Capital Allocation & Financial Performance: The Comparison Of Three Milk Listed Companies

After the Asian Financial Crisis, a lot of enterprises' price still exceed the MSCI (Morgan Stanley Capital International Inc.) global index in Asia. These enterprises implement Asset-Light Strategy, with the intangible assets. The operation mode makes enterprises able to distribute the inside and external relevant resources effectively as the key structure of enterprises, and creates unique value for customers. This paper studies three IPO milk companies (Shanghai Bright Dairy??&??Food Co.,?Ltd.(SBDF); Inner??Mongolia??Yili??Industrial??Group??Co.,Ltd. and Beijing Sanyuan Foods Co.,Ltd.). They were been paid close attention to extensively in the past two years. Regarding industry chain of the dairy products as the clue, we analysed capital allocation tactics of four aspacts separately, in milk source, product mix, brand marketing and logistics link. We found: (1) Asset-Light Strategy has been benefit to strengthening enterprise's long-term earning capacity; (2) Implementing Asset-Light Strategy, SBDF got a higher ROIC (Return on Invested Capital) than other international and domestic first-class milk enterprises except No. one Nestle of the world; (3) Asset-Light Strategy runs through the whole industry chain in SBDF, with the obvious coordination function, it has promoted the financial performance.