Frozen rice industry staged the Three Kingdoms

The fast-frozen rice noodles industry is currently performing the drama of “Three Kingdoms”.

In the "chaotic world" where the growth rate of the industry is declining, Sanquan, Si Nian, and Wan Chai, like Wei Weiwu in the Three Kingdoms period, together accounted for 64.2% of the country's total (September 2015 value), while Haibawang, Hippo, etc." Small local governments share the remaining market space.

With the intensified competition in the industry, the war between the "countries" has also intensified. Companies have used various methods to maintain their market share, including expansion, price cuts, acquisitions, and new business development.

Then, what is the current operating situation as the largest Sanquan food (29.4%) in the "Three Kingdoms" site? What is the current sales situation of the company's new business, Sanquan Fresh Food? In order to help investors better understand the company's operating conditions and development strategy, the reporter has repeatedly called the person in charge of the company in recent days, but the telephone has never been answered; then, the reporter sent the interview outline to the three public mailboxes left by the company. However, as of this writing, no reply has been received before the press release. Therefore, the reporter can only analyze the public information published by the company.

Industry growth slips or becomes normal

The good days for rapid growth in the fast-frozen rice industry seem to be over.

According to industry research report provided by Zhongtai Securities, in the first three quarters of 2015, the cumulative output of domestic frozen rice noodles reached 3.7937 million tons, only a slight increase of 3.26% year-on-year, while the growth rate in previous years remained at 20%.

The key driving factor of quick-frozen foods is the penetration rate of household appliances such as refrigerators. At present, the penetration rate of refrigerators in urban residents in China has exceeded 95%. Therefore, it is expected that the growth rate of consumption below 10% will become the norm.

The decline in the growth rate of the industry was first reflected in the performance of the company. Wind data shows that in the first three quarters, Sanquan’s net profit growth rate for food and homeowners was 4.6% and 5.3%, respectively. However, after deducting investment income in the third quarter, the company’s deducted net profit was a loss of RMB 30 million. .

"Cake" does not grow. If you want to grab someone else's "site," the price war seems inevitable. Since the beginning of 14 years, the company has adopted a low-price competition strategy and seized market share by lowering the ex-factory price and terminal price, thereby launching a full confrontation with Sanquan and Wanchai. In order to cope with the offensive, the whole company was forced to cut prices at the end of 2014, while Wanchai declined in market share because it did not cut prices.

Overall, the price war has a slight impact on the overall market share of the Big Three, but the bigger change comes from corporate mergers and acquisitions. For example, Sam Woo started the acquisition plan for Longfeng Dumplings in 2013. With the completion of mergers and acquisitions, there has been a certain increase in market share, but it also bears the pressure of Longfeng's loss.

In this regard, a long-term follow-up of the three full food investors said: Compared to similar consumer products industry, the more stable the industry structure, the higher the monopoly, the lower the three fees, but unfortunately the frozen rice industry should not be so happy. Sanquan and Missing are listed companies. The Wanchai Ferry is a foreign company. It is almost impossible for these three companies to acquire mergers and acquisitions. Therefore, there is not much expectation for traditional businesses.

Fresh food business is concerned by the market

In order to cope with the pressure of performance, Sanquan expanded its new business, Sanquan Fresh Food.

The so-called three-full-food, that is, users can purchase lunches directly on their mobile phones through the Sanquan Fresh App. After the payment is completed, you will receive a meal pick-up code. Then go to the nearby lunch vending machine and enter the meal pick-up code to take away your own lunch.

From the quick-freezing business to the take-away business, Sanquan's span is not small. As of November, a total of nearly 1,000 fresh food vending machines were placed on the market, basically in line with expectations. With the upgrading of the latest three generations of machines, the corresponding product varieties will be further enriched. In response, the company pointed out in its investor relations activities in November that the Sanquan Fresh Food Project has progressed smoothly and the products have been listed in Shanghai and Beijing. The company will complete the layout as soon as possible.

For the fresh food business, the brokerage industry as a whole gave a relatively positive evaluation. Among them, Ping An Securities, Zhang Yuguang, believes that fresh food actively explores Internet sales channels, and cooperation with online ordering platforms has been launched in full swing. At the same time, it is also available for the US group, Baidu’s takeaway and other platforms, and has been promoted in areas where fresh food cannot be covered. . At present, the fresh food income is about 300,000 yuan per day, and it is estimated that the income will be about 70 million yuan in 15 years.

Of course, the promotion of Sanquanxianshi also brought a significant cost burden to the company, which is one of the important reasons for the decline in net profit. In this regard, some investors believe that with the quick-frozen industry entering a period of stability, the other two have begun to reduce their profits for three fees, but the three go all out to eat, so the cost can not fall.

From a market strategy point of view, Sanquan currently presents a strategy of first-to-market profit, which will continue to be the case for some time to come?

In response, Sanquan said in an investor Q&A that the purpose of the company is profitability. We are more concerned with the long-term profitability of the company. Each company has a different stage of development. Sanquan is now at a development stage, although our market accounted for The rate is the first in the industry, but the industry has great potential. In this phase of the development of Sanquan, we value the long-term interests of the enterprise.

Judging from the trend of stock prices, the broad market decline from June to September has a greater impact on the company's share price, from the lowest 24 yuan to 9 yuan, a drop of more than 60%, and this is the largest decline since the company's listing. The average decline in the beverage industry is only 30%. In addition, due to declining performance growth, the current price of 10 yuan corresponding to the dynamic price-earnings ratio is still as high as 102 times, a higher valuation.

In general, from the perspective of traditional business, Sanquan still leads the market in terms of market share, but the competition with giants in the background of declining growth of the industry also has a significant impact on the business; fresh food business is an important part of the company's future However, at present, it is still in the development stage. Whether it will really be able to provoke a profitable banner in the future will still require the test of time and will continue to pay attention.