Mengniu’s “100 Billion Stall” in revenue, what are the difficulties with Mengniu’s reengineering?

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Junlebao and Bellamy are precisely the two major players in the Mengniu Milk Powder business line.

At the end of 2019, after the sale of Junlebao by Mengniu Group, Bellamy was followed by the acquisition of Bellamy.

Compare the contribution of the two brands to revenue: Bellamy contributed 1.

0317 billion yuan to Mengniu Group in 2020, while Junlebao contributed 11.
124.

In order for Bellamy to achieve the value of Junlebao to Mengniu in the milk powder field, it also needs to go through brand building, consumer awareness, channel laying, etc.

After all, the operation of a new brand requires a lot of time.
Although Bellamy is known as the "money cow for purchasing agents," it was only half a year after the acquisition that it obtained the registration license for Chinese-labeled infant milk powder formula.

Therefore, some analysts believe that the loss of Junlebao's bet on Bellamy will have a great impact on Mengniu, and it may be difficult to fill this gap within three to four years.

As for the decline in profits, Mengniu attributed it to the increase in additional costs caused by the epidemic.

Affected by the epidemic in the first quarter of 2020, Mengniu invested additional costs for epidemic prevention and control.

Due to the impact of the epidemic, Mengniu’s main source of performance, room temperature liquid milk, was only digested normally in April last year, and it has been in the state of clearing the inventory before.

Lu Minfang revealed to the media last year that the early stage of the epidemic had a very large impact on Mengniu.

The entire group was under pressure due to the receipt of all orders, including huge losses caused by powder spraying and increased inventory due to poor product sales.
Destocking is also more difficult than in previous years.
In addition, the shortage of raw milk supply, the pressure of rising milk prices, and the transportation problems caused by the epidemic may all affect the increase in the "three fees" and affect profits.

In addition, Mengniu's continuous mergers and acquisitions have also had a great impact on performance.

Although Mengniu Dairy is known as the "harvester" in the dairy industry, except for the cash cow of Junlebao, other acquisitions in recent years have not been smooth.

Just like Bellamy’s slower drive to Mengniu’s revenue, a successful M&A consumes corporate efforts, and with the increase in mergers and acquisitions, Mengniu has to face the “sequelae” of M&A: rising debt, tight cash, and low profits.

Mengniu’s debt-to-asset ratio has increased from about 40% after listing to 60% in the first half of 2020.
Although the debt-to-asset ratio for the whole year of 2020 has been adjusted, Mengniu still has two outstanding acquisitions (the second largest in Australia).
Dairy companies (LLD and Miao Ke Lan), 2021 are destined to spend money.

In addition, comparing Mengniu’s cash flow, it can be found that its investment cash flow has been mostly net outflows in recent years, used to build fixed assets and purchase companies, its operating cash income is far from supporting its investment expenditures, and “self-bloodmaking” may have emerged.
problem.

Moreover, continuous mergers and acquisitions will also bring about the risk of goodwill impairment.
After all, Yashili’s goodwill impairment has already caused Mengniu a loss, while Bellamy’s net assets at the time of the acquisition were only A$232.
3 million, and Mengniu’s 1.
46 billion.
The Australian dollar purchase price premium rate is as high as 527.
4%, and the extremely high premium differential has also brought great goodwill.

If Mengniu bet that Bellamy will still not be able to fight a good battle in 2021, the goodwill part will still be a hidden thunder for Mengniu's future performance.

Can Myco Landau become the new cheese?

Can Myco Landau become the new cheese?

Mengniu set its sights on cheese again when the constant struggles on the milk powder track and mergers and acquisitions were pending.

Because Mengniu’s cheese business grew by more than 30% in the catering channel last year, and the retail market increased by more than 130%.
It is one of the few high-growth businesses.
Mengniu’s cheese harvest has far exceeded the average five-year growth of 20% in the cheese industry by the outside world.
Rate forecast.

Just a month ago, Microcolando disclosed that Mengniu had accumulated 20.
76 million shares of Microcolando through a centralized bidding method, accounting for 5% of Microcolando's total share capital.

After this increase in holdings, Mengniu will own 9.
93% of the total share capital of Microcolumn.
In addition, Mengniu also stated that it plans to continue to increase its holdings of Microcolumdo by no less than 1 million shares in the next 12 months.

At present, the top five brands in my country's cheese industry are Baijifu, Lezhiniu, Anjia, Kraft and Microcolando.
In the promising children's cheese field, Microcolando is the first domestic brand.

After the popularity of Microcolander’s children’s cheeses, Mengniu also expanded its category from children’s cheese to the adult cheese market, greatly expanding the growth boundary of the cheese market.

Many research reports and consumer industry market analysts believe that instant cheese is a single product with potential, and its gross profit margin is also higher than that of other dairy products.
At present, the consumption and development of my country’s cheese market still rely on imported cheese to a certain extent.
According to China’s customs data, from January to October 2020, China imported a total of 106,000 tons of cheese, a year-on-year increase of 12.
7%, indicating that the domestic cheese market has huge room for growth.
Domestic consumers' demand for cheese products is increasing.

Therefore, Mengniu's holding of Microcorand is indeed using Microcorand to develop the C-end business and accelerate the filling of shortcomings in the snack cheese sector.

In 2020, the net profit attributable to shareholders of the listed company is expected to be between 55 million yuan and 75 million yuan, a year-on-year increase of 186.
01% and 290.
02%.
The sales volume of Microcolando does have an advantage.
Although Mengniu's old rival Yili also has its own cheese flagship store on Taobao, the sales volume and Microcolando are not in the same order of magnitude.

However, behind the "truly fragrant" surface of this piece of cheese, Miao Ke Lan Duo is not easy to swallow.

When we disassemble it carefully, we can find that the net profit margin of Microcolumn is not optimistic.

In 2019, the net profit margin of Microcolumn is between 1% and 2%, and the net profit margin in 2020 is hovering around 3%.
In addition, Microcolum’s sales expenses are high, accounting for nearly 30% of revenue in each quarter of 2020.
We can also see that Microcolum’s revenue increase is far less than the increase in sales expenses.

In the first three quarters of 2020, 70% of Microcolon’s sales expenses are advertising and promotional expenses.
It can be seen that Microcolon is still in the stage of burning money to promote its popularity.
When will it become Mengniu like Junlebao back then? The cash cows are still unknown.

It is not difficult to see that Mengniu’s acquisition of Miacolando is the same as the milk powder company before the acquisition.
The logic is to seize the market.
It is true that dairy products are a big market.
If you want to be an absolute giant, you must control the tracks of pure milk, cheese, yogurt, butter, and low-temperature milk.
Mengniu faces a huge cheese market, so if you eat Miao Kelan Duo, you must also consider the actual problems of "this cheese".

Hundreds of billions are overwhelming, what else besides milk source?

Hundreds of billions are overwhelming, what else besides milk source?

Why does Mengniu have such a soft spot for acquisitions? In addition to seizing the track, the most important thing is the source of milk.

my country’s milk source has never been self-sufficient.
In 2019, my country’s milk source feed rate was slightly higher than 65%, and the new consumer demand from 2008 to 2019 was 15.
8 million tons, of which 95.
5% came from imports.
Head milk companies have seized small milk companies one after another, aiming at the milk source behind them.
At present, the milk supply rate of Mongolian milk is higher than that of its old rival Yili.

For Mengniu, after taking advantage of its milk source, facing the remaining quarter of its 100 billion revenue, it still depends on its own operational capabilities for the acquired business.

The old rival Yili's operating strategy is product differentiation, relying on endogenous capabilities.

For example, Yili is a veteran in "differentiated cognition", shaping all products such as Anmushi, Classic Organic Milk, and Senamu organic milk powder into differentiated products, and the profit margins of these products are very high.
For example, Yili's classic category still had a significant gap with Bielunsu before, but after the introduction of New Zealand milk sources, Yili's competitiveness has improved significantly.
In 2019, the market share of classic and derensu has been close.

At present, Yili currently holds three "tens of billions of single products", namely Yili Pure Milk, An Muxi and Jindian, and there are 11 single products with sales exceeding 1 billion.
Mengniu can only contend with the two tens of billions of single products of Deluxe and Pure Zhen, so it needs the blessing of the next explosive single product.

Mengniu's development strategy is acquisition and industrial chain integration.

The essence of the acquisition logic is its own milk source and insufficient market occupation.
It hopes to rely on external forces to make up for its shortcomings.
Mengniu has indeed worked harder in the integration of the industrial chain after the acquisition.

From a strategic point of view, it is completely correct to control milk sources upstream and make up for shortcomings downstream.
However, at the implementation level, Mengniu must consider how to make the companies that have invested heavily in acquisitions "not hold back" before they can consider profitability.

In addition, if looking for the next hot item to compete with Yili, Node Finance believes that Mengniu’s low-temperature milk is promising.

Data show that in 2019, the market for low-temperature pasteurized milk reached 34.
3 billion, a year-on-year growth rate of over 11%, while the growth rate of normal temperature white milk during the same period was less than 2%; in 2020, Tmall's normal temperature milk sales increased by 50% year-on-year, and low-temperature milk sales This was an increase of 150% year-on-year.
According to Nielsen data, in terms of low-temperature milk (low-temperature yogurt + low-temperature fresh milk), Mengniu's market share in 2019 is more than 30%, which is about 15% higher than Yili.

Last year, "Ke Niu Le Dairy Co.
, Ltd.
" jointly established by Coca-Cola and Mengniu made everyone talk about it.
The goal of "Ke Niu Le" is to create a brand new low-temperature milk brand.

At present, Mengniu's fresh milk business segment has doubled its sales for three consecutive years, and its share has expanded by 1.
7 times year-on-year.
In the high-end fresh milk field, Daily Fresh is also firmly ranked as one of the preferred brands in the high-end fresh milk segment.

As the layout of low-temperature milk is limited by the fresh activity of dairy products and the characteristics of cold chain transportation and storage, the supply chain has extremely high requirements on shelf life, sanitary conditions, and storage conditions, such as the shortest possible transportation time.
Mengniu has been ranked first in the low-temperature yogurt industry for 16 consecutive years.
Therefore, in the battle of low-temperature fresh milk, the starting point is more advantageous than other brands, and it can naturally extend the business tentacles of low-temperature milk to further markets.
It will still bring about the effect of "stretching the radius".

Postscript: The layout determines the ending, and change brings improvement?

Postscript: The layout determines the ending, and change brings improvement?

Many institutions issued research reports that the increase in milk prices in 2021 may exceed expectations.
With the supply and demand gap of milk sources, milk prices are expected to continue to rise moderately.
As a leading dairy company, Mengniu’s falling expense ratio is expected to support the improvement of profitability.
Mengniu also has the opportunity to replicate the growth of the previous cycle and restart its performance growth this year.

For the next five years, Mengniu has enough layout.
Just as the saying "Although the layout determines the outcome, changes can bring improvement", Mengniu needs to make good use of the layout and make changes in order to create another Mengniu in 2025.
opportunity.

"Create a new Mengniu", the road is long and difficult.

Source: Node Finance

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