Frozen packaging industry contains huge business opportunities

One of the Big Three frozen food industry's Sanquan suspension was finally revealed. Last week, it raised a fixed amount of 1.122 billion yuan to raise funds for the expansion of 270,000 tons of production capacity in three major bases in South China, Southwest China, and North China.

Behind the overcapacity of the industry giants is the considerable growth potential of the frozen food industry. According to industry data, the domestic frozen food industry scale has increased from 4,566.6 million yuan in 2004 to 65 billion yuan in 2013, with a compound annual growth rate of 30.42%. However, the focus of the next round of competition of the frozen food giants is no longer limited to frozen dumplings, dumplings, and noodles.

Behind the expansion of production, the focus of the next round of competition for frozen food giants is no longer limited to frozen dumplings, dumplings, and noodles. Among the 269,600 tons of new production capacity of Sanquan, the capacity expansion plan for the two major categories of fresh and frozen dumplings is 40,000 tons and 20,400 tons. The three full names, will be through the production of the Sanquan fresh food production line layout of the domestic first-tier cities of the restaurant O2O market. The brand-new business model launched in September 2014 means that consumers can order food from the vending machine after completing payment through APP. The white-collar lunch market is the one that needs to be robbed.

Ping An Securities analysts pointed out that the current rate of advancement of Sanquan's vending machines in Shanghai is 200 units per month, which can be promoted in Beijing during the year and broadly distributed in 2016. “The expansion of production capacity will support the acceleration of fresh food projects in the first-tier cities. It is estimated that the distribution of Guangsheng-Shenbei will achieve an income of 500 million to 100 million yuan.”

Sanquan took advantage of the development opportunities of the “Internet” to accurately enter the urban white-collar lunch market. After more than half a year of exploration and experimentation, the business model has gradually matured. It is expected that the laying of second-generation machines will be accelerated in the Shanghai and Beijing markets in June. This capacity building will help the company further consolidate the advantages of starting and scale, reduce the marginal cost, and strengthen the competition barriers of fresh food business.

As the fresh food business shifted from building machines to corporate machines, the number of sales of single machines decreased, and the annual forecast revenue of fresh food business was adjusted accordingly. Corresponding adjustments to the company's 15/16 revenue -2.4%/-12.9% to 47.8/56.1 billion yuan, net profit attributable to owners of the parent company -2.9%/-35.4% to 1.02/130 million yuan, EPS0.13/0.16 yuan. According to the company history P/S and A shares comparable company P/S, given the company 4 times P/S in 2015, the target price was raised 77% to 23.8 yuan, maintaining the recommendation rating.