Wen | Fang Lu
Editor| Zhang Shuo
More than three months after successfully landing on the A-share capital market, JuneYao Health (605388, the first share of lactic acid bacteria beverages. SH) is about to sell water across borders.
JuneYao Health announced on December 7 that it intends to carry out new business of mineral water as an important strategic layout. A person in charge of the board secretary office of JuneYao Health revealed to AI Finance and Economics that JuneYao wanted to do "high-end mineral water" this time, but the person did not introduce how much a bottle of water was priced. On the issue of water source selection, the person only said that "it is currently selected in Hubei".
After the news of mineral water was released, boosted by this news, JuneYao Health's stock price rose 9.99% to 21.69 yuan / share on December 7. According to the analysis of the flush, the future market may continue to rush higher kinetic energy.
JuneYao Health, which is firmly determined that "the future development of the mineral water industry has broad prospects", can it get a share of the cake in the fiercely competitive water market?
Crack the product structure single
It is understood that JuneYao Health intends to set up Shanghai JuneYao Natural Mineral Water Company (tentative name, subject to industrial and commercial approval, the registered capital does not exceed 90 million yuan), and said that the purpose of this move is to "seek new business growth points, further broaden the company's product line, meet the health needs of consumers, improve the company's competitiveness, and enhance the influence of the company's service brand.".
At the beginning of the listing, there were views that JuneYao Health product structure was single, and the follow-up growth was worrying. JuneYao Health has also emphasized in the prospectus that there are risks in the relatively single product line. JuneYao Health said that "if the external environment of this series of products deteriorates in the future, it will adversely affect the company's operations."
According to the data, in the three years from 2017 to 2019, the sales revenue of JuneYao Healthy Lactic Acid Bacteria Beverage reached 1.134 billion yuan, 1.257 billion yuan and 1.188 billion yuan respectively, accounting for 99.02%, 97.71% and 95.37% of the company's total main revenue.
On the one hand, JuneYao Health believes that this is a "less and fine" product layout, which can ensure that it can improve production efficiency, reduce costs, strengthen management and promotion effects, but on the other hand, JuneYao Health also believes that it needs to "resist the market uncertainty faced by the relatively single product series" and will launch a richer product line at the "right opportunity".
According to the third quarter report of 2020 previously released by JuneYao Health, the net profit attributable to the owners of the parent company in the first three quarters of this year was 197 million yuan, a year-on-year decrease of 33.84%; the operating income was 710 million yuan, a year-on-year decrease of 27.41%; and the basic earnings per share was 0.54 yuan, a year-on-year decrease of 34.94%. Previously, JuneYao Health predicted revenue of about 1.027 billion yuan in 2020, down 19.33% from 2019; predicted that the net profit attributable to shareholders of the parent company in 2020 was about 248 million yuan, down 17.79% from 2019; and predicted that the non-net profit attributable to the shareholders of the parent company in 2020 was about 2.040 billion yuan, down 18.79% from 2019.
Perhaps, under the pressure of a single product and a double decline in revenue and profit, the announcement of entering the mineral water market is the appropriate "opportunity" for JuneYao Health to launch a richer product line.
Chinese food industry analyst Zhu Danpeng also told AI Finance and Economics: "Mineral water is the fastest growing beverage category in the past three years, with the popularization of health knowledge, the Chinese people just need to continuously improve the quality of mineral water, in this case, JuneYao layout of mineral water direction is not wrong." ”
What are the prospects for the mineral water industry? Tianfeng Securities report quoted Euromonitor data as saying that the annual output of China's packaged water industry has ranked first in the world, but there is still a gap with several major developed countries in per capita consumption, and even less than 1/5 of Germany's per capita consumption. Even compared with South Korea, which has the same food culture habits as our country (Japanese tap water can be directly drunk), there is still room for doubling the per capita consumption of packaged water in China.
Consultancy Frost & Sullivan expects China's bottled drinking water market to expand at a rate of 10.8% per year and reach 337 billion yuan by 2024.
The mining of gold has been highly mature mineral water market, can JuneYao Health make up for the shortcomings and develop mineral water into a new wheel to drive performance?
The technical threshold is low and the operating risk is high
Ye Tan, a well-known financial commentator, said in an interview with AI Finance and Economics: "Mineral water (industry characteristics) is a high brand power, there is no threshold at the technical level, JuneYao has done milk drinks before, plus JuneYao has airlines and other businesses, you can sell (mineral water) to its own internal field first." ”
Founded in 1991, JuneYao Group is a modern service enterprise focusing on industrial investment, and has formed five major business sectors: air transport, financial services, modern consumption, education services and scientific and technological innovation. In September last year, JuneYao Group and China Eastern Airlines Group and its subsidiaries China Eastern Airlines and Juneyao Airlines have upgraded from commercial partnerships to strategic partnerships, officially opening a comprehensive cooperation of "equity + business".
However, from the perspective of a larger consumer market for mineral water, Zhu Danpeng believes that making mineral water requires brand precipitation and customer stickiness, and the population that pays more attention to mineral water beverages is concentrated in first- and second-tier cities, while JuneYao's healthy consumer population is "mainly in the third, fourth, and fifth-tier markets", so there are three major non-integrations of "market, crowd and channel". In addition, the players who enter the field of mineral water are giants such as Nestlé, Coca-Cola, and Master Kong, and in comparison, JuneYao, which joins the mineral water battlefield and claims to be a high-end mineral water, has a higher operating risk.
According to Zhu Danpeng's analysis, JuneYao's healthy milk drink sector is "not doing very well", coupled with the company's strength "is not very strong", premature diversification of categories is a greater risk for JuneYao. Secondly, he believes that JuneYao does mineral water interlaced like a mountain, with fewer advantages. For example, Ipoh pure water does well but does not make drinks as well. Therefore, even if it is a beverage product under the same major category, the operation mode of the sub-category is not the same, and the playing style is different. Therefore, JuneYao Health layout mineral water project, the trend is not wrong, but looking at its comprehensive strength, "I am not optimistic."
Although the technical threshold of the mineral water market is not high, it is also an industry with a reef in the depth of the water, and it is not uncommon for enterprises to touch the reef in recent years. According to reports, in November 2013, Evergrande tried to enter the mineral water market, invested 6 billion yuan in advertising, enhanced brand awareness, and only completed sales of 1.09 billion yuan in fiscal 2014, with a loss of 2.37 billion yuan, followed by other advertising investments, about 4 billion yuan.
Can JuneYao's attempt at mineral water avoid Evergrande's detours? Ye Tan said that mineral water is a low threshold, capital-intensive industry, mainly rely on marketing capabilities and brand capabilities, "everyone makes mineral water, indicating that the mineral water market profits are very thick, it depends on everyone's management ability (can keep up), whether the market recognizes, not to say that you want to do high-end, the key is to see the resource matching degree and brand power." ”
It is not difficult to find that more and more large brand enterprises have entered the high-end mineral water industry, and at the same time, imported bottled water has also begun to seize China's high-end water market. For new entrants, whether it is to grab market share or build brand recognition, there is no small difficulty.
It is undeniable that high-end bottled water is showing a high-speed growth trend in the Chinese market. Zhu Danpeng previously predicted that high-end mineral water will enter the "real" supply and demand boom, the capital market for high-quality mineral water projects continue to heat up, high-quality mineral water will usher in another high-speed growth, the expected growth rate is not less than 12%.
This is also the main reason why JuneYao Health's stock price rose after the announcement of the high-end water news.
Is the mineral water market overvalued?
After JuneYao Health announced the news of entering the mineral water market, it also attracted the market's renewed attention to Nongfu Spring, the "printing machine of nature".
The soaring stock price and market value of Nongfu Spring since its listing may also become a model for JuneYao Health's cross-border water sales reference.
Nongfu Spring (09633. HK) jumped to the national bottled water sales champion in 2014, and in 2018, it stunned the market with its impressive results of annual revenue of more than 17 billion yuan and net profit of 3.616 billion yuan. Relying on 2 yuan a bottle of mineral water, the net profit of Nongfu Spring exceeds the revenue of Master Kang, which is several times its unified. In 2019, the net profit of Nongfu Spring was nearly 5 billion yuan, of which the gross profit margin of bottled water was as high as 60.2%.
According to the data, Nongfu Spring, Yibao and Baishishan are listed as the top three in China's pure water market with a market share of 26.4%, 20.9% and 9.6%, and the same familiar Wahaha brand has a market share of less than a quarter of Nongfu Spring.
On September 8 this year, Nongfu Spring officially landed on Hong Kong stocks with an opening price of HK$39.8 per share, with a total market value of HK$4,453 (about RMB392.4 billion), and the total market value since its listing once exceeded HK$500 billion. As of the close of trading on December 7, Nongfu Spring's share price rose slightly by 0.24% to HK$42.6 per share, with a total market capitalization of HK$479.1 billion. Its founder Zhong Sui's value has also risen, surpassing Ma Yun and Ma Huateng many times in the Forbes real-time rich list to become China's richest man.
Compared with the enthusiasm of the capital market, there are also views that the stock price of Nongfu Spring has seriously deviated from the reasonable range, the valuation is too high, and there is a bubble. In addition to the leading market share of bottled water, Nongfu Spring's other diversified products are lagging behind other brands.
Some analysts also pointed out that as far as the product itself is concerned, Nongfu Mountain Spring Water does not have much added value, in addition to the main business mineral water and a part of the tea business, the rest is a small share of juice, coffee and other businesses, and the gold content of its product matrix is not high.
According to the data of Nongfu Spring's semi-annual report, in the first half of this year, Nongfu Spring achieved a total revenue of 11.54 billion yuan, compared with 12.309 billion yuan in the same period last year, a year-on-year decline of 6.21%; the net profit was 2.864 billion yuan, compared with 2.877 billion yuan in the same period last year, a year-on-year decline of 0.43%.
In the case of both revenue and profit decline, whether Nongfu Spring can continue to maintain a high stock price depends on its actual operating ability.
For latecomers such as JuneYao Health, the myth of capital created by Nongfu Spring is difficult to replicate.
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