Edit | Yuer Lake
出品 | 潮起网「于见专栏」
In the fast-paced 21st century, biotechnology has played an increasingly important role in various fields and is one of the most popular investment directions. It sounds like biotechnology is very lofty and somewhat unattainable, but in fact it is very close to our daily life, such as steamed buns and yeast used for bread are the main force of biotechnology.
Don't underestimate the humble yeast, if you take it to the extreme, it will also burst into infinite potential. Angel yeast, the domestic brand we are familiar with, is now the world's second largest yeast producer, and its products are exported to more than 160 countries and regions. However, although Angel Yeast has become a well-known yeast brand in the world, in the past 2023, Angel Yeast has been a little sluggish.
Especially in the recently released 2023 financial report, although the revenue exceeded 13 billion yuan, it is difficult to satisfy investors at the profit level. Is it the downturn in the general environment, the weakening of market demand, or the fact that yeast products have hit the ceiling of the industry? Perhaps the problems faced by Angel Yeast are far more than that.
The more you sell, the less you earn
On March 19, Angel Yeast's 2023 performance report was released. The revenue was 13.581 billion yuan, a year-on-year increase of 5.74%, and the net profit attributable to the parent company was 1.27 billion yuan, a year-on-year decrease of 3.86%. There are no surprises and no surprises in this palmares. After all, in the first half of last year, Angel yeast was already in a state of "increasing income but not increasing profits".
Since its revenue exceeded 10 billion yuan for the first time in 2021 and rose to the second place in the world, Angel Yeast's performance at the profit level has been somewhat unsatisfactory. From 2020 to 2023, the revenue will increase by 4.648 billion yuan, while the net profit attributable to the parent company will decrease by 102 million yuan.
In other words, the more Angel yeast sells in the past four years, the less it earns. It is not difficult to understand the skyrocketing revenue, the epidemic has matured the kitchen economy, and yeast sales have increased dozens of times. In fact, the problem of profitability has always been a big problem for Angel Yeast.
Looking at the financial report data of more than ten years, it is not difficult to find that the development of Angel yeast is rising in stages. From 2011 to 2014, 2017 to 2019, and 2020 to the present, there has been an obvious phenomenon of skyrocketing revenue and no increase in profits. The logic behind it is very simple, after rounds of factory construction and expansion, the release of production capacity promotes revenue growth, but also makes its profits stagnate.
From 2012 to the present, Angel Yeast has successively built yeast, yeast extract, organic fertilizer, plant protease and other production line projects in Egypt, Liuzhou, Guangxi, Dehong, Yunnan, Chifeng, Inner Mongolia, Yili, Xinjiang, Russia, Binzhou, Shandong, Mexico and other places. Total yeast fermentation capacity has also surged from 201,000 tons in 2013 to 370,000 tons in 2023.
It can be said that Angel yeast can get to where it is today, relying on continuous expansion and energy increase. But perhaps many people don't know that the yeast track looks small and beautiful, but it is actually an asset-heavy model. In the past two years, the construction of a 10,000-ton yeast production line needs to invest 200 million to 300 million yuan, which can be imagined how much Angel yeast needs for funds, which also affects its profitability in the short term.
At the same time, Lesaffre, the world's largest yeast manufacturer, continues to increase the domestic market, which also puts Angel Yeast under pressure. At present, Lesaffre has three factories in China: Anhui Guangming, Guangxi Danbaoli and Xianggui, with a total yeast fermentation capacity of about 100,000 tons. In 2020, it acquired 70% of the equity of Inner Mongolia Baihuisheng to further develop the northern market.
Especially in recent years, the explosion of the baking track has made Lesaffre's swallow yeast win the love of a large number of B-end customers and baking enthusiasts. Although Angel Yeast has an innate advantage in terms of channels and production capacity, and its domestic market share is far ahead, the growth rate of its domestic market has slowed down under the fading of the epidemic dividend and the close pursuit of competitors.
In 2023, its domestic business revenue will be 8.761 billion yuan, a year-on-year decrease of 1.2%. It is worth noting that this is the first time that the domestic market of Angel yeast has declined. However, the contraction of the domestic market and the aggressive capacity expansion strategy are not the main reasons for its profit not to increase, and being trapped in the sugar cycle is the long-term pain of Angel yeast.
Strength + luck cannot escape the laws of the industry
Until now, many people believe that Angel Yeast has been able to grow and develop because of luck. Under the two major outlets of home economy and baking, the performance began to break out, and it is indeed true from the financial data. However, from another point of view, Yichang, Hubei Province, where Angel Yeast is located, is not suitable for the development of yeast industry in the raw material production area, but it has become the second in the world, which is a manifestation of hard power.
However, even though it has become a large multinational company with more than a dozen factories, the cost control of upstream raw materials is a shackle that it has not been able to get rid of. The main raw material for the production of yeast is molasses, which accounts for about 80% of the cost of raw materials. Molasses is a by-product of the sugar industry, in other words, the profitability of Angel yeast is indirectly controlled by the sugar industry.
Unfortunately, the prices of sugarcane, corn, sugar beet and other crops are obviously cyclical due to the weather and planting characteristics, which leads to a 5-6 year sugar cycle in the sugar industry. The most direct impact on Angel Yeast is that the gross profit margin is extremely unstable.
For example, since 2011, the gross profit margin of its yeast and deep processing business has begun to decline, and has remained at about 30%. It began to climb in 2015, and the gross profit margin of this business stabilized at 40% from 2017 to 2020. From 2020 to the present, it has slipped again to around 30%. During the sugar cycle, Angel yeast's gross profit margin is as high as 10 percentage points.
In order to solve this problem, Angel Yeast had to buy and build its own sugar factory in the early days to alleviate the effects of the sugar cycle. Since 2013, the revenue of Angel yeast sugar business has increased from 57.73 million yuan to 1.71 billion yuan. The revenue figures are very gratifying, but during this period, Angel's yeast sugar business has suffered many losses, which has not added luster to the profit level.
Many people don't understand why Angel Yeast never gives up such a loss-making deal. On the one hand, because molasses is a solid waste that the state prohibits importing, it is obviously unrealistic to rely on imports to solve the shortage of molasses.
On the other hand, the role of the sugar mill is not to contribute to revenue, but to make sacrificial strategic investments, form strategic complementarities with the yeast business, reduce the cost of upstream molasses, and thus achieve the overall benefit of the company.
However, with the increasing production capacity of yeast, the supply of raw materials for sugar mills is only a drop in the bucket. Since 2021, Angel Yeast has started to build a hydrolyzed sugar deep processing production line in an attempt to reduce its dependence on molasses. As of 2023, Angel Yeast has three hydrolyzed sugar production lines with a production capacity of 450,000 tons and is running at full capacity.
Although it seems that hydrolyzed sugar can fundamentally solve the sweet problem of Angel yeast, in fact, hydrolyzed sugar can only replace molasses at this stage and is suitable for some products such as Saccharomyces cerevisiae and feed yeast. It remains to be seen when molasses will be completely replaced, and what will be the market effect of yeast produced by hydrolyzed sugar solutions. In other words, for a short time, Angel yeast is still trapped on molasses.
Which is the optimal solution?
For investors, there are often two types of companies that are preferred. The first is "small and beautiful" with a large space for development; the second is "big and strong", with a stable foundation. However, the current Angel yeast is stuck in between. When the revenue is only a few hundred million or billions, it is easy to double the performance. However, when the revenue reaches the order of 10 billion, it will often hit the bottleneck, and it is difficult for the performance to grow further.
If molasses is a long-term problem, finding new growth points is the main task of Angel Yeast at this stage. From the current point of view, diversification and overseas are still the main theme of its development, but it is worth worrying that these two directions are not small challenges for Angel Yeast.
As early as the 90s of the 20th century, Angel Yeast launched the "Zhiduoxing" brand to enter the nutrition and health care products track, and in 1997, it launched "Xiwang" milk to open the road to the development of dairy enterprises. In 2007, he founded "Angel Newt", focusing on the track of maternal and infant nutrition. In 2009, it acquired Hongyu Plastic Industry to lay out the packaging track. Diversification has allowed Angel Yeast to play tricks, but in fact, its main revenue contribution is the yeast deep processing business.
From 2013 to 2021, the revenue of dairy products business only increased by more than 20 million yuan, and the scale has not exceeded 65 million yuan, which is only a public welfare business; although the revenue of the sugar industry has reached 1.71 billion yuan, its role is a strategic service; although the shareholding of Hongyu Packaging Materials has just landed on the Beijing Stock Exchange, its revenue in 2023 will only be 651 million yuan, and there is a downward trend.
In the health care product track, although Angelnut's sales are gratifying, it is still difficult to compare with brands such as Tomson Beijian and Kangenbei. Therefore, in terms of products, the core growth point of Angel yeast is still yeast, and more accurately it is yeast extract.
Yeast extract is abbreviated as YE, which is used in soy sauce, seasonings and other fields to increase the salty taste. In today's advocacy of less salt and more flavor, there will undoubtedly be a larger market space, and Angel yeast is the world's largest supplier of YE. However, it remains to be seen whether YE can become the darling of the condiment market and trigger a change in the track.
As for going to sea, Angel Yeast is very forward-looking. As early as 2010, the company built a factory in Egypt, and in 2015, it opened a second overseas factory in Russia. In the past two years, Angel Yeast has set up subsidiaries in the United States and Germany respectively to lay out the North American and European markets.
The layout of overseas markets has been improving day by day. In 2023, its foreign business revenue will be 4.786 billion yuan, a record high. Whether in terms of revenue growth or gross profit margin, it has surpassed the domestic market. In particular, the Egyptian factory, with a profit of up to 210 million yuan in 2023, has become the main core of Angel Yeast's performance growth.
Although the overseas market has great potential, it also faces multifaceted challenges. First of all, the turbulent situation abroad and the complex business environment have made the profitability of its Russian factory worrying. Secondly, the popularity and popularity of Angel Yeast in overseas markets are certainly not as high as Lesaffre and British Union Marley, and brand marketing and channel laying are the problems that Angel Yeast needs to solve in the future.
epilogue
Unconsciously, Angel yeast, which is essential for every household, has gone from the country to the world. From the dry yeast used for steamed bread to the fields of feed, winemaking, condiments, nutrition and health, step by step. Although it has achieved the ultimate in the yeast track, the development logic behind it is a big investment and a small return.
In the process of development, any enterprise will always encounter growth problems. Yeast has a wide range of applications, how to find the precise product direction, expand the new application scenarios of yeast may be the top priority of Angel Yeast, and I also hope that Angel Yeast, as a domestic product, will break the shackles of molasses as soon as possible and no longer worry about profitability.