Arowana's future

Arowana in the Super Territory

Arowana 1:1:1, this slogan of hanging fried sky, I think it has been almost 20 years, and like the natural porters of Nongfu Spring, it has become a classic in the Chinese advertising slogan classic. Today, Yihai Kerry, to which Arowana belongs, has also entered China's A-share capital market with a huge scale of twice the annual turnover of Moutai. There are often golfers who compare Arowana with Haitian, I think there is no comparison between the two, although the feeling is to provide the people with chai rice oil and salt in the kitchen, but the difference between the scale of the two is too far small ten times, the second is that one is a soy sauce-based condiment completely marketized, and the other is currently mainly rice flour grain and oil is basically controlled by the state. It is not easy to compare Arowana with Haitian's analysis methods and analysis conclusions, so that the investment logic estimates will be very different.

To fully understand Arowana, we must first clarify two aspects of the problem, one is the majority shareholder of Arowana, and the other is the product matrix of Arowana.

The first discussion is between the protagonist, Mr. Guo He, and his nephew Mr. Guo Kongfeng.

History goes back to the early 20th century, in 1909, Guo Henian's father came from Fujian to Johor, Malaysia, and together with his brothers, he ran Dongsheng Company, specializing in rice, soybeans and sugar. In the early post-war period of the 1940s, Guo's father seized the opportunity to use his connections to quickly control the entire johor food supply. By the end of the 1940s, Guo Henian's father was already a well-known wealthy businessman in Johor, and Dongsheng Company would become the bridgehead for Guo Henian and his brothers to create a huge corporate kingdom.

In 1948, Guo Henian's father died, and Guo Henian joined his brothers and cousins to form guo brothers company, inheriting the traditional business of Dongsheng company, dealing in rice, flour, beans, sugar, etc., guo Henian served as the chairman of the board of directors. When Malaysia became independent from the United Kingdom in 1957, the government urgently needed to develop import substitutions to embark on the path of economic independence. Less than five years later, Guo Henian took control of the sugar industry in Malaysia, and in 1968 he established the PPB Group, becoming the "Malaysian Sugar King". By the 1970s, Guo Brothers controlled 80% of Malaysia's sugar industry, accounting for 20% of the international sugar market at that time, and Guo Henian became the "Asian Sugar King".

After the success of the sugar industry in the 1960s, Kwok Brothers vigorously expanded its business in grain and non-staple food processing, established rice trade channels between Thailand and Malaysia and Singapore, and created a federal flour mill, which had a market share of 45% in Malaysia at that time, and opened a number of refineries, feed mills and timber mills.

Due to his long-term engagement in international commodity trade, In the 1970s, Guo Henian came forward to establish the Malaysian International Shipping Company, and later founded the Malaysian Pan Shipping Company, the Pacific Shipping Company and Leo Shipping Company in Singapore, and the Hong Kong Kelly Shipping Company, which provided great transportation support for the future Kerry Logistics.

In the early 1970s, Guo He began to invest in the real estate industry, from Rainbow Group in Malaysia to Leo Industry in Singapore, Kelly Industry in Hong Kong and Guo Industry International in the Philippines. In 1971, Shangri-La's first luxury hotel was created in Singapore, which opened the shining pearl of the crown of Shangri-La Hotel Group, and in the 1990s, Guo Henian won the reputation of "Hotel King" in Southeast Asia.

Time shifts to the 90s. Shangri-La Hotels and Resorts, a subsidiary of Kerry Group, controlled by Kwok Brothers Group, is listed in Hong Kong. Kerry Group's property investment and development in Both Hong Kong and China and the related infrastructure projects are listed in Hong Kong, which is Kerry Construction, one of the largest property investment and development companies in Hong Kong, including luxury houses, apartments, Kerry Centre office buildings, etc., and has a number of large-scale construction projects in the Mainland and Hong Kong. Kerry Construction Property and Kerry Group's warehouse warehousing, logistics, etc. have been integrated and listed, which is Kerry Logistics, which later acquired Chase International in the mainland in 2005, and the business name in China was changed to Kerry Chase, and the entire Kerry Logistics became a well-known logistics brand in Asia.

In 1974, Kerry Group, controlled by Kwok Brothers Group, was established in Hong Kong, and Chinese mainland and Hong Kong, China, became the focus of Kwok's further development in Asia. In the 1980s, Kerry Group began to invest in Chinese mainland, and its vegetable oil, grain and beverage processing series was Kerry Grains and Oils, and in 1988, it established a joint venture with COFCO to establish Nanhai Oils and Fats. After the South China Sea oils and fats, Kerry Grains and Oils launched a large-scale attack on the Chinese market within 2 years, and has made nine additional investments, establishing 8 refineries in Shenzhen, Shanghai, Guangxi Fangchenggang, Shandong Qingdao, Liaoning Yingkou, Shaanxi Xi'an, Sichuan Chengdu and other places. Except for south sea oils and fats, Kerry has not cooperated with COFCO. It was not until 1992 that COFCO reacted, confused and cultivated its biggest competitor, and also acted as a guide for the other party to enter the Chinese market, and finally announced the termination of cooperation with Kerry. During this period, Kerry Group has been investing in China in full swing, vigorously developing Kerry Construction (International Trade Centre, Kerry Centre, Shangri-La) and Kerry Grains and Oils, and coordinating the development of Kerry Logistics.

Next, the protagonist of the character turns to Mr. Guo Kongfeng. Born in 1949, the son of Guo Henian's cousin, Kwok Hung-fung graduated from the National University of Singapore and is considered by Kwok He-fon to be the most similar to him and the most business-gifted talent in the Kwok Family Kong's generation.

In 1973, Guo Kongfeng entered the federal flour of the Guo Brothers Group, and soon became familiar with the grain trade such as rice, wheat, corn and soybeans, and was soon promoted to general manager until 1991. Since 1980, Kwok Kong Fung has also been a director of Kwok Brothers Singapore, in charge of the edible oil business, and from 1989 to 1991, he was the head of Kerry Grains and Oils.

In 1991, Guo Kongfeng left Kerry Group and founded Wilmar International in Singapore together with Indonesian palm oil king Wu Shengfu, laying out the upstream plantation industry in Southeast Asia, focusing on the development of palm oil trading business, and through a series of acquisitions and expansions in Indonesia, Malaysia and China, the layout completed the whole industrial chain including palm planting, production, trade and logistics. By the beginning of the 21st century, it had grown to become the world's largest palm oil processor.

In 2000, Wilmar International introduced the international grain industry giant ADM Group of the United States to form yihai group and began to focus on china business. Yihai Group and COFCO jointly built Beihai Grain and Oil, Yellow Sea Grain and Oil and East China Sea Grain and Oil, etc., and extensively controlled or participated in COFCO grain and oil production and trading enterprises, which have continued to this day.

At the end of 2006, Guo Henian and Guo Kongfeng released their previous suspicions, Wilmar International expanded its shares in Singapore, fully acquired Kerry Grains and Oils, and merged Yihai Group and Kerry Grains and Oils in an all-round way, and the merged Yihai Kerry fully deepened the Chinese grain and oil market. ADM later acquired a stake in Wu Shengfu, and since then, Wilmar has accounted for about one-third of Kerry Group, about a quarter of ADM in the United States, and about 12% of Guo Kongfeng. And now we see Wilmar International, that is, about 90% of the A-share listed company Yihai Kerry Arowana that we need to discuss.

So far, we can basically clearly understand the major shareholders of Arowana and its past and present lives, and the controlling shareholders of Arowana are Guo Henian and Guo Kongfeng's uncle and nephew who have shocked Southeast Asia, which can be described as a stealth predator with great commercial genes, and li ka-shing, Lee Shau Kee and other bigwigs, and their families have stood firm in the Asia-Pacific region for nearly a hundred years.

Next, look at the product matrix of Arowana, it is estimated that it will also open the minds of many golfers.

In the 1980s, under the leadership of Guo Kongfeng, Kerry Grains & Oils focused on oil pressing business in Southeast Asia, creating a Arowana small package edible oil brand. In 1991, Arowana's first bottle of small package edible oil entered the Chinese market, opening up a new era for Chinese consumers to go from edible bulk oil to small package refined oil. In 1994, Kerry Grains & Oils and Qingdao Vegetable Oil Factory joint venture, peanut oil brand Orchid flower came into being. Off-topic, in 1993, while holding a stake in cofco, Guo Kongfeng also invested heavily with COFCO, which expanded Luhua's production capacity by 10 times and became the largest fragrant peanut oil brand in China. Wilmar International has also been holding shares until now, but it has not been acquired, and if it is acquired, it will become a famous sub-brand of Arowana. Subsequently, Yihai Grains & Oils launched carp brand rapeseed oil. In 2012, Yihai Kerry created the Olivieran Extra Virgin Olive Oil brand.

Arowana, orchid, carp and Olivilan should be the high-end brands of edible oil in Yihai Kerry. In order to protect the brand and lay out the market in different levels, Yihai Kerry also has a number of mid-range mass brands, which are in the wholesale market and catering market, and are also well known in the industry, including Xiangmanyuan, Yuanbao, Koufu and so on. It is estimated that many golfers are also like me, it is estimated that many years ago I was familiar with the soybean oil of Xiangmanyuan and Yuanbao brands, but I also began to study the listed companies to suddenly realize that they were all under the umbrella of Arowana.

In 1995, the state included oil and fat processing in the Grade B restricted foreign investment projects, and before Yihai Kerry had quickly completed the national layout of refining refineries in China, it had become less easy to continue to open refineries to expand the scale of edible oil production. Since then, Arowana has gradually established a production base and product brand for rice noodles. At present, under brands such as Arowana and Xiangmanyuan, there are rice and flour products of various models and specifications. In 2015, Yihai Kerry launched the Milk Jade Imperial Princess Daoxianggong Rice in the exclusive base of Baicheng, Jilin Province, and until 2018, it had strategically laid out 29 Arowana Rice Ecological Bases represented by Heilongjiang Wuchang, covering eight major rice-growing provinces in the country. Through the multi-year operating foundation of Guo Brothers Thailand and the support of the supply chain with full advantages, in 2016, Yihai Kerry built an exclusive ecological base in 10,000 acres of fertile fields in Ubon Ratchathani Province, Thailand, and Arowana launched a very high-quality Chanaran Thai fragrant rice. In 2020, Arowana successfully launched snowflake powder in the Hetao Plain, which carried out the order agriculture model of enterprise and base in Bayannaoer, Inner Mongolia, using Yongliang No. 4 wheat in the Hetao Plain, with excellent quality and strong sales growth.

At this point, it can be seen that in the past thirty years since it entered China, Yihai Kerry Arowana has methodically promoted the product matrix from oil to rice noodles, and launched more than 20 independent brands of different grades such as Arowana, Orchid, Carp, OuLiweilan, Xiangmanyuan, Yuanbao, Koufu, Milk Jade Imperial Princess, Xiang Nalan, etc., covering the multi-level demand of Chinese consumers for rice noodles and oils in an all-round way, which can be described as steady and steady on the deep basis of the whole industry chain, and is pervasive in the market.

From the above two parts of the major shareholders and product matrix content, we can basically form a basic understanding of Arowana. Although Arowana has only been listed in the A-share market for one year, its profound heritage can be extended to the strong expansion and steady operation of Malaysia's richest family in the grain, oil and rice noodle industry in the Asia-Pacific region for nearly a century, and its products have also formed a multi-brand, multi-level and high market share of the whole industry chain ecological pattern in China's grain, oil and rice noodle industry through thirty years of development, which can be described as a grain and oil aircraft carrier with super channels and super large-scale whole industry chain. This is the basic plate for our understanding of Arowana's market behavior and industry expansion, and it is also the basic logical consideration for our investment in Arowana.

Next, let's look at the operating ability and investment value of Arowana from two tactical levels. From the equity structure, it can be clearly seen that the family members of the major shareholders and the international modern management are combined with each other, the equity incentives are completely consistent, the efforts have been diligent for decades, all the long-term development of the enterprise and the provision of high-quality products as the starting point, the pattern is very large, and its business strategy and business ability do not need our research and analysis to corroborate, which is to sort out some of the rough opinions of the "law", throw bricks and lead the jade, and the personal shallow and generous laughs.

First, let's discuss Arowana's growth strategy, that is, the market space in which it is located and the growth of the company.

From the perspective of market space, if only from the perspective of the edible oil market, enterprises should not have much room for development, but the second level of rice and flour, enterprises still have a lot of competitive market and development space, from the third level of condiments and kitchen related products, enterprises have more huge imagination space. In addition, from the perspective of Wilmar International's major shareholders and Guo Brothers Industry Group, the investment in Arowana does not consider the share of the international market, which is similar to Shuanghui, and is different from Yili's imagination space.

Edible oil products are divided into three specifications: small packaging, medium packaging and bulk packaging, of which small packaging is mainly for household consumption, medium packaging is mainly for catering consumption, bulk is used for industrial consumption, and some are used for household and catering consumption. In 2019, the consumption of three specifications of oil accounted for about 33%, 31% and 36%. In the medium and long term, the food oil industry will significantly benefit from the trend of consumption upgrading, and the future improvement will be carried out from three dimensions at the same time, packaging, branding, and high-end. According to public data, the current first- and second-tier large cities, the proportion of small packaging consumption in the total consumption of edible oil has reached 60%, while ordinary cities are less than 30%, which should be the data of household consumption. Considering the changes and development of household, catering and industrial consumption, individuals predict that the proportion of small and medium-sized packaged edible oil can also increase by about 2 times, and from this point of view, the company has a more obvious ceiling at the oil level. According to public data in 2019, Arowana's small package edible vegetable oil market share was 38.4%, COFCO 12.5%, and Luhua 11.2%. It can be seen that the current oil has become the industry boss, the market share has reached about 40%, but the overall market share of rice noodles is less than 10%, and the amount of rice noodles used in the entire Chinese market is 4 times that of oil. Compared with the concentration of edible oil CR3 of more than 60%, the CR3 of rice and flour is less than 40%, the market concentration is still very good room for improvement, coupled with brand substitution, so the Arowana rice noodles market space is vast, there is still a lot of room for growth.

Yihai Kerry has strong expansion ability and genes. The rapid expansion of Kerry Grains and Oils in China from 1991 to 1993 has been discussed before, and it can be described as a gallop, and the basic layout of Kerry Grains and Oils in China has been completed quickly. Looking back at 2002-2003, Wilmar International, which introduced the American ADM, helped Yihai Kerry, during which time the roller coaster market in the global soybean market led to the almost total destruction of China's soybean crushing enterprises, and acquired small and medium-sized oil mills in China, and successively established grain and oil production bases in Yantai, Qinhuangdao, Zhoukou, Lianyungang, Fuzhou, Wuhan, Quanzhou, Changji and other second- and third-tier cities, which achieved Yihai Kerry's hegemony in the field of chinese crushing in a very short period of time. In 2006, Yihai Kerry's market share in China's soybean crushing field has exceeded 16%, and in 2018, the market segment reached 18%.

At present, Arowana has gradually penetrated in condiments and oil-derived products.

In 2015, Yihai Kerry and Taiwan Maruzhuang Soy Sauce joint venture in Taizhou, Shandong Province, Maruzhuang soy sauce was founded in 1909, is the only one in Taiwan that completely inherits the black bean, soybean two kinds of soy sauce pure handmade brewing secret recipes and processes of century-old brand. In 2019, the project was officially put into production, and the first batch of Maruzhuang soy sauce positioned for the domestic high-end market officially entered the market. Arowana invests in soy sauce and has a strong advantage in terms of sales channels and raw material costs. The main raw material of soy sauce is soybean meal, and Arowana itself is a food-grade soybean meal processor, which has long been the main supplier of well-known soy sauce manufacturers such as Haitian and Lee Kum Kee. Therefore, Arowana has a great raw material advantage in soy sauce condiments. Condiments is an industry with high channel barriers and great dependence on catering channels. Arowana has a huge network of channels, covering a wide range of high density. Arowana has established good relationships with numerous wholesale platforms and catering businesses through the sale of edible oil. Through existing channels, Arowana can quickly reach the terminal with new products, greatly reducing the cost of promotion.

In 2013, Arowana and Kellogg established Yihai Kerry Kellogg Shanghai as a joint venture, combining Yihai Kerry's supply chain advantages in grain, oil and cereals, as well as Kellogg's long history and brand advantages in breakfast cereals and children's snacks, to better promote Kellogg's products in China.

In 2017, Arowana established a cooperation with abbreviation Mali, the world's second largest yeast company, and in 2019, a yeast factory was established in Qiqihar Fuyu County, and xiangmanyuan yeast has entered the national market with Arowana flour.

In 2012, Yihai Kerry relied on the advantages of Wilmar International's strong international industrial chain, using the by-products of oil refining as raw materials, began to enter the daily chemical industry, launched the Jiejin 100 washing brand, and has now become one of the top kitchen detergents in the catering industry in wholesale shipments. In 2018, Wilmar International and Japan Lion King established a joint venture GEC to produce meS, a plant-based surfactant with excellent performance, based on high-quality palm fruit. In 2019, Yihai Kerry strategically upgraded Jiejin 100 and introduced plant-based surfactant MES, which greatly improved the green quality of Jiejin 100.

In 2021, Yangjiang Condiment was established and Guangdong Guangweiyuan Condiment was acquired. Guangweiyuan is located in Panyu, Guangzhou, mainly producing soy sauce, oyster sauce, seasoning powder and sauce and other kitchen condiments, has a long history, has won many honors such as Guangzhou famous trademark, Top Ten Well-known Brands in the Chinese industry, etc., is deeply loved in the family kitchen in southern China, and is also a very well-known condiment brand in the Chinese catering industry.

In 2020, Arowana invested in the central kitchen field, relying on the supply chain and product advantages of rice and flour grains, oils and condiments, to establish a comprehensive factory park, covering nutritious meals, bento and other specific high-quality finished and semi-finished food products. Arowana into the central kitchen, in terms of cost, quality, sales and distribution and other aspects have accumulated advantages for many years, is currently under construction in Zhejiang Hangzhou prefabricated dishes, Hebei Langfang fresh food, Shaanxi Xi'an noodles, Chongqing hot pot industry chain these 4 projects, explore the experience and then promote. With the rapid growth of the group meal and takeaway market, the gap between supply and demand continues to reflect, and the central kitchen has extremely high requirements due to heavy asset operation and cost research and development standardization, which has a unique first-mover advantage for Arowana and is expected to become a new performance growth point with great potential. But personally believe that the central kitchen that provides meals involves the field of catering operations, compared to the raw materials and products required by the catering industry, the service type is too strong, may not necessarily have a good ideal effect, relatively speaking, Arowana expands the certainty of condiments, oil and fat by-products, etc. Is stronger, the central kitchen cuts away and looks at it, and individuals do not use it as a deterministic growth space.

Therefore, in general, the gradual promotion of Arowana in the rice and flour grain and oil industry and the steady expansion of related industries have a strong strategic intention, and a simple estimate can be made on the whole. The company's growth and upward space is first of all edible oil, and there is still about doubling the space for the time being. Next is rice and flour, if you can double the current market share of 10%, and the sales capacity of rice noodles is about 4 times that of oil, you can optimistically expect to bring about 2 times the upward potential for Arowana, this rising potential is still relatively clear, 2019 data modern channel Arowana packaging flour has reached 27% of the market share, packaging rice reached 18%, the upward trend is obvious. Finally, condiments and oil-related products, these spaces are also very large, but the current penetration time is not long, and it can be conservatively estimated that the space is doubled. Combined with the ability and stability of Arowana's historical expansion, I think that within 10 years, Arowana's annual revenue will reach the level of trillions, which is a high probability event, and at the same time, from the low gross profit margin industry to the high gross profit industry, the overall net profit margin of the enterprise should be about doubled on the current basis. Overall, ten times a decade is not a dream.

Secondly, let's discuss the brand strategy of Arowana, which is of great significance for the stable development of the enterprise.

For decades, Arowana has defined a strategic and effective brand strategy, protecting the brand value of high-end brands, expanding the brand spectrum of different price levels, and establishing regionalized strong brands according to different geographical locations.

It can be clearly seen from the brand matrix that Arowana has established high-end brands such as Arowana, Carp, Chanalan, Orchid, OuLiweilan, Grandma Township Small Squeeze, Milk Jade Imperial Princess, etc., and then launched the Xiangmanyuan, Koufu, Yuanbao, Haihuang, Lily, and Jinyan mid-end mass brands in the face of fierce competition, forming a huge net, so that different levels of rice flour grains, oils and condiments in China's kitchens all fall into this net.

Arowana has a deep understanding of the diverse needs of people in the vast areas of China for food and flavor, and has established a strong regional brand according to different geographical locations. For example, Yihai Kerry Chengdu mainly produces carp rapeseed oil, carrying forward this 30-year-old local brand in Sichuan. Yihai Kerry Anhui mainly promotes small squeezed rapeseed oil in Grandma Township to cater to the flavor and folklore preferences of the Yangtze River Basin and Jiangnan region. Yihai Kerry Qingdao focuses on orchid peanut oil, digging deep into this ancient oil pressing technique with historical origins, giving orchid flower intangible cultural heritage brand value. Fangchenggang factory sells Xiangmanyuan blended oil in the southern provinces, Xi'an factory sells lily cauliflower oil in the northwest, etc., all reflect the brand strategy of Arowana, specializing in different brand industries according to the different consumption habits of various places. Judging from the existing market feedback, this brand strategy is very effective.

At the same time, Arowana has a high quality pursuit of products, especially high-end products, which is very compatible with the growing Chinese market, with the continuous growth of per capita GDP, China is moving closer from developing countries to developed countries, and Chinese consumers' quality requirements for consumer products are also constantly improving. Arowana has established a high-end status from the beginning, gradually covering the low-end from the high-end, and many products have been recognized by domestic and international authorities, interpreting the perfect quality of products for consumers.

In 2010, Arowana Plant Sterol Corn Oil won the Corning 2010 Product Innovation Award in Chicago, USA. In 2011, As the first senior member from China, Yihai Kerry joined the global EPA and DHA organization GOED, becoming one of the formulators of global EPA and DHA dietary nutrition and health standards, and Arowana's addition of deep-sea fish oil blending oil won two awards: GOED's Best Innovative Application and global deep-sea fish oil supply organization ONC Outstanding Contribution to Human Health. At the 3rd International Rice Oil Council in Tokyo, Japan, 2016, Arowana Rice Oil won the International Rice Oil Quality Award, which is known as the Nobel Prize in the edible oil industry. In 2018, Arowana Valley Victor Rice Oil won the Two-Star International Top Delicious Medal at the International Top Delicious Awards in Brussels, Belgium. In 2016, 2017 and 2018, Arowana Sesame Oil and Pepper Oil won the Gold Award of China International Condiments and Food Ingredients Expo.

In 2021, the results of the annual appraisal of the International Flavor Evaluation Institute ITI were officially announced, and in this award, which was hailed as the Oscar on the tip of the tongue, the Milk Jade Imperial Princess Wuchang Daohuaxiang No. 2 won the Rice Three-Star Excellence And Delicious Medal with 93.1 points. With only four medals and 2.4 percent of the awards, it is THE HIGHEST HONOR FOR ITI's global rice category.

In 2020, Oliviland won the gold medal in the competition for more than 1,000 olive oil brands in 27 countries at the New York International Olive Oil Competition NYIOOC, and in 2021, the largest and oldest olive oil international competition in South America, Central America and the Caribbean, the Argentine OLIVEINUS Olive Oil Competition, won the Gold Medal for Excellence with a maximum score of 97.33 points.

In 2014, at the International Oil and Fat Industry Conference in Kiev, Ukraine, Arowana Sunshine Sunflower Oil won the European Healthy Edible Oil Award, the European Dnieper River Basin has 43% of the world's black soil, rich in organic nutrition, sufficient sunshine, very suitable for the growth of high-quality sunflowers, the peoples along the river basically take natural sunflower oil as a daily edible oil. The Delta Wilmar plant in Odessa, in the Dnieper River Basin, was awarded the best source producer of Sunflower Oil in Europe at the meeting, and this plant is the base for Arowana's supply base for sunflower oil raw materials in Europe.

And so on. In 2009, Yihai Kerry spent 800 million yuan to set up a global R&D center in Pudong, Shanghai, with the project leader Being Cai Nanhai, a world-renowned plant molecular biologist and a foreign academician of the Chinese Academy of Sciences, and a number of academicians of the Chinese Academy of Sciences as senior consultants of the R&D center. At present, the R & D center has invested a total of billions of funds, with nearly 100 laboratories and more than 1,000 scientific research equipment, has more than 500 patents, more than 300 R & D personnel, more than 70% have master's or doctoral degrees, with international leading technical advantages and strong R & D capabilities. In 2018, it led the establishment of the Nutrition and Safety Research Fund with the Chinese Nutrition Society, focusing on the development of food nutrition and health industry needs, focusing on the research projects on the relationship between diet, nutrition and health, as well as food safety. In 2019, it jointly led the establishment of China's regional food nutrition innovation platform with the Chinese Nutrition Society, and extensively united universities, research institutes, hospitals and industrial chain enterprises to create an industry-university-research innovation platform integrating scientific research and development, achievement transformation to industrial production. Through highly systematic and large-scale R&D investment and R&D capabilities, we have reason to believe that Arowana will become wider and stronger on the road of excellent food quality.

From Yihai Kerry's cooperation in supply chain-related industries, we can also see Arowana's pursuit of quality, do yeast and Abbey Marley cooperation, do soy sauce and Taiwan Maruzhuang cooperation, do cereal snacks and Kellogg cooperation, do dish soap and Japanese lion king cooperation, etc., basically are strong combinations, from the product side have excellent quality genes and strong market aggressiveness.

Arowana not only holds excellent product quality, but also has super marketing capabilities, which are actually obvious to all, and a few small examples can be seen in the tube. Before the Spring Festival in 1992, Arowana drilled into the kitchen of Chinese families for the first time in small quantities through the New Year benefits of national enterprises and institutions, in the form of welfare oil, knocking out the gap in the market in one fell swoop and gaining a foothold in the market. In 1993, China's grain and oil dual regulation ended, grain and oil open supply, grain stamps into history, bulk oil prices soared, and Arowana did not raise the price of small package edible oil, but the price of small package oil and bulk oil price pulled together, so that sales rose sharply, within two years the share of Arowana in the edible oil market increased to 20%, completed the market popularization. In 2002, the 1:1:1 that has been recited so far has pushed the marketing of Arowana to the extreme, and the brainwashing advertising words have penetrated the hearts of the people and quickly occupied the mind, completely becoming the brand brand in the hearts of Chinese consumers.

Therefore, from the perspective of brand strategy, vigorously invest in product research and development, the ultimate pursuit of product quality, long-term excellent marketing level, in the market competition in the high-end product spelling technology, mid-end product spelling advertising, low-end products spelling price, these aspects to ensure that Arowana will maintain the leading edge of the industry for a long time in the future, can be described as the strong Hengqiang, with the improvement of consumer brand awareness, Arowana's brand advantage will become more and more obvious.

Familiar with the past and present lives of Arowana and its major shareholders, the various product matrix of Arowana, and the growth strategy and brand strategy of Arowana, I feel that I can complete the basic outline of Arowana's investment logic. Arowana is a growth enterprise with excellent brand power, channel power and expansion power, under the leadership of a family and management with great business genes, it will surely become a whole industry chain grain and oil and food industry aircraft carrier with a monopoly position in the market in the future, which is very worth investing, and clear certainty can be seen from the five aspects of Daotiandi general law. Naturally, if you could invest in Arowana 10 years ago, it would be better, but you can only haha!

Finally, let's talk about the comparison between Arowana and Haitian.

1. Haitian is a brand-type enterprise, Arowana is a platform ecological enterprise, doing the whole industry chain, the gap is huge. Arowana can be compared to the early Jingdong, profit is not what the current enterprise needs to pursue; and the ceiling of Haitian is more obvious, naturally it is mainly to harvest profits. Arowana is swimming in the trillion market, while Haitian is dominant in the field of tens of billions of condiments, which is basically the difference between the imperial hegemony and the division of princes. In the words of Chairman Guo Kongfeng, making oil to make rice noodles is a carrier, not to make money, because this amount is very large, with this carrier to promote condiments will be very convenient, this is the meaning of this, this is also the strategic direction of the management of major shareholders.

2, grain and oil by the state control, gross profit is basically about 10%, with a considerable barrier to entry, while facing international fluctuations in raw material commodity prices, the need for high management capabilities, otherwise it is very easy to lose.

3, channel control ability, Arowana dealers are monopoly, do Arowana can not do other, Haitian due to sales volume limits, it is unlikely to reach the level of control of Arowana. At present, the number of channels, Arowana has reached about 1.4 million terminals, and channel masters Yili and Bull are in an order of magnitude, while Haitian is about 400,000 terminals, which is slightly lower than Weilong, and there is still a big gap between the two in this regard.

4, Arowana from the grain and oil products into the condiment products, can be through the means of acquisition, can be used in the same channel to shop goods, relatively easy, and from low gross profit to high gross profit, from thrift into luxury; and Haitian wants to enter the grain and oil market from condiments, not to mention the problem of state licensing, only from the perspective of the scale of fixed asset investment are not easy to bear, than Shuanghui at that time to acquire Smithfield is more difficult than enough, and from high gross profit to low gross profit, from luxury to frugality. To take a simpler example, it is more intuitive, there are supermarkets that sell Arowana oil bundled to send Maruzhuang soy sauce, but you have no way to sell Haitian soy sauce bundled to send Haitian rice, which is the difference between mutual entry.

Sometimes the Arowana and Gree will be compared, the current revenue is about 200 billion, from the Arowana backed by the multi-industry group and the family with rich business genes to feel, Arowana has better development space and development expectations than Gree, and Gree has obviously encountered difficulties in diversified development. Haitian does not need to be compared, there is no comparison, there is no evidence that it can do better in the field of diversification. Here, I also emphasize that it is not that Haitian is not good, Haitian is naturally very bullish, but the valuation is too high! Arowana is not low, and from an investment point of view, it is not very recognized by Mr. Lin Yuan's purchase time.

Arowana's financial data does not need to be analyzed, and the golfers have discussed it almost. Regarding hedging, for this type of commodity-related enterprises, it should be classified as a normal net profit and cannot be treated as non-deductible. However, from a historical point of view, it seems that Mr. Guo Kongfeng can not catch up with the futures management level of his uncle Mr. Guo He, blindly saying that ha, in the early 90s, Guo Kongfeng came out of Kerry Grain and Oil as if he was responsible for the futures trading failure at that time, which greatly affected the profits of the enterprise that year and led to the contradiction between uncle and nephew; and in 16 years and this year, the company's hedging business has a certain degree of negative impact on the overall profit. However, looking at Guo Henian's entrepreneurial history, he gained a lot in the global sugar futures market in the 60s. This casual talk has little impact. At present, there are more professional futures experts to provide professional support, and the management led by Mr. Guo Kongfeng will also summarize the experience, believing that this part of the business will not have much impact on the overall business of the company.

Arowana sneak predator, I am still very optimistic about the long-term development of Arowana, is definitely a ten-year ten times the target, as for the purchase price, now the market sentiment is a bit exaggerated, I hope that the price-earnings ratio TTM returns to the level of about 25, the buying time is still difficult to determine Oh, fall, the more it falls, the better. To make an investment, you must be able to withstand loneliness and stick to waiting.