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Public company info - Dali Foods Group Company Limited , 03799.HK
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Dali Foods Group Company Limited, 03799.HK - Company Profile
Chairman Xu Shihui
Share Issued (share) 13,694,000,000
Par Currency Hong Kong Dollar
Par Value 0.01
Industry Packaged Foods
Corporate Profile Business Summary: The Group was principally engaged in the manufacture and sale of food and beverage in Mainland China. Performance for the year: In 2019, the Group’s revenue reached RMB21.375 billion, representing a year-on-year increase of 2.5%. In particular, the revenue of household consumption segment increased year-on-year by 41.6%; the gross profit of household consumption, snack food and ready-to-drink beverage segments were RMB1.316 billion, RMB3.795 billion and RMB3.336 billion, respectively, representing year-on-ear increases of 35.6%, 1.1% and 1.5%, respectively. The Group’s overall gross profit margin was 39.7%, representing an increase of 1.1 percentage points as compared with the same period last year; profit before tax was RMB5.146 billion, representing a year-on-year increase of 8.3%; net profit increased by 3.3% year-on-year to RMB3.841 billion, with a net profit margin of 18.0%. Business Review Household Consumption Business Household consumption business consists of soy milk brand DouBenDou and short shelf-life brand MeiBeiChen, which primarily satisfies the main meal needs of the consumer group. Since the household consumption business is characterised by repeated purchases, huge market capacity, high brand loyalty and so on, the Group can fully utilise its integrated advantage. The Group has formulated RMB10 billion sales development plans for soy milk and short shelf-life bread business, respectively, making them one of the main drivers of the growth of the Group’s future results. Sales revenue of the household consumption business increased by 41.6% from RMB1.876 billion in 2018 to RMB2.657 billion in 2019. Soy Milk Since its launch, Doubendou has won the recognition of both consumers and the industry, and has successfully become a leading brand in the industry. In 2019, Doubendou’s brand power and the operation of household consumption channels have drastically improved. At present, emphasis is laid on high-end products with high price tags and modern channels of first-and second-tier cities. In the future, its penetration will further improve as the product lines expand. Given the existing traditional perceptions of soy milk held by some customers, who had lower expectations for the quality and pricing of soy milk consumed in a breakfast scenario, the Group has offered generic products with high cost-performance ratio to complement the product lines since the second half of 2019; in respect of distributors’ resources, the Group focuses on strengthening the development of breakfast shops and food distribution channels according to consumers’ habit. It is believed that with the gradual introduction of these measures, the Group will extend its presence to the general consumer group whose primary concern is high cost performance, which will expand the consumers’ base and foster the progress of packaged soy milk industrialisation. Looking forward to 2020, Doubendou will mainly improve brand power and explore consumer groups. In respect of product strategy, Doubendou will continue to focus on plant nutrition value, introduce new flavour and nutrition elements to further enrich its product line, and gradually develop derivative products such as flavoured soy milk and plant-based yogurt; in respect of market cultivation, the Group will further explore household consumption market, holiday gifts market and food and beverage market to enrich consumption scenario, and build around Doubendou to expand the business scale of plant-based protein beverage. With regards to brand building, Doubendou has adopted more sophisticated promotional strategies to strengthen the leading brand image of plant-based protein beverage. By implementing the above measures, Doubendou will continue to lead the market, and progress steadily towards the strategic goals of the Group. Short Shelf-life Bread The short shelf-life bread market in the PRC has huge growth potential, with its market size potentially reaching tens of billions of RMB. Currently, the market landscape is hardly concentrated, mainly comprising regional and local factories as industry players. The Group captured the opportunity and fully entered the short shelf-life bread business of the Meibeichen brand in 2019. Leveraging the Group’s comprehensive advantages, the Group had made substantial progress in the first year of operation. 52 SKUs were introduced, winning consumers over with products of high quality, rich nutrition and diverse tastes; with completed distributor deployment in core markets, the number of sales terminals has reached nearly 80 thousand and production capacity has been released in an orderly manner following the growth of sales scale and key indicators such as daily allocation rate at terminal, and rate of returned goods has gradually optimised. Looking forward to 2020, Meibeichen will increase its coverage of core provincial capital cities and key prefecture-level cities, and significantly increase the penetration rate of channels, further boost various business indicators, and achieve a rapid increase in sales revenue by increasing the number and density of sales terminals, expanding and optimising transportation routes, and improving the efficiency, of logistics and distribution. Snack Food Business Snack food business comprises bakery business under Daliyuan brand, potato chips business under Copico brand and biscuit business under Haochidian brand. With the improving living standards, consumers’ pursuit of a healthy and happy lifestyle has been integrated into the trend of consumption upgrade. The Group captures the change of the market, upgrades product line with an emphasis on nutrition, health and happiness and continues to explore new niche markets. Given the effects of resource allocation and team adjustment, sales revenue of the snack food business dropped from RMB10.407 billion in 2018 to RMB10.154 billion in 2019, representing a decrease of 2.4%. With the completion of team adjustment and the introduction of new products, sales trend gradually improved in the second half of 2019. Bakery Daliyuan, with its well established brand advantage, still maintained its leading market share as the number one bakery brand in the PRC. In 2019, Daliyuan’s R&D efforts on products resulted in sales acceleration, and Daliyuan developed various new products such as pineapple bun, ice cream pie and qiaokechun, upgrading the brand with higher quality, more advanced technique and brand-new tastes. Looking forward to 2020, Daliyuan will continue to enrich product lines, stably improve brand awareness and maintain a stable development. Potato Puffed Food Copico is a leading local brand producing potato chips in the PRC and enjoys a good market reputation. In 2019, the Group made appropriate adjustments to its product portfolios, the emphasis of which was on fresh-cut potato chips, so that the products would be well suited to consumers’ need for healthiness. In respect of sales channels, Copico had a comprehensive presence on e-commerce platforms as fresh-cut potatoes with various small packages were put on the market in order to attract new consumers. In terms of flavours, Copico continued to launch different unique flavours relating to Chinese food and pop culture. As for brand image, the IP co-branded packaging for young consumers in the target consumer group will be developed and marketed in respect of the packaging upgrade of products. The aforesaid initiatives will further strengthen Copico’s shares in the potato puffed food market and maintain its leading position. Biscuit In 2019, Haochidian Biscuit accelerated its effort in introducing new products. The newly launched “Beiyouxing” and “Ritech” were positioned in the fast-growing children food market and high-end soda biscuit market, respectively, and they continuously penetrated submarkets with improved product positioning. Jiang Pai Cookies, a new product, was the first jam-filled cookie product in Mainland China, boosting the brand with its healthier ingredients and brandnew flavours. Ready-to-drink Beverage Industry Ready-to-drink beverage industry mainly consists of Hi-Tiger energy drinks, Heqizheng herbal tea and other beverage businesses. The branded products under the ready-to-drink beverage industry are diverse in terms of development phases, therefore, the Group has adopted varied business strategies accordingly so as to increase their market shares while maintaining profitability. In general, the ready-to-drink beverage industry faces severe market competition and is susceptible to macroeconomic factors and fluctuates accordingly. The sales revenue of the ready-to-drink beverage industry dropped by 2.1% from RMB7.294 billion in 2018 to RMB7.142 billion in 2019. Energy Drinks China’s energy drinks market continues to develop rapidly and remains the most attractive product category in the beverage industry. Due to the slowing down of the entire market and intensifying market competition, Hi-Tiger recorded a slower growth. The Group will continue to improve the properties and brand image of Hi-Tiger energy drinks, solidify its unique advantages, and comprehensively upgrade its brand positioning. For example, the Group carried out an integrated brand promotion campaign with focus on sports events IP by marketing the products as “The Official Energy Drinks of 2019 FIBA Basketball World Cup”. Looking into 2020, Hi-Tiger will continue to strengthen its channel penetration and sales terminal expansion by implementing precise advertisement placement and marketing practice targeted at relevant consumption scenarios of energy drinks. Herbal Tea The herbal tea market in 2019 showed a lacklustre growth, but the Group’s herbal tea business maintained its market share in the face of challenges. Since Heqizheng currently enjoys a solid brand recognition, the focal point of its marketing strategy has shifted to the connection between the brand and traditional Chinese culture, with a view to creating a deeply embedded brand image for authentic herbal tea. Looking ahead in 2020, Heqizheng will rearrange its resource allocation, sort out its sales system, and strive for a growth in sales. Prospects: 2020 will be unprecedently challenging for China’s consumer market. The domestic outbreak of COVID-19 and the external trade tension will deal a major blow to its macroeconomic growth. In the face of macroeconomic challenges, the Group’s long-standing strategy of steady operation and the foresighted industry planning are believed to be helpful in coping with such challenges while maintaining a healthy and steady growth and continuing to create values for its shareholders. In respect of industry strategy, the Group will focus on three major industries, namely, household consumption, snack food and ready-to-drink beverage, and carry out strategic planning for each industry in a pragmatic manner. In terms of product strategy, the Group will aim at different sub-markets and continue its development in innovative products with diversified product lines. Meanwhile, the Group will optimise resource allocation and improve the Group’s brand portfolios. With new consumption pattern and trend on the horizon after the epidemic, the Group will adjust its sales channels and relevant strategies in a timely manner and develop new sales channels and marketing approaches that coincide with the new consumption pattern. The Group will further enhance the efficiency of sales channels and tighten its control over sales terminals, thereby increasing its market presence. Furthermore, the Group will continue to strengthen its e-commerce team to proactively explore businesses in e-commerce. The Group will accelerate the development of online business, work closely with different platforms by resource binding, and expand new businesses. The Group has been committed to enhancing corporate governance, optimising production process and lifting product quality in order to further increase the Group’s product competitiveness with consolidated and expanded market shares. The Group will adhere to prudent financial management policies, maintain ample cash flow and a sound financial position. While strengthening the Group’s own growth, the Group will continue to explore any opportunities for mergers and acquisitions and external cooperation. Looking forwards, the Group will continue to produce quality products under a pragmatic yet proactive corporate culture. The Group will keep the Group’s faith to offer more delicious and healthy products for the Group’s customers. The Group will continue to strive for enormous returns for the Group’s shareholders, and forge ahead to new achievements.

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