” Shanghai Milkground Food Tech Co.Ltd(600882) as the leading brand in the industry, it will not take the initiative to launch a price war.”
On March 25, Shanghai Milkground Food Tech Co.Ltd(600882) ( Shanghai Milkground Food Tech Co.Ltd(600882) . Sh, Shanghai Milkground Food Tech Co.Ltd(600882) ) held the 2021 annual performance presentation meeting. Chai Xiu, vice chairman and general manager of Shanghai Milkground Food Tech Co.Ltd(600882) made the above statement.
Earlier, on March 24, Shanghai Milkground Food Tech Co.Ltd(600882) released its annual report for 2021, saying that during the period, it realized an operating revenue of 4.478 billion yuan, an increase of 57.31% year-on-year (compared with the same period of the previous year), better than expected; The net profit attributable to the shareholders of the listed company (net profit attributable to the parent company) was 154 million yuan, a year-on-year increase of 160.60%, lower than the previously expected 165 million yuan.
As of the closing on March 25, Shanghai Milkground Food Tech Co.Ltd(600882) ( Shanghai Milkground Food Tech Co.Ltd(600882) . SH) closed down 1.83% to close at 35.86 yuan.
no price war, normal temperature cheese stick made in Guangzhou
Cheese, a segment of the track, is constantly attracting new players. Chaixiu promised at the performance presentation that Shanghai Milkground Food Tech Co.Ltd(600882) has the responsibility to maintain the stability of the price and will not take the initiative to launch a price war. “The company firmly believes that the competition is all-round, and it can not occupy the market simply by relying on the low price strategy.”
However, chaixiu also admitted that the cheese industry is in its infancy, and the penetration rate is not high compared with mature categories. Therefore, Shanghai Milkground Food Tech Co.Ltd(600882) will continue to carry out category education and brand promotion in the future, and is willing to invest more in category education. Chai Xiu said that the company will invest expenses more accurately and effectively, and the expense rate is expected to gradually decline in the future.
According to the annual report, Shanghai Milkground Food Tech Co.Ltd(600882) 2021’s net profit attributable to the parent company decreased significantly in the fourth quarter, while the annual sales expenses increased by 63.08% year-on-year, reaching a new high. Kuai Yulong, director and chief financial officer, said that the company increased the investment of advertising promotion and channel expenses in the fourth quarter to prepare for the Spring Festival hot season in 2022, so the marketing expense rate increased compared with the first three quarters.
In September 2021, Shanghai Milkground Food Tech Co.Ltd(600882) launched the new normal temperature cheese stick, and its performance attracted market attention Shanghai Milkground Food Tech Co.Ltd(600882) said that the scale effect of cheese products was obvious, coupled with the upgrading of low-temperature cheese sticks and the launch of new products at room temperature, driving the gross profit margin of cheese business to increase by 3.14 percentage points to 48.51%.
How does room temperature cheese stick develop differently? Chai Xiu believes that the company follows the idea of “refining at low temperature and expanding at normal temperature”.
“Low temperature (product) can maintain better taste and properties, but limited by the limitation of low-temperature cold chain, (low-temperature refining) attaches importance to the display of single point and the improvement of single point effort.” Chai Xiu explained that “expanding at normal temperature” means constantly sinking the channel and hoping to have more terminal sales scenarios.
Shanghai Milkground Food Tech Co.Ltd(600882) main products, tuyuan annual report of 2021
Shanghai Milkground Food Tech Co.Ltd(600882) did not disclose the market response of normal temperature cheese stick in the annual report and performance description meeting. In this regard, Shanghai Milkground Food Tech Co.Ltd(600882) explained to surging journalists that it was a trade secret and inconvenient to publish. Last December, Shanghai Milkground Food Tech Co.Ltd(600882) once disclosed on the investor interaction platform that the normal temperature cheese stick products launched by the company have been put on the market one after another.
In terms of channels, Shanghai Milkground Food Tech Co.Ltd(600882) last year made great efforts to develop dealers and retail terminals, or the performance of the sinking of new channels at room temperature.
The annual report shows that cheese and liquid milk products are mainly sold through distribution, which is also the main sales channel of Shanghai Milkground Food Tech Co.Ltd(600882) and the distribution revenue accounts for about 73.9% of the total revenue. As of December 31, 2021, the company had 5363 dealers, compared with 2626 at the end of last year, an increase of 104% year-on-year; Retail terminals increased rapidly from 290000 in 2020 to Shanghai Pudong Development Bank Co.Ltd(600000) last year.
Previously, Shanghai Milkground Food Tech Co.Ltd(600882) once said in the investor interaction platform that the company’s offline retail channels mainly include national and regional supermarkets such as Carrefour, Yonghui and Suguo, as well as outlets such as convenience stores and mother and baby stores.
Shanghai Milkground Food Tech Co.Ltd(600882) ranks first in the market share of cheese industry. According to the household sample group of Kaidu consumer index, Shanghai Milkground Food Tech Co.Ltd(600882) ranked first with a market share of 30.8% in the sales of Chinese cheese brands in 2021. According to euromointer’s statistics, Shanghai Milkground Food Tech Co.Ltd(600882) ranked first in the brand market share of China’s cheese retail market in 2021 with 27.7%.
Data source: Euromonitor, tuyuan company’s 2021 Annual Report
cheese products to be distributed in China
In 2021, China’s downstream commodity prices continued to be under pressure and profits continued to rise.
Taking the liquid milk business as an example, the annual report disclosed that the operating cost of the liquid milk business has increased by 9.31% year-on-year due to the rise in the price of raw milk; The operating cost of cheese products rose sharply year-on-year by 51.54% to 1.717 billion yuan. Previously, according to the interim results of fiscal year 2022 disclosed by Fonterra cooperative group, the average cost of raw milk in the first half of the fiscal year increased by nearly 30% year-on-year.
Referring to the pressure of raw materials, Shanghai Milkground Food Tech Co.Ltd(600882) Board Secretary Xie Yi said that the main raw material of the company’s cheese products is imported foreign cheese, which is less affected by China’s milk price.
“The company also plans to use Chinese milk sources as raw materials to produce cheese in order to cope with the more changeable international supply situation.” Xie Yi said that at present, the prices of foreign raw materials are also rising. The company will respond to the rise of supplier prices by refining supply chain management, expanding procurement sources, broadening supplier channels, and hedging, foreign exchange locking and other means.
Shanghai Milkground Food Tech Co.Ltd(600882) will cost pressure be passed on through price increase Shanghai Milkground Food Tech Co.Ltd(600882) last November, the company said in the investor interaction platform that the company has always attached importance to the reasonable pricing of products. Product pricing is a systematic problem, which is affected by many factors and relevant policies of the company. The company will be market-oriented, comprehensively consider the price of raw materials, product price competitiveness, market supply and demand and other factors, and timely adjust the product price system.
It is worth noting that Xie Yi also said that the repeated epidemic had a certain impact on the company, the logistics and transportation of raw materials and finished products was not smooth, and the terminal passenger flow was greatly reduced. Xie Yi expects the company’s production and operation and downstream demand to resume after the end of the epidemic.
Inner Mongolia Mengniu Dairy (Group) Co., Ltd. (hereinafter referred to as “Inner Mongolia Mengniu”) is the largest shareholder of Shanghai Milkground Food Tech Co.Ltd(600882) and their business integration progress has also attracted much attention.
Xie Yi said that according to the agreement between the two sides, Mengniu will take the company as the only operating platform for the global cheese business, and inject the milk and cheese business of Inner Mongolia Mengniu and its controlled enterprises, including the trade of cheese and related raw materials (i.e. butter, vegetable oil, cream and cream cheese), into the listed company within two years.
Shanghai Milkground Food Tech Co.Ltd(600882) official website information shows that the company, formerly known as Guangze Dairy Co., Ltd., was founded in Jilin in 2001. In 2015, the company wholly acquired Shanghai Milkground Food Tech Co.Ltd(600882) (Tianjin) Food Technology Co., Ltd. and Danone Shanghai factory. It was officially listed in 2016, established the business direction with cheese as the core, and became the only A-share listed company in China with cheese as the core business.
