Government subsidies decreased and Panda Dairy Corporation(300898) profits declined. On the evening of April 17, Panda Dairy Corporation(300898) disclosed the annual performance report, which showed that in 2021, the company’s revenue increased by more than 20%, but its net profit decreased by 5.11%. In the 2021 performance forecast, Panda Dairy Corporation(300898) attributed it to “the reduction of government subsidies for the current profit and loss of the company”. In addition to the reduction of government subsidies, the decline of gross profit margin of main products is another main reason for the decline of Panda Dairy Corporation(300898) profits.
Panda Dairy Corporation(300898) set its sights on the C-end cheese business and regarded it as a new growth point of the company’s concentrated dairy products business. However, despite the gradual expansion of China’s cheese market, in addition to senior brands such as Shanghai Milkground Food Tech Co.Ltd(600882) , Briggs & Stratford, emerging brands such as miaofei and Dr. cheese have also swept the market with the help of capital, Panda Dairy Corporation(300898) it is not easy to expand profits in this field.
increasing income without increasing profit
As the “first stock of condensed milk”, Panda Dairy Corporation(300898) was listed for more than one year and fell into the situation of “increasing income without increasing profit”.
According to the annual performance report issued by Panda Dairy Corporation(300898) the company, in 2021, the company achieved a total operating revenue of 857 million yuan, with a year-on-year increase of 25.21%; The net profit attributable to shareholders of the parent company was 77.349 million yuan, a year-on-year decrease of 5.11%.
As for the decrease of net profit, Panda Dairy Corporation(300898) did not make much statement in the annual performance report. However, in the 2021 performance forecast, Panda Dairy Corporation(300898) once explained that “due to the decrease of government subsidies included in the current profit and loss of the company, the net profit attributable to the shareholders of the listed company was stable compared with the previous period”. The financial report shows that in 2021, the government subsidies included in the current profits and losses of Panda Dairy Corporation(300898) .
A detailed analysis of the performance of Panda Dairy Corporation(300898) over the years shows that government subsidies have always been an important support for Panda Dairy Corporation(300898) profit growth. According to the data, from 2018 to 2020 Panda Dairy Corporation(300898) received government subsidies of 5.766 million yuan, 5.532 million yuan and 23.912 million yuan respectively. It is reported that in 2020, the net profit of Panda Dairy Corporation(300898) whole year was 815129 million yuan, and the amount of government subsidies accounted for about 29.3% of the company’s net profit and 40.9% of the company’s non net profit deduction.
Statistics show that Panda Dairy Corporation(300898) was founded in 1996, and its main business is the R & D, production and sales of condensed dairy products including condensed milk, cheese and cream and dairy trade. On October 16, 2020, Panda Dairy Corporation(300898) was listed on the Shenzhen Stock Exchange, becoming the “first share of condensed milk”. In addition, Panda Dairy Corporation(300898) has cooperative relations with large-scale food manufacturing enterprises, such as Yuanqi forest, Xiangpiaopiao Food Co.Ltd(603711) , Mengniu Dairy, Danone dairy, Dali food, Ligao Foods Co.Ltd(300973) , Xizhilang, heluxue, Guming, yihetang, novacoffee, etc.
core product gross profit decline
In addition to the reduction of government subsidies, Panda Dairy Corporation(300898) core product gross profit margin decline is also one of the reasons for its poor performance.
From the perspective of revenue composition, the revenue of Panda Dairy Corporation(300898) concentrated dairy products, dairy trade and other products in 2021 was 542 million yuan, 254 million yuan and 61 million yuan respectively, accounting for 63.2%, 29.7% and 7.1% of the revenue respectively. Among them, the gross profit margin of concentrated dairy products with the largest proportion of revenue was 31.07%, down 3.58% year-on-year.
According to the financial report, Panda Dairy Corporation(300898) the main products of concentrated dairy products are condensed milk, and the business of cream, cheese and other dairy products is still in its infancy. During the reporting period, the sales revenue of concentrated dairy products accounted for more than 60% of the company’s main business revenue, mainly the sales revenue of condensed dairy products.
In this case, Panda Dairy Corporation(300898) tried to improve by raising the price. In December 2021, Panda Dairy Corporation(300898) announced that “in view of the continuous rise in the costs of main raw materials, packaging materials, labor and transportation of products, in order to better provide consumers with high-quality products and promote the sustainable development of the market, it is decided to adjust the outgoing price of main condensed milk related products by 3% – 10%, and the new price will be implemented on January 1, 2022”.
Shen Meng, director of Xiangsong capital, believes that “raising the product price is to restore the gross profit margin as much as possible, because the gross profit margin continues to decrease and the adjustment space of fixed costs is limited, which will squeeze the net profit. Compared with TOC, the price increase may directly weaken consumer demand, tob can absorb part of the pressure of price increase by downstream enterprises before passing on to consumers”.
However, Zhu danpeng, an analyst of China’s food industry, also said that for Panda Dairy Corporation(300898) which focuses on tob business, while improving its gross profit margin by raising prices, it may also face the risk of losing key customers Panda Dairy Corporation(300898) the main reason for the decline of gross profit margin of core products is the rise of raw material costs. Therefore, for Panda Dairy Corporation(300898) which has a high dependence on key customers, raising prices is not a long-term plan, and reducing costs and increasing efficiency is the good strategy for Changhong’s performance.
According to the financial report, in terms of Tob business, Panda Dairy Corporation(300898) highly relies on head customers and raw material suppliers. According to the data of Panda Dairy Corporation(300898) 2021 annual report, the sales of the top five customers accounted for nearly 20% of the annual sales, including Xiangpiaopiao Food Co.Ltd(603711) and so on. The total purchase amount of Panda Dairy Corporation(300898) top five suppliers accounted for nearly 79% of the total annual purchase amount, of which the first supplier accounted for 60.86% of the whole year.
fali cheese business
Panda Dairy Corporation(300898) wants to develop the C-end cheese business to create the second growth curve of performance.
Panda Dairy Corporation(300898) once said in an investment relationship activity record in August 2021: “as for the plan for the next two years, Panda Dairy Corporation(300898) will build some infrastructure based on cheese sticks at the C-end, and retail leisure cheese will be the company’s key product in the future.” In this year’s financial report, Panda Dairy Corporation(300898) reiterated that “in the future, we will continue to increase investment in R & D and application, and accelerate the introduction of new cheese products and new packaging in the field of children’s leisure retail”.
Cheese is a promising sunrise industry. According to the data of China Dairy Association, in 2020, the annual per capita consumption of cheese retail in China was only 0.084kg, which was 1.87kg in Japan and 0.53kg in South Korea; The annual per capita consumption of catering end is 0.196kg, while that of South Korea is 3kg, with a very large gap.
China’s cheese market is still in the stage of rapid development. It is expected that the share of China’s retail cheese market will reach 24.3 billion yuan by 2026.
However, the competition in the cheese industry should not be underestimated. At present, in the cheese market, there are not only senior brands such as baguiffe, Shanghai Milkground Food Tech Co.Ltd(600882) , Aishi Chenxi, but also new brands such as Dr. cheese and miaofei. Relevant data show that at present, the first echelon of the industry is mainly foreign brands Brigitte luck and domestic brands Shanghai Milkground Food Tech Co.Ltd(600882) , and the volume of cheese sticks has reached 1 billion; Dr. cheese, who specializes in “graded cheese experts”, has obtained three rounds of financing since its establishment in 2019. Miaofei obtained round a financing in July 2020 and round B financing of nearly 200 million yuan in December of the same year.
“Cheese is the next red sea for dairy enterprises to prepare for competition. Panda Dairy Corporation(300898) needs to face an environment where there is no brand in the middle and high end and the middle and low end compete with China’s top enterprises. However, the cheese market is still in the growth stage and the demand scale is still limited, which is not enough to become Panda Dairy Corporation(300898) new important performance support in the short term.” Shen Meng said.
Song Liang, an independent dairy analyst, said, “at present, the remanufactured cheese business has many brands and great market competition pressure. It is not recommended that Panda Dairy Corporation(300898) intervene in the C-end cheese business. Because Panda Dairy Corporation(300898) focusing on tob business is weak in brand publicity and market promotion, it is difficult to develop the C-end cheese market”.
Regarding the main reason why Panda Dairy Corporation(300898) the above performance did not increase revenue and how to treat the current cheese market competition, the reporter of Beijing business daily sent an email to interview Panda Dairy Corporation(300898) , but as of press time, no reply has been received.
