Yili not only sells milk, but also sells water! 740 million investment in Changbai Mountain natural mineral water
Inner Mongolia Yili Industrial Group Co., Ltd. (600887.SH) announced the closing of the afternoon, saying that the new Yili Changbai Mountain natural mineral water drink project, the project investment amount is 743 million yuan.
Yili said that in order to realize the corporate vision of “becoming the most trusted health food provider in the world” and enhance its competitiveness, the company chose to enter the mineral water industry. Euromonitor data shows that in 2017, China's bottled water market sales reached 105 billion yuan, and it is expected to have a compound annual growth rate of 9.5% in the next five years, which is one of the high-growth beverage categories. Mineral water is an important driving category for the growth of the bottled water market, and the market development prospects are improving.
Changbai Mountain Natural Mineral Water Drink is implemented according to the “Company 2018 Annual Management Policy and Investment Plan” reviewed and approved by the company's 2017 Annual General Meeting of Shareholders. Yili held the extraordinary meeting of the 9th Board of Directors on December 14 to deliberate and approve the "Inner Mongolia Yili Industrial Group Co., Ltd. Request for the New Yili Changbai Mountain Natural Mineral Water Drinks Project".
According to the introduction, the project plans to build a new Yili Changbai Mountain natural mineral water beverage project in Changbai Mountain Natural Mineral Water Industrial Park, Antu County, Jilin Province, with an investment amount of 743.88 million yuan. The estimated investment recovery period of the project is 5.7 years, the return on investment is 16.34%, and the internal rate of return is 16.01%. The project construction period is expected to be 31 months.
Yili said that the project investment funds are self-raised by the company, and the investment is conducive to improving the company's profitability, enhancing the company's competitiveness and enhancing the company's brand influence.
There is no connected transaction in this investment behavior of Yili, and it does not constitute a major asset restructuring. The project is within the scope of approval of the board of directors and does not need to be submitted to the company's shareholders meeting for review; it must be approved by the relevant government departments.
Wind shows that Yili's revenue in the first three quarters of 2018 was 61.3 billion yuan, up 16.88% year-on-year. The net profit attributable to the parent company was 5.048 billion yuan, up 2.24% year-on-year; the profit growth rate was far lower than the income growth rate.
In the current period, Yili's return on equity (ROE) was 19.1%, and the return on assets was 10.69%. The return on investment of Yili Changbai Mountain natural mineral water was 16.34%, which was between ROE and ROA in the first three quarters of the company.
Yili fell 0.43% on December 14 to close at 23.29 yuan / share; the current company market value of 141.6 billion yuan, the price-earnings ratio of 22. Erie's old rival Mengniu Dairy (02319.HK) currently has a market capitalization of HK$96.2 billion and a P/E ratio of 33.
Is Yili selling mineral water? Diversified layout or fall again, and Evian, Baisuishan become competitors
After the functional beverages, Yili, who ran all the way on the road of diversification, may choose to sell mineral water this time.
Today, the snack food generation is seen on the official website of the Fusong County People's Government. A press release issued on April 23 shows that after the company fully demonstrated that mineral water resources are important for future development, Yili Group will pay attention to mineral water resources. .
According to the above notification, from April 18th to 19th, Fu Qiang, general manager of Inner Mongolia Yili Group project team, Shi Yongsheng, project director, Yu Yu, general manager of Liaoning Branch, and Zhao Xing, general manager of Jilin Branch, visited Fusong County to inspect mineral water in detail. Resources, visited a number of mineral water drinks companies such as Quanyang Spring.
“After the inspection, the Yili Group project inspection team said that after going back, the board of directors will be inspected to form a specific decision-making plan, and then return to Fusong for detailed project docking.” The above-mentioned circular pointed out.
The briefing also mentioned that after the group entered the beverage industry, the beverage sector represented by Yili every lactic acid drink was booming.
Yili, a team that investigates mineral water resources, has been a bit busy recently.
According to the information of the small food generation, a press report issued by the Hunan Bureau of Geology and Mineral Exploration and Development on April 11 showed that Fu Qiang and his party went to the Yuejia mining area in Shimen County to inspect the selenium-enriched mineral water resources in detail, and learned more about Yuejiaquan and Bi. The formation of the enrichment zone, the flow area, the content of trace elements, the amount of water and the development and utilization of the mineral springs in the Yanquan and Baimiao, and the relevant conditions of the development and utilization of the Yanquan peak, and the natural ecological conditions of the mineral water producing areas were observed.
According to the data, in the Yuejia mining area of Shimen County, four se-enriched mineral water enrichment belts have been discovered. Among them, Yuejiaquan has a maximum self-flow rate of 3,724 cubic meters per day and an average annual flow of 1987 cubic meters per day, which has good prospects for development and utilization.
The above notification pointed out that after the on-site inspection, Fu Qiang and his entourage went to Shimen County to participate in the investment invitation meeting of the county government chaired by Yin Xuelang, deputy director of the Provincial Department of Land and Resources. The relevant technical personnel of the 403 team made a report on the results of the mining area resources and gave detailed answers to the questions raised by the Yili Group inspectors.
Perhaps soon, after becoming a direct competitor with Red Bull, Yili will once again enter the territory of Evian and Baisui Mountain.
For the dairy giant with a target of 100 billion revenues, business diversification is a long-established direction. The snack food generation reported that at the end of 2014, Yili Group clearly defined that it would enter the global dairy industry top five by 2020 and achieve the goal of leapfrogging from tens of billions to tens of billions of enterprises.
To achieve the "five hundred billion", Yili's gaze is not only on the milk, but on the "first-class health food provider." This means that the company will continue to expand the business of other categories outside of the core dairy products.
The latest financial report data shows that Yili's total operating income in 2017 was 68.58 billion yuan, and the total operating income in the first quarter of 2018 was 19.753 billion yuan. The company plans to achieve a total revenue of 77 billion yuan in 2018.
Last month, Yili announced its entry into the energy drink market.
But if you choose to enter the bottled water market, the dairy giant may face no small challenge.
First, bottled drinking water, including mineral water, is a market where overall sales growth is slowing. According to data obtained by the market research agency Minmin, the retail sales volume of bottled water in China increased by 9.8% year-on-year in 2011-2016, and the annual compound growth rate of sales volume was 8.3%. The sales growth rate in 2011-2016 was somewhat increased. Slow down.
“Part of the reason may be that the overall market has become saturated. Low-end products are the most affected, because many companies and brands either only produce high-end series or turn to high-end products. At the same time, the slowing economy has also led to consumption. Reduced." Mintel analysis said.
Second, this is still a highly concentrated market. According to Mintel data, in 2016, the top ten bottled water companies accounted for 76.1% of sales. This poses a certain degree of challenge for new companies and new products to enter the market and gain market share.
At the same time, the importance of water sources is undoubted for mineral water. In a report released last year, Mintel pointed out that the vast majority of consumers (71%) believe that “from high-quality water sources” best reflects the high-end image of bottled water, including mineral water, “high-end, high-quality water source”. The dominant view is likely to continue to maintain an important position in the future.
It can be clearly seen that the mineral water brands in the market are all emphasizing the advantages of their own water sources, such as Changbai Mountain, Kunlun Mountain, Qinghai-Tibet Plateau, Norway, and Iceland. It is not easy for Yili to seek a water source that is attractive enough for consumers and can highlight its own advantages.
Finally, consumers are increasingly choosing mineral water products. Not only do domestic companies operating in other categories enter the mineral water market, but overseas brands have also entered the Chinese market. A recent example is the volcanic spring mineral water from Australia, Blackhill (Boshan Spring) announced its listing in China last month.