The company announced the acquisition of VDL, the largest dairy company in Australia, owned by major shareholders by way of share issue and cash payment, with a consideration of 1.183 billion yuan, of which 860 million was paid by shares and 323 million by cash, and an additional 340 million yuan was raised at the same time. After M & A, VDL, first of all, as a raw milk company, benefited from the bottoming out of the global dairy cycle and became the purest upstream raw milk company in share A; what is more noteworthy is that VDL has the highest quality milk source base in the world, and the company plans to make use of resource endowments and the advantages of the whole industry chain to locate domestic ultra-high-end consumer groups and create "VAN" brand ultra-high-end imported pasteurized milk, with great flexibility in income and profit. In terms of project requirements and logic, compared with other domestic raw milk companies or new yoghurt companies, the project is more attractive, but the customer development progress is worthy of attention.
Merger and acquisition plan and price: pioneer Xinliang announced that 85.589 million shares issued at 10.05yuan per share paid 860 million yuan combined with cash payment of 323 million yuan, with a total consideration of 1.183 billion yuan to acquire VDL, the largest dairy farm enterprise in Australia, with a fixed increase of 340 million yuan per share. After the completion of the merger and acquisition, the company's share capital is 593 million shares. The asset business of this acquisition covers the whole upstream of the dairy industry, and after the completion of M & A, the company will become a dual main company of fabric business and dairy product development.
Company profile: VDL has 25 farms in Tasmania, Australia, the best milk source in the world, accounting for 10% of the total area of the local pastures. Tasmania's ecological resources are extremely superior, with the purest air and water recognized in the world, and its natural high-end water and food are famous all over the world, providing a guarantee for the creation of milk aristocrats. VDL15's annual net profit is about A $3.1 million (about $15 million) and total assets are about A $250 million.
Business model and profit analysis: on the basis of ensuring the local raw milk supply, the company plans to open up the whole process of milk source construction, fresh milk production, import and sales, and build the VAN brand super-high-end imported pasteurized milk in China. The sales model adopts the member customized sales model to locate ultra-high-end customers (36000 / year / copy, 19000 / half year), and it will be delivered directly to the door by air from Australia (4-5 days). We judge that the pre-development is in a state of slight loss due to the high transportation cost. with the increase of customized quantity, the unit transportation cost will be diluted and the profit space will be revealed. The profit margin can reach more than 15% at 50,000 copies, and the annual pre-tax income can reach 1.8 billion yuan. The profit can reach 270 million yuan, so it is estimated that the company will develop the number of customers as fast as possible on the basis of logistics protection.
Future outlook and valuation discussion: the company recently began to focus on developing ultra-high net worth customers in Beijing, including ultra-high net worth families, senior clubs, luxury car clubs, top private schools and so on. We think that in terms of stock price logic, the first point is to benefit from the theme of the current large-cycle rise in milk prices, and the second is the potential valuation space for high-end fresh milk. If more than 10,000 customers can be developed in Beijing this year (then the current market capitalization is basically reasonable), we expect that there is a higher probability of achieving 30,000-50,000 copies next year (it is expected to achieve a market capitalization of more than 10 billion), while 5-100000 copies will take a longer time for in-depth development. and we suggest that we develop more local products and increase the value per unit (which is expected to reach more than 20 billion).
Risk tips: 1, the number of customer development is not up to expectations; 2, the transportation process management is not in place leading to low customer repurchase rate; 3, the risk of restructuring failure.