Weilong's sprint to go public, which has been brewing for many years, is finally about to kick in.
On December 5, Weilong launched its IPO, and the expected pricing date is December 8; the offering price will be HK$10.4 to HK$11.4 per share; Weilong is expected to be officially listed in Hong Kong on December 15, 2022.
The news that Weilong will go public began to circulate in 2018. In 2020, the rumors became more specific, saying that "Weilong will go public in Hong Kong in the second half of 2021." In May 2021, Weilong really submitted the prospectus. , but there has been no new progress for a long time, and the listing application materials have been invalidated several times.
Until late at night on November 23 this year, Weilong disclosed the latest version of the post-hearing information set, and then the pace of listing began to accelerate.
However, according to the highest value of the above-mentioned offering price range, Weilong’s corresponding total market value is less than 30 billion yuan, which is a significant discount compared to the valuation of more than 60 billion yuan in the 2021 round of financing.
Therefore, some people in the industry believe that Weilong is listed at a "discount" this time.
In the first half of this year, Weilong’s revenue fell year-on-year, with a profit loss of more than 200 million
The latest prospectus disclosed by Weilong shows that from 2019 to 2021 and the first half of 2022, the company's total revenue will be approximately 3.385 billion yuan, 4.12 billion yuan, 4.8 billion yuan, and 2.261 billion yuan, respectively.
Among them, the revenue in the first half of 2022 has declined compared with the first half of 2021.
In recent years, Weilong has strengthened the layout of major e-commerce platforms.
From 2019 to 2021 and the first half of 2022, the revenue generated by Weilong’s online channels will be approximately 251 million yuan, 382 million yuan, 554 million yuan, and 239 million yuan, accounting for 7.4%, 9.3%, and 11.5% of the total revenue. %, 10.6%.
Weilong said: From 2019 to 2021, the compound annual growth rate of the company's total revenue will be 19.1%. According to Frost & Sullivan, this growth rate far exceeds the 4.2% compound annual growth rate of China's snack food industry during the same period. .
"Our net profit margin will reach 17.2% in 2021. According to Frost & Sullivan, this net profit margin is higher than the average net profit margin of China's snack food industry of about 10% in 2021." Wei Long said.
However, the Beijing News Shell Finance reporter noticed that Weilong's net profit margin will reach 19.9% in 2020.
In other words, compared with 2020, Weilong's net profit margin will decline in 2021.
From 2019 to 2021 and the first half of 2022, Weilong's profits will be approximately 658 million yuan, 819 million yuan, 827 million yuan, and -261 million yuan, respectively.
Regarding the reason for the loss in the first half of 2022, Weilong explained that it was mainly due to the one-time share-based payment related to the previous investment, which was partially caused by the company's gross profit increasing from RMB 849.7 million to RMB 861.5 million over the same period. offset by.
In the eyes of the outside world, the reason for Weilong's loss may be related to factors such as revenue decline and the epidemic.
Bo Wenxi, chief economist of IPG China, believes: "The direct reason for Weilong's net profit loss should be the decline in revenue, and the reason behind it should be the lack of product innovation, declining competitiveness and weak consumption growth."
Bo Wenxi pointed out: "Weilong's profit model may have the problem of too single product line and over-reliance on single products. At this stage, Weilong should continue to strengthen product innovation and enrich product lines while strengthening marketing efforts and improving business operations. level, thereby boosting performance.”
Fundraising is used to build new factories, etc., and the product structure is being adjusted
Weilong's headquarters is in Luohe City, Henan Province. As of the end of June this year, it has 4 factories in Henan Province, namely Luohe Pingping Factory, Luohe Weilai Factory, Zhumadian Weilai Factory and Luohe Weilai Factory. There is also a factory in the province (the Luohe Xinglin factory) under construction, and part of the production lines of this factory have been used for trial production."
According to Zhu Danpeng, an analyst in China's food industry, "Weilong mainly relies on spicy sticks to support the company's revenue. The product line is single, and the overall structure is not rich and perfect, and there is a risk of sustainable development."
Zhu Danpeng pointed out: "Weilong needs to add new categories to improve the matrix, open up the layout of high-end and healthy snack products, realize the high-end of low-end snacks, and remove the inherent impression label of 'unhealthy'."
According to the prospectus, seasoned noodle products are the main source of Weilong's revenue, and the contribution of revenue from 2019 to 2021 will account for more than 60%. Product structure adjustments are also underway.
Seasoned noodle products are Weilong's most classic product category, mainly including large gluten, small gluten, spicy sticks, small spicy sticks, and kissing roasts.
On the other hand, Weilong is vigorously developing vegetable products.
From 2019 to 2021, the proportion of revenue contributed by its vegetable products will increase year by year.
Weilong's vegetable products mainly include Konjac Soup and Fengchi Seaweed, which are characterized by "low calorie and crisp taste".
In fact, this is also Weilong's approach to the strategy of "health brand" for food companies.
In addition to seasoned noodle products and other products, Weilong also produces soy products including soft bean skin and braised eggs and other products.
In 2020, a reporter from Beijing News Shell Finance visited Weilong's production workshop.
Outside the workshop, you can't smell any food. As soon as you enter the door, you will be greeted by the smell of spicy noodles, and childhood memories will be instantly restarted.
However, when the reporter visited, Weilong was in the period of equipment maintenance, and could only see clean and tidy machines, but could not see the whole process of kissing bean curd (a product of Weilong) being made on the production line.
At that time, according to the staff of Weilong, Weilong will arrange 3 to 4 days to stop production in the middle and end of each month to clean and maintain the equipment. work better."
This listing in Hong Kong, Weilong plans to use the raised funds to build new factories, expand and upgrade existing factories to meet consumers’ growing demand for the company’s products; to upgrade production equipment, mainly including Introduce automation equipment for seasoned noodle products and vegetable products; use it to improve the enterprise's storage equipment, system automation and intelligence; use it to further expand sales and distribution networks, strengthen brand building and product research and development activities, and promote Digital intelligence construction of business, etc.
Behind Weilong's "discount" listing
Not long before the release of the prospectus in May 2021, Weilong had just completed a round of financing, and capital tycoons were "competing for" spicy bars.
At the end of March 2021, CPE Yuanfeng, Hillhouse, Tencent, Yunfeng Fund, Sequoia Capital China Fund, Housheng Investment, Haisong Capital, etc. entered into a share purchase agreement with Weilong. These investors subscribed for Weilong at a consideration of US$274.5 million 61,223,007 newly issued common shares, and purchased 61,223,007 common shares from Weilong’s old shareholders at a consideration of US$274.5 million.
According to multiple media reports, after the completion of this financing, Weilong's valuation exceeded 60 billion yuan.
According to the announcement issued by Weilong on December 5, the number of shares in its global offering is 96,397,000 shares (depending on whether the over-allotment option is exercised or not), and the offering price is between HK$10.4 and HK$11.4 per share.
In other words, the maximum fundraising amount is approximately HK$1.1 billion.
Then the total market value corresponding to Weilong is less than 30 billion yuan.
Therefore, some people in the industry believe that Weilong is listed at a "discount" this time.
In this regard, Bo Wenxi analyzed to the Beijing News Shell Finance reporter: "The main reason is that Weilong Latiao is currently in a state of loss, and the overall situation of Hong Kong stocks is not good. These two factors have greatly shrunk Weilong's valuation."
"The timing of Weilong's listing in Hong Kong was very poor." Independent economist Wang Chikun told the Beijing News Shell Finance reporter, "Currently, the Hong Kong stock market as a whole is undervalued. After many leading companies are listed in Hong Kong, their The market capitalization fails to reflect the true value of the enterprise."
So why did Weilong go public at this time?
Wang Chikun analyzed: "There is a high probability that Weilong signed a VAM agreement with an investment institution. This is also a common method used by investment institutions to urge companies to go public as soon as possible. It is very common in the capital market. VAM conditions usually include the company's listing time, for example, Businesses need to go public by a certain date or face huge compensation."
"Vaint conditions often don't include the market value performance of the company after listing. That is to say, as long as Weilong goes public before the specified date, it will meet the standard, and the market value is not important." Wang Chikun said, "However, if the market value increases significantly after listing If it shrinks, investment institutions will inevitably suffer heavy losses."
Wang Chikun told the reporter that the company has the initiative in terms of share issuance and pricing, "It seems that Weilong's low-priced listing is mainly to hurry up; however, in order to recover the losses of investment institutions, companies usually choose to list in multiple places, such as in After listing in Hong Kong, the company has completed the VAM agreement, and no compensation is required. Then the company can find a market with better liquidity and a more reasonable valuation to go public; or start a shareholder repurchase plan to prevent further losses and wait for the market Valuation restoration. In short, under such circumstances, investment institutions and enterprises will find ways to promote the rise of stock prices in compliance with the regulations.”
"Even if there is no gambling agreement, Weilong is very anxious at present." Wang Chikun believes, "In the first half of this year, Weilong is already in a state of loss. Then, as the impact of the epidemic on the company is gradually reflected in the performance, the situation may In addition, Weilong’s product structure is single, and if the consumption habits of the entire market change, the company may experience zero performance. In short, Weilong’s future financial performance has great uncertainty, so the company Now it is necessary to rush and go public.”
Beijing News Shell Finance reporter Yan Xia