Jiangsu Yanghe Brewery Ltd – Risk Profile
- As per GlobalData's proprietary risk methodology, Jiangsu Yanghe's overall risk score is 3.74, signifying a solid risk profile
- The country, industry, and financial risk pillars have boosted the overall risk profile of the company
- A smaller scale of operations and geographic concentration in China negatively impacted the operational risk scores
Jiangsu Yanghe Brewery (Jiangsu Yanghe) Ltd has a strong risk profile and is one of the top five companies based on our proprietary risk assessment of the alcoholic beverages sector in the consumer industry. The company's country risk, operational risk, and financial risk scores fare better than the industry average. However, low liquidity is a cause for concern, impeding the company's financial risk scores.
Jiangsu Yanghe is a manufacturer of wine and spirits. The company's product portfolio comprises white spirits, top-graded gifts liquor, and liquor for daily consumption. It also offers various types of cocktails, including Blue Velvet, White Fur Warriors, Beijing Brulee, Badnn' Baijiu, and Fig Special. The company is headquartered in Suqian, Jiangsu, China.
Jiangsu Yanghe is one of the leaders in the alcoholic beverages industry, with reported revenue of $3billion in 2021, a decline of 8.66% from 2020. However, net income showed an increase of 1.4% in 2021compared to 2020.
Risk Pillars
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.
Jiangsu Yanghe's overall risk score is better than the sector's average. Companies like WuliangyeYibin Co Ltd, Kweichow Moutai Co Ltd, and Lu Zhou Lao Jiao Co Ltd are the leaders in the sector.
Country Risk:
Jiangsu Yanghe 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's primary exposure is from alcoholic beverages. This sector is characterized by higher profit margins and high growth projections compared to other sectors, which has resulted in an industry score of 4.0.
Operational Risk:
The company has a moderate operational score of 3.48, primarily attributed to its business positioning. It primarily distributes its products within China, with Jiangsu Province as its main market, have affected the business positioning pillar. However, healthy mid-40s profitability margins and returns on equity have boosted the profitability and operational efficiency pillars.
Financial Risk: Jiangsu Yanghe's financial score of 3.83 is better than the industry average. Low debt levels reflect positively on the leverage and cash flow ratios. High inventory has impacted the liquidity ratios, which might prevent the company from meeting its short-term obligations efficiently, limiting its ability to capture growth opportunities in the market.
About our Methodology:
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 return potential based on its key operational and financial metrics. Our scores are based on an average of the latest three fiscal year data.
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