Economic Observer reporter Ye Xinran In mid-January, under the influence of the concept of “pre-made dishes”, the stock price of Babie Foods reached a historical high of about 40 yuan per share. However, in late January, the stock price of Babie Foods fell all the way, and the stock price continued to decline after the release of the performance forecast. trend. The news of external mergers and acquisitions did not bring much boost to the stock price. In March, the stock price of Barbie Foods was still hovering around 30 yuan per share. On March 4, the opening price of Babie Foods was 31.35 yuan per share, slightly lower than the issue price.
Why hasn’t the expansion brought a boost? How do you view the target of Babi Foods?
early shot
Did not wait until April, Babi Foods (SH: 605338) shot.
On February 25, Babi Foods released an announcement on the progress of foreign investment, and started the equity acquisition of Texiang Zhongmao, the subsidiary of the breakfast chain brand Haolike and Zaoyidian in Wuhan. Texiang Zhongmao is valued at 30 million yuan, and Babi Foods plans to acquire a 75% stake in Texiang Zhongmao for 22.5 million yuan.
According to the announcement issued by Babi Foods in January 2021, the second half of April this year is the end of the performance inspection of Texiang Zhongmao. The reason for the advance, the company stated in the announcement, because the agreed corresponding performance and financial indicators have been basically clear, it can be reasonably foreseen that in order to speed up the company’s market expansion in central China, the development policy and goals of central China in 2022 will be determined as soon as possible.
The companies that did not see the target in the disclosure completed the performance agreement ahead of schedule. According to the announcement, as of December 31, 2021, Texiang Zhongmao achieved a revenue of 51.0717 million yuan and a net profit of -1.0409 million yuan. The prerequisites for the equity acquisition signed by the two parties are: the total estimated sales in the last 12 months (April 2021-April 2022) is not less than 65 million yuan; the accumulated net profit after deduction is positive.
At the same time, it was disclosed that Texiang Zhongmao had total assets of 25.1843 million yuan, total liabilities of 21.2252 million yuan and net assets of 3.9591 million yuan.
According to the data of December 2021, there are a total of 461 stores under the brands of “Hao Li Ke” and “Zao Yi Dian”, and 174 Babi stores. It is worth noting that the brand stores of “Hao Li Ke” seem to have declined during the reporting period. According to the news in March 2021 disclosed on the official website of Babi Foods, Babi introduced that the Holike brand is a chain store brand in Wuhan, which mainly sells food and beverage products such as steamed buns. The number of franchised stores has exceeded 500.
There is no detailed disclosure for another brand, Zaoyidian. Last year, after Babi Foods released its foreign investment announcement, some investors asked on the interactive platform: Zaoyidian shows that there are only about 10 chain stores, and they have not yet reached a scale. Babi Foods said that this foreign investment is a prudent decision made by the company from the perspective of long-term development, and the company has conducted sufficient and necessary feasibility studies on this investment. At present, searching on the map and review websites, Zaoyidian shows that the number of stores is still more than ten.
In response to the specific consideration of the early equity acquisition, whether the Holiike store has declined, and why the acquisition should be earlier, the reporter’s call to the investor of Babi Foods has not been answered. As of press time, the interview letter has not been answered.
Need blood urgently?
Before disclosing the progress of the investment, Barbie Foods disclosed its 2021 performance forecast. The announcement shows that the net profit attributable to the parent company of Babie Foods in 2021 is expected to be 305 million to 315 million yuan, a year-on-year increase of 73.82%-79.52%.
It is worth noting that half of this profit is contributed by Dongpeng Beverage. The net profit generated by Babie Foods’ indirect holding of Dongpeng Beverage shares through Junzheng Investment is about 140 million to 150 million yuan. Therefore, compared with the same period last year, the non-net profit of Barbie Foods in 2021 will only increase by 12.42%-20.17% year-on-year.
To explore the real Babi food, we need to get rid of Dongpeng beverage. Taking the 2021 semi-annual report as an example, the net profit of Barbie Foods increased by 279.04% year-on-year, while the non-net profit increased by 45.7% year-on-year.
Judging from the previous data, the franchise expansion process of Barbie Foods has slowed down significantly. From 2017 to 2020, the number of stores of Barbie Foods was 2,331, 2,641, 2,915 and 3,089 respectively. Babi Foods pointed out that due to the prevention and control of the epidemic, roads or communities were blocked for a long time, which had a greater impact on store operations, and some stores were forced to suspend business and withdraw from the alliance.
Moreover, the company’s sales are concentrated in East China. In the third quarterly report of 2021, the revenue of East China region accounted for more than 90%. According to the 2020 annual report, Barbie has 2,735 franchisees in East China, accounting for more than 88%.
At the same time, the average revenue of Barbie Foods stores is also decreasing. In 2017 and 2018, the average revenue of a single store remained above 330,000 yuan, while it fell to 314,900 yuan in 2019 and 263,100 yuan in 2020.
And if more than 600 stores of Texiang Zhongmao also list Babi Foods, the situation of Babi Foods walking on one leg in the East China market will be improved.
On January 20, 2021, Babi Food announced that it plans to sign the Investment Cooperation Agreement with four natural persons including Wang Yong and Wang Zhulin. The counterparty of the transaction will set up Texiang Zhongmao Company, and within 3 months, all the assets and business related to the “Haoliike” and “Zaoyidian” brands will be restructured and injected into the target company. The performance observation period is from April 21, 2021 to April 20, 2022.
Before the end of the observation period, Babi Foods launched the acquisition. It was originally expected to complete the equity delivery in May 2022. It can be seen that the performance of Babi Foods in the first quarter of 2022 deserves attention.
Standardization and National Expansion
Beginning in 2021, established catering brands such as Wufangzhai and Laoxiangji have successively submitted prospectuses, and some emerging ramen brands have also been frequently favored by capital; in 2022, Yang Guofu and Rural Ji will start the IPO, and the catering market is booming. approaching. When talking about restaurant chain brands, standardized management and national expansion are two inescapable themes.
According to Zhang Xinyue, an analyst at Mob Research Institute, standardization is one of the highlights of Babi Foods on this track. Zhang Xinyue said that only with a standardized management system can supply chain capabilities and product quality be guaranteed, which is the foundation of brand incubation and multi-brand operations.
At present, Babi Foods has established central factories in Shanghai, Guangzhou and Tianjin. The Tianjin factory was put into use at the end of 2019, while the capacity utilization rate of the Tianjin factory in 2020 is only 2.26% for pastries, 20% for fillings, and 28% for the Guangzhou factory. Corresponding to the production capacity is the proportion of sales. In the third quarter of 2021, the revenue of the South China market accounted for 6.14%, and the North China market accounted for 2.14%.
On the one hand, the capacity utilization rate of the East China factory exceeds 100%, and on the other hand, the capacity utilization rate of the South China and North China factories is very low. In this case, Babi needs to continue to build new production capacity in the East China market. The announcement revealed that Babi Foods’ new factory in Nanjing will be completed by the end of 2022.
In terms of expansion, to conquer the central China market, Babi Foods did not follow the method of building a central factory to pave the way for expansion. Zhang Weilin, chief analyst of the retail and social service industry of Toubao (Shanghai) Research Institute, pointed out that the production capacity of Babi Foods’ existing central factory cannot reach the central China region. It is a more suitable choice to achieve rapid expansion with local brand influence, with good synergy effect.
Among them, there is also a key question, do local franchisees choose Hoi Kee or Barbie Foods? Both provide breakfast noodles, and there is no obvious difference in price. In terms of brand competition, will there be a relationship between one and the other? How to handle such a relationship?
Zhang Xinyue said that such an expansion method requires attention to the risks of diversification and the strategic risks after the integration of resources. Because the cultures, values, goals and internal management capabilities of the two companies are different, post-merger operations require the companies to have greater internal management capabilities and standardization capabilities. In addition, the strategy formulation after resource integration is also more important, and how to achieve the differentiated and healthy development of the three brands requires long-term consideration.
multi-dimensional competition
An insider of a catering chain brand told reporters that the business of catering stores is simply understood in two aspects: reducing costs and increasing efficiency. First, how to reduce costs, the high cost of rent, raw materials, and personnel in the catering industry makes it difficult to increase gross profit margins; secondly, how to increase efficiency, such as the problem of cross-period operation, how to make use of idle time.
Talking about the issue of cross-period operation, the reporter visited Shanghai and found that the steamed buns with the concept of “night buns” began to appear, which is another differentiated segment in the large category. Through the search, it was found that most of the operating hours of this brand store lasted from 12:00 noon to the early morning. Such brands have internet celebrity attributes and capture young people in the nightlife.
The battle of brands is equal to the battle of minds, and when such new consumer brands emerge, the battle of steamed buns in the minds of consumers becomes complicated.
In addition to brand competition, Barbie Foods also faces competition from convenience stores in terms of ready-to-eat. Taking Shanghai as an example, the China Chain Store & Franchise Association’s “2020 China Convenience Store Development Report” shows that there are 6,430 convenience stores in Shanghai, and most of them supply fresh food products. In addition, some local Shanghai convenience store brands are creating an unmanned breakfast retail scene, that is, placing an unmanned breakfast cabinet in the office area to supply hot food such as steamed buns and soy milk.
The above-mentioned industry insiders pointed out that breakfast is a consumption scene for quick decision-making. For consumers, it is easier to make positive decisions when they can see the real object. But the Babi steamed buns are all in the steamer, so it is difficult to stimulate the purchase.
Although Babi Foods did not open up a night scene, it opened up another growth curve with its fresh-keeping category and group meal business. On multiple online platforms, Babies has launched fresh and ready-to-eat retail products. In terms of group meals, the proportion of sales of Babi Foods is increasing. In 2019, the sales revenue of Babi Group Meals was 114 million yuan, accounting for 10.72% of the total revenue. In the first three quarters of 2021, group meal revenue was 142 million yuan, accounting for 14.59%.
Group meal customers mainly include various catering chain stores, convenience stores and unit canteens. Babi Foods said that from the current point of view, the demand for Chinese-style pastry and quick-frozen food in group meals has just begun to release, and the future market space is broad.
It is true that convenience stores that compete with Barbie stores can become Barbie’s B-end customers, but the question arises. The above-mentioned industry insiders pointed out that how much role can group meals play in brand building? Will it further squeeze the gross profit margin?
In conclusion, when evaluating catering targets, cost reduction and efficiency increase are the key, but product power, brand power, technology and supply chain capabilities need to be supported. Zhang Xinyue pointed out that in addition to standardizing the management system, the brand building ability is also very important for catering enterprises, and it must also combine product innovation at the same time. Zhang Weilin also pointed out that research and development of products suitable for local tastes according to local conditions is the key to the company’s geographical expansion and expansion. In addition to research and development, it is also necessary to ensure excellent product quality, which also requires strong production technology and supply chain capabilities to do support.
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