Weilong Delicious Global Holdings Co., Ltd. (hereinafter referred to as "Weilong"), a subsidiary of the hot strip brand "Weilong", updated the hearing materials on the Hong Kong Stock Exchange a few days ago.
It has been a year since Weilong passed the listing hearing in November 2021.
During this period, Weilong experienced the failure of the listing application materials and submitted the listing application again.
Regarding the recently updated hearing materials, according to the Beijing News reporter, Weilong has made some strategic adjustments, and the specific listing time has not yet been clarified.
In the first half of this year, it lost 216 million yuan. For many years, its revenue has been supported by spicy noodles. It has been accused of simplification of products. Weilong still faces many challenges.
Some experts believe that although the loss will not affect the listing of Weilong at present, seeking diversification is the way out in the future.
With the entry of many enterprises into the spicy stick industry, which has an output value of 60 billion yuan, Weilong, who is exploring the road of diversification and focusing on konjac refreshing single product, can get rid of the "spicy stick dependence"?
Listed with many twists and turns
According to the Hong Kong Stock Exchange documents, Weilong recently updated the prospectus again.
This also means that Weilong, the "No. 1 Latiao stock" is one step closer to being listed.
According to the data, Weilong was founded in Luohe City, Henan Province in 1999 by two brothers Liu Weiping and Liu Fuyou.
In September 2004, Liu Weiping established Luohe Pingping Food Co., Ltd., which is mainly engaged in seasoned noodle products (spicy strips), bean products and vegetable products, among which the "Weilong" brand spicy strips are the most famous.
According to the Frost & Sullivan report, based on retail sales in 2020, Weilong's market share in the domestic spicy snack food industry is about 5.7%, ranking first.
In May 2021, Weilong completed the Pre-IPO round of financing, which was jointly led by CPE Yuanfeng and Hillhouse, followed by Sequoia China and Tencent. The specific financing amount was not disclosed.
On May 12, 2021, Weilong submitted a prospectus to the Hong Kong Stock Exchange for the first time.
On November 12 of the same year, the day before the listing materials were about to expire, Weilong submitted a listing application to the Hong Kong Stock Exchange again, and passed the listing hearing on November 14.
However, there has been no new progress after passing the hearing. Until the listing application materials expired in May 2022, Weilong submitted another application and passed the listing hearing on the Hong Kong Stock Exchange on June 27.
On November 23, Weilong updated the hearing materials again.
In fact, according to the listing process of the Hong Kong Stock Exchange, after passing the hearing, the company can start preparing for the listing. That is to say, Weilong can prepare for the listing after November 14, 2021, but Weilong seems not in a hurry. Listed, there has been no further action.
According to the Beijing News reporter, since half a year has passed since the last application materials were submitted, some data content needs to be updated, so Wei Long updated the hearing materials.
Weilong has also made some strategic adjustments, and the specific listing time has not yet been clarified.
According to Bai Wenxi, chief economist of IPG China, behind Weilong's prolonged listing time, it may be to wait for a suitable window period to facilitate the issuance.
"Weilong's cash flow is good, and we are not eager to go public as soon as possible to supplement our cash flow. Currently, the U.S. dollar is still in an interest rate hike cycle, which causes liquidity to flow back. In addition, Hong Kong stocks and U.S. stocks have a connector effect, which leads to a long-term downturn in Hong Kong stocks, which is not conducive to financing. .”
Performance growth slows
According to Weilong’s recently updated prospectus, from 2019 to 2021 and the first half of 2022, Weilong’s revenues will be 3.385 billion yuan, 4.12 billion yuan, 4.8 billion yuan and 2.261 billion yuan, respectively, and the annual profits will be 658 million yuan. Yuan, 819 million yuan, 827 million yuan, -261 million yuan.
Regarding the loss of 216 million yuan in the first half of this year, Weilong responded that this was due to a one-time share-based payment related to investment.
The actual receivables in the first half of the year were stable, and the adjusted net profit was 425 million yuan, a year-on-year increase of about 12% from 380 million yuan in the same period last year.
It is also mentioned in the prospectus that profits are expected to decline significantly in 2022, mainly due to the fact that the share-based payment related to the previous investment involves the supplementary agreement of the share purchase agreement signed by the company and certain former investors, according to which the company in A total of 158 million common shares were issued and sold to these investors in April 2022 at a consideration of approximately US$1,576.26.
However, Weilong's loss in the first half of the year still caused investors to worry.
Zhang Ji, chief consultant of Shanghai Zhihui Marketing Consulting Co., Ltd., said in an interview with the media that this will cause investors to question its ability to respond to changes in the external environment, which may prolong its listing time.
At the same time, losses may also reduce investors' expectations of its value and affect stock pricing.
In Bai Wenxi's view, as long as the temporary loss of performance does not affect the fundamentals of the company and its future development prospects, it will not affect the listing process of Weilong.
But for Weilong, the slowdown in performance growth cannot be ignored.
According to the prospectus, from 2019 to 2021, Weilong's net profit will increase by about 38%, 24% and 1% year-on-year respectively.
From 2019 to 2021 and the first half of 2022, Weilong's net profit margins will be 19.4%, 19.9%, 17.2% and -11.5%, respectively, and the decline will be more obvious from 2020.
In addition, Weilong's two price increases in 2020 and 2021 have not been satisfactory.
According to the prospectus, in the first half of 2022, Weilong's seasoned noodle products, vegetable products, soybean products and other sales volumes were 81.5887 million tons, 27.8614 million tons, and 2.9434 million tons, a year-on-year decrease of 13.82%, 3.94%, and 19.71%, respectively.
spicy stick addiction
Many consumers know Weilong from Latiao, and Latiao has become the main revenue of Weilong.
According to the prospectus, Weilong’s seasoned noodle products mainly include spicy stick products such as large gluten, small gluten, spicy sticks, small spicy sticks, and kisses. 73.1%, 65.3%, 60.8% and 59.3% of the total.
That is to say, the proportion of spicy strips has always been around 60%.
"Weilong has always relied on the development of Latiao, which has resulted in excessive reliance on a single product, which is not conducive to the long-term stable development of the company. For further development, Weilong must take the path of broadening its product line and get rid of the problem of over-reliance on a single product. "Bo Wenxi said.
Xu Xiongjun, founder of Jiude Positioning Consulting Company, believes that many listed companies rely on large single products to survive. Whether it is strong, and whether its future development prospects and space are large."
Perhaps already aware of the simplistic development of Latiao, Weilong is also working hard to create new single products.
In 2014, "Weilong Konjac Shuang" was launched.
In 2015, Weilong launched its sub-brand "Weilai", which focuses on dim sum and Konjac Shuang, as well as assorted fruit and vegetable crisps.
Among them, Konjac Shuang has become a big single product trend.
The prospectus shows that from 2019 to the first half of 2022, the revenue of vegetable products represented by Konjac Shuang accounted for 19.6%, 28.3%, 34.7%, and 36.2% of the total revenue, respectively.
A reporter from the Beijing News also learned that Konjac Shuang has become Weilong’s next hot item after Latiao, accounting for a considerable proportion of sales.
Weilong is also promoting the development of new product lines. In addition to seasoned noodle products, it has also launched vegetable products, bean products, etc., and other products are also under continuous development.
Increased concentration of industry brands
Tan Bin, chief researcher of the Academy of Sciences of the National Grain and Material Reserve Bureau, once introduced that the market size of my country's seasoned noodle products industry is expected to exceed 60 billion yuan in 2022.
According to data provided by the Food Industry Association of Pingjiang County, Hunan Province, there are currently more than 1,000 spicy stick manufacturers across the country, with an output value of at least 50 billion to 60 billion yuan.
The huge market has led to an increase in the number of hot strip companies year by year.
According to the data from Qichacha, there are 2,446 companies related to spicy noodles in my country.
From 2017 to 2021, there will be 226, 577, 745, 870, and 565 newly added spicy bar related companies in my country.
Leading companies include Weilong, Spicy Prince, etc.
Many companies have also entered the hot strip market one after another.
The three squirrels, a snack food brand, began to lay out the production line of spicy strips as early as 2015, and later launched the spicy series of spicy strips;
In addition, the candy company Golden Monkey also launched the "Spicy Strange Time and Space" series of products in 2019.
Xu Xiongjun said that the entire spicy strip market is large enough and has not yet reached its peak, and there is still room for further improvement in market share. If the spicy strips can be made healthy and delicious in the future, there will be good prospects for development.
Bo Wenxi also believes that the intensified market competition in the hot strip industry will also lead to a decline in the industry's profit margins, and the future will inevitably lead to a competitive road of increasing brand concentration and expanding product lines.
Beijing News reporter Liu Huan