Transformation and integration of services

On March 24, packaging manufacturer Origen released the performance forecast for the first quarter of 2021, which shows that it is expected to achieve a net profit of 220 million to 286 million yuan, a year-on-year increase of 400% – 550%, and a net profit of 43.9584 million yuan in the same period of last year.

For the second quarter of 2021, the company’s main business grew in good order, and its net profit increased significantly.

According to the data, Origen was founded in the 1990s. As the main canner of Red Bull China, Origen has cooperated with red bull China beverage for more than 20 years and is the core supplier of Red Bull China. Since its listing in 2012, the operating revenue and net profit of Red Bull org, which relies on its big customer, has shown a straight-line upward trend, rising all the way. However, in 2017, affected by the trademark dispute between Thailand Tencel and Huabin group, origin’s revenue and net profit both fell, showing negative growth, with a decrease of 3.37% and 38.98% respectively.

In fact, Origen is aware of the risks of relying on Red Bull and is paving the way for “de Red Bull”. Beijing business daily learned that the “alien” functional drinks, war horse, pulse, Zhengda banlanhua and rijiaman of Yuanqi forest are all manufactured by Hubei origin beverage company. According to the vision of Guan Yuxiang, founder of Origen, the transformation of integrated services will be an attempt to break the bottleneck of manufacturing growth and get rid of the dependence of big customers.

In addition to expanding the beverage OEM business, Origen announced in December 2018 that it would raise US $205 million to acquire the equity of ball Asia Pacific Ltd (Boer Asia Pacific) in China’s packaging related companies. At that time, Origen said that it would further undertake the production capacity and customers of Boer Asia Pacific, so as to reduce the business proportion of Red Bull China and optimize the company’s customer structure and revenue structure. After this acquisition, the two-piece can business has gradually become the key development direction of org.

It is understood that at present, origin has formed the cornerstone echelon of three categories of functional drinks, beer and milk powder. Customers include Red Bull, Dongpeng special drink, Qingdao beer, Budweiser, snow beer, Yanjing Beer, Feihe, JUNLEBAO, Yili and other milk powder enterprises.

Zhu danpeng, a food industry analyst, believes that Origen hopes to reduce its dependence on Red Bull business with the help of the acquisition, whether it is beverage OEM or replenishing the two piece can business. However, in the short term, red bull’s can business is still only the main source of revenue of oregin.

According to the bond tracking and rating reports of oregin in recent years, the sales revenue of the company from the top five customers accounted for 76%, 71.46% and 73.74% of the operating revenue in 2017-2019. For the largest customer, Red Bull China’s sales revenue accounted for 59.68%, 59.1% and 57.18% of the company’s operating revenue.

According to the research report released by Zheshang securities, since 2015, Origen has continued to develop new customers, accelerated the pace of extension, improved the layout of two-piece cans, successively invested in COFCO packaging and Yongxin packaging, and acquired four factories of global can making giant Boer in China in 2019. With the improvement of supply and demand pattern, the filling service has entered a large-scale period, the one-time negative impact has been eliminated, and the company is optimistic about its performance in 2021 with a good performance on the low base. For the two-piece can products mentioned by orekin, Zheshang Securities believes that the price of raw materials rises, the price of two-piece can rises smoothly, and the profit is still flexible.

As for business development and risk response to red bull’s lawsuit in China, Beijing business daily interviewed the relevant person in charge of orekin, but as of press release, no reply has been received.

Beijing Business News (reporter Qian Yu, Wang Xiao)

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