Hot pot without beef is not called hot pot, winter without hot pot is not called winter. I believe many food lovers who have tasted the delicacies of the bottom of the sea must still eat fresh and slippery beef, colleagues and friends gathered in groups in the bottom of the sea fishing, beef hot pot with frozen beer, let people enjoy dripping, full of blood to revive.
Food lovers may not have thought that the bottom-of-the-sea beef was supplied by Kilcoy Global Foods, Ltd., the world's largest supplier of premium beef products to China, and Kilcoy was also a supplier of sipping (00520-HK), Baisheng China and McDonald's China.
In 2013, Kilcoy was co-founded by China's leading entrepreneurs, Liu Yonghao, Wang Hang and Canadian Chinese Zhang Tianli. In just a few years, Kilcoy has become a fast-growing supplier of high-quality global food solutions, mainly producing and providing high-grade beef and other high-quality animal protein products, with top, high-grade and high-grade refrigerated or frozen beef and natural aquatic products, high-quality cooked mutton, pork and poultry products.
The United States, Australia and China are the global beef consumption countries, the United States accounted for nearly 60% of the global high-grade beef consumption in 2018, China's high-grade beef consumption showed a huge growth space, and in 2018 only accounted for% of the total global high-grade beef consumption. Kilcoy's business and processing facilities are strategically located in both the U.S. and China, in addition to being based in Australia.
Kilcoy's operations in Australia, China and the United States now have four processing and manufacturing facilities. In addition to Australia, China and the United States, Kilcoy's products have radiated more than 35 jurisdictions in Japan, South Korea and the Philippines.
Kilcoy's business model extends from the middle of the value chain of the food industry to the downstream, including initial processing, value-added processing, packaging and marketing of beef solutions, protein solutions and dietary solutions, while raw materials, grain cattle and raw meat need to be purchased from around the world.
Kilcoy's revenues and profits have grown substantially in recent years, with total Kilcoy revenues of $100m and $100m in 2017 and 2018, adjusted EBITDA of $27.8m and $50.6m, net profit of $5.2m and $11.6m, respectively, with growth rates of% and%.
Kilcoy's revenue rose from $100 million to $100 million in the first three quarters of 2018 and 2019, adjusted EBITDA doubled from $23.7 million to $74.6 million and net profit from $2 million to $25.4 million.
According to the division of business, Kilcoy can be divided into beef solution products, protein solution products and meal solution products. Among them, beef solutions is the company's largest revenue business, with revenues of more than 64% in the past few years, mainly high-grade beef, which accounts for about half of the company's total revenue, and australia, china and the united states are the company's top beef revenue regions.
It is worth noting that the rapid growth in performance in recent years is not actually driven by Kilcoy's beef solution products, but rather by the meal solution product division. The division's revenue share was% in 2017, reaching the first three quarters of 2019
In addition, the Chinese market became Kilcoy's \"Dinghai needle\" in 2019, with revenues from the Chinese market soaring to $100m year-on-year in the first three quarters, while Australia's revenues were almost flat in the same period and revenues from the US, Japan and South Korea fell. As a result, China's market demand for beef was strong, and in 2018, although China accounted for nearly 19 percent of the world's population, it accounted for only% of the world's total consumption of high-grade beef. Because of China's large population, rapid economic growth and high-quality food consumption, the space for growth will turn into a strong driving force, making China one of the fastest-growing top beef consumers. And markets such as the United States have been stymied by fierce competition, so Kilcoy said in its prospectus that it would focus on investing in the Chinese market, developing new facilities in China, increasing capacity and expanding the range of channel sales.
The raw material cost accounted for%,%,% and% of Kilcoy ' s total sales cost for the year ending in 2017 and December 31,2018 and the month ending in 2018 and September 30,2019, respectively.
Over the years, raw-material prices have shown typical cyclical variations, and the volatility is likely to be significant. For example, the average price of cattle for cereals in Australia for 100 days or more has fluctuated from Australian fairies per kilo in 2016 to Australian fairies per kilo in 2017, followed by Australian fairs per kilo in 2018.
According to the prospectus, the average price of beef aged 100 days or above in Australia's valley increased from about 350 Australian fairs\/kg to Aussie fairs\/kg in 2013-2018, an increase of much more% than the average export price of Australian high-grade beef in the same period. The rise in the purchase price is far greater than the increase in the sale price, the impact is a decline in profitability. Kilcoy is also aware of this potential risk, and to minimize the risk of price fluctuations in raw materials, Kilcoy carries out forward purchases with its fattening plant partners to lock in prices and order volumes three to four months in advance. But it's also important to look out for the fact that the average price of beef for Australian cereals for 100 days or more will repeat the frenzied rise from 2013 to 2016, putting pressure on Kilcoy's cost end.
Because of the need to purchase raw materials, and the price of raw materials has risen significantly in recent years, Kilcoy needs to have sufficient cash flow to maintain business operations and expand in markets such as China and the United States.
Kilcoy's cash and cash equivalents are relatively limited, with $28.5 million in cash and cash equivalents in the first three quarters of 2019, down% year-on-year, as business operations require a lot of money. Kilcoy relies mainly on dividends paid by its subsidiaries to meet its cash and financing needs, and growing demand for working capital from business growth and acquisition projects keeps Kilcoy in need of financing.
Kilcoy's bank loans totaled $100 million as of November 30,2019, of which $100 million were not spent, while outstanding interest-bearing loans amounted to $100 million. With so much borrowing, Kilcoy's own cash is not enough to cover its debt.
So in this case, the Chinese market is particularly important for Kilcoy, as other markets outside of China have been hampered by such factors as competitive growth. But relying on China's single market to provide the company with growth momentum is also a risky move.
After the outbreak of mad cow disease in Europe and the United States in 2000, China resolutely banned imports of beef from Europe and the United States for food safety. It wasn't until 2017 that our country lifted its beef ban on Australia. At present, China only allows beef imports from Australia, New Zealand, Argentina, Canada and other eight countries. China's ban on French beef imports early last year was a blow to Australian beef exports. In addition, Kilcoy would lose China, the big market, if Australia had an outbreak of mad cow disease, and pose a major risk to its operations.