China Fund News reporter Li Zhi
Another "light of domestic goods" is about to go public.
On May 12, Weilong submitted an IPO application to Hong Kong, which may impact the "spicy first share". The 5 cent pack of spicy noodles officially embarked on the road of counterattack.
Weilong completed the pre-IPO round of financing
Hillhouse, Sequoia, Tencent, etc. are listed
According to Tianyancha data, Weilong Food Group has recently completed a pre-IPO round of financing. This round of financing lineup is very strong, jointly led by CPE, Hillhouse Capital 3.56 billion yuan, in addition, Tencent Investment, Yunfeng Fund, Sequoia Capital, Tianyi Capital, Welfare Capital, Haisong Capital and other well-known institutions jointly invested in the shares. The financing was exclusively financial advisored to Ippo Capital.
It is worth mentioning that this is the first time that Weilong has introduced external capital since its establishment more than 20 years ago. Some people in the investment industry said that the valuation of Weilong after this round of financing was as high as 70 billion yuan.
According to the prospectus, before the IPO, and Global Capital held 92.17% of the shares, and Weilong Future Development Co., Ltd. held 1.98%. In addition, CPE Yuanfeng holds 2.32% of the shares, Hillhouse Capital holds 1.17%, Tencent and Yunfeng Fund hold 0.64% of the shares, Sequoia Capital, Duckling Fund, L.P., and Welfare Investment all hold 0.29% of the shares, and Haisong Capital holds 0.21% of the shares.
The "spicy first stock" is coming
Weilong submitted an IPO application to the Hong Kong Stock Exchange
According to the documents of the Hong Kong Stock Exchange, on May 12, Weilong officially submitted a listing application and launched an IPO. Morgan Stanley, CICC and UBS acted as contact sponsors.
Weilong is The largest spicy snack food enterprise in China, with strong growth momentum and influential brands. According to the data, in 2020, Weilong ranked first in China's spicy snack food market, with a market share of 5.7%, 3.8 times the second largest participant in terms of retail sales, and ranked first in the market share of seasoned noodle products and spicy leisure vegetable products.
At the same time, its audience is also relatively young, which is highly loved by young consumers. According to Frost & Sullivan, 95.0% of Veron's consumers are 35 years old and under, and 55.0% are young people aged 25 and under. At the same time, Weilong is the most well-known and most popular spicy snack food brand in China, and in terms of brand awareness, Weilong is the first brand of leisure food in the minds of young people aged 25 and below.
Image: Weilong official website
For the use of the amount of funds raised in the Hong Kong IPO, Weilong said in the prospectus that it will build new factories, expand and upgrade production facilities and supply chain systems to improve the company's production capacity, warehouse management and product quality; for prudent investment or acquisition of enterprises that have synergistic effects on its business; it will be used to further expand sales and distribution networks; for brand building; product research and development activities and enhance research and development capabilities; to promote the digital and intelligent construction of its business; and for working capital and general corporate purposes.
Liu Weiping with a high school education
Build Weilong into a "10 billion empire"
Inconspicuous spicy noodles, but can achieve a valuation of tens of billions of enterprises, only the founder of High Chinese rely on the 5 cents of spicy noodles, into today's "ten billion empire".
Public information shows that in 1978, Liu Weiping was born in Pingjiang County, Hunan Province. Liu Weiping learned the craft of making dried sauce with his mother since he was a child, from soybean screening, soaking, refining, filtering, and finally brine, he is familiar with every aspect of dried sauce production.
In 1999, Liu Weiping and Liu Fuping brothers came to Luohe, Henan from their hometown of Hunan to start a business, and by chance, they got inspiration to start producing spicy food, and founded Weilong Food in the same year.
After the development of the factory gradually entered the right track, Weilong moved into the private industrial park in 2003-2004, committed to creating a series of "Weilong" leisure food, and put it in luohe, Zhumadian, Fugou multiple production bases, Weilong became a famous brand in Henan Province. From 2010 to 2013, he created the "Kissing Mouth" series and entered the soy products industry.
In 2010, together with the popular star Zhao Wei, a strong attack, launched the "Weilong" classic series; in 2012, Weilong invited the popular actress Yang Mi to join in, and endorsed the series of products such as "kissing mouth", "kissing mouth tofu" and so on. Due to the endorsement of the two celebrities and the multi-means marketing of Weilong, the brand image of Weilong has gradually become "high-end" and has also been trusted by more and more consumers.
Although Weilong is currently the industry leader, Weilong does not seem to have been able to shake off labels such as "unhealthy" and "unsafe". The "spicy strips" with scattered industries and frequent problems have repeatedly appeared on the "unqualified product list" of local market supervision departments. Although in December 2019, the State Administration for Market Regulation finally unified the production license management standards for spicy strip foods, the dispute over the use of additive standards for spicy strips was settled. However, at present, there are still nearly 20 kinds of ingredients in Weilong spicy noodle products, including monostearate glycerides, disodium nucleotides, terbutylhydroquinone, monosodium glutamate and other added ingredients.
In the prospectus, Wei Long said that it is committed to using popular ingredients such as soybeans, flour and kelp, adhering to the product concept of "industrial thinking to maximize the value of the origin of food". At the same time, it has been innovating continuously, and in recent years, it has successfully expanded into categories such as vegetable products and soy products, accumulating a wide and loyal fan base across multiple age groups. As the industry leader, Weilong has single-handedly pulled the spicy noodle industry into the right track, but in order to create a healthier spicy food, Weilong still needs to work hard.
Weilong's annual revenue is 4.1 billion yuan
The gross profit margin is comparable to nongfu spring
Does this minimum pack of 5 cents spicy strips make money? After reading the IPO file, you will find that the "spicy strips" not only make money, but also have a high gross profit margin!
According to the disclosed data, Weilong's revenue has grown rapidly in recent years and its profitability is excellent. In 2018, 2019 and 2020, the total revenue reached RMB2,752 million, RMB3,385 million and RMB4,121 million, respectively, and profit was RMB476 million, RMB658 million and RMB819 million, respectively.
It is calculated that the compound annual growth rate from 2018 to 2020 will reach 22.4%. According to the Frost & Sullivan report, this growth rate far exceeds the compound annual growth rate of 4.1% in China's snack food industry over the same period. In addition, Weilong's net profit margin reached 19.9% in 2020, which is much higher than the average net profit margin of about 10% in China's snack food industry in 2020, according to the Frost & Sullivan report.
Weilong products include three categories: seasoned noodle products, vegetable products, soy products and other products. In 2020, the annual retail sales of two categories exceeded RMB1 billion, of which the annual retail sales of four single products exceeded RMB500 million.
In addition, Weilong's total gross profit and gross profit margin have shown a gradual increase trend in recent years. Gross profit in 2018 increased by 31.3% from 955 million yuan to 1.254 billion yuan in 2019 and further increased by 24.8% to 1.566 billion yuan in 2020, Wei Long said, mainly due to revenue growth.
Gross margin also increased from 34.7% in 2018 to 38% in 2020. Wei Long pointed out that the increase in gross profit margin was mainly due to the increase in the selling price of seasoned noodle products and the change in product mix. It is worth mentioning that Weilong's gross profit margin is comparable to That of Nongfu Spring. Known as nature's printing press, Nongfu Spring's gross margin has been stable at more than 50% over the past three years.
In terms of market share, Weilong is The largest participant in spicy snack food in China. In terms of retail sales, the market share of the top five players in 2020 is 10.7%. In 2020, Weilong was China's largest player in spicy snack food, with a market share of 5.7%, 3.8 times the second largest player in terms of retail sales. According to the data, as of December 31, 2020, Weilong cooperated with more than 1,900 dealers, covering more than 570,000 retail terminal outlets.
At the same time, Weilong is also constantly strengthening the layout of major e-commerce platforms. Revenue from online channels increased by 52.2% from $250.8 million in 2019 to $381.8 million in 2020. In addition, through e-commerce and social media channels, interactive marketing campaigns are also used to create a trendy and interesting brand image.
Edit: Xiao Mo
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This article originated from China Fund News