#FMCG Eight Talks##Consumption##Akuan Food##Ma Liuji##Li Ziqi#Ma Liuji, the OEM manufacturer behind Li Ziqi's hot and sour noodles, Sichuan Baijia Akuan Food Industry Co., Ltd. (hereinafter referred to as "Akuan Food") withdrew its IPO application. On December 20, the relevant person in charge of Akuan Food Securities Department responded in an interview with a reporter from Beijing Business Daily that the withdrawal of the listing application on the main board of the Shenzhen Stock Exchange was considered by the company based on the current capital market environment and policy guidance, combined with strategic planning and development. In the past few years, Akuan Food has been out of the circle in the convenience food market with its large single product red oil dough. However, as the convenience food track began to cool down, the performance growth rate of Akuan Food has slowed down year by year, and has even dropped to single digits. What will happen next for Akuan Food, which has terminated its listing, has become the focus of market attention.
According to the official website of the Shenzhen Stock Exchange's issuance and listing review information, the Shenzhen Stock Exchange announced its decision to terminate the initial public offering of Akuan Foods and its listing on the main board. According to the announcement, on December 7, 2023, Akuan Food submitted to the Shenzhen Stock Exchange the "Application of Sichuan Baijia Akuan Food Industry Co., Ltd. on Withdrawing the Application Documents for Initial Public Offering of Shares and Listing on the Main Board", and according to Article 62 of the "Shenzhen Stock Exchange Stock Issuance and Listing Review Rules", the Shenzhen Stock Exchange decided to terminate the review of the initial public offering of shares and listing on the main board of Akuan Food.
On December 20, on the withdrawal of the listing application on the main board of the Shenzhen Stock Exchange, the relevant person in charge of the Akuan Food Securities Department told the Beijing Business Daily reporter that the company's decision to adjust the listing-related work plan is mainly based on the current capital market environment and policy guidance and prudent consideration in combination with strategic planning and development.
Akuan Foods began to submit its prospectus in December 2021, and after several rounds of prospectus updates, the most recent submission of the prospectus was on June 28 this year. According to the prospectus, Akuan Food sought to go public this time, and originally planned to raise 665 million yuan to invest in the construction project of the health food industrial park (phase I) and the construction project of the R&D center, and planned to invest 535 million yuan and 130 million yuan respectively.
Regarding whether the termination of the listing will affect the advancement of the above two construction projects, the relevant person in charge of the Akuan Food Securities Department said that it is inconvenient to disclose it for the time being.
According to Zhu Danpeng, an analyst in China's food industry, the termination of Akuan Food's IPO is due to the adjustment of the overall strategy, and it is also possible to apply for Hong Kong stocks in the future, because the process of Hong Kong stocks will be relatively simple, and the review of IPO companies is also more convenient. From the perspective of the efficiency of capital empowerment, the possibility of Akuan Food going to Hong Kong stocks in the future will be relatively high, and it is also a shortcut chosen by many companies in the IPO process.
As for whether it will seek to go public again in the future, Akuan Food said that for the future listing plan, the company will consider it comprehensively in combination with its own financing needs and business development plans in the future.
According to the data, Akuan Food takes convenience food as its main business, and has its own brand and OEM services. It has the "Ah Kuan" brand based on red oil dough, the "Baijia Chen Ji" brand based on hot and sour noodles, and the three squirrels, Ma Liuji, Baicaowei, Li Ziqi and other brands. According to the prospectus, in 2022, the top five customers of Akuan Food's customized sales business are Ma Liuji, Three Squirrels, Li Ziqi, Sister Peach, and Baicaowei, and Ma Liuji is the largest customer, with a sales revenue of 50.3451 million yuan.
It is worth noting that as a convenience food company, Akuan Food has constant food safety problems. Whether it is a self-operated product or an OEM product, it has been revealed that there are product quality problems, and they have also been interviewed by the regulatory unit because of more complaints.
According to public information, in February 2022, a consumer broke the news that Akuan was suspected of eating rats in the red oil dough, although Akuan Food later issued a statement saying that the market supervision bureau, manufacturers and consumers jointly confirmed that the black part of the dough was caused by moldy deterioration of the dough cake caused by external contamination after unpacking, but the incident still affected consumers' brand impression of Akuan Food to a certain extent.
In 2023, in the 315 special report released by China Food Safety News, ammonium alum was added to the Ma Liuji hot and sour noodles and Li Ziqi hot and sour noodles of Akuan Food, which mentioned that excessive intake of ammonium alum affects the body's absorption of iron, calcium and other components. Akuan Food's explanation for this is that the addition of ammonium alum is in line with the range and dosage allowed by laws and regulations.
In addition, according to the complaint data of the Market Supervision and Administration Bureau of Longquanyi District, Chengdu, from 2020 to 2022, the number of complaints filed by consumers against the competent authorities on the grounds of overtime delivery, black spots on the dough, product damage and mold was 162, 202 and 566 respectively, and there were 96 complaints in the first quarter of 2023. On June 28, 2022, due to the concentration of consumer complaints, the Chengdu Market Supervision and Administration Bureau conducted an administrative interview with Akuan Food and urged rectification.
At present, the convenience food track has been highly concentrated, and the growth rate has slowed down, and what will happen next for Akuan Food, which has attracted much attention.
From the perspective of the convenience food market as a whole, the convenience food track has cooled down. In the first half of this year, the growth rate of the instant noodle business of giants such as Nissin Foods and Uni-President slowed down. In this way, in the fierce market competition, it has become a consensus in the industry that convenience food is becoming more and more difficult to sell.
According to Euromonitor data, the mainland instant noodle market is highly concentrated, with industry CR10 reaching 75.1% and CR3 reaching 59.7%. Among them, Master Kong ranks first in market share, accounting for about 40% of the market share, followed by Uni-President, which accounts for more than half of the market share, while Akuan Food's market share is only 2.1%, ranking seventh.
From the perspective of Akuan Food itself, although it has won a share of the convenience food market in the past few years with its large single product red oil dough, the loss of popularity in recent years has been very obvious, and the prospectus data shows that from 2020 to 2022, the number of active users of Akuan Food is 5.3756 million, 4.3521 million, and 2.7392 million respectively. In addition to the decrease in active users year by year, the number of repeat users of Akuan Food has also decreased from 873,800 to 370,800.
The most direct impact of user churn is a slowdown in performance growth. According to the prospectus, from 2020 to 2022, the operating income of Akuan Food will be 1.110 billion yuan, 1.214 billion yuan and 1.246 billion yuan respectively, with a growth rate of 75.89%, 9.40% and 2.65% respectively, and the net profit attributable to shareholders of the parent company in the same period will be 76.2649 million yuan, 58.9669 million yuan and 68.8182 million yuan respectively, a year-on-year increase of 222.49%, -22.68% and 16.71%.
On the question of how to develop the convenience food business in the future, the relevant person in charge of the Akuan Food Securities Department told the Beijing Business Daily reporter that the company will still develop into the main business of convenience food in the future and continue to focus on the operation of this business.
Shen Meng, director of Xiangsong Capital, said that Akuan Food is currently in the mature field of food manufacturing, which does not have the characteristics of high growth and high returns, so the simple pursuit of scale expansion is easy to cause low-quality development. If Akuan Foods is listed for the sake of listing, Hong Kong stocks do have more flexibility, but such a listing is not necessarily a better choice for investors and enterprises.
Beijing Business Daily reporter | Guo Xiujuan Zhang Han
Image source: Akuan Food Weibo
Edited by Topol