Original link: https://www.latepost.com/news/dj_detail?id=1323
Michelle Bingcheng issued a prospectus, making 3.5 billion cups of drinks a year and using 8,500 tons of tea
China’s tea business is in an infinite price war, and Michelle Bingcheng, which has the lowest price, is likely to be the most profitable tea brand in China.
Michelle Bingcheng released its A-share prospectus today, and its revenue last year reached 10.35 billion yuan, more than doubling year-on-year. Before Michelle Ice City, only Haidilao, a local Chinese catering brand, had an annual revenue of more than 10 billion yuan (41.1 billion yuan in 2021).
Haidilao self-operated stores, revenue is mainly the sales of stores. Almost all of the more than 20,000 stores in Michelle Bingcheng have joined. If we push back according to the gross profit margin, the sales of Michelle Bingcheng’s stores last year were close to 20 billion yuan.
Although the sales of brand stores are only half of Haidilao, Haidilao lost 4.1 billion yuan last year, while Michelle Ice City’s net profit reached 1.845 billion yuan. The loss of Haidilao has begun to shrink this year because of the rapid opening of new stores after the outbreak of the epidemic in 2020. On the other hand, Michelle Ice City has accelerated the speed of opening stores. Last year, it added 7,000 stores, and in the first quarter of this year, it opened nearly 2,000 more stores and continued to make profits.
According to the prospectus, Michelle Ice City plans to apply for the issuance of no more than 40.01 million ordinary shares, raising about 6.495 billion yuan, accounting for no less than 10% of the total share capital after the issuance, and the corresponding listing valuation is about 64.95 billion yuan. As of the close of Hong Kong stocks today, Haidilao’s market value is HK$83.6 billion (about 75.2 billion yuan).
Michelle Ice City was founded by Zhang Hongchao in 1997, and its business format has been adjusted several times. In 2007, Zhang Hongchao’s younger brother, Zhang Hongfu, became the first-generation franchisee of Michelle Bingcheng. In his own words, he belongs to the “generation 1.5”.
As of the signing of the prospectus, Zhang Hongchao was the chairman of the company, and Zhang Hongfu was the director and general manager of the company. The brothers each directly hold a 42.78% stake in Michelle Bingcheng, which will be worth more than 27 billion yuan after listing. Dragon Ball Capital and Hillhouse each hold 4% of the shares.
The catering brand with the largest number of local stores
As of the end of March 2022, Michelle Bingcheng has a total of 22,276 stores, of which 21,619 are Michelle Bingcheng brands. It is currently the only four local catering brands in China with more than 10,000 stores. The other three are Wallace, Juewei Duck Neck and Zhengxin Chicken Chop, all of which are smaller than Michelle Ice City.
From the first release of franchise in 2007, Michelle Ice City took 13 years to reach the scale of 10,000 stores. Historically, McDonald’s, KFC China and Subway have spent 33 years, Starbucks has spent 34 years, Burger King has spent 45 years, and Wal-Mart has spent 49 years. It took only 11 years for Zhengxin Chicken Chop to reach the scale of 10,000 stores faster than Michelle Bingcheng in China.
Just counting the Michelle Bingcheng brand stores, there will be a net increase of 7,057 and 1,596 stores in 2021 and the first quarter of this year, respectively. On average, there will be one more newly opened Michelle Bingcheng in China in an hour and a half. Under the disturbance of low temperature, spring and other factors, the first quarter is the traditional off-season for tea drinking, but the frequency of opening stores in Michelle Ice City is even higher than that in 2021.
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The average price of the product is 6 yuan to 8 yuan
The average price of products in more than 20,000 stores in Michelle Bingcheng is 6 yuan to 8 yuan. Refer to the basic information of the representative brands in the industry of freshly made tea, freshly ground coffee and freshly made ice cream listed in the prospectus of Michelle Bingcheng:
- Lucky Coffee (Mi Xue’s coffee brand), 7400+ stores, average price of 19 yuan
- Gu Ming, 6600+ stores, the average price is 15 yuan
- Tea Baidao, 5800+ stores, average price of 16 yuan
- A little bit, 3500+ stores, the average price is 15 yuan
- Nai Xue’s tea, 900+ stores, the average price is 27 yuan
- HEYTEA, 800+ stores, average price of 25 yuan
- Luckin Coffee, 7400+ stores, average price of 19 yuan
- Starbucks, 6700+ stores, average price of 39 yuan
This set of data does not reflect the latest situation. HEYTEA began to cut prices this year, and Nayuki and more brands followed suit. At present, most teas of HEYTEA are priced at more than ten yuan. But for the time being, there is no chain brand close to Michelle Bingcheng that can achieve an average price of 6-8 yuan.
Extreme price, selling 3.5 billion drinks a year
Michelle Bingcheng’s prospectus disclosed in detail the details of the raw materials sold to franchise stores, including the total amount and unit price. We were able to push back the sales volume. In 2021, Michelle Bingcheng will sell a total of:
- 1.055 billion cups, 0.3 yuan/piece, 3.516 billion cups
- 640 million yuan of tea, 75.23 yuan/kg, 8507 tons of tea
- 453 million yuan of fruit, 8.6 yuan/kg, 51,071 tons of fruit
The classic slogan of Xiang Piao Piao milk tea more than ten years ago “sells more than 300 million cups a year, and it can circle the earth once in a single connection”, and it can circle the earth ten times in Michelle Ice City. According to the data in the prospectus, the ratio of self-produced and outsourced fruits in Michelle Ice City last year was about 3:7, and the self-produced ratio has increased to 50% this year.
Tens of billions in revenue, mainly from ingredients and packaging sold to franchisees
Michelle Ice City’s revenue last year and the first quarter of this year were 10.3 billion yuan and 2.433 billion yuan respectively, and more than 80% of them came from cups, tea, fruits and other ingredients and consumables. The rest of the revenue comes from the sale of operating materials, equipment and facilities, and the collection of franchisee management fees. Still taking 2021 as an example:
- The sales of ingredients were 7.23 billion yuan, accounting for 69.89%
- The sales of packaging materials were 1.778 billion yuan, accounting for 17.9%
- Equipment and facilities sales were 694 million yuan, accounting for 6.72%
- Sales of operating materials amounted to RMB 362 million, accounting for 3.5%
- The franchisee management income was 195 million yuan, accounting for 1.89%
- Direct store product revenue was 82 million yuan, accounting for 0.8%
The 10.3 billion yuan is just the amount that Michelle Ice City sells goods and services to franchisees. According to the average price of 6 yuan and 3.5 billion cups, the actual sales of beverages will exceed 21 billion yuan.
Michelle Bingcheng sells goods and equipment through its commercial subsidiaries to franchisees, who turn them into beverages and ice cream and sell them to consumers. Michelle Ice City implements a unified sales price. For stores located in special areas such as stations and scenic spots, after approval, the price of some items can be increased by 1 yuan.
Profitable scale as marketing expenses are extremely low
Through the sales of raw materials, equipment and the collection of franchise fees, Michelle Bingcheng’s revenue last year was 10.3 billion yuan, and the gross profit margin after deducting various direct costs was about 31.7%. Compared with the catering peers, there is no special surprise:
- Nayuki’s Tea, 68.3%
- Zhou Hei Ya, 57.78%
- Wallace, 51.53%
- Guangzhou Restaurant, 37.82%
- Juewei Food, 31.67%
- Barbie Foods, 25.69%
- Yum China, 21.5%
- Hometown Chicken, 16.55%
The low gross profit margin means that the raw material purchase price of the franchisee is low, which in turn allows Michelle Bingcheng to ensure that consumers can buy particularly cheap drinks. However, the pre-tax profit margin of Michelle is as high as 24%, which is higher than most chain catering companies, and also higher than most franchise catering companies.
On the one hand, the franchisee bears the rent of the store, on the other hand, because Michelle spends almost no money on marketing. Last year, Michelle’s sales expenses were only 400 million yuan, accounting for 3.9% of total revenue, and it was evenly spread to a little more than 10 cents per cup of tea.
The signboard of the 22,000 stores is itself a billboard, and the extremely low price means that it does not need to launch new products frequently to attract consumers, so the research and development cost is only 17 million yuan.
The large population base has formed a large catering market of 10 trillion yuan. Michelle Bingcheng is a rare large-scale standardized and nationalized chain brand.
In 1984, the Pierre Cardin Beijing store opened, the first chain company in China. In the following 20 years, large supermarkets and specialty stores replaced department stores, supermarkets replaced food specialty stores, and chain operations developed rapidly.
Later, the increasing urbanization rate and the income level of residents supported specialized stores with different formats, and technological upgrades on the supply side such as cold chains and central kitchens propped up catering chains, and it became possible to distribute raw materials daily, giving birth to local 10,000-store chains. (Gong Fangyi)
Ctrip turned losses in the second quarter, and revenue in Europe and the United States exceeded that before the epidemic
The latest financial report shows that Ctrip posted a net loss of 958 million yuan in the first half of this year.
However, in the second quarter, it has turned losses, with a net profit of 43 million yuan, a significant improvement from the loss of 1 billion in the previous quarter. This is mainly due to better cost control and non-operating income contribution of RMB 469 million.
Ctrip’s revenue in the quarter fell sharply by 31.9% year-on-year. Among them, the performance of the two main businesses of hotel reservation and transportation ticketing was in sync with the trend of the epidemic. In April and May, it was sluggish and rebounded in June, contributing 1.4 billion yuan and 1.8 billion yuan respectively. Domestic hotel bookings in late June surpassed the same period in 2019.
CEO Sun Jie said that despite repeated challenges from the epidemic, the basic demand for travel remained stable, and areas less affected by the epidemic recovered faster. Revenue is expected to grow year-on-year in the third quarter, thanks to strong summer demand in China and a recovery in overseas markets.
Local travel is currently an important support for Ctrip’s domestic business. From January to August this year, Ctrip’s local orders accounted for a 44% increase compared to the same period in 2019. In addition to Ctrip, Meituan also integrates hotels, attractions and food to promote peripheral travel services, while Fliggy cooperates with AutoNavi and Ele.me to develop the local market.
Since August, the epidemic has spread in many places across the country. According to the data center of the Ministry of Culture and Tourism, the number of domestic tourists during the Mid-Autumn Festival this year continued to decrease by 16.7% compared with last year, when it was not high. Long-term travel is decreasing and local travel is heating up. It is expected that this trend will continue during the National Day holiday.
Liang Jianzhang, co-founder of Ctrip, said at the earnings conference that domestic tourism demand was released strongly at the end of the quarter, and the Asia-Pacific market is expected to recover faster in the third quarter, and it is believed that the market outlook will continue to improve.
The management said that the contribution of overseas business to revenue has increased, and the revenue of the European and American markets in the second quarter exceeded that of the same period in 2019, but did not announce the specific proportion. Among them, the number of air ticket bookings on overseas platforms increased by about 680% year-on-year, and the number of air ticket bookings in July recovered to 90% before the epidemic.
The relaxation of travel restrictions in Europe and the United States has brought about a strong recovery. The total number of Airbnb accommodation and experience orders in the second quarter was nearly 104 million, the occupancy rate of Marriott International Hotel reached 67.8%, and the entire Royal Caribbean fleet resumed sailing, and operating cash flow turned positive in the second quarter. (intern Xue Yujie)
The Fed raises interest rates for the fifth time this year, and the market is still not used to it
The Federal Reserve is struggling with the highest inflation in 40 years. On Wednesday (September 21), local time, the September interest rate meeting announced a 75 basis point interest rate hike. The cumulative rate hike during the year has reached 300 basis points, the largest rate hike in a single year since 1982.
Fed Chairman Jerome Powell said that the pace of rate hikes depends on future data and will continue to raise rates until inflation eases. Responding to whether rate hikes will lead to a slowdown, he said, “No one knows if current policy will lead to a recession, even if it does. , and no one knows how serious it will be.”
The Fed forecasts that the unemployment rate will rise to 4.4% next year and GDP growth will slow to 0.2%.
The pessimism sent major indexes lower, with the Dow Jones Industrial Average down 1.7% and the Nasdaq down 1.8% on Wednesday, even as the rate hike was in line with market expectations. The Bank of Japan said it still maintains an ultra-loose monetary policy. The exchange rate of the yen against the US dollar fell below US$145, hitting a 24-year low. Subsequently, the Bank of Japan announced that it would intervene in the exchange rate market by selling US dollars and buying yen, and the yen rose 2%.
This is Japan’s first foreign exchange intervention since the 1998 Asian financial crisis. In addition, the Shanghai and Shenzhen stock markets both opened lower on Thursday, the Shanghai Composite Index closed down nearly 0.3%, and the ChiNext Index closed down 0.5%. (intern Xue Yujie)
OTHER NEWS
Li Auto will release a new car L8 at the end of the month.
The long-awaited ideal ONE replacement product, L8, will be released on September 30. It is a six-seat SUV with a price of less than 400,000 yuan. According to the product naming principles announced by Ideal Community, there will be L7 and L6, corresponding to five-seat SUVs within 400,000 yuan and 300,000 yuan.
At the same time when the new car naming rules were released, Ideal ONE updated the warranty terms to increase the production and supply guarantee of original after-sales spare parts to no less than 12 years after production was discontinued. “, causing dissatisfaction with the first car owner who originally had a lifetime warranty, representing the official “ONE Knows” quickly added in the ideal community post “Users who enjoy the first owner’s lifetime warranty will not be affected in any way.”
The tourist attractions in Sanya, Hainan have been reopened.
- On September 21, there were 114 new local confirmed cases, including 42 in Guizhou, 41 in Sichuan, and 13 in Tibet; 512 new local asymptomatic infections, including 143 in Tibet, 134 in Guizhou, and 109 in Heilongjiang.
- Guizhou added local “42+134”, of which Guiyang City “16+61” and Bijie City “26+73”.
- There were 19 new cases of local asymptomatic infections in Hubei, including 2 in Wuhan and 16 in Enshi.
- Tianjin added a new local “1+10”, of which 1 was a socially discovered case.
- Heilongjiang added the local “7+109”, of which Jiamusi City “3+74”.
- On the 22nd, 2 new positive infected persons were added in Chaoyang District, Beijing, who were quarantined at home in medium-risk areas.
- Sanya’s tourist attractions have resumed opening, with a 50% current limit, and a green code and a 48-hour nucleic acid negative certificate are required.
Luanchuan, Henan subsidizes the new house deed tax.
On September 21, Luanchuan County, Luoyang City, Henan Province announced that those who purchased new houses from 2014 to the end of the year and did not pay the deed tax will be subsidized by 20% of the tax after paying the tax. The subsidy adopts the method of “payment after collection”, and is directly transferred to the bank account submitted by the applicant.
Alibaba reduced its holdings in Kuaigou Taxi and sold HK$14.8 billion in shares.
According to the Hong Kong Stock Exchange, Kuaigou Dache was reduced by 232,000 shares of Alibaba on September 15. After the reduction, Alibaba’s shareholding ratio dropped to 13.99%. In the past four years, Kuaigou Dache’s accumulated net loss (adjusted) is about 1.6 billion yuan. It was listed on the Hong Kong Stock Exchange in June this year. Today, Kuaigou Dache’s Hong Kong stock fell 8.9%, and its market value has fallen by more than 70% since its listing.
Pinduoduo cross-border e-commerce platform Temu surpassed Amazon for the first time in single-day downloads in the United States.
According to SensorTower, on September 17, Pinduoduo’s cross-border e-commerce platform Temu ranked first in terms of downloads among shopping apps in the Google Play store, ahead of Amazon and SheIn. The Temu website was launched on September 1, and the application was launched on the Google and Apple App Stores in early September. Most Americans have used Amazon’s service and don’t need to download it anymore. It’s not that rare for a new app to surpass Amazon in downloads, but it at least shows that Temu is starting to roll out heavily in the US.
Singapore is “getting more expensive” for businesses.
According to media reports, as Singapore faces its worst inflation in nearly 14 years, operating costs such as manpower salaries, office rents, and electricity bills continue to rise. Ravi Menon, the head of the Monetary Authority of Singapore, previously warned that global inflation could remain at higher levels for longer. In 2021, multinational companies will set up about 7,000 branches and 400 family offices in Singapore. As of the end of April this year, the Monetary Authority of Singapore has received applications from 143 family offices.
Inflation kept more Americans eating at home, and General Mills’ quarterly profit rose 30.78% year over year.
The US food giant General Mills reported revenue of US$4.718 billion in the first quarter of fiscal 2023, and its net profit increased by 30.78% year-on-year to US$820 million. Costs such as raw materials, labor, freight and fuel are expected to rise 15% this fiscal year. General Mills owns food brands such as Wanchai Ferry Dumplings, Haagen-Dazs Ice Cream, and Cheerios Cereal Flakes. Inflation and declining consumer purchasing power have led more households in the U.S. to choose to eat at home rather than eat out, its CEO said on an earnings call. Even as the company raises prices to offset higher costs, more people eating at home will increase sales, raising its full-year sales forecast.
Pessimistic about Christmas spending, Walmart will cut 110,000 temporary workers this year.
Walmart announced it will hire 40,000 seasonal employees, including seasonal store assistants, customer service assistants and 1,500 full-time truck drivers, to support the U.S. consumer season. Walmart is hiring 110,000 fewer seasonal workers this year than last year due to lower U.S. household budgets and higher product prices. In addition to seasonal recruiting, Walmart maintains 1.7 million employees in the United States on a regular basis.
Germany will nationalize gas import group Uniper.
The German government has reached an agreement with energy group Uniper to increase its stake in the company for 8 billion euros. After the transaction is completed, the German government will become the majority shareholder with a 99% stake and will inject an additional $8 billion. Before the Russian-Ukrainian conflict, Uniper was Germany’s largest importer of natural gas from Russia, providing more than 1/3 of the natural gas source for Germans. The conflict between Russia and Ukraine continues to escalate. Uniper lost 12 billion euros in the first half of the year, and may not be able to continue operating without government capital injection. Germany’s finance minister said the government would pull out when markets stabilized. This is the second time the German government has recently stepped in to bail out energy companies, while the British government this week announced it would intervene in natural gas usage and prices.
Facebook will lay off staff and cut expenses by at least 10%.
Facebook’s parent company Meta will reduce expenses by 10% by restructuring departments and laying off employees. Affected employees can apply for positions within the company within 30 days, and will be fired if they do not find new positions within a month. At the end of the second quarter, Meta had 83,553 employees, a 32 percent increase in headcount compared to last year.
Text | Gong Fangyi, intern Zeng Xing, and intern Xue Yujie
Editor | Huang Junjie
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