The company announced the acquisition of Australia's largest dairy farm VDL company under the majority shareholder through the issuance of shares and cash payments, at a cost of 1,183 million yuan, of which 860 million were paid in shares and 323 million were paid in cash, while a fixed increase of 340 million yuan in supporting capital was raised. After the merger and acquisition, VDL first became a raw milk company, benefiting from the bottoming out of the global dairy industry cycle and becoming the purest upstream A-share raw milk company; what is more noteworthy is that VDL has the highest quality milk source base in the world. The company plans to use resource endowments and the advantages of the entire industry chain to position the domestic ultra-high-end consumer group and create the “VAN” brand ultra-high-end imported pasteurized milk. There is great room for income and profit flexibility. Compared to other domestic raw milk companies or new yogurt companies in terms of project requirements and logic, the project is more attractive, but customer development progress is worth paying attention to.
Merger and acquisition plan and price: Pioneer New Materials announced that it will issue 85.589 million shares at 1,005 yuan/share and pay 860 million yuan combined with cash payment of 323 million yuan, to acquire VDL, Australia's largest dairy farm enterprise under the majority shareholder, for a total of 1,183 million yuan. At the same time, it raised supporting capital by 340 million yuan with a fixed increase of 10.5 yuan/share. After the merger was completed, the company's share capital was 593 million shares. The asset business of this acquisition covers all upstream aspects of the dairy industry. After the merger and acquisition is completed, the company will become a dual main company in the fabric business and dairy product development.
Target company profile: VDL has 25 ranches on the Australian island of Tasmania, the best source of milk in the world, accounting for 10% of the total area of local ranches. Tasmania has excellent ecological resources, and is recognized globally as having the purest air and water. The natural high-end water and food it produces is famous all over the world, providing a guarantee for building the nobility of milk. VDL's net profit for 15 years was approximately 3.1 million Australian dollars (about 15 million yuan), and total assets were approximately 250 million Australian dollars.
Business model and profit analysis: On the basis of guaranteeing the supply of local raw milk, the company plans to open up the whole process of milk source construction, fresh milk production, import and sales, create a VAN brand of ultra-high-end imported pasteurized milk domestically. The sales model uses a membership reservation sales model to target ultra-high-end customers (36,000/year/portion, 19,000/half year), and direct delivery to homes by air from Australia (4-5 days full cold chain). We judge that early development is at a slight loss due to high transportation costs. As the order volume increases, unit transportation costs will be diluted. Profit margins are evident. It is estimated that at 50,000 copies, profit margins can reach 15% or more, annual pre-tax revenue can reach 1.8 billion yuan, and profits can reach 270 million yuan. Therefore, it is estimated that the company will do its best to develop the number of customers as quickly as possible on the basis of ensuring logistics.
Future prospects and valuation discussions: The company recently began focusing on developing ultra-high-net-worth customers in Beijing, including ultra-high-net-worth families, high-class clubs, luxury car riders clubs, and top private schools. We think that in terms of stock price logic, the first point is that it benefits from the current large-scale cyclical rise in milk prices, and the second is the potential valuation space for high-end fresh milk. If we can develop more than 10,000 customers in Beijing this year (then the current market capitalization is basically reasonable), we expect a high probability of achieving 30,000 to 50,000 copies next year (then it is expected to achieve a market value of 10 billion or more), while 50,000 to 100,000 will require further in-depth development, and we suggest developing more local products to increase the value of a single portion (which is expected to achieve a market value of 20 billion or more).
Risk warning: 1. The number of customer developments falls short of expectations; 2. Poor transportation process management causes a low customer repurchase rate; 3. The risk of restructuring failure.
