In recent years, in the domestic milk market that lacks new stories, adopting a cow has quickly emerged from the circle with the concept of “adopting” marketing and brand stories, and has become a new “Internet celebrity” in the domestic milk market, not only gaining traffic, but also sales.
At the same time, the adoption of a cow by a new “net celebrity” has also attracted the favor of a lot of capital. According to Tianyancha data, the company has completed 5 rounds of financing so far, with Meituan Longzhu, Dehong Capital, KKR, Gu Ming and many other capitals leading and participating in the investment.
Driven by capital, Adopting a Niu Holding Group Co., Ltd. (hereinafter referred to as “Adopting a Bull”) disclosed its IPO prospectus for the first time on July 5, and plans to list on the main board of the Shanghai Stock Exchange.
According to the prospectus, Adopt A Cow was established on July 9, 2014. It is mainly engaged in the research and development, production and sales of dairy products under the “Adopt A Cow” brand. The products include various styles of pure milk, yogurt, milk powder, cheese and other dairy products and raw milk, forming a well-known new domestic dairy product brand based on Internet online sales and gradually expanding to offline sales.
Although adopting a cow is already a well-known emerging dairy product brand in China, it is still difficult to escape the situation of increasing income but not increasing profits. According to the prospectus, the company’s revenue has increased year by year, from 865 million yuan in 2019 to 2.566 billion yuan in 2021, but the net profit attributable to the parent will decline in 2021, from 145 million yuan in 2020 to 2021. 140 million yuan per year.
With the deepening of the investigation, Times data found that the price of some products of adopting a cow in 2021 will be lower than that in 2020. In addition, the company still has many problems, such as a high proportion of direct material costs, a sales expense ratio higher than the industry average, and the largest supplier being the largest customer.
In this regard, Times Data sent an interview letter to adopting a cow on July 8.
On July 11, the adoption of a cow responded to the interview letter.
More than half of the revenue comes from pure milk, and the sales price of some products has dropped
According to the prospectus, the main products of adopting a cow include pure milk, yogurt and milk powder, and some raw cow milk is sold externally. Among them, the revenue of pure milk products has grown rapidly year by year, from 243 million yuan in 2019 to 1.428 billion yuan in 2021, surpassing the revenue of yogurt products and becoming the company’s largest source of income.
At the same time, the sales prices of some of the company’s products declined. Among them, the company’s top two products sold in 250ml of pure milk and 200ml of yogurt have an average sales price in 2021, which is lower than that in 2020. In addition, the sales volume of yogurt 200ml in 2021 will also decline significantly.
In response, adopting a cow replied, “From 2019 to 2021, the average sales unit price of the company’s main products in each period will remain relatively stable.”
Raw material costs remain high, and gross profit margins gradually decline
According to the prospectus, the direct material cost is an important component of the main business cost of adopting a cow. From 2019 to 2021, the direct material cost is 363 million yuan, 609 million yuan, and 1.059 billion yuan, respectively, accounting for the proportion of the main business cost. 72.63%, 54.69%, 59.25%.
In this regard, the company stated in the prospectus that “the raw materials such as silage corn, alfalfa, soybean meal and other raw materials required for ranch operations are mostly bulk agricultural products, and their prices usually fluctuate greatly with changes in market supply and demand”; “On the other hand, Although the company has established a good cooperative relationship with third-party cooperative milk source suppliers, if the competitive procurement of upstream milk sources by dairy companies in the same industry intensifies in the future, the company’s procurement of raw milk may experience interruption of cooperation, insufficient supply or The unfavorable situation of the sharp rise in prices will have an adverse impact on the company’s production and operation.”
At the same time, the gross profit margin of the main business of adopting a cow has gradually declined. The gross profit margin from 2019 to 2021 is 40.95%, 30.79% and 28.86% respectively.
In this regard, the company said, “After the freight in 2019 was merged into the cost of the main business, the gross profit margins of the main business in each period were 29.05%, 30.79% and 28.86% respectively, which remained relatively stable overall. The company’s main business gross profit margin in 2021 The decrease was mainly due to the increase in raw material prices and the adjustment of product prices.”
At the same time, the company replied that “the gross profit margin of the company’s main business is basically stable, and there is no obvious decline.”
Selling expenses are growing rapidly, and the selling expense ratio is higher than the industry average
On the other hand, the selling expenses and management expenses of adopting a cow have risen rapidly, among which the selling expenses have increased the most. According to the prospectus, sales expenses increased from 194 million yuan in 2019 to 483 million yuan in 2021, of which the net increase in 2021 exceeded 180 million yuan; at the same time, management expenses increased from 24.5349 million yuan in 2019 to 9800.23 yuan in 2021 The company’s research and development expenses in 2021 are only 6.8713 million yuan.
In this regard, the company said, “The company’s sales expenses account for a relatively high proportion, mainly because the company is in the field of fast-moving consumer goods, and as an emerging Internet brand, it is in the stage of rapid brand influence, and needs to continue to maintain high brand exposure and market awareness. Therefore, the company needs to maintain a high level of investment in marketing and promotion expenses to consolidate the brand’s market position and strive to become a well-known public consumer brand.”
At the same time, Times Data found that the sales expense rate for adopting a cow is much higher than the average of comparable listed companies in the industry. From 2019 to 2021, the company’s sales expense ratios are 22.46%, 18.35% and 18.82%, respectively, which are higher than the industry averages of 17.72%, 13.81% and 12.18% for comparable listed companies.
In this regard, the company said, “On the one hand, the company, as an emerging brand, is in a stage of rapid development, making full use of multi-channel resources for brand promotion to increase product market share; on the other hand, the company mainly sells through online channels, online The marketing and promotion expenses of channels are relatively large. The company mainly faces consumers directly through the e-commerce platform. The channel has less profit, but the corresponding channel costs are relatively high. Compared with the average level of the same industry, the company presents a high gross profit and a high sales expense ratio. specialty”.
Bright Dairy is both a competitor and the largest supplier, and it was also the largest customer
According to the prospectus, the sales volume of dairy products for adopting a cow in 2021 has exceeded that of most regional listed dairy companies, second only to large dairy companies such as Yili, Bright Dairy, New Dairy and Sanyuan. However, as a milk source supplement, the company also has to carry out procurement cooperation with companies such as Aoya Dairy, Shengmu Dairy, Bright Dairy, and Zhongken Huashan Animal Husbandry. Senior partners carry out outsourcing processing.
From 2019 to 2021, the company’s outsourced processing amounts to Bright Dairy were 35.5141 million yuan, 75.8203 million yuan, and 47.5799 million yuan, accounting for 61.34%, 55.36% and 57.75% of the outsourced processing.
Affected by this, Bright Dairy quickly grew from the company’s second largest supplier to the first largest supplier in 2020. From 2019 to 2021, the company’s purchases from Bright Dairy were 86.013 million yuan, 143 million yuan, and 212 million yuan, respectively, accounting for 13.91%, 11.08%, and 11.48%.
At the same time, Times data also found that Bright Dairy was the largest customer who adopted a cow in 2019, and the company’s offline sales to it reached 139 million yuan, accounting for 16.08% of the current revenue.
In response, the company replied, “The company’s main customers and suppliers have been disclosed through the “Prospectus”. During the reporting period, the company did not rely on a small number of suppliers, and the company’s core suppliers did not have an associated relationship with the company. And the relevant procurement is carried out in line with the procurement operation process and management specifications.”
Rapid Inventory Growth Hidden Risks
According to the disclosure, the inventory of adopting a cow is mainly composed of raw materials, inventory commodities and issued commodities, and the increase in the reporting period is rapid. As of the end of each period of the reporting period, the book values of the company’s inventories were 107 million yuan, 288 million yuan and 452 million yuan respectively.
In this regard, the company said, “During the reporting period, the company’s raw materials, inventory goods, and issued goods have increased significantly, mainly because the company’s business scale has grown rapidly. Inventory scale of dairy-based products.”
At the same time, the company replied that “the company has made full provision for impairment according to the actual operating conditions and the actual conditions of various assets, and the provision for impairment of various assets is sufficient”.
More than 10% of the IPO funds raised are used to supplement the company’s operating funds
According to the prospectus, the IPO of adopting a cow plans to raise 1.851 billion yuan for the construction of 3 projects and to supplement the company’s operating funds. Among them, 300 million yuan is planned to be used to supplement the company’s operating funds, accounting for 16.21% of the funds to be raised. %.
However, as of the end of December 2021, the company still has monetary funds of 1.17 billion yuan. The company has ample funds, and the necessity of using 300 million yuan of raised funds to supplement working capital is doubtful.
In response, the company replied, “With the further expansion of the business scale, the company’s operating asset capital needs will be further increased. Based on the long-term development needs, the company plans to use 300 million yuan of the raised funds to supplement working capital. To meet the company’s production and operation capital needs.”
Pre-IPO companies frequently increase capital to push up valuations
It is reported that Mr. Xu Xiaobo is the controlling shareholder and actual controller of the company. As of the disclosure of the prospectus, Xu Xiaobo directly held 38.52% of the company’s shares, and indirectly held 0.76% of the company’s shares through Hangzhou Qingniu, Hangzhou Duniu, and Hangzhou Chaoyang, and served as the company’s chairman and general manager.
At the same time, Times Data also noticed that the adoption of a cow in 2021 has frequently increased capital, which has continuously pushed up the company’s valuation.
As of September 2020, Hebei Yituniu (predecessor of the company) has increased its capital for the third time. The capital increase price is still 3 yuan/registered capital, and the corresponding company valuation is about 678 million yuan. However, in April 2021, the fourth capital increase and equity transfer of Yitou Co., Ltd. (predecessor of the company), the capital increase price and transfer price became 18.63 yuan/registered capital, and the corresponding company’s overall post-investment valuation was about 4.808 billion yuan, The valuation has increased by more than 5 times from the third time.
In this regard, the company stated that the price of the third capital increase was negotiated with reference to the book value of the company’s net assets at that time, while the price of the fourth capital increase was negotiated and determined by all parties, and the equity transfer was consistent with the price of the same capital increase.
In July 2021, the joint-stock company will increase its capital for the first time after its establishment. The capital increase price is 18.63 yuan/registered capital, and the corresponding post-investment valuation of the company is about 4.984 billion yuan. In this regard, the company stated that the capital increase price is determined with reference to the capital increase price of the company’s introduction of external investors in April 2021.
In November 2021, the second capital increase of the joint-stock company is to transfer 40.125 million shares to all shareholders with a capital reserve of 40.125 million yuan, with a par value of 1 yuan per share, increasing the paid-in share capital by 40.125 million yuan. In this round of capital increase, the company’s shareholders did not actually contribute capital.
In December 2021, the joint-stock company quickly made a third capital increase. At this time, the capital increase price was increased to 27.63 yuan/registered capital, and the corresponding company’s overall post-investment valuation was about 10.064 billion yuan. In this regard, the company stated that the price of capital increase is determined by all parties through negotiation.
In the process of frequent capital increase in 2021, the valuation of a company that adopted a cow increased from about 678 million yuan to about 10.064 billion yuan in an instant, and the valuation increased by nearly 13 times.
In this regard, the company stated, “The company’s previous equity changes have a reasonable background, the pricing basis is reasonable and fair, and the source of capital is legal. All equity changes have undergone internal decision-making procedures and completed industrial and commercial change registration, and the equity change procedures are legal and compliant. The company’s previous capital increase is true and effective, and there is no shareholding, entrusted shareholding, benefit transfer or other benefit arrangement in the equity of each shareholder, and there is no dispute or potential dispute.”
According to the prospectus, the IPO of adopting a cow plans to issue no more than 40.4706 million shares in the initial public offering, accounting for no less than 10% of the total share capital after the issuance, and plans to raise funds of 1.851 billion yuan. Based on this estimate, after the IPO, the company’s market value will reach 18.51 billion yuan.
The content on this website (including but not limited to text, pictures, audio and video), except for reprinting, is copyrighted by Times Online. Without the authorization of a written agreement, reprinting, linking, reposting or using in other ways is prohibited. Anyone who violates the above statement will be investigated for relevant legal responsibilities. If other media, websites or individuals reprint and use, please contact Mr. Ding of this website: [email protected]