Wei Ya and his wife bet on "Huawei in the beauty industry", their net worth soared by 200 million, Juzi Bio was listed, and the gross profit margin was close to Moutai

Source of this article: Times Finance Author: Wen Ruonan

Image source: Picture Bug Creative

Wei Ya and his wife bet on a medical beauty company with a market value of nearly 25 billion yuan, and won their first IPO after fading out of live streaming for nearly 1 year.

On November 4, the "first strand of collagen" halo above his head, Juzi Bio (02367. HK) is listed on the Hong Kong Stock Exchange. According to the announcement, Juzi Biotech issued 22.6088 million shares at an issue price of HK$24.3 per share, raising a net amount of HK$496 million.

Founded in 2000, Juzi Biotech's main business includes biomaterials, biomedicine, nutrition and health, dermatology, beauty and skin care, etc., and is currently one of the world's largest recombinant collagen manufacturers, known as "Huawei in the beauty industry".

"As a new concept beauty product, collagen has great development potential, especially after the mass production of recombinant collagen, there are many conceptual stories that can be told, but the core is mass production and marketing, which are the main influencing factors." Shi Lichen, an expert in pharmaceutical strategic marketing, told Times Finance.

According to the prospectus, on October 14, 2021, Juzi Biotech distributed 37.98% of its share capital to investors such as Hillhouse Investment and CPE Yuanfeng at a price of 20 yuan per share, with a financing amount of up to 7.360 billion yuan, of which Qianyi Holdings Limited (hereinafter referred to as "Qianyi") is one of the investors. After the equity penetration, Weiya's husband Dong Haifeng is the ultimate beneficiary of Qianyi.

According to the prospectus, Qianyi holds a 0.84% stake in Juzi Biotech after its global offering. On the first day of listing, Juzi Biotech finally closed at HK $26.70 per share, up 9.88%, with a total market value of HK $26.476 billion (equivalent to about RMB 25 billion). According to this calculation, the market value of the shares of Juzi Bio held by Weiya and his wife exceeds 200 million yuan.

The two couples behind the "first strand of collagen"

The biggest feature of Juzi Biotech lies in its scientific research genes, and its core recombinant collagen-related products and technologies are derived from the research results of Dr. Fan Daidi, executive director and chief scientific officer of the company. This is the starting point of the story of "The First Strand of Collagen".

Born in Pucheng County, Shaanxi Province in 1966, Fan Daidi received a bachelor's degree in inorganic chemical engineering from Northwest University in 1988 and a master's degree in chemical engineering three years later. In 1994, Fan Daidi successfully obtained a doctorate degree in biochemical engineering from East China University of Science and Technology, becoming the first female doctor in biochemical engineering in China, and returned to her alma mater Northwest University to teach after graduation.

According to the official website of Northwest University, Fan Daidi is currently the dean of the School of Chemical Engineering of Northwest University and the dean of the Institute of Biomedicine of Northwest University.

Fan Daidi and her husband Yan Jianyacha got married from Northwest University. In 1988, Yan Jianya received a bachelor's degree in chemical engineering, and after graduating from university, he successfully stayed on to teach and became a chemical engineering teacher.

In 2000, Fan Daidi and his research team successfully developed recombinant collagen technology, and in 2003, they discovered a collagen close to humans, achieving a milestone breakthrough in the field of collagen biomaterials. The mainland has become the first country in the world to mass-produce human-like collagen materials, and Fan Daidi is also known as the "mother of human-like collagen".

According to the official website of Juzi Biotechnology, in 2005, the company's proprietary recombinant protein technology, that is, a human-like collagen and its production method, obtained the industry's first invention patent authorization in China, and won the "China Patent Gold Award" in 2016.

Compared with traditional animal collagen, human-like collagen has the characteristics of no viral hidden dangers, excellent biological compatibility and efficacy, and low immunogenicity, which effectively avoids the virus hidden dangers and rejection reactions of traditional animal-derived collagen, and overcomes the drawbacks of inaccurate clinical efficacy and unstable quality of terminal products caused by animal age differences and species differences of traditional animal collagen.

It was in 2000 that Fan Daidi and Yan Jianya established Juzi Biotechnology, which crossed from academia to business, focusing on the three major fields of functional skin care products, medical dressings and functional foods.

Currently, Fan Daidi serves as the executive director and chief scientific officer of Juzi Biotech, Yan Jianya serves as the chairman, executive director and CEO of Juzi Biotech, and their 27-year-old daughter Yan Yubo joined the company after graduating with a master's degree and currently serves as the company's joint company secretary and board secretary.

According to the prospectus, at the end of 2021, Juzi Biotech opened a pre-IPO round of financing, and star capital such as Hillhouse Investment and CPE Yuanfeng entered the market, subscribing for 37.98% of the company's shares at a price of 20 yuan per share, with a financing amount of 7.360 billion yuan.

According to the prospectus, a company named "Qianyi Holdings Limited" (hereinafter referred to as "Qianyi") was on the list of investors, and it participated in the A-1 round of preferred shares and A-2 preferred stock financing of Juzi Biotech for a total consideration of 168 million yuan, holding 0.86% of the equity of Juzi Biotech before the global offering, followed by 0.84% of the equity after the global offering.

Qianyi is a company incorporated in the British Virgin Islands on 11 October 2021 and is controlled by Shanghai Qianyi Enterprise Management Partnership (Limited Partnership) ("Shanghai Qianyi"). Tianyan investigation shows that the ultimate beneficiary of Shanghai Qianyi is Weiya's husband Dong Haifeng.

In addition to investment, Juzi Bio's brand "Kefumei" has also appeared in Weiya's live broadcast room many times, and the two sides have cooperated in many live broadcasts. In 2021, Weiya also stood for Juzi Bio at the Haikou Consumer Expo, and when the pre-sale of "Double 11" opened in advance in 2021, Fumei became the top 5 of Weiya's live broadcast room sales, reaching more than 50 million yuan.

The gross profit margin of the product is close to Moutai

Not only was he favored by Wei Ya and his wife, but also pulled Hillhouse Capital, why is Juzi Bio?

According to the official website, Juzi Biotech focuses on the industrial direction of functional skin care products, medical devices, functional foods and formula foods for special medical purposes, mainly including eight major brands: Fumei, Cleargold, Preprecipitous, Traceable, Ping, Liyan, SKIGIN and Ginginnoside.

In recent years, with the improvement of public awareness of skin care, functional skin care products have won the favor of many consumers. Not only that, but the policy is also favorable. In January 2021, the State Administration for Market Regulation promulgated the Measures for the Administration of Cosmetics Registration and Filing, which sets out clear requirements and definitions for new cosmetic raw materials, registration and filing management, supervision and management, legal liability and other aspects. This will make some small and medium-sized enterprises or manufacturers unqualified products and raw materials be cleared out of the market, and then promote the standardized development of the functional skin care industry.

With the patent of human-like collagen, Juzi Bio rode the east wind. According to data from the State Medical Products Administration, Shaanxi Juzi Biotechnology Co., Ltd., a wholly-owned subsidiary of Juzi Biotech, has obtained 12 Class II registration certificates for medical devices, covering different types such as human-like collagen dressings and medical skin repair dressings.

The prospectus shows that the performance of Juzi Biotech has continued to grow in the past three years. In 2019, Juzi Biotech achieved revenue of 957 million yuan, which has broken the 1 billion yuan mark to 1.191 billion yuan in 2020, and further increased to 1.552 billion yuan in 2021. From January to May 31 this year, the company has also achieved revenue of 723 million yuan, an increase of 202 million yuan over the same period in 2021.

From the perspective of net profit, from 2019 to the first five months of 2022, the net profit of Juzi Biotech was 575 million yuan, 826 million yuan, 828 million yuan and 314 million yuan respectively, and during the same period, the adjusted net profit was 575 million yuan, 827 million yuan, 851 million yuan and 336 million yuan respectively.

From the perspective of specific business, Fumei and Cleargold have supported most of the performance of Juzi Bio. According to the prospectus, from 2019 to the first five months of 2022, the combined revenue of the above two brands was 771 million yuan, 981 million yuan, 1.424 billion yuan and 667 million yuan respectively.

In addition to the continuous growth of revenue, the gross profit margin of Juzi Biologics products cannot be underestimated. According to the prospectus, from 2019 to the first five months of 2022, the gross profit margin of Juzi Biotech was 83.3%, 84.6%, 87.2% and 85.0% respectively. This figure is not only higher than the 2021 Huaxi Biotechnology (688363. SH) has a comprehensive gross profit margin of 78.07%, and it is close to Kweichow Moutai (600519. SH). Financial report data shows that in 2021, the gross profit margin of Kweichow Moutai's alcohol business will be 91.62%.

In addition, the trend of marketing over R&D is also reflected in Juzi Bio's financial reports. According to the prospectus, from 2019 to the first five months of 2022, the research and development costs of Juzi Biotech were 11 million yuan, 13 million yuan, 25 million yuan and 14 million yuan respectively. However, during the same period, its marketing expenses were 94 million yuan, 158 million yuan, 346 million yuan and 196 million yuan respectively.

From the perspective of the main purpose of Juzi Bio's IPO fundraising, marketing is still the focus of fundraising investment. According to the prospectus, "approximately 46% of the proceeds will be used to strengthen its omni-channel sales and distribution network and conduct science- and knowledge-driven marketing activities to enhance brand awareness", "about 28% of the net proceeds will be used to expand production capacity related to the combination products, i.e. bioactive ingredients", while R&D investment accounted for only 11%.

In fact, despite the strong momentum of Juzi Bio, there is no shortage of competitors in the recombinant collagen track.

Since the beginning of this year, Guangzhou Chuanger Biotechnology Co., Ltd. and Shanxi Jinbo Biopharmaceutical Co., Ltd. have sought to go public. Even the medical beauty giant Huaxi Biotech acquired Yierkang Biotech, which has been deeply engaged in the collagen market for 233 million yuan in April this year.

Guosheng Securities Research Report shows that in 2020, collagen skin care products accounted for 21.7% of the functional skin care products market, with a market size of 4.1 billion yuan, and in the future, with the continuous advancement of collagen industrialization and consumers' awareness of collagen ingredients, the penetration rate of collagen ingredients is expected to continue to increase, reaching 30% by 2025, and the market size can also be expanded to 19.6 billion yuan.