Bright Dairy &Food Co.,Ltd:Register performance that is in line with expectation,confirm to extend development over the whole industry chain
Company Profile
Bright Dairy & Food Co., Ltd. engages in the development, production, and sale of milk and dairyproducts in China. Its products primarily include milk, functional milk, and flavored milk; children'sproducts; fresh milk, fresh yogurt, lactobacillus drinks, milk at room temperature, room temperatureyogurt, cheese and cream cheese, and butter; milk powder, including infant formula, adult milk, andindustrial milk powder products; and juices, such as bright fruit juices and light trap. The company wasfounded in 1911 and is based in Shanghai, China. Bright Dairy & Food Co., Ltd operates as a subsidiary ofBright Food (Group) Co., Ltd.
(Source: Bloomberg)
Event
Bright Dairy & Food (the company) unveiled annual fiscal reports of 2016, which shows company ’soperating revenue grew 4.3% YoY to CNY 20.2 bn, its operating profit grew 45.88% YoY to CNY 975 mn ,its shareholder attributable net profit grew 34.63% YoY to CNY 563 mn (grew 35.12% YoY to CNY 466 mnafter deducting non-recurring items)
Comments
Revenue growth improves quarter by quarter; sales of dairy products achieves rapid expansion in overseasmarket.
The company’s operating revenue trended up 4.3% YoY to CNY 20.2 bn for year 2016, and ramped up11.44% YoY to CNY 4.74 bn in Q417 alone. Company ’s growth rate of operating revenue improvedquarter by quarter, it recovered back to positive territory in 2016 from 2015’s -6.2% and notched aglaring upturn of 11.4% YoY in Q416.
The company has expanded sales in foreign market aggressively. In year 2016, company ’s revenuegrowth inched up by 2.2 ptc to 0.8% in Shanghai and edged down 0.51% (a narrowed d ecline from sameperiod in 2015) in other domestic cities. However, company ’s sales of dairy products jumped 44.9% YoYto CNY 280 mn in foreign market. This is mainly caused by strong demand for A2 milk powder thatmanufactured by company’s subsidy in New Zealand, Synlait, whose operating revenue jumped 43.9%YoY in 2016.
Declining price of raw milk drove 3.61 pct upswing in the gross margin of dairy products ’ manufacturingindustry. Company’s gross margin inched up 2.6 ptc to 38.68% generally in 2016, among which:benefited by lower cost of raw milk, company’s gross margin of liquid milk products went up 4.7 pct to48.54%, company’s gross margin of other dairy products edged up 2.1 pct to 17.9%. Also due todeclining price of raw milk, the whole animal husbandry industry report 5.9 pct decline in 2016’s grossmargin.
Company’s sales expense ratio and administrative expense ratio remained stable, while its financialexpense ratio increased in 2016.
For 2016, company’s sales expense ratio edged down 0.02 pct to 27.8%, its administrative expense ratioand financial expense ratio inched up 0.3 pct and 0.71 pct respectively to 3.8% and 1.4%.
Company’s sales expense ratio almost stayed unchanged in 2016, this is because the company has pareddown rental expense, transportation expense and warehouse costs. However, company ’s advertisingexpense and financial expense surged 61.7% and 107.77%, mainly due to provision for VAM (valuationadjustment mechanism) against RRJ.
Growth of gross margin triggered slight upturn in company’s net profit margin to 3.34%, which is 0.8 pcthigher than last year.
Attributed to the hike in gross margin, company’s net profit ramped up 36.11% YoY to CNY 675 mn,company’s net profit margin inched up 0.78 pct to 3.34%, company ’s shareholder attributable net profitjumped 34.63% YoY to CNY 563 mn.