Little Master's Uncle Column - Let a few people see the investment opportunities first
Arowana cooking oil, Haitian soy sauce, Hengshun vinegar, Qianhe spices, scanning the kitchen cabinet at home, I found myself with a question, who is the leading enterprise of MONOS?
Based on this problem, this article is available
First of all, I have to admit that when I found the MSG dragon head plum blossom creature, I couldn't resist the urge to analyze it.
But when I first analyzed it, I remembered a sentence that said, "If you see a beautiful woman with long hair flowing in front of you, remember not to go up and pat her on the shoulder, because she will turn back."
Let's take a look at this company
< h1 class="pgc-h-center-line" > introduction</h1>
Meihua Biology was established in 1995, belongs to the fermentation manufacturing industry in the food manufacturing industry, since 2007 Meihua Biology from a single monosodium glutamate production, has become China's lysine, threonine, monosodium glutamate and other subdivision industry leader, is also currently the world's largest amino acid production, the most complete product range of enterprises,
And 1995 ~ 2007 in the middle of the 12 years, in fact, there is also a hidden history of plum blossoms, the predecessor of plum blossoms is not called plum blossom biology, called the pearl of five continents, the main business is to do power grid construction, transformers and energy meters sales, etc., and food has nothing to do. In fact, plum blossoms into the field of amino acids, monosodium glutamate for a long time, 07 years to now, only 14 years, and these 14 years out of such an industry giant.
The main raw material of plum blossom products is corn, and the production process is mainly through the extraction and saccharification of corn to form starch sugar, supplemented by fermentation of various strains to produce products.
Schematic diagram of the production process
The product end of Meihua Bio can be divided into four categories:
1. Animal nutrition amino acid products
Animal nutrition amino acid products are mainly based on lysine and threonine, and the products are widely used in the downstream poultry feed such as pigs, chickens, fish and shrimp.
Among them, lysine is a feed nutrient enhancer, which has the effect of enhancing the appetite of livestock and poultry, improving disease resistance, improving lean meat rate, improving meat quality, and improving feed protein utilization.
Threonine (L-threonine) is an amino acid that animals themselves cannot synthesize, but is very much needed, which can adjust the amino acid balance in the feed, promote the growth of livestock, and improve meat quality.
2. Umami agent products
The company's umami agent products mainly include monosodium glutamate (99% monosodium glutamate also known as sodium glutamate) and I + G (scientific name is aodrinated nucleotide disodium oxide) two products.
"MONOSODG", also known as "MSG", is an important food additive widely used at home and abroad, and is also widely used in domestic convenience food, meat products, flavor products and other industries.
I+G is known as "strong monosodium glutamate", both of which are similar in shape to powder, and are one of the main flavor ingredients of instant noodle seasoning buns, chicken essence, chicken powder and freshening soy sauce.
The demand side of products is mainly divided into three areas: food processing, catering consumption and household consumption, of which the food processing field accounts for more than 60% of the demand.
3. Human medical amino acid products
The company's human medical amino acid products include glutamine, leucine, isoleucine, pharmaceutical grade valine, inosine, guanosine, adenosine, proline and other products.
The above products are mainly used as additives or raw materials in sports nutrition drinks, nutritional injections, health care oral liquids, and APIs for the production of Puri antihypertensive drugs.
Such products are currently in the operating income of plum blossoms, only contribute about 5% of the proportion, although the gross profit is high, but the proportion is relatively small, the company's main source of business income is still monosodium glutamate and amino acids, so the medical field can only be expected, can not be delusional.
4. Colloidal, polysaccharide products
Colloids are mainly xanthan gum, which is currently a kind of biological glue with superior performance that integrates thickening, suspension, emulsification and stabilization in one. Xanthan gum can be divided into food grade xanthan gum and petroleum grade xanthan gum due to different downstream application fields;
The polysaccharides are mainly trehalose, trehalose is a typical stress metabolite, which can form a protective film on the surface of the cell in a harsh environment such as freezing, drying, and high osmotic pressure, which can effectively protect the biomolecular structure from being destroyed. Trehalose is widely used in the food industry and cosmetics
Colloids, polysaccharides and the medical amino acids on them, like the medical amino acids on them, account for a smaller proportion of the company's operating income.
From the perspective of the industrial chain, the upstream of the biological fermentation industry in which the company is located involves agriculture (mainly corn) and chemical production (mainly coal), and the downstream links condiments, feed breeding, food and health products and pharmaceutical industries.
The product portfolio is complete and the correlation is small, which is conducive to the stability of plum blossom revenue growth and gross profit margin, and can also enhance the ability to resist industry cycle risks.
<h1 class="pgc-h-center-line" > the competitive landscape of the industry</h1>
Meihua Bio's main competitors focus on the top three companies in the industry, the main competitors in China are Fufeng Group (HK:00546), Ningxia Yipin, Dacheng Biochemical Technology (HK:00809), Julong Bio (NEEQ:831775), Star Lake Technology (SH:600866), and the international competitors are mainly Japanese Ajinomoto, South Korea's Xijie, the United States Archer Daniels Midland Company (ADM), Germany's Evonik, etc.
Among them, Dacheng Biochemical has been in a state of loss in the past 7 years, and the audit recommendations issued by accounting firms in 13-19 years are all qualified opinions.
From the perspective of the industry, the biological fermentation industry in food manufacturing belongs to the asset-heavy industry, and in the balance of supply and demand, the larger the production capacity, the more significant the scale effect brought about by the larger the production capacity, and the more competitive the cost of the enterprise.
According to Zhuo Chuang information data, 70% of the global MONOSG production capacity in China,
The production capacity of MsG in China is mainly concentrated in the hands of Fufeng Group, Meihua Biological and Yipin Biological, with the production capacity accounting for 44.07%/23.73%/14.24% respectively, and CR3 is as high as 82.04%, which belongs to the typical oligopoly pattern.
In terms of amino acid production capacity, Meihua Bio has a production capacity of one million tons, lysine production capacity of 700,000 tons, and threon acid production capacity of 300,000 tons, of which threon acid production capacity is the world's first.
Food freshener I+G on. At present, domestic manufacturers mainly have Xijie, Meihua Biological and Xinghu Technology, with production capacity of about 25,000 tons, 10,000 tons and 7,500 tons respectively, and Meihua Biology accounts for 23.53% of the production capacity of domestic manufacturers.
As of now, Meihua Bio is relatively clear in the product market and industry position, after all, this is also a leader, and then we continue to analyze the data from the top ten data to unveil the veil of plum blossoms. (The 2020 annual report has not yet come out, and the data is analyzed using the 2019~2015 annual report and the three quarterly reports of 2020)
<h1 class= "pgc-h-center-line" >, concentration</h1>
The degree of focus is judged from: the concentration of revenue of various products, net profit and deduction of non-net profit, and foreign investment.
The revenue sources of Meihua Biological Products are mainly concentrated in amino acids, monosodium glutamate and raw material by-products, accounting for 36%, 32.49% and 17.62% respectively, totaling 85%, accounting for an even and concentrated proportion.
Image source Flush Finance
In the past 5 years, the average net profit growth rate is 25.32%, and the average non-net profit growth rate is 38.28%
The difference between the two is 13%, and the deduction is much greater than the growth rate of net profit, indicating that the company has incurred large losses in non-recurring transactions and transactions, which has reduced the growth of its own net profit.
Too many "extraneous branches" of the company is not a good thing, it is good to win, and the loss is the tears of the shareholders, we still like the "lazy" company that focuses on the main business.
In 2018 and 2019, the net profit growth rate of Meihua Bio was negative, and the performance declined in recent years, which is not a good phenomenon.
Judgment on the situation of foreign investment
In the past 5 years, the total proportion of the company (available for sale of financial assets, holding maturity investments, long-term receivables, long-term equity investments, and investment real estate) has basically accounted for less than 3% of total assets, accounting for a small proportion and will not constitute a practical problem.
In this regard, plum blossom biology to be considered.
<h1 class = "pgc-h-center-line" > second, a strong competitive advantage</h1>
Meihua Bio belongs to the food processing industry, and its main products, MONOSG and amino acids, involve our daily diet and catering. Common food manufacturing enterprises, similar products such as Haitian flavor industry, Arowana, Hengshun vinegar industry and other company products brand awareness is very high, consumer attention to such products is also very strong, but when it comes to monosodium glutamate, the brand effect is not so strong.
I searched for the MSG brand on the Internet, and found that I only had an impression of Mrs. Le MSG, plum blossom MSG basically did not have a brand impression, from the sales point of view, the largest msG sales of the e-commerce platform is also Mrs. Le.
It can be seen that the company's competitiveness is not reflected in the common brand, and according to the company's 19-year annual report, plum blossom biological product sales are uniformly responsible for the marketing company, the revenue brought by the direct sales model accounts for about 81% of the total revenue, consignment sales account for 19%, and direct sales are lower than the sales costs of consignment sales.
Image source annual report
As the leader of various subdivisions of biological fermentation, the key to competition with leading enterprises lies in the competition of costs, the competition of soft power such as management and operation, and the operational efficiency largely determines the profitability of enterprises.
The competitive advantage of Meihua is mainly the low-cost competitive advantage brought about by the scale of production capacity.
Meihua has three major production bases: Tongliao in Inner Mongolia, Wujiaqu in Xinjiang and Baicheng in Jilin Province. At present, Plum Blossom is still in the expansion stage, as of the end of September 2020, the company has lysine production capacity of 700,000 tons / year, threonine production capacity of 300,000 tons / year, monosodium glutamate production capacity of 1 million tons / year, the production capacity of the leading advantage is significant, with the gradual elimination of backward production capacity, and the gradual recovery of downstream catering, aquaculture market demand, the company's production capacity is conducive to helping the improvement of market share.
In the first half of 2020, Meihua Bio's products of lysine, threonine and tryptophan obtained the first batch of safety certifications in the European Union. Safety certification is equivalent to getting a pass for the European market, compared with manufacturers who have not yet obtained relevant certifications, Meihua Bio has the first-mover advantage of overseas market expansion.
<h1 class = "pgc-h-center-line" > third, the company's total profit is high</h1>
Meihua Biology completed asset restructuring and fully entered the biological fermentation industry in 2009, so we take the net profit from 2009 to 2019 as a reference. The company's net profit in 2009 was 760 million, and in 2019, the company's net profit was 989 million,
In 11 years, the net profit of Plum Blossom increased by two or three hundred million, as an industry leader, people have to doubt life? Is this a fake faucet ~ this item is not qualified.
<h1 class = "pgc-h-center-line" > fourth, high gross margin, low expense ratio</h1>
Good companies tend to have high gross margins and low expense ratios. The gross profit margin of Meihua Bio has remained above 20% for a long time, and the gross profit margin is not greater than 25%, but it is still relatively stable.
As shown in the figure below, the expense ratio of Meihua Bio fluctuates around 10% to 15%, and the gross expense ratio in 2018 and 2019 reaches 60%, which is higher, which shows that the company maintains a high gross profit and net profit The cost of expenses is still very high. The indicator does not conform.
Image source: Xiaoshi Uncle Gong
<h1 class= "pgc-h-center-line" >5, prepayments payable - receivables prepaid >0</h1>
Meihua Bio's pre-receivables are greater than the prepayments receivable, indicating that Meihua can occupy the cash of upstream and downstream enterprises without interest, and its competitive position in upstream and downstream enterprises is relatively strong, which is in line with this.
<h1 class = "pgc-h-center-line" > six, short-term debt-free crisis</h1>
Plum blossom biology, interest-bearing liabilities have a continuous upward trend, monetary funds can not cover the total amount of interest-bearing liabilities, in the short term the company has to consider the problem of debt repayment, from the abundance of cash flow and the virtuous cycle of business operations, are not satisfied.
< h1 class = "pgc-h-center-line" > seven, high return on equity</h1>
Plum blossom's ROE is not high, basically below the quantitative indicator of 15%, and the high return on net assets does not meet.
Image source; Flush Finance
<h1 class= "pgc-h-center-line" > eight, cash cow type company</h1>
Analyzing this, we can probably predict that the cash flow of Plum Blossom Bio is such a situation. We also judge from three perspectives
First, the net profit cash ratio
According to the calculation, the company's net profit cash ratio from 2020 to 2015 is: 188.9% (third quarter), 278.8%, 240.14%, 129.3%, 286.6%, 772.9% Can be seen that the company's net profit is all cash, and the cash content is high.
The image comes from the xiaoshi uncle gong number
However, in addition to looking at the profit quality of net profits, we also have to measure the net cash generated by the company's operating activities to match the net profit, it is obvious that in 2015, plum blossom bio has an abnormal phenomenon, the ratio of the two, 7 times the gap. Through vertical comparison, there is no problem with net profit growth, but the company's net cash in 2015 was 3.4 billion, while the net cash from operating activities in 2014 was only 400 million,,, what caused Plum Blossom Bio to suddenly increase so much cash?
As retail investors, the real situation may not be known, but through long-term historical data, we can know that the company's progress is not sustainable, and since 2015, the net amount has begun to decline, and the change is unstable.
Second, look at the increase in cash and cash equivalents
The company only has a cash balance every year, in order to better continue to operate, plum blossom cash accumulation is not obvious, when the net increase in cash is the majority,
Third, look at the net cash flow of operating activities, investment activities and financing activities
The cash flow types of Meihua Bio in the past 5 years are: plus or minus, plus and minus, plus or minus, positive and negative, plus or minus. Fits the type of investment. Cash flow this piece, plum blossoms basically meet
<h1 class = "pgc-h-center-line" > nine, high dividend rate</h1>
In the past 10 years, the dividend rate of Plum Blossom has basically remained above 70%, and the company's dividends in 2019-2015 were 81.25%, 103.12%, 86.84%, 88.24%, and 71.43%.
The dividend rate is absolutely high, we all know that the high dividend rate is a guarantee for investors, and many retail investors value the high dividend of plum blossoms and the current low valuation.
If you bought a company because you valued the company's high dividends, then you have to figure out whether the company's dividends are sustainable, and you have to figure out whose pockets the high dividend cash comes from?
< h1 class = "pgc-h-center-line" > ten, and finally look at management changes and related situations</h1>
In 2009, the company was reorganized and began to operate food manufacturing business, and in 2017, the chairman and actual controller of the company was Meng Qingshan
The current chairman and general manager of the company is Wang Aijun. The change in the management of Meihua Bio is mainly due to the end of the term of office of each position in 2017.
For the management of Meihua Biology, the biggest evaluation I see is that the management is too much, and the most eye-catching thing is that the major shareholder Meng Qingshan operated the stock price in 2017 and was recently punished by the CSRC.
In addition, there is the failure of plum blossom biology in 2015, two acquisitions:
1 is Meihua's acquisition of Ningxia Yipin, a leader in the same industry
2 Is the company's original plan to issue shares to purchase Xijie's first sugar asset (asset injection of amino acid business)
These events have no impact on Meihua Bio's own business conditions, but the company's market value management and reputation are very negative.
brief summary:
Plum Blossom Biology belongs to the track is a good industry, belongs to the industry absolute leader, but the company's operation in recent years showed an attenuation trend, quantitative indicators lose more than win less, the latest data show that PE is 21.05 times, PB is 2.24.
Image source: Yiniu.com
The article was first published on the public account: Little Master Uncle
February 18, 2021
A deeply scarce soul-level public account.
------- relevant information for reference
Plum Blossom Bio 2001-2019 Annual Report
《Sina Finance Network News》
"Flush Finance"
Termination of Issuance of Shares to Purchase Assets of Xijie. Gao Zheng》
"The acquisition of Yipin strengthens the leading position of product price increases to boost future performance. Huang Fusheng》
"Threonine boom rebounded, MSG prices fell. Liu Wei / Liu Hairong》
"Meihua Biological Stock Price Manipulation Case Penalty Fall Major Shareholder Meng Qingshan Was Banned and Fined Nearly 100 Million"
"The post-breeding cycle begins to exert force, low valuation and high dividend target. Zhou Sha》
"MSG price increase contributes to the main performance increase The gradual release of Baicheng lysine production capacity. 》
"Trehalose Project Helps The Company's Strategic Extension"
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