IPO Express | Weilong's Hong Kong IPO ranks first in China's spicy snack food industry

Futu News on November 15th reported that according to the Hong Kong Stock Exchange disclosure, Baijue has passed the hearing of the Hong Kong Stock Exchange, with Morgan Stanley, CICC, and UBS Group as joint sponsors.

Company Overview

Weilong is a leading spicy snack food enterprise in China with strong growth momentum. According to Frost & Sullivan data, based on 2020 retail sales, the company ranks first among all spicy snack food enterprises in China with a market share of 5.7%, and ranks first in market share in seasoning noodle products and spicy snack vegetable products subcategories.

Weilong is a popular leisure food brand loved by young consumers in China. According to Frost & Sullivan data, 95.0% of consumers are 35 years old and younger, 55.0% are young people aged 25 and younger. At the same time, the company is the most well-known and beloved spicy snack food brand in China, and among young people aged 25 and below, it is the top leisure food brand in terms of brand awareness.

Financial Overview

The company's revenue in 2018~2020 was approximately 2.752 billion yuan, 3.385 billion yuan, and 4.12 billion yuan respectively, with a compound annual growth rate of 22.4%; according to Frost & Sullivan's report, this growth rate far exceeds the 4.1% compound annual growth rate of the Chinese leisure food industry during the same period. Revenue for the first six months of 2021 was 2.303 billion yuan, an increase of about 22.0% year-on-year.

The company's net income from 2018 to 2020 was 0.476 billion yuan, 0.658 billion yuan, and 8.19 billion yuan respectively, with net income rates of 17.3%, 19.4%, and 19.9% respectively; in 2020, the net income rate was significantly higher than the average net income rate of about 10% in the Chinese leisure food industry during the same period. Net income for the first six months of 2021 was 0.358 billion yuan, a decrease of about 2.5% year-on-year.

Industry Overview

China's spicy snack food industry's retail sales increased from 102.6 billion yuan in 2015 to 157 billion yuan in 2020, with a compound annual growth rate of 8.9%, higher than the overall Chinese leisure food industry's compound annual growth rate during the same period. It is projected to grow at a compound annual growth rate of 10.4% from 2020 to 2025, reaching a retail sales of 257 billion yuan by 2025.

Shareholder Structure

Tianyancha data shows that Weilong has completed several rounds of financing, with investors including CPE Yuanfeng, Hillhouse Capital, Sequoia China, Tencent Investment, Yunfeng Fund, etc.

Before the IPO, CPE Yuanfeng and Hillhouse respectively held 2.32% and 1.17% of Weilong's shares, Tencent and Yunfeng Fund held 0.64% each, Sequoia China, Tianyi Capital, and Housheng Investment held 0.29% each, while Haisong Capital held 0.21% of the shares.

Prospectus link:

https://www1.hkexnews.hk/app/sehk/2021/103993/documents/sehk21111400219_c.pdf

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