China's largest fruit retailer, Pagoda, sprints to the market.

　　On May 2, Shenzhen Pagoda Industrial (Group) Co., Ltd. (hereinafter referred to as "Pagoda") submitted the application to the Hong Kong Stock Exchange, with Morgan Stanley as the sole sponsor.

　　Previously, Pagoda had twice planned to hit the market.

On June 1, 2020, Pagoda submitted the "Overseas Initial Public Offering of Shares Approval" to the International Department of the China Securities Regulatory Commission, and plans to list on the main board of the Hong Kong Stock Exchange.

Then in November of the same year, Pagoda signed a mentoring agreement with Minsheng Securities, and planned to IPO on the Shenzhen GEM.

　　Pagoda’s revenue in 2021 is as high as 10.289 billion yuan, but the cost of sales exceeds 9.1 billion yuan, the gross profit margin is only 11.2%, and the net profit is 235 million yuan.

Over 5,300 stores opened in 20 years, 99% of which are franchise stores

　　According to the prospectus, Yu Huiyong and his wife Xu Yanlin founded Baiguoyuan in 2001.

In the 1990s, Yu Huiyong worked as a researcher at the Jiangxi Academy of Agricultural Sciences, and then as a distribution manager at a food retailer in Shenzhen.

Xu Yanlin opened the first Baiguoyuan store in Shenzhen in 2002 with Yu Huiyong after being an English teacher in a junior high school in Jiangxi for 8 years.

　　In the past 20 years, Pagoda has rapidly expanded its distribution network through the franchise model.

According to the prospectus, as of the latest practicable date, Pagoda has over 5,351 offline stores, of which 5,336 are franchise stores, accounting for over 99%, and there are 15 self-operated stores.

　　In 2008, Baiguoyuan suspended new franchises, and spent nearly 3 years buying back the previous franchise stores and regaining control of the stores.

Also since 2008, Pagoda has encouraged employees to hold shares, and since 2009, it has implemented the "three no-return" service, that is, if customers are not satisfied with the fruits they buy, they can get compensation from the store. It is necessary to return the previously purchased fruit, and there is no need to specify the reason for the return.

　　Baiguoyuan’s WeChat official account offers two plans, A and B. In plan A, the total investment to open a franchise store is 277,000-297,000 yuan, while plan B is 85,000 yuan, of which 62,000 yuan is saved. Signboard equipment fee, 30,000 yuan information equipment fee and estimated decoration cost of 100,000-120,000 yuan.

　　Judging from the prospectus, Pagoda has made a lot of profit from the franchise model.

From 2019 to 2021, the revenue of Baiguoyuan franchise stores will be 7.687 billion yuan, 7.303 billion yuan and 8.125 billion yuan respectively.

From the perspective of the proportion of sales channels in 2021, Pagoda’s franchised stores account for 81.3% of revenue, regional agents account for 9.3%, direct sales account for 5.7%, online channels account for 3.2%, and self-operated stores account for only 0.4%.

　　While the offline retail network is rapidly expanding, Pagoda began to explore online channels in 2008, and launched a mobile app in 2016 to build e-commerce channels.

In addition, Pagoda is not satisfied with being "China's largest fruit retailer", and announced its entry into the fresh food market in 2019, and launched the fresh food brand "Panda Fresh" in 2020.

Last year, the revenue exceeded 10 billion yuan, and the net profit was 235 million yuan

　　Pagoda’s revenue mainly comes from sales of fruits and other products, franchise royalties and franchise income, membership fee income and other income.

The prospectus disclosed that from 2019 to 2021, Baiguoyuan’s revenue was 8.976 billion yuan, 8.853 billion yuan, and 10.289 billion yuan respectively. Among them, the fruit sales accounted for the majority in the same period, accounting for 96.5%, 96.4% and 95.0% of the total revenue respectively. %.

　　The prospectus pointed out that Baiguoyuan’s performance in 2020 was affected by the epidemic.

From the end of 2019 to May 2020, a total of 191 stores have been closed for more than 10 days, and stores in various regions have also been affected to a certain extent by the decline in consumer traffic.

　　According to the prospectus, Pagoda aims to "become the world's largest fruit company".

But in terms of profitability, Pagoda still faces challenges.

　　From 2019 to 2021, the sales costs of Baiguoyuan are 8.099 billion yuan, 8.046 billion yuan and 9.133 billion yuan respectively.

The cost of sales is mainly the cost of sold inventory, which accounts for about 95% of the total cost of sales.

In 2021, the cost of sold inventory will be as high as 8.706 billion yuan, accounting for 95.3% of the total cost of sales.

In addition, in 2021, transportation costs will be 199 million yuan, accounting for 2.2%, a slight decrease from 2.4% in the previous year.

　　The gross profit of Pagoda from 2019 to 2021 was 876 million yuan, 807 million yuan and 1.156 billion yuan respectively, and the gross profit margins were 9.8%, 9.1% and 11.2% respectively during the same period.

　　Specifically, the gross profit margin of franchised stores is relatively low, at 9.2% in 2021; the gross profit margin of self-operated stores is stable at around 27%; the gross profit margin of direct sales channels is mainly affected by price fluctuations in the fruit market.

It is worth noting that the gross profit margin of Baiguoyuan regional agents and online channels is relatively low, and the gross profit margin of online channels has turned from positive to negative in the past two years.

　　The prospectus stated that from 2019 to 2021, the gross profit margins of regional agents were 0.9%, 0.9% and 1%, respectively, because the company used the cost-plus method to price the products sold to regional managers in order to motivate regional agents (referring to the cost-plus method). plus reasonable fees and profits for pricing).

The online channel is due to the fact that Pagoda has shifted from only providing high-end fresh food to paying members to mass market products with lower gross profit margins, and the increase in online sales has increased distribution and packaging fees, which will reduce the gross profit margin in 2020 and 2021. is a negative number.

　　Affected by this, from 2019 to 2020, the net profit of Pagoda was 249 million yuan, 49 million yuan and 235 million yuan respectively; the net profit rate was 2.8%, 0.5% and 2.2% respectively.

Net profit has yet to return to pre-pandemic levels.

　　It is worth noting that the continuous blood transfusion from external funds has supported the difficult and profitable Baiguoyuan to expand all the way to the sprint listing.

　　In 2015, Pagoda received 400 million yuan in Series A financing, led by Tiantu Investment, followed by GF Xinde and Qianhai Fund of Funds. At that time, Pagoda was valued at 5 billion yuan.

In 2018, Baiguoyuan completed the B round of financing of 1.5 billion yuan, which was invested by capital institutions such as Zhongjin Zhide, Zhongzhi Capital, Zhongjin Huirong, Cornerstone Capital, Yuexiu Industry, and Shenzhen Venture Capital.

At present, Pagoda has as many as 35 institutional and individual investors, many of which are investment companies controlled by local governments.

　　The prospectus shows that before the IPO, Yu Huiyong, Xu Yanlin and his wife and the employee shareholding platform were the controlling shareholders of Baiguoyuan. Among them, Yu Huiyong and Xu Yanlin directly and indirectly held more than 35% of the shares and were the largest shareholders of Baiguoyuan, while the investors held a total of about 43.5% of the shares. %.

　　The Paper reporter Wang Qiwen