Fake meat is the real and yummy thing for puntersBusiness | Ivan Tong 17 May 2019
Shares of imitation meat-makers Beyond Meat hit a new high again, rising over 9 percent on Wednesday night after recording an astounding 163 percent increase on their market debut on May 2.
Apparently unaffected by the escalating Sino-US trade war that has been spooking the market, the share is surging on a path of its own.
The plant-based burger and sausage maker's rally was further boosted by the news that Canada's coffee chain Tim Hortons will introduce Beyond Meat's plant-based sausages.
We have to take our hats off to the North Americans for their inventive spirit - trying to eat meat while drinking coffee, just like Hongkongers who yum cha with mock chicken, mock goose and mock barbecued pork!
Imitation meat-makers are not only welcomed by the US stock market as more than 10 vegan mock-meat stocks have also listed in the A-shares market and done well.
Sadly, Hong Kong Exchanges and Clearing (0388) has not yet introduced these stocks, which would give local punters chance to buy them even though they are unfamiliar with this type of "fake meat."
Jokes aside, let us figure out how much value these imitation meat-makers have.
I think Beyond Meat - which implies it is better than meat - is a good name and it does not matter whether the product is real meat or not.
But in terms of investing, the more elusive the concept the better, as it can stir the imagination of investors.
Imitation meat has a relatively short history - it was born out of the growth of veganism and has become a trend among the scientific community.
There are two types of man-made meat. One is soy protein meat, which use soy or other vegetable protein as a substitute for animal protein. Another uses stem cells from animals which are grown into muscle tissue and combined to make meat.
The market for mock meat has been helped by the increase in the number of vegetarians worldwide.
However, imitation meat is much more expensive to produce than real meat.
In addition, the biggest hurdle it faces is that meat lovers will not want it while vegetarians or those who want vegetarian dishes have a wealth of options in vegetarian restaurants.
Thus, there's limited scope for the development and growth of the imitation meat market.
Moreover, according to a US research firm's data, the global meat substitutes market was estimated at US$4.6 billion last year and is predicted to reach US$6.4 billion by 2023.
These figures aren't very attractive.
However, investors who are bullish about it point to its advanced technology and environmental credentials. Fake meat has also become so sophisticated it can imitate the flavor and texture of real meat. They also believe its prices will fall and have confidence in the mock-meat market.
Imitation meat makers have been supported by big names in recent years.
On the heels of Beyond Meat's successful debut, Impossible Foods - backed by celebrities such as Serena Williams and Katy Perry - has raised US$300 million in the latest round of funding ahead of a possible initial public offering with Li Ka-shing, Temasek and famous American venture capital firm Khosla Ventures among its institutional investors .
Investors should always carefully examine a company's prospects but even though we know that Beyond Meat will not generate significant revenues in the future, its valuation has increased to around US$5.2 billion, much higher than Impossible Foods.
Some investors are worried that the market is too bullish about imitation meat and that these stocks could suffer the same fate as the dot-coms, whose bubble burst in 2000.
I can't say if this will happen, but if imitation meat-makers start trading in Hong Kong, I believe retail investors will line up for a bite of this stock.
is Editor in Chief of The Standard