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- Chief Business Intelligence
- Chief Business Intelligence
Introduction: The health care product industry, which has been criticized for its "IQ tax", is about to usher in a "mom-and-pop shop" IPO.
On the evening of May 2, Hong Kong model couple Guo Jinan and 15-year-old Ou Qianyi officially announced their divorce, the two have been in love for 7 years, 18 years of married life, and both children and daughters.
In the official announcement post of the divorce, Guo Jinan even revealed that the two have lived separately since two years ago, "I am grateful that we have also paid for each other and worked hard for the family." ”
On the other hand, in stark contrast to Guo Jinan's "divorce", on May 27, Guo Jinan's sister Guo Zhiyin and his brother-in-law Li Risheng's health care product company, Caoji Group Holdings Co., Ltd. (hereinafter referred to as Caoji Group) submitted a prospectus to the Hong Kong Stock Exchange.
Interestingly, in March 2022, Guo Jinan chose to withdraw from the company and transferred 30% of his shares in Caoji International to his sister Guo Zhiyin at a very low price.
The timing of the equity transfer coincides with the timeline of the separation of his ex-wife Ou Qianyi, so the distribution of the property between the two has also aroused heated discussions, and some netizens speculated whether there is a suspicion of transferring property within marriage.
Although there is a lot of speculation about the reasons for the divorce, in any case, the company of Caoji International is the family business of Guo Jinan, and his ex-wife Ou Qianyi has no sense of participation in the whole process.
Cao Ji International was founded in 1999 by Guo Jinan and his sister Guo Zhiyin, and the siblings held 60% and 40% of the shares respectively at the beginning of its establishment.
After Guo Jinan withdrew, the current controlling shareholders of the company are Guo Zhiyin and his spouse Li Risheng, Guo Zhiyin holds 90% of the shares, and Li Risheng holds 10% of the shares, which can be said to be a complete family "mom-and-pop shop".
Source: Prospectus
Guo Jinan serves as a non-executive director in Caoji Group, playing the role of "star spokesperson", mainly participating in various endorsement activities and important celebrations, and can get 640,000 Hong Kong dollars (about 595,800 yuan) just for his salary every year.
With the blessing of the star halo, Caoji Group's revenue and net profit have ushered in double-digit growth, and now it is confident to come to the Hong Kong stock market to knock on the door of capital.
When the first store opened
The company's gross profit margin exceeds 70%
The "elixir" is not licensed in the mainland
As a health care product company, Caoji Group sells products that are quite marketable among middle-aged and elderly people, such as health care products with ingredients such as Cordyceps and Ganoderma lucidum for the immune system, and the main focus is the concept of traditional Chinese medicine.
In addition, there are also men's and women's health products that "nourish yin and aphrodisiac", as well as NMN anti-aging products known as "elixir".
In April 2024, it entered the pet health care products market and launched two health care products for pet digestive health and anti-allergy functions.
As of May 20, 2024, Caoji Group has 8 self-owned brands, involving 50 health products, 21 beauty and skin care products and 2 pet health products.
However, even though Caoji Group was established in 1999, not many people know about this brand, and even fewer people are familiar with it in the mainland market.
It is not until this year that more and more people know about it, which shows that if you want to break out of the world in the health care product track, you must go through a long period of precipitation, of course, this is also inseparable from Guo Jinan's conscientious publicity.
As a company with celebrity endorsement and family characteristics, Caoji Group's business is indeed full of infinite possibilities, and the company's revenue has grown steadily in the past three years.
In the three years from 2021 to 2023, Caoji Group's revenue will be HK $189 million, HK $208 million, and HK $251 million respectively, with a compound annual growth rate of about 15.4%; The net profit was about HK $23.181 million, HK $27.972 million and HK $39.502 million respectively, with a compound annual growth rate of 30.5%.
Those who make health care products usually lie down to make money, and the gross profit margin is very impressive.
From 2021 to 2023, the gross profit margin of Caoji Group will be above 70%, 71.99%, 71.91%, and 73.82% respectively.
Among them, the gross profit margin of anti-aging products is even more terrifying, and in fiscal year 2023, Caoji Group's anti-aging products will reach 84.6%! It is also the product category with the highest gross profit margin of the group, and it is really a woman's money that is easy to "earn".
Caoji Group's anti-aging products are also a hot ingredient in the past few years - NMN, after this ingredient was hyped by capital, it was once boasted of being miraculous, and it was also known as the "longevity medicine" used by the rich, and related concept stocks also continued to strengthen.
SEARCHING ON THE OFFICIAL WEBSITE OF GRASS JI GROUP, ZINOMALL, IT WAS FOUND THAT THE PRICE OF ONE GRASS JI NMN 24000+ IS AT HK $1638 / box (about RMB 1525 / box), and the price of another grass Ji NMN 10000+ is at HK $1188 / box (about RMB 1106 / box), the latter shows that it has been sold out.
It's just that this product is currently only sold in Hong Kong, because in the mainland market, the compliance of NMN has not been hammered so far.
NMN has not yet obtained licenses for medicines, health foods, food additives and new food raw materials, so it cannot be produced and operated as food, so consumers can only buy products featuring this type of ingredient through cross-border e-commerce platforms.
Nearly 300 million advertisements in 3 years, no R&D expenses
Like many health care products that have been criticized for "IQ tax", Caoji Group is also inseparable from the characteristics of "emphasizing marketing and ignoring research and development".
In the financial report, Caoji Group did not even disclose the R&D expenses, perhaps because the numbers were too small to be embarrassed to list.
Marketing expenses, on the other hand, account for a large part of the company's revenue.
From fiscal year 2021 to fiscal year 2023, the sales and distribution costs of Caoji Group were HK $86.821 million, HK $93.907 million, and HK $107 million (about RMB 80.8269 million, 87.4237 million yuan, and 100 million yuan), respectively, and the sales and distribution costs accounted for 46.03%, 45.19%, and 42.63% of the current operating income respectively, accounting for almost half of the revenue.
Nearly 300 million RMB was spent on marketing expenses in 3 years! That's even more than its net profit in three years combined.
So I can't help but sigh, how much premium space does the product get to consumers? And what is the value of the product itself?
One of the characteristics of the health care products industry is that it needs to burn money to promote popularity, constantly advertise to occupy consumers' minds, and rely on celebrities and Internet celebrities to reduce consumers' doubts.
Therefore, this is a common problem in the industry, and basically the marketing expenses of these health care product companies are the bulk of the expenses.
This is why in this IPO, 3 of the 5 projects raised by Caoji Group are related to marketing, such as expanding, improving and optimizing the sales network, and hiring more sales promoters to be stationed in the stores of "Customer A".
Judging from the prospectus, in the composition of Caoji Group's sales and distribution costs, employee costs account for the largest proportion, accounting for 50% of the current revenue. At present, the company has a total of 230 employees, including 164 employees responsible for sales and 22 employees responsible for marketing.
In addition, although the prospectus did not disclose specific data on R&D expenses, it did not prevent Caoji Group from being able to keep the "efficacy" of its products up to date.
For example, the hot-selling wall-breaking Ganoderma lucidum spore powder, after the epidemic, it claims to enhance the body's immunity. At present, it has become a must-have nourishing health care product for middle-aged and elderly people. At the same time, for young people, it has the effect of beautifying and improving overall health.
Although Ganoderma lucidum spore powder is still questioned, it does not prevent it from becoming an "all-rounder" of health conditioning by means of marketing.
Moreover, Caoji Group does not have its own factories and production lines, and its own brand products are mainly produced by manufacturers in the form of OEM, that is, OEM production.
By outsourcing manufacturing, brands are only responsible for advertising and operations, so manufacturers may fail to comply with quality control requirements when delivering products, which can lead to food safety issues.
As a health care product industry, once a food safety problem breaks out, it is equivalent to cutting off the back road, and it is extremely difficult to repair a good reputation in the future.
At the same time, the unusually high marketing expenses have also eroded its gross profit, and in the fierce market of Hong Kong's health care products, a business without a moat, relying on momentum alone to make a name for itself will not only affect its profit performance, but also may weaken its credibility in the eyes of consumers.
Therefore, it is not so easy to knock on the door of capital, after all, the uncertainty and limited growth that Caoji Group will face in the future will limit its valuation imagination.
Are health supplements an "IQ tax" or a "tonic"?
"As long as you can't eat any problems, the effect depends on the brain, and the general routine of health care products!"
On the packaging of health care products, there is usually a sentence: "Health food is not a drug and cannot replace drug treatment", and even the merchants themselves cannot package tickets for efficacy.
It can be said that health care products are a market without truth, and there is a typical thinking mode of "if you believe it, if you don't believe it, you don't believe it".
After all, the state has approved the production of health food, which at least shows that it is not harmful.
However, foreign countries have always called this kind of health care products "dietary supplements" or "nutritional supplements", which are foods that can regulate the functions of the body, are not for the purpose of treating diseases, and do not produce any acute, subacute or chronic harm to the human body.
In the final analysis, if you can't cure the disease but only have a conditioning effect, it is better to go to bed early and get up early, eat more vegetables and fruits, and maintain regular fitness, which is more effective than any health care products, not to mention that if you want to anti-aging, prevent gravity, or fitness is more reliable.
Finally, marketing expenses are too high, IQ taxes, no growth, and product efficacy is unimaginative...... It can be said that Caoji Group still has many challenges to face, and whether it can be successfully listed can only wait and see.
Have you used any supplements? Do you think health supplements are an IQ tax? Welcome to leave a message in the comment area to discuss and express your opinions or opinions, thank you.
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