Recently, Anhui Laoxiang chicken catering Co., Ltd. (hereinafter referred to as "Laoxiang chicken") officially disclosed its prospectus and plans to be listed on the main board of Shanghai Stock Exchange, Guoyuan Securities Company Limited(000728) as a sponsor. This means that rural chickens began to sprint for the "first share of Chinese fast food".
fearing the impact of the epidemic, raised 1.2 billion to continue to "open stores"
In 2003, Shu Congxuan, founder of rural chicken, opened the first store called "Feixi old hen" in Hefei, Anhui Province, operating catering services represented by the signature dish "Feixi old hen soup". In 2012, the brand of Feixi old hen was upgraded and renamed "hometown chicken". By the end of 2016, there were more than 350 rural chicken stores in Anhui. In 2017, rural chickens settled in Nanjing and Wuhan, went out of Anhui and distributed across the country. In 2018, local chicken acquired some stores of "Wuhan Yonghe", further accelerating the pace of national development. At present, stores are located in Beijing, Shanghai, Shenzhen, Anhui, Jiangsu, Hubei, Zhejiang and other places. Since the establishment of the brand, rural chicken has more than 1000 fast-food restaurants across the country, and continues to develop at a high speed.
This time, Laoxiang chicken plans to issue 63.53 million new shares and raise 1.2 billion yuan. The investment projects are carried out around the main business. The Laoxiang chicken east China headquarters project will help to improve the production capacity of the company's central kitchen; The new catering store construction project will help to improve the national store layout, expand and strengthen the main business and enhance the company's market share; The data informatization upgrading construction project helps to strengthen the company's intelligent management level. Among them, 475 million yuan is used for the construction of hometown chicken east China headquarters, 510 million yuan is used for the expansion of catering stores, and 215 million yuan is used for the construction project of data informatization upgrading.
It is worth mentioning that in recent years, affected by the epidemic, large chain catering enterprises have taken measures such as closing stores to reduce expenses and reduce costs, but rural chickens have bucked the trend.
According to the prospectus, from 2019 to 2021, the number of rural chicken stores was 769, 890 and 991 respectively, increasing year by year. Even in the first quarter of 2022, which was seriously affected by the epidemic, it seems that rural chickens will not be affected. According to the data, as of May 16, the national stores of rural chicken covered 33 cities in 12 provinces (including municipalities directly under the central government), reaching 1380, but the 1380 stores were highly concentrated in Anhui, Jiangsu and Hubei provinces. According to the plan, in the next three years, rural chickens will open 700 Direct stores in 10 key cities such as Shanghai, Nanjing, Suzhou, Shenzhen, Beijing, Wuhan, Hangzhou, Hefei, Wuhu and Lu'an.
rapid expansion, rapid rise in debt ratio and obvious capital pressure
The results brought by the rapid expansion are quite significant. From 2019 to 2021, the rural chicken achieved revenue of 2.859 billion yuan, 3.454 billion yuan and 4.393 billion yuan respectively, and the scale of enterprise revenue expanded year by year. But at the same time, its profitability has weakened. From 2019 to 2021, the company's net profit was 159 million yuan, 105 million yuan and 135 million yuan respectively; The net profit margin on sales has also declined all the way from 2019, from 5.57% to 3.06% in 2021, almost halving.
(increase income but not profit)
At the same time, the gross profit margin of the company also decreased year by year. From 2019 to 2021, the gross profit margins of rural chickens were 19.02%, 17.28% and 16.56% respectively. In this regard, the local chicken said that the main reason was the rising cost of main raw materials, labor costs and the impact of the epidemic. It is not difficult to see that although the rural chicken is ambitious, its development as a catering enterprise is still limited to a certain extent under the epidemic. According to the data, from 2019 to 2021, the number of Direct stores reduced by rural chickens was 43, 63 and 114 respectively.
(local chicken stores in recent three years)
The performance is under pressure, the financial data has also appeared, and the company's liabilities have risen sharply. From 2019 to 2021, the current liabilities of rural chickens were 405 million yuan, 766 million yuan and 1.2 billion yuan respectively. Among them, accounts payable amounted to 187 million yuan, 288 million yuan and 434 million yuan, accounting for 45.21%, 37.32% and 20.28% of the total liabilities respectively.
(from fellow chicken prospectus)
In this regard, the explanation given by the company is that it has maintained a good business cooperation relationship with suppliers in production and operation and accumulated a good business reputation. Most suppliers provide the company with raw materials and related engineering equipment by means of delivery before collection, and give the company a certain credit period.
(total liabilities have more than quintupled in three years)
However, the reporter noted that from 2019 to 2021, the total liabilities of rural chickens were 414 million yuan, 771 million yuan and 2.14 billion yuan respectively. In three years, the liabilities increased more than five times. This undoubtedly shows that its capital pressure is obvious, and the explanation of the company also confirms this. Laoxiangji said that the increase of the company's total liabilities at the end of 2020 compared with 2019 was due to the increase of the company's borrowings and accounts payable from banks. The increase of the company's total liabilities at the end of 2021 compared with the end of 2020 was due to the increase of lease liabilities and non current liabilities due within one year due to the company's implementation of the new lease standards for accounting leased real estate.
(asset liability ratio increases year by year)
In addition, the reporter noted that from 2019 to 2021, the asset liability ratios of rural chickens were 23.41%, 34.03% and 50.10% respectively, showing an overall upward trend. Compared with the same industry, its debt ratio has also changed from lower than the average level of the same industry to much higher than the average level. At the same time, compared with the same industry, the low gross profit margin is also an inevitable problem for rural chickens. Over the past three years, although the overall profit of the catering industry has declined, the company's comprehensive gross profit margin is still lower than the average value of the comprehensive gross profit margin of comparable listed companies.
challenges: insufficient production capacity, single financing channel and high concentration of market sales area
As a chain catering brand, the local chicken will inevitably face competition in the same industry if it wants to seek greater development. Laoxiang chicken also admitted that at present, the company's business scope is mainly distributed in Anhui, Shanghai, Jiangsu, Hubei, Beijing, Guangdong, Zhejiang and other regions, so its main competitors in the same industry are other fast-food catering enterprises in the same region, such as Yum China Holdings Co., Ltd., golden arch (China) Co., Ltd., zhenkung Fu Catering Management Co., Ltd., Lao Niang uncle catering Co., Ltd.
Yum China has the exclusive operation and authorized operation rights of KFC, Pizza Hut and Taco Bell in the Chinese market, and fully owns the brands of Xiaofeiyang, Huang Jihuang and coffii & Joy chain restaurants. In the list of top 100 catering enterprises in 2020 released by China Cuisine Association, yum China ranked first. Golden arch, that is, McDonald's, also ranks in the forefront of the industry in terms of popularity and acceptance. It ranks third in the list of top 100 catering enterprises in 2020 released by China Cuisine Association.
To compete with these strong competitors with perfect supply chain, higher brand awareness and more perfect industrial model development, rural chickens have to face many challenges. Insufficient production capacity and single financing channels are more prominent problems.
At present, the breadth and depth of the company's sales channel coverage are difficult to meet the market demand, and the production center is facing the problem of insufficient production capacity. At the same time, in many years of operation, the financing channels of rural chicken are bank loans and the accumulation of enterprises' own profits, and the financing channels are relatively single. The new construction of the company's central kitchen and the expansion of direct sales network all need a lot of financial support. The capital scale has become one of the bottlenecks restricting the company's long-term development. At present, relying only on bank loans and profit accumulation can not fully meet the company's development needs. Insufficient funds and single financing channels have become the bottleneck restricting its rapid development.
(rural chicken has high regional concentration)
In addition, as a local and regional brand, it is unknown whether the native chicken starting in Anhui can obtain acceptance in different regions with obvious taste differences, such as in Anhui Province. This is not difficult to find in its financial report. At present, the sales area of local chicken in China is mainly east China and central China, of which East China is the most important sales area. The sales amount of products in each year during the reporting period accounted for more than 89%, and the sales area showed a certain degree of concentration. Among them, since the company's production and processing base is still mainly located in Hefei, Anhui Province, limited by the sales radius of fresh and short-term guaranteed food, the proportion of income from Anhui market from 2019 to 2021 has always been at a high level, accounting for 82.01%, 79.97% and 70.65% respectively. Therefore, the company still has the market concentration risk that its operating income mainly comes from Anhui.
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