road for new domestic tea beverage enterprises. However, at present, for fresh beverages, its business is mainly concentrated in East China, Central China and South China, and has not yet expanded to overseas markets.
In general, from the current situation, fresh drinks may have to experience a period of sluggish performance before other paths are passed. (This article was first published in Titanium Media APP, author| Yu Ying)