Confident about Branded Pork, Jiuding Capital to Invest 50 Million Yuan in Qinglian Food
2010-05-10
Because of being confident about the future market of branded pork, recently Jiuding Capital Co., Ltd. (Jiuding Capital) invested 50 million yuan in Zhejiang Qinglian Food Co., Ltd. (Qinglian Food).
“Under the policy guidance that the state pays more and more attentions to food safety, branded fresh pork will be recognized by more and more customers and thus will meet with great development opportunities”, Jiuding Capital partner Zhongyi ZHAO said to this newspaper.
Market Opportunity
According to reports, China is the largest pork consumption country in the world with pork consumption/capita exceeding that of the world average, and has a huge market capacity.
However, the pork industry is greatly dispersed. According to Jiuding Capital’s data, in the upstream breeding link, scale breeding of above 100 heads accounts for less than 30%; in the middle stream slaughtering link, enterprises of scale and above scale account for less than 10%, with three leading enterprises Shuagnhui, Jinluo, and Yurun accounting for less than 5% market share; and in the terminal consumption link, fresh pork consumption is the main form, with hot fresh pork accounting for the largest share, refrigerated fresh pork being in a development stage, and pork products processing accounting for only around 10%.
Even the leading enterprises have a relatively small market share. According to the financial statements disclosed by Yurun, its net profit growth rate in the past year was around 45%, and in its early development stage, the rate was even reaching 100%. The share prce in the second market also has risen to around 24 yuan now from 4 yuan in IPO in 2005.
Shuanghui, listed in A-share market, also saw a net profit growth rate at around 30%. The outlook of branded pork is still regarded to be very promising, and branded pork is one of the concepts of consumption upgrading.
Branded fresh pork is facing with a more extensive market. “Branding has always been a weakness for many pig slaughtering and sales enterprises in China”, Zhongyi ZHAO emphasized.
Jiuding Capital holds that under the policy guidance that the state pays more and more attentions to food safety, branded fresh pork will be recognized by more and more customers. The economically developed coast regions and central cities have seen this trend. In the next 3-5 years branded fresh pork will meet with huge growth opportunities, and a few pork enterprises possessing high investment values will gradually grow up and hope bigger growths in the future. Qinglian Food is just one of the high quality enterprises recognized by Jiuding Capital.
Qinglian Story
Qinglian Food, founded in 2001, is headquartered in Haiyan County, Jaixing City, Zhejiang Province, and is one of the key agricultural enterprises in Zhejiang Province. In the past several years, both the annual revenue and profit growth rates have exceeded 30%.
The background for this speedy development is that the Jiaxing District headquartered by Qinglian Food is a main base in Zhejiang Province for supplying fresh pork to Shanghai and Qinglian Food accounts for the majority share. Qinglian Food has established a solid market position in the Yangtze Delta region with the most advanced economy and the highest urbanization rate, accounting for 15% of the Shanghai pork market.
At present, Qinglian even has become the “aid base” for supplying pork for 2010 Shanghai World Expo, and will supply to Shanghai 15,000 tons of non-pollution pork and 650 tons of fresh vegetables during the World Expo.
Besides, the pattern of chain shops that is highly regarded by PEs is just one of Qianlian’s highlights. Because of the concept of consumption upgrading, many enterprises that operate chain shops are attracting attentions from investment institutions, such as the previous diet enterprises Little Sheep, Xiabuxiabu, and so on, as well as the current enterprises with consumption concept of branded pork.
“Meal Boss” is a pork brand that is particularly promoted by Qinglian Food, and more than 400 “Meal Boss” chain shops have been opened in Shanghai covering standardized vegetable markets and supermarkets.
Because consumers pay more and more attentions to food safety, “branded food will have a promising growth space”, Wu Kezhong, TopCapital partner, who has invested in a branded food enterprise, said to this newspaper.
What is more regarded by Jiuding Capital is the quality and safety tracking system of fresh pork products of Qinglian Food, which enable each piece of pork consumed to be tracked back to each link from breeding to a sales shop.
Since Shanghai Municipal Commission of Commerce pays particular attention to quality and safety of fresh pork supplied from outside Shanghai, Jiuding Capital believes that the entry into and long-term recognition by Shanghai market is significant for Qianlian Food to expand its scale in the future.
The 50 million yuan invested by Jiuding Capital “will be mainly for optimizing and improving Qinglian’s operation system including high-end production bases, brand upgrading of the brand “Meal Boss”, and industry integration”, Zhongyi ZHAO said.
It is said that under the assistance of Jiuding Capital, Qinglian Food has completed within a short time the acquisition of an enterprise in Zhejiang Province. Before this, Jiuding Capital, as an emerging well-known PE, had a special feeling for branded consumption products, agriculture, and so on, and had invested in several well-known enterprises in the food industry including Baiyang Seafood, Golden Monkey Food, etc..