Summary of the Pre-prepared Food Industry Conference Call Industry Overview - The pre-prepared food industry is experiencing favorable policies, with a notification from six departments in 2024 clarifying the scope of pre-prepared dishes, which is expected to promote high-quality development in the industry [1][4] - The frozen food market in China benefited from the development of cold chain logistics and consumption upgrades, reaching a market size of 199.2 billion yuan in 2022, with a compound annual growth rate (CAGR) of 10.25%, projected to reach 330 billion yuan by 2025 [1][5] - The frozen hot pot ingredient market is continuously growing, with a market size of 52 billion yuan in 2021, expected to reach 83.3 billion yuan by 2025 [1][6] - The frozen noodle and rice products market has entered a mature phase, with a market size of 78.2 billion yuan in 2021, projected to exceed 100 billion yuan by 2025 [1][7] - The pre-prepared dishes market is rapidly growing, with a market size of 419.6 billion yuan in 2022, a year-on-year increase of 21.31%, and expected to surpass 1 trillion yuan by 2026 [1][8] Key Players and Market Structure - The upstream of the pre-prepared food industry includes raw material suppliers from agriculture, forestry, animal husbandry, and fishery, as well as packaging materials [2] - The midstream consists of five categories: agricultural and aquaculture companies, traditional frozen food companies, specialized pre-prepared food companies, restaurant chains, and retail companies [2] - The downstream includes large B-end, small B-end, and C-end markets, covering diverse dining scenarios such as chain restaurants, takeout, and group meals [2] Market Dynamics and Trends - Chain restaurants adopting pre-prepared dishes can improve service speed, stabilize quality, and reduce costs, with leading chain restaurants using pre-prepared dishes exceeding 85%, increasing profit margins from 25% to 32% [3][10] - The online takeout market in China grew from 0.3 trillion yuan in 2017 to 1.12 trillion yuan in 2022, increasing its share of the overall dining market from 7.6% to 20% [10] - The group meal market is expected to maintain a growth rate of around 10%, with a low concentration level (CR100 of only 6.7%) indicating significant potential for consolidation [11] Consumer Insights - C-end consumers of pre-prepared dishes are primarily women, middle to high-income individuals in first and second-tier cities, and young adults [13] - The trend of smaller households and a faster-paced lifestyle are driving the demand for pre-prepared dishes, with sales on major e-commerce platforms increasing by 120.5% year-on-year in January 2024 [13] Competitive Landscape - The frozen hot pot ingredient market has a low concentration (CR5 of only 15%), indicating potential for further consolidation, with key players including Anjijia and Haixin [7] - The frozen noodle and rice products market has a high concentration (CR3 of 64%), dominated by three major players: Sanquan, Sinian, and Wanchai Ferry [7] Future Outlook - The pre-prepared food market in China is considered a blue ocean market, with a projected size of 1 trillion yuan by 2026, and low industry concentration suggesting ample growth opportunities [15] - Companies with product, customer, channel advantages, and high supply chain efficiency are expected to stand out, with recommendations to focus on leading companies like Anjijia and Qianwei Central Kitchen, as well as others like Longda Meishi and Weizhi Xiang [15]

Core Viewpoint - Longda Food's recent financial report shows a decline in revenue and net profit, indicating increased short-term debt pressure and a need for strategic adjustments in its business model [1][3]. Financial Performance - Total revenue for the first half of 2025 was 4.975 billion yuan, a decrease of 1.38% year-on-year [1]. - Net profit attributable to shareholders was 35.17 million yuan, down 39.52% compared to the previous year [1]. - The gross profit margin improved to 5.48%, an increase of 10.03% year-on-year, while the net profit margin fell to 0.62%, a decrease of 50.96% [1]. - Total expenses (selling, administrative, and financial) amounted to 228 million yuan, representing 4.57% of revenue, an increase of 8.44% year-on-year [1]. - Earnings per share decreased to 0.03 yuan, down 40% year-on-year [1]. Cash Flow and Debt Situation - The company's liquidity ratio is at 0.88, indicating rising short-term debt pressure [1][4]. - Cash flow from operations per share was 0.11 yuan, a decline of 48.81% year-on-year [1]. - The company has a high ratio of interest-bearing liabilities to operating cash flow, reaching 11.52% [4]. Business Model and Market Position - The company's return on invested capital (ROIC) was 1.83%, indicating weak capital returns, with a historical median ROIC of 7.38% over the past decade [3]. - The business model relies heavily on marketing, which requires careful examination of underlying drivers [3]. - The pre-prepared food sector is expected to grow, with the company aiming to reach a scale of around 5 billion yuan, leveraging its established relationships with over 1,000 major clients [5].