IPO failed three times, the final game of the Ba Ma tea industry is a small can of tea?

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Text|Silver Arrow Wealth View

Ba Ma Tea Industry, which failed three IPOs before listing, once again showed the anxiety of tea companies.

On the evening of September 28, according to the information disclosed by the Shenzhen Stock Exchange, Ba Ma Tea applied to withdraw the issuance of listing application documents. Except for the three years of the short listing of the New Third Board in 2015, from 2013 to the present, this is also the third failure of Ba Ma Tea Industry's impact IPO.

Considering that the IPO review will become more stringent in 2023, before the current round of withdrawal of the application of Ba Ma Tea Industry, the fellow chicken and Texas grilled chicken, which are also in the catering and life service categories, have also experienced IPO failures. At the same time, not only was the real meeting rate less than 50% in the first half of the year, but on October 7 and 8, Zhejiang Guoxiang and CP shares were successively called off IPOs.

Coupled with the recent rumors circulating in the industry that "the tea industry is included in the restricted list", all aspects have shown a lot of pessimism about whether the Bama tea industry and even the entire tea track can go public.

In this regard, we combine the prospectus of Ba Ma Tea Industry and the current situation of the tea market to come to the following views:

1. The failure of Ba Ma Tea Industry's third impact IPO, in addition to the external factors of the audit environment, mainly lies in the inaccuracy of its own positioning and the lack of core competitiveness of the product.

2. The difficulty of listing tea companies also means that the road of branding may no longer be the optimal solution for tea. At least in the recent Shanghai area to try to promote the beverage sugar content grading policy, sugar-free tea, which is getting more manufacturers' attention, may hide a new opportunity for tea manufacturers to break through the dilemma.

The comprehensive registration system "scares off" IPO, and the final game of the Ba Ma tea industry is a small can of tea?

From the perspective of the investment market review environment, Ba Ma Tea Industry's dedication to listing for many years is somewhat too eager.

After the failure to hit the small and medium-sized board in 2013, with the positioning of "refined tea processing" enterprises, Ba Ma Tea Industry entered the new third board in 2015, but was delisted in 2018 for unknown reasons.

Not long after that, in June 2020, the Shenzhen Stock Exchange issued the "Interim Regulations on the Application and Recommendation of Enterprises on the Growth Enterprise Market of the Shenzhen Stock Exchange", which included the refined tea manufacturing industry in the list of industries that "do not support their application for listing on the Growth Enterprise Market in principle".

However, in this regulation, it does not block the listing path of refined tea manufacturing enterprises, but encourages enterprises to carry out deep integration and innovation with new technologies such as the Internet, big data, artificial intelligence, and new energy. At least for these innovative transformation directions, they are not within the limits of the Shenzhen Stock Exchange.

According to normal business ideas, tea companies want to continue to pursue listing on the Shenzhen Stock Exchange and should have tried to integrate new formats. However, Ba Ma Tea Industry seems to "not believe in evil", and in 2021, with the positioning of "retail industry", it opened a sprint to the ChiNext board.

The end was obvious, although Ba Ma Tea received many inquiries during the period and updated the prospectus for 3 versions, and finally terminated the listing application in May 2022.

However, after experiencing the failure of the second IPO, Ba Ma Tea did not reflect much on the failure, but could not wait to disclose the prospectus in September 2022 to start the IPO process on the main board of the Shenzhen Stock Exchange.

Unfortunately, in addition to the rumor that "the tea industry was included in the restricted list", on February 17, 2023, the CSRC announced the full implementation of the stock issuance registration system, and promulgated relevant institutional rules to further clarify the requirements for key qualifications such as sector positioning and financial indicators.

The strict audit environment has prompted a large number of enterprises that do not apply the new regulations to give up the fluke mentality. According to incomplete statistics, in the first four months of 2023 alone, the number of companies voluntarily withdrawing IPO applications exceeded 75.

In such an environment, the Bama Tea Industry, which chose to hit the IPO for the third time as a "retail industry", is naturally difficult to meet more detailed regulatory requirements. Rao is so, Ba Ma Tea still insisted on withdrawing its application before the National Day, and this dedication to listing is really amazing.

According to the article on the Internet channel, the reason why Ba Ma Tea Industry showed a listing posture of "knowing that it cannot be done" is because of the gambling agreement and pressure from investors. In the absence of direct evidence, we are non-committal about the veracity of these speculations.

From the perspective of Yinjian Cai, the unfirmness and distrust of Ba Ma Tea Industry on its own track may be the deep reason for the frequent failure of IPOs.

The most direct performance is still as the former "refined tea manufacturing industry", Ba Ma Tea Industry has somewhat neglected to pay attention to the research and development of tea production.

According to the data disclosed in the prospectus, from 2019 to 2021, the sales expenses of Ba Ma Tea Industry were 358 million yuan, 429 million yuan and 576 million yuan, accounting for 35%, 33.85% and 33.04% of the total revenue, respectively. However, in terms of R&D expenses, they were 5.7022 million yuan, 3.2801 million yuan and 6.6412 million yuan, respectively, and the total revenue accounted for only 0.56%, 0.26% and 0.38%.

Especially after changing its positioning to "retail", the revenue focus of Ba Ma Tea Industry has gradually shifted to the "white-label" sales of customized procurement products. According to the prospectus, among the product categories sold by Bama Tea Industry, customized procurement products generally account for no less than 50%.

The tea production and marketing model of heavy marketing, light research and development, and high OEM cannot help but remind people of small cans of tea that also pursue asset-light marketing.

However, although small cans of tea have long been questioned by "excessive packaging", under the operation of marketing master Du Guoyang, it has anchored the brand image of high-end tea. The marketing story of "master tea" has pulled the small can of tea that lacks historical heritage all the way into the 2 billion yuan revenue club.

In contrast, Ba Ma Tea Industry, not only the chairman Wang Wenli is the 13th generation inheritor of the national intangible cultural heritage Tie Guanyin, before the transformation of the "retail industry", "Pearl Buck" fragrant Tie Guanyin also has a lot of popularity in the high-end tea consumption circle.

However, after paying a lot of marketing expenditure, Ba Ma Tea failed to tell the brand story well, and the proportion of "Pearl Buck" sales revenue in the total revenue during the reporting period also dropped from 20.28% to 18.22% and 16.29%.

On the road of light assets, Ba Ma Tea Industry has not only failed to replicate the marketing success of small cans of tea, but also lost its advantages in independent production and star products in order to seek shortcuts in the IPO process, continuously weakening the core competitiveness of Ba Ma Tea Industry.

In the current investment market environment, the review threshold will only become stricter, if the possibility of successful listing in the short term cannot meet expectations, is it also a way out for Ba Ma Tea Industry to become the next small pot of tea by tapping its own resources?

Lack of industry standardization, it is difficult for listed companies in the tea track?

Objectively speaking, even if the audit environment is relaxed, it is still difficult for the tea industry to go public.

The investment market is a standardized financial scenario. Whether it is to maintain the most basic principles of fair trade or to be responsible for the majority of investors, it is also reasonable to restrict industries that cannot form a unified standard for risk avoidance considerations.

Unfortunately, in the process of tea production and sales, standardization is a hurdle that cannot be bypassed. At least in the current tea production and marketing system, from raw materials to production, to sales, there is a lack of sufficient stability, which continues to reduce the potential commercial value of tea companies.

As the only production area in the world that can produce six major tea categories at the same time, the domestic tea market has unique advantages. However, limited by historical differences such as category, origin, and formula, it is difficult for the tea market to integrate resources on a large scale.

For example, nowadays, there are still some tea companies that do not have self-controlled tea production areas, and the main source of tea still relies on third-party procurement. This also leads to the tea industry is still dominated by small and medium-sized enterprises, under the same type of tea category, mixed with a large number of white-label products, not only can not ensure the stability of tea prices, quality control is even more difficult to control.

Coupled with the prevalence of the asset-light model, more and more tea companies are tilting their channel focus to franchisees in order to disperse cost pressure, and their ability to control end-of-line sales scenarios has also declined.

Just like Ba Ma Tea Industry, although it adopts a channel design that pays equal attention to direct management and franchise, in the actual operation process, the dependence on franchisees is becoming more and more serious. According to the prospectus, the sales revenue contributed by the franchisee channel during the reporting period has exceeded half of the total revenue.

The continuous expansion of the scale of franchisees has amplified the chaos in the production and marketing links of the tea industry, and also made false publicity and excessive packaging the norm. Tianyan investigation shows that in the past many years, most of the judicial disputes involved in the Ba Ma tea industry have been mainly infringement.

Even Ba Ma Tea Industry itself, as early as 2018, was called to the police by the Boao Forum because of false publicity about the "designated tea" of the Boao Forum for Asia on its official website and suspected forgery of authorization letters.

Under the relatively chaotic industry logic, although the domestic tea market has exceeded 300 billion yuan, it has not been able to get out of a listed company. Well-known tea companies such as Hangzhou Longjing Tea Industry, Fujian Anxi Tie Guanyin, Sichuan Zhuye Green Tea Industry, and Xinyang Maojian Group have all experienced setbacks in IPO failures.

Yinjian Financial View believes that at a time when the road of traditional tea branding is blocked, it may be possible to reap more possibilities by jumping out of tea that is already difficult to find innovation potential in categories and finding breakthroughs in the field of derivatives.

Especially for enterprises such as Ba Ma Tea Industry, which have their own superior core competitive resources, it is easy to open up the derivative product segment. Among them, as the tea drinking track that is most suitable for tea, sugar-free tea, which has risen rapidly in popularity in recent times, is worth trying in depth.

Just like the oriental leaves, which are now called "middle-aged men buy crazy", they have experienced no attention after being listed in 2010, and were even included in the list of the most difficult drinks to drink, but after the health and wellness appeal became the mainstream of the market in 2019, it has doubled in 2021.

Relying on the fit of health and wellness elements and the demands of young consumer groups, sugar-free tea is ushering in a window of rapid development.

For tea companies trapped in the existing production and marketing model, perhaps outside the road of branding, using basic advantages to enter the tea drinking track, maximize the use of tea resources, and deepen the cognition among young groups is the most positive direction to think about in the context of blocked IPOs.

It is hoped that Ba Ma Tea Industry can be released from the pressure of IPO as soon as possible and actively explore more market possibilities.