New stock pricing | "Hong Kong's number one baijiu company" Zhenjiu Lidu received 1.74 times oversubscription, with a price per share of 10.82 Hong Kong dollars.

Futu news on April 26th, Wednesday,$ZJLD (06979.HK)$announced that the company will issue 0.491 billion shares, priced at 10.82 Hong Kong dollars per share, 200 shares per hand, expected to be listed on April 27th.

In the public offering stage, Zhenjiu Lidu received approximately 1.94 times oversubscription, with a final number of 49.07 million shares allocated to the public offering, accounting for approximately 10% of the total shares offered (before any exercise of over-allotment options). A total of 0.01067 million valid applications were received, with a 100% successful application rate for one lot, subscribing for one lot with stability.

In addition, the international offering has been oversubscribed, with the final number of shares offered at approximately 0.442 billion, equivalent to around 90% of the total shares offered (before any exercise of over-allotment options). Futu news has compiled the relevant data in the table below:

Company Profile

Zhenjiu Lidu is a baijiu company that produces primarily mid- to high-end baijiu products with a sauce fragrance profile. According to Frost & Sullivan data, based on 2021 revenue, Zhenjiu Lidu ranks 14th among all baijiu companies in China, with a market share of 0.8%. During the past record period, Zhenjiu Lidu has grown at a rate far exceeding the industry average.

Operates four major baijiu brands, including the flagship brand.Zhenjiu , as well as the vibrant brand Li Du , and two region-leading brandsXiangjiaoAnd KaitouxiaoAmong them are the four major baijiu brands in China.

Financial Overview

In terms of financial conditions, the company's revenue in the fiscal years 2020, 2021, and 2022 were 2.399 billion yuan, 5.102 billion yuan, and 5.856 billion yuan respectively. The compound annual growth rate of revenue from 2020 to 2022 was 56.24%. The net income for the same period was 0.52 billion yuan, 1.032 billion yuan, and 1.03 billion yuan, with a compound annual growth rate of profit from 2020 to 2022 at 40.74%.

Industry Overview

In 2021, based on income, China's baijiu market share accounted for 69.5% of the Chinese beverage alcohol market, surpassing the 49.9% market share of wine in the French beverage alcohol market and the 50.5% market share of beer in the US beverage alcohol market. In recent years, the number of baijiu consumers has continued to grow, with more and more people showing increasing interest in traditional Chinese liquor products. In 2021, the baijiu consumer population reached 350 million people.

According to data provided by the China Alcoholic Drinks Association in 2021, the majority of baijiu consumers are aged between 21 and 50, with the highest proportion of consumers aged 31 to 40, accounting for 48%. This indicates that the influence of the younger generation on baijiu consumption in China is growing. Additionally, while most baijiu consumers are male, this proportion has decreased over the past few years, with female consumers currently accounting for 28% of the baijiu consumer cohort. Looking ahead, as the younger generation becomes more financially independent, they will have greater purchasing power and may be more willing to try different types of baijiu.

Based on income, the market size of China's baijiu industry increased from 536.4 billion yuan in 2018 to 603.3 billion yuan in 2021. Driven by regulatory measures leading to healthy industry growth, continued trend towards premiumization, and the increasing popularity of sauce-flavor baijiu, the Chinese baijiu industry is expected to continue expanding in the coming years. Furthermore, the increasing penetration of mid to high-end baijiu will further drive the development of the Chinese baijiu industry.

Purposes of fundraising

In terms of fundraising purposes, the company's net proceeds amount to approximately 4.99 billion Hong Kong dollars (calculated at the offer price), and the company plans to use the net proceeds from the share sale for the following purposes: approximately 55.0% will provide funding for the construction and development of production facilities in the next five years; approximately 20.0% will be used for brand building and marketing promotion in the next five years; approximately 10.0% will be used for expanding sales channels in the next five years; approximately 5.0% will be used for business operation automation and digitization in the next five years; the remaining approximately 10.0% will be used for working capital and general corporate purposes.

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