the leader of grain and oil industry Yihai Kerry Arawana Holdings Co.Ltd(300999) also encountered the embarrassing situation of increasing income without increasing profit.
On February 22, Yihai Kerry Arawana Holdings Co.Ltd(300999) released the annual performance express of 2021. It is estimated that the company will achieve an operating revenue of 226.225 billion yuan in 2021, a year-on-year increase of 16.1%. The unaudited revenue in Kweichow Moutai Co.Ltd(600519) 2021 was 109 billion yuan. In other words, from the perspective of revenue scale, Yihai Kerry Arawana Holdings Co.Ltd(300999) is about equal to two Kweichow Moutai Co.Ltd(600519) .
However, behind the steady growth of revenue, Yihai Kerry Arawana Holdings Co.Ltd(300999) gave investors a “dull fist”. Last year, the net profit attributable to the parent company was only 4.132 billion yuan, a year-on-year decrease of 31.1%; The net profit attributable to the parent company after deducting non recurring profits and losses was 4.996 billion yuan, a year-on-year decrease of 43.2%.
The main business of 300A {food and oil technology giant is the same as that of 999} kitchen. Since 2016, the company has maintained positive growth in revenue and net profit for four consecutive years. However, the turning point occurred in 2021. In the first three quarters of 2021, Yihai Kerry Arawana Holdings Co.Ltd(300999) revenue increased by 16.24% year-on-year to 162.725 billion yuan, but the net profit decreased by 27.68% year-on-year to 3.681 billion yuan. If calculated based on this, the net profit in the fourth quarter of 2021 was only 451 million yuan, a year-on-year decrease of about 50%.
The market reacted quickly to this report card. On the night of the release of the above express, some investors called it “performance Thunderstorm”. On February 23, Yihai Kerry Arawana Holdings Co.Ltd(300999) shares fell at the beginning of the session, once down 9%. As of the close, Yihai Kerry Arawana Holdings Co.Ltd(300999) fell nearly 5% to close at 54.36 yuan, and the share price hit a new low since November 6, 2020.
why did net profit decline
The “abnormal” performance of Yihai Kerry Arawana Holdings Co.Ltd(300999) has been revealed in the semi annual report of 2021. Compared with the double-digit growth rate of revenue and net profit in the same period in 2020, the growth rate of net profit of Yihai Kerry Arawana Holdings Co.Ltd(300999) decreased significantly in the first half of 2021. Meanwhile, in a single quarter, the company’s profitability continued to decline after the second quarter of 2021.
According to the reasons given by Yihai Kerry Arawana Holdings Co.Ltd(300999) , the price rise of raw materials, the change of product sales structure and the failure of hedging are the main culprits of the decline of its net profit. Yihai Kerry Arawana Holdings Co.Ltd(300999) said in the express that in terms of kitchen food, the production and operation cost of the company was higher than that in the same period last year due to the large increase in the cost of raw materials during the reporting period. Although the company raised the price of some products, it did not fully cover the rise in raw material costs. In addition, due to the intensification of market competition and the superposition of factors of weak consumption, the sales volume of the company’s medium and high-end retail products has been greatly affected.
However, according to a number of industry insiders, the rising operating costs may be the key to swallowing Yihai Kerry Arawana Holdings Co.Ltd(300999) profits. Data show that in the first three quarters of 2021, Yihai Kerry Arawana Holdings Co.Ltd(300999) total revenue was 162.725 billion yuan, and the corresponding total operating cost was 156.685 billion yuan, accounting for 96.29%.
Among them, the kitchen food business with product types covering edible oil, rice, flour, noodles, condiments and other categories is the core sector of Yihai Kerry Arawana Holdings Co.Ltd(300999) . In the scale of Yihai Kerry Arawana Holdings Co.Ltd(300999) revenue of nearly 200 billion yuan in 2020, this sector generated 121.202 billion yuan, accounting for 62.18% of the total revenue. In the first half of 2021, the operating revenue of Yihai Kerry Arawana Holdings Co.Ltd(300999) kitchen food business increased by 22.19% year-on-year to 65.97 billion yuan from 53.988 billion yuan in the same period in 2020, but the operating cost also increased by 23.48% year-on-year to 58.158 billion yuan from 47.1 billion yuan. In the same reporting period, the increase of operating cost exceeded the increase of operating revenue.
In this context, Yihai Kerry Arawana Holdings Co.Ltd(300999) has raised prices many times before. According to relevant information disclosure, Yihai Kerry Arawana Holdings Co.Ltd(300999) at the end of 2020 and from March to April 2021, based on various factors such as raw materials, market situation, market competitiveness and consumption power of various oils, prices were raised to varying degrees, and the overall price increase was about 10% – 15%.
“Some of the company’s products are priced and sold according to market changes, while the other part mainly meets the consumption of residents’ families. The company will handle the price adjustment problem more steadily after comprehensive consideration according to various kinds of raw materials, market conditions, market competitiveness, consumption power and other factors.” On February 23, Yihai Kerry Arawana Holdings Co.Ltd(300999) said in an interview with the reporter of the international finance news that it would continue to raise the price of relevant products as appropriate, “The company will continue to carry out product structure adjustment and product upgrading, add more products with high added value and high gross profit margin, and make full use of the advantages of comprehensive enterprise group, marketing network channel, brand and R & D, so as to reduce the impact of raw material price fluctuations on the company’s profits.”
prefabricated vegetable track
As a wholly-owned subsidiary invested by Singapore Fengyi International Group in China, Yihai Kerry Arawana Holdings Co.Ltd(300999) landed on the gem on October 15, 2020. After listing, it ranked the leading position in the A-share grain and oil processing sector due to the advantage of revenue scale, and was dubbed “Youmao”.
According to the financial report data, from 2018 to 2020, the operating revenue of Yihai Kerry Arawana Holdings Co.Ltd(300999) was 167.074 billion yuan, 170.743 billion yuan and 1949.222 billion yuan respectively. However, compared with the revenue, the net profit of the company is not rich. From 2018 to 2020, it was 5.517 billion yuan, 5.564 billion yuan and 6.001 billion yuan respectively, and the net profit margin hovered around 3.3% for three consecutive years.
At present, Yihai Kerry Arawana Holdings Co.Ltd(300999) is trying to diversify to seek growth space, one of which is the prefabricated vegetable track located in the tuyere. According to Yihai Kerry Arawana Holdings Co.Ltd(300999) , the company has more than 70 production bases in China and plans to build Fengchu central kitchen parks in Hangzhou, Chongqing, Langfang, Xi’an and other places. Among them, Hangzhou Fengchu is in the trial production stage and is expected to launch the first batch of products in the second quarter of this year. Fengchu central kitchen products will cover student meals, nutritious meals, bentos, prefabricated dishes, sauce Clean vegetables, flour products, etc.
As a subdivision track of the catering industry, at the beginning of this year, prefabricated vegetable boards attracted much attention and once became a hot spot in the capital market. According to the development report of China’s Prefabricated vegetable industry from 2021 to 2022, the scale of China’s Prefabricated vegetable market will exceed 300 billion yuan in 2021 and is expected to exceed 830 billion yuan by 2025.
Under a blue ocean, there are many entrants. The reporter noted that retail platforms, including dingdong shopping and meituan shopping, have entered this track layout before. According to the data provided by dingdong shopping, in 2021, the sales volume of all products of dingdong shopping and prefabricated vegetables increased by 300% year-on-year, and the penetration rate of orders including prefabricated vegetables in the overall orders has exceeded 40%. The person in charge of meituan’s vegetable buying and prefabrication project previously said that the growth rate of prefabrication in 2021 was fast, four times higher than that in 2020.
“At present, the prefabricated vegetable industry is in a period of ‘horse racing and enclosure’ by a large number of enterprises. With hot capital and broad space, it is a blue ocean of competition. In the long run, enterprises that can achieve high quality, low cost, standardization and meet the consumption preferences of C-end consumers will gain an advantage in the competition.” According to Zhu Yue, partner of CIC insight consulting, the key to the competition of prefabricated vegetable track in the future lies in “learning from each other’s strong points to make up for their weaknesses”, “the future development of the industry also needs to solve many problems such as consumer recognition, product planning and cold chain transportation. Only enterprises with strong product power and brand power and able to conquer consumers’ taste buds can stand out in the competition”.
