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Zhongpin, Inc. Message Board

  • waldo_mushman waldo_mushman Jul 26, 2011 4:15 PM Flag

    Musings about the stores

    The pictures we saw from Anyang City clearly portray the mom and pop nature of the "stores". HOGS never claims to own the stores and it is fairly clear that is accurate. So we have a distribution channel that consists of individual merchants offering Zhongpin products in the retail outlet they operate.

    Some implications of that....HOGS revenue is wholesale not retail since they have to supply the retailers at a price that generates a profit for the small guy. The distribution is clearly problematic. You are looking at a route sales type operation with very small revenues attached to each location. It is expensive to have your truck and driver deliver to low volume operators.

    The issue of double counting the revenue becomes much more likely. The easiest explanation of why HOGS has such a miserable list of "stores" is that they actually are selling to a distributor that services a geographic area. HOGS doesn't know where the stores are because they don't deliver to them. The distributor for that area tells HOGS how many stores they service and probably gave HOGS a rough idea of where the stores were. So the questions that arise are 1. Who are the owners of the stores buying product from? HOGS or a distributor of HOGS products? 2. Who are the distributors and who do they distribute to? 3. Does HOGS actually own any retail outlets or are they 100% owned and operated by "franchisees"?

    John

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    • stores are interesting story but the issue is revenue and how much did they make on it.....airlifts, internet sales or home delivery....how much did they move and what did they earn.

    • It would seem that the size and number of outlets arent the main problem. They sell their products where they can. Until China begins to buld out their infrastructure, companies like HOGS will have to deal with the local issues. They have received numerous awards from the Chinese government, a large line of credit from a leading bank, and are in the process of bulding a couple of modern facilities to handle the future increase in the growth of China's economy. A lot of the price of HOGS, will really depend on their earnings and outlook for the future. We will see next week!!

 
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