With the explosive development of coffee drinks, Jiahe Food (605300. SH) chose to expand its full range of coffee products. On the evening of January 8, Jiahe Food disclosed the reply to the inquiry letter and further explained the fixed increase plan.
Titanium Media APP found that due to the actual funds raised did not meet expectations, 2 of Jiahe Food's 4 IPO fundraising projects were abandoned, one of which was the project with an annual output of 2,160 tons of freeze-dried coffee (hereinafter referred to as the "freeze-dried coffee project"). Now the fixed increase project will increase the coffee production capacity in a big way, Jiahe Food said that the cancellation of the freeze-dried coffee project is a comprehensive consideration of the capital needs of each project, and the freeze-dried coffee project is only planned to put into production freeze-dried coffee products, and there is no correlation with the fixed increase investment project. It is worth noting that in the past three years since its listing, the current progress of the new R&D center of the IPO fundraising project has almost stood still, and has been repeatedly changed.
At the operational level, in the first three quarters of 2023, Jiahe Food walked out of the dilemma of increasing revenue and reducing profits for three consecutive years, and achieved a double increase in revenue and net profit attributable to the parent company. With the growth of revenue, accounts receivable have also risen, but its turnover rate is much lower than that of its peers.
The two fundraising projects were both aimed at the coffee business, and the relevance was questioned
Since the initial fundraising project in 2021, Jiahe Food has thrown out a fixed increase plan in May 2023.
According to the prospectus, the total amount of funds raised by Jiahe Food is 750 million yuan, which is invested in the coffee expansion construction project and the supplementary working capital project, with an investment amount of 550 million yuan and 200 million yuan, which is the further expansion and upgrading of the company's existing main business.
After the completion of the project, it will form an annual production capacity of 16,000 tons of roasted coffee beans, 3,000 tons of ground coffee powder, 8,000 tons of hot and cold coffee liquid, 10,000 tons of RTD ready-to-drink coffee and 610 tons of freeze-dried and blended coffee.
Referring to the main considerations and necessity of this expansion of coffee production capacity, Jiahe Food said that in recent years, the mainland coffee industry has developed rapidly, especially the specialty coffee market with better taste and flavor has become a hot spot of segmentation, with a broad market space, and from January to September 2023, the capacity utilization rate of the company's coffee business has reached 94.63%, and the existing coffee production capacity can no longer meet the downstream consumption demand.
However, at a time when Jiahe Food is expanding its coffee business aggressively, the freeze-dried coffee project, one of its IPO fundraising projects, has attracted the attention of the Shanghai Stock Exchange. The reasons and considerations for Jiahe Food's choice to cancel the previous fundraising coffee project, the specific relationship with this fundraising coffee project, and the necessity of continuing to implement the coffee project were questioned.
According to public information, Jiahe Food's original plan IPO raised 565 million yuan, and the actual net amount of funds raised was 401 million yuan. The IPO fundraising project mainly invests in the construction project of the production base with an annual output of 120,000 tons of creamer (hereinafter referred to as the "creamer project") and the new R&D center project, with an investment of 365.2161 million yuan and 35.5272 million yuan respectively. The freeze-dried coffee project and the information system upgrade construction project did not use the IPO funds for investment because the net funds raised were less than the planned funds raised.
As for the reason for the cancellation of the freeze-dried coffee project, Jiahe Food said in the reply letter that according to the company's business maturity and priority development needs, the company's powder oil business was the company's largest sales scale and the most competitive core product at the time of the initial listing, and its main business income accounted for more than 85% Considering the scale of the capital demand of each project, the total investment of the non-dairy creamer project is planned to be all raised funds, and the capital demand of the freeze-dried coffee project is 117 million yuan, and there will be greater pressure on the investment of self-owned or self-raised funds. In order to carry out coffee business, Jiahe Food has invested 30.58 million yuan in the construction of an integrated coffee production line through its own funds.
Titanium Media APP noticed that the funds in Jiahe Food's hands have not been tight since its listing. In 2021 and 2022, the total monetary funds and transactional financial assets of Jiahe Food will be 893 million yuan and 1.328 billion yuan respectively, and the short-term borrowings will be 0 yuan and 555 million yuan. From January to September 2023, the total amount of monetary funds and easily realizable financial assets was 1.575 billion yuan, and the total amount of available existing funds at discretion was about 727 million yuan after excluding restricted funds such as short-term bank loans and bank acceptance draft margins. It can be seen that the disposable funds of Jiahe Food far exceed the funds required for the freeze-dried coffee project.
Involving the specific relationship between the two coffee fund-raising projects, Jiahe Food said that the previous fund-raising project only planned to put into production freeze-dried coffee products, and the coffee expansion construction project was based on the company's full-category coffee production capacity that had been formed, expanding the construction of specialty coffee production lines, and there was no correlation between the two fund-raising projects.
It is worth mentioning that after nearly three years of listing, the creamer project has been fully put into operation in January 2022, while there is almost no progress in another fundraising project. As of the end of September 2023, the proportion of funds raised for the new R&D center project is only 3.85%. Jiahe Food explained that the company optimized the R&D direction of the upgrade project in a timely manner to meet the latest market consumer demand, and the project construction was delayed, and since 2020, due to the impact of public health emergencies, the construction personnel have stopped production and work frequently, and logistics and transportation have been blocked, resulting in the extension of the project construction period.
In addition, the project has been subject to repeated changes. In April 2023, Jiahe Food adjusted the date for the new R&D center project to reach the scheduled usable state from April 2023 to December 2024, and in October of the same year, the project was implemented at Lianhua Road, Wujiang District, Suzhou City, and adjusted some equipment of the project according to the actual needs.
Accounts receivable have surged
Jiahe Food is mainly engaged in the research and development, production and sales of powdered oils, coffee, plant-based and other products. Since 2017, the company has vigorously developed the coffee business, and after 5 years of development, the coffee business has grown rapidly to become the second largest business segment, second only to the powder oil business. The existing coffee products mainly include instant coffee, coffee solid beverages, cold brew coffee liquid, roasted coffee beans, ground coffee powder, coffee concentrate, freeze-dried coffee, etc., covering the whole product chain of coffee.
In recent years, Jiahe Food has launched products such as "Very Mai" oat milk, "Golden Cat" coffee, and "Su Xiaowan" prefabricated desserts for C-end channel sales. At present, Jiahe Food has made great efforts in the coffee business and promoted the branding of products, which has to make people pay attention to its main business in recent years.
From 2020 to 2022, Jiahe Food has increased revenue and decreased profits for three consecutive years, with operating income of about 1.874 billion yuan, 2.399 billion yuan and 2.428 billion yuan respectively, with a growth rate of 2.07%, 28.02% and 1.17% respectively, and a net profit attributable to the parent company of 216 million yuan, 151 million yuan and 115 million yuan respectively, down 20.49%, 30.19% and 23.45% year-on-year respectively. In the first three quarters of 2023, Jiahe Food ushered in a rebound in performance, achieving revenue and net profit attributable to the parent company of 2.086 billion yuan and 206 million yuan, a year-on-year increase of 28.18% and 240.77% respectively.
In May 2023, Jiahe Food began to supply coffee beans, coffee liquid and other products to Cudi, but the revenue growth of the coffee business in the third quarter of 2023 was less than expected. Jiahe Food said at the performance briefing that the main reason is that coffee chain enterprises have adopted a low-price strategy, which has led to changes in the structure of coffee products, especially the year-on-year slowdown in the revenue of instant coffee products.
Along with revenue, accounts receivable are also rising. From 2020 to 2022 and from January to September 2023, accounts receivable will be 203 million yuan, 243 million yuan, 422 million yuan and 404 million yuan respectively, with growth rates of 6.53%, 19.34%, 74.15% and 37.08% respectively. Except for 2021, the growth rate of accounts receivable in the remaining periods of Jiahe Food is much higher than the growth rate of revenue. Jiahe Food explained that the balance of accounts receivable at the end of 2022 increased significantly, on the one hand, due to the early Spring Festival holiday in 2023, customers increased purchase orders in the fourth quarter of 2022 for stocking, resulting in sales growth in the fourth quarter of 2022, and the relevant sales have not been paid at the end of the year; In each period, the proportion of accounts receivable of Jiahe Food was 99.4%, 99.45%, 99.47% and 73.33% respectively.
Compared with comparable companies in the same industry, Jiahe Food's accounts receivable turnover ratio is slightly inferior. From 2020 to 2022 and from January to September 2023, the accounts receivable turnover ratio was 9.51 times, 10.76 times, 7.3 times, and 6.73 times, respectively. Comparable company Nanqiao Foods (605339. SH), Hairong Technology (300915. SZ), Xiang Piaopiao (603711. SH) were 47.78, 51.42, 36.18 and 34.61, respectively. Jiahe Food said that there are differences between the company and comparable companies in terms of sales models and customer types. At the same time, Jiahe Food said that there is no situation where the credit policy for large customers is relaxed to stimulate sales. (This article was first published in Titanium Media APP, author: Lu Wenyan)