A leading enterprise in the domestic condensed milk industry, with a long brand history. The company was founded in 1996 and has been deeply involved in the R&D, production and sales of condensed milk for more than 20 years. The company has a deep brand heritage and a long history - the “Panda” brand was founded in 1956, and was awarded the “Zhejiang Time-honored Brand” in 2010. Currently, the company's main products include the “Panda” brand series of sweetened condensed milk, full-fat sweetened condensed milk, prepared evaporated milk, full-fat condensed milk, sweet milk sauce, mozzarella cheese, children's cheese, cheese snacks, whipped cream, etc. According to the company's prospectus, citing statistics from the China Dairy Products Industry Association, the company's condensed milk sales scale in 2018 was second only to Nestle, making it the second largest condensed milk brand in the domestic market. The company's revenue grew from 410 million yuan in 2016 to 890 million yuan in 2022 (CARG = 13.79% during the period). In the first three quarters of 2023, the company achieved revenue of 709 million yuan (YOY 10.06%) and realized net profit of 82 million yuan (YOY 104.88%).
The basic plate of condensed milk is stable, and the second curve continues to develop. Currently, the company has formed a four-category matrix of “mainly condensed milk, with cream, cheese, and plant-based as the second growth curve”, and has a series of products such as condensed milk series, evaporated milk series, cheese series, cheese series, yogurt, coconut milk series, and coconut drink.
(1) Condensed milk: In terms of condensed milk, due to consumption upgrades, there is broad space under catering standardization. At the same time, the rise of the tea and baking industry is driving the growth of condensed milk as a food ingredient. As a leading company in this field, the company will continue to increase its market share through an active, flexible and differentiated strategy in the future. The company's concentrated dairy revenue increased from 362 million yuan in 2017 to 596 million yuan in 2022 (CAGR = 10.47% during the period). (2) Cheese/cream/vegetable aspect: The cheese industry is currently in a stage of rapid expansion, and the cream industry is also in the domestic substitution stage, and will maintain a high level of prosperity in the future. The company has a layout in the field of cheese and cream. The cheese and cream sector is gradually becoming a new growth point for the company's concentrated dairy business. In addition to the continuous growth of core products such as condensed milk, sweet milk sauce, and cream, the company will continue to develop plant-based products.
The number of dealers is growing rapidly, and the C-side business continues to expand. The company's downstream customers for concentrated dairy products are mainly food processing enterprises, bakeries, restaurants, drink shops and household consumption. At present, the company has initially established sales channels covering more than 30 provinces across the country, mainly in East China and South China, and is also promoting regional expansion.
(1) The current distribution model is the company's main sales method. The number of the company's distributors grew from 88 in 2017 to 312 in 2022. The 2022 distribution model achieved operating revenue of 500 million yuan, accounting for 56.06% of total revenue (2) Downstream customers in the company's direct sales model are mainly large food manufacturing enterprises — such as Genqi Forest, Fragrant Piao, Mengniu Dairy, Weiquan Foods, Ligao Foods, Xizilang, etc. In 2022, the company's direct sales model achieved revenue of 173 million yuan, accounting for 19.38% of total revenue. In the future, the company will improve the distribution network, develop product combinations, improve product channel supply, and launch high-quality and cost-effective products. Furthermore, in terms of C-side business, the company will promote through new channels, actively launch new products to the market, and create model stores.
Risk warning. (1) Food safety risks, (2) downstream demand falls short of expectations, (3) market competition intensifies, (4) new products, new channels, and new market expansion fall short of expectations, and (5) fluctuations in upstream raw material cost prices and cost investment.