Talk every Monday: Mengniu: the first step of “creating a new Mengniu”
COFCO takes over and Mengniu opens a new era.
In 2009, COFCO group and its partners transferred 20% equity of Mengniu and became the largest shareholder of Mengniu.
In 2015, the company’s revenue declined. The following year, Lu Minfang was appointed as the president of the company, marking the beginning of a new era.
Vigorously reform and return to growth.
The core business segment of the company is divided into new business divisions operating independently such as normal temperature, low temperature, ice products and milk powder, and focuses on strengthening the construction of global high-quality milk sources.
Through the reform, Mengniu returned to the rising channel. The total revenue / net profit of the company increased from 37.3 billion yuan / 1.59 billion yuan in 2011 to 76 billion yuan / 3.63 billion yuan in 2020.
The plan of “creating a new Mengniu” will further accelerate growth.
On November 30, 2001, Niu Gensheng officially resigned as a non-executive director and a member of the strategy and Development Committee of the company. At the same time, a group of cadres led by COFCO group took office. COFCO’s control over Mengniu will be further improved, which will help it play a stronger role and further implement the group led strategy. In this context, in January of 21, Mengniu first proposed the development goal of “creating a new Mengniu in 2025” and formulated the development strategy “Five-Year Plan”.
The first report card of the “Five Year Plan” saw double growth in revenue and profit.
In 21 years, the company achieved a revenue of 88.141 billion yuan, an increase of 15.9% year-on-year; The profit attributable to owners was 5.026 billion yuan, a year-on-year increase of 42.6%.
Liquid milk revenue was 76.514 billion yuan, with a year-on-year increase of 12.9%, and terentsu accounted for half of the country. The normal temperature, low temperature and fresh milk business division actively promotes product innovation, brand upgrading and channel intensive cultivation.
The ice cream business revenue was 4.24 billion yuan, a year-on-year increase of 61%. The company’s brands such as casual, Tilan Shengxue and green mood promoted product innovation and upgrading, and opened flagship stores on e-commerce platforms such as tmall and jd.com to complete the layout of online channels. During the year, the group also acquired Alice, a leading ice cream brand in Southeast Asia, and steadily promoted business expansion in Indonesia and other places.
The revenue of milk powder business was 4.949 billion yuan, a year-on-year increase of 8.2%, mainly from Yashili. Yashili, its domestic milk powder brand, focuses on ruibu Enying powder brand, jiyourui adult powder brand, and Bellamy focuses on the “real organic” brand. Among them, Yashili achieved a revenue of 4.44 billion yuan, a year-on-year increase of 21.5%, which is the main pillar of milk powder business. Excluding the one-time impairment of Dumex trademark of 200 million yuan, Yashili realized a net profit of 119 million yuan.
Cheese business holds the leading position in the industry and occupies a high growth industry. The company actively grasps the growth opportunities of the industry and develops products such as children’s cheese stick, cheese snack and family cheese butter. In July 21, it successfully acquired Shanghai Milkground Food Tech Co.Ltd(600882) , the leading cheese producer in China, and became its main shareholder.
Market Review
In the recent week, the food and beverage index fell by + 2.9%, ranking 10th among the 28 industries in Shenwan, outperforming the CSI 300 index by 0.47 PCT. Meat products (+ 6.99%), snacks (+ 3.82%) and dairy products (+ 3.47%) performed better in the sub industries.
Top 5 gainers of individual stocks: Qinghai Spring Medicinal Resources Technology Co.Ltd(600381) , Henan Shuanghui Investment & Development Co.Ltd(000895) , Chacha food, Xinjiang Yilite Industry Co.Ltd(600197) , St Xifa
Top 5 stocks with declines: Star Lake Bioscience Co.Inc.Zhaoqing Guangdong(600866) , Yantai Shuangta Food Co.Ltd(002481) , Juneyao Grand Healthy Drinks Co.Ltd(605388) , Lanzhou Zhuangyuan Pasture Co.Ltd(002910) , Namchow Food Group(Shanghai) Co.Ltd(605339)
Investment strategy
Key recommendations: 1 Chongqing Fuling Zhacai Group Co.Ltd(002507) , Shanghai Bairun Investment Holding Group Co.Ltd(002568) , are recommended for companies that occupy a leading position in subdivided fields and have a good competitive pattern and strong ability to raise prices. 2. The milk industry giant Inner Mongolia Yili Industrial Group Co.Ltd(600887) , which is basically stable in normal temperature and low temperature milk, has made great efforts in infant powder and cheese business, and has achieved good results in the beginning of the year. 3. Ternary organism with strong downstream demand, limited upstream bargaining power and leading position in oligopoly pattern in horizontal competition. 4. For the beer industry with improved competition pattern and high-end certainty, recommend Chongqing Brewery Co.Ltd(600132) , China Resources beer and pay attention to Tsingtao Brewery Company Limited(600600) . 5. Good performance and high certainty Kweichow Moutai Co.Ltd(600519) , Wuliangye Yibin Co.Ltd(000858) , Shanxi Xinghuacun Fen Wine Factory Co.Ltd(600809) .
