Dali Foods Group Co Ltd (Dali) has a solid risk profile and is the top company based on our proprietary risk assessment of the food sector in the consumer industry. Country and financial risk pillars boosted the overall risk score for the company. The company’s financial performance is its major strength, whereas the scale of operations and lack of geographic diversification remain causes of concern.
Dali is an investment holding company. The company, through its subsidiaries, manufactures and markets food, beverages, and packaging material. Dali offers packaged foods, including bread, cakes, pastries, croissants, rolls, potato chips, potato bubble biscuits, and beverages comprising herbal tea, plant-based dairy beverages, energy drinks, and cookies. The company offers products under Daliyuan, Copico, Haochidian, Meibeichen, Landibao, Heqizheng, and Hi-Tiger brands.
Dali Foods Group Co Ltd is one of the leaders in the food industry, with reported revenue of $3 billion in financial year (FY) 2021, which declined 1.81% over that in FY2020. However, the company’s net income increased 0.36% in FY2021 compared to that in FY2020.
Our proprietary risk assessment uses a combination of four risk pillars – Country, Industry, Operational, and Financial. Scores are based on a scale of 1 to 5, 1 being the lowest risk and 5 being the highest.
Dali leads the food sector with companies like Calbee Inc, Foshan Haitian Flavoring Food Co., Ltd., and Hormel Foods Corp.
Country Risk: Dali operates in China and generates most of the revenue from the region, which has resulted in a country risk score of 4.00. However, geographical concentration is a cause for concern for the company. Dependence on a limited area could affect the company’s operational and financial performance and increases its business risks by exposing it to the economic and geopolitical risks associated with the country, which could affect the demand for its products or disrupt the supply chain and restrict its market share and growth opportunities in the future.
Industry Risk: The company generates 62.86% of its revenue from the food sector, characterized by lower profit margins and weak growth projections compared to other sectors. The alcoholic beverage sector accounts for the rest of the revenue. Higher profit margins and growth projections characterize the alcoholic beverage sector. As a result, the company has a slightly above-average industry score of 3.32.
Operational Risk: Our operational risk score is based on four pillars – business positioning, scale, operational efficiency, and profitability. Healthy profitability margins, strong return, and efficiency ratios have positively impacted operational risk scores. However, a moderate scale of operations and the decline in revenues remain a cause of concern.
Financial Risk: High liquidity and near-zero leverage ratios have positively impacted the overall financial score. The same has resulted in a solid financial risk score of 4.71.
GlobalData risk scorecard for a sector provides the analysis of various risks a company is vulnerable to. Our risk framework comprises four pillars – country, industry, operational and financial. The country risk for an entity signifies the risk of operating in a particular country. GlobalData's proprietary country risk assessment framework is used to calculate the risk for individual countries. Industry risk is an integral part of risk analysis, and it implies the riskiness and stability of the industries in which a company operates. The operational and financial risk profile comprises a company's risk and returns potential based on its critical operational and financial metrics. Our scores are based on an average of the latest three fiscal year data.
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