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When it comes to spicy snacks, “Pickled Pepper Beef Banjin”, “Smelly Ganzi”, “Windmill Wheel”… one after another childhood spicy noodles are unforgettable, but who can think of making spicy noodles? One day may also ring the bell to go public.
According to the Hong Kong Stock Exchange, on November 12,Well-known spicy strip brand Weilong submitted a listing application, once again hitting the “first share of spicy strips”. According to the prospectus, the full name of the company is Weilong Delicious Global Holdings Limited (hereinafter referred to as “Weilong”). In the first half of 2021, Weilong achieved total revenue of 2.303 billion yuan, a year-on-year increase of 22.06%; net profit was 358 million yuan, a year-on-year decrease of 2.53%.
According to data from the survey agency Frost & Sullivan, calculated by retail sales in 2020,Weilong ranks first among all spicy snack food companies in China, The market share reached 5.7%,And ranked first in the market share of seasoned noodle products and spicy casual vegetable products.。
“A listed company with 5 cents”
95% of consumers are under 35
Established 22 years of WeiDragon, already equated with Latiao.Also posted by consumers:Labels such as “listed companies made by 50 cents”, “small spicy strips and big business”.However, Laotiao has also made Weilong, with sales revenue of 4.12 billion yuan in 2020 and net profit of as much as 818 million yuan.。
Nowadays, Weilong’s spicy strips are no longer the “5 Mao” single product in the memories of the “post-90s”. At present, the price has doubled several times,Mainstream single product is nearly 5 yuan. In addition, the Weilong spicy strip product package has been upgraded to “Bai Fu Mei”, getting rid of the label of low quality and low price. Therefore, the high value and high price have brought high income to Weilong.
Image source: Weilong Delicious official Weibo
In addition, as can be seen from its prospectus,95% of Weilong’s consumers are under 35 years old, and consumers under 25 years old account for 55%. Another important reason for Weilong to achieve the above-mentioned performance: the taste of the product has indeed captured the taste buds of the “Generation Z” group.
Valuation up to 70 billion
More than the combined market value of Qiaqia, Three Squirrels, and Best Shop
As early as May 12, Weilong submitted a prospectus to the Hong Kong Stock Exchange. However, in accordance with the main board listing rules of the Hong Kong Stock Exchange, the prospectus will be automatically presented if the application company has not approved the application for more than 6 months. Invalid state.
This time Weilong is again submitting a listing application to the Hong Kong Stock Exchange. According to the prospectus, the joint sponsors of Weilong’s listing application are Morgan Stanley, CICC and UBS.
The official website information shows that Weilong was founded by Liu Weiping and Liu Fuping in Luohe, Henan in 2001. In 2003, the company applied for the Weilong trademark. According to the prospectus, Weilong’s product portfolio includes seasoned noodle products (mainly including large gluten, small gluten, large spicy sticks, small spicy sticks and chez-yaki), vegetable products (mainly including konjac cool and wind-chi kelp), soy products And other products (mainly including soft bean skin, 78° braised eggs and meat products).
In terms of financial data, from 2018 to 2020, Weilong’s total revenue was 2.752 billion yuan, 3.385 billion yuan, and 4.120 billion yuan. In addition, in the first half of 2020 and the first half of 2021, Weilong’s total revenue was 1.87 yuan and 2.303 billion yuan, respectively, and the total revenue in the first half of 2021 increased by 22.06% year-on-year. Weilong said that from 2018 to 2020, the company’s total revenue will grow at a compound annual growth rate of 22.4%.
Source: Weilong Prospectus
From the perspective of net profit, from 2018 to 2020, Weilong’s net profit will be 476 million yuan, 658 million yuan, and 819 million yuan respectively. In the first half of 2020 and the first half of 2021, Weilong’s net profit was 367 million yuan and 358 million yuan, respectively, and the net profit in the first half of 2021 decreased by 2.53% year-on-year. Weilong said that the company’s net profit margin will reach 19.9% in 2020. According to the Frost & Sullivan report, the net profit margin is higher than the average net profit margin of the Chinese snack food industry of about 10% in 2020.
The prospectus shows that as of June 30, 2021, Weilong has cooperated with more than 2,150 distributors, covering more than 625,000 retail terminals, about 80% of which are located in low-tier cities. To supplement offline channels, Weilong also sells products through online channels. From 2018 to 2020 and the first half of 2021, Weilong’s online channels generated revenues of 232 million yuan, 251 million yuan, 382 million yuan and 268 million yuan, respectively, accounting for approximately 8.4%, 7.4%, and 268 million of the total revenue in the same period. 9.3% and 11.7%.
According to the China Fund News, shortly before Weilong submitted its application in Hong Kong in May, according to public information, Weilong completed the only pre-IPO round of 3.56 billion yuan in the history of financing, which was jointly led by CPE and Hillhouse Capital. cast. Hillhouse invested 110 million U.S. dollars in Weilong, Tencent and Yunfeng Fund each invested 60 million U.S. dollars, Sequoia China, Tianyi Capital and Health Investment each invested 27 million U.S. dollars, and Haisong Capital invested 20 million U.S. dollars. There are reports thatThe valuation of Weilong in this round of financing is as high as 70 billion yuan, which is more than the combined market value of Qiaqia, Three Squirrels, and Liangpin Shop.。
Founder’s net worth of 56 billion
Only a high school degree when starting a business
According to the prospectus, Weilong’s core management: Weilong’s board currently consists of nine directors, including five executive directors, one non-executive director and three independent non-executive directors.
Image Source:Weilong Prospectus
Liu Weiping, 42 years old, is the chairman and executive director of the company.
Liu Fuping, 39 years old, is an executive director and president of the company.
Peng Hongzhi, 39 years old, is an executive director, CFO and vice president of the company.
Zhang Xiaosan, 40, is an executive director and vice president of the company, mainly responsible for sales and marketing.
Chen Lin, 34, is an executive director and vice president. He is mainly responsible for supply chain management and human resources. He is also a member of the remuneration committee of the board of directors.
The company’s non-executive director is Mao Wei.
The three independent directors are: Xu Lili, Zhang Bihong, and Xing Dongmei.
In addition, Weilong also has a vice president named Liu Zhongsi, 35 years old this year, who is mainly responsible for the company’s overall research and development.
It can be seen that there are many senior executives surnamed Liu in Weilong’s core management, and they are indeed a family.
According to the prospectus, Liu Weiping is Liu Fuping’s elder brother and Liu Zhongsi’s cousin. And Peng Hongzhi and Chen Lin are not outsiders, they are Liu Zhongsi’s cousin and cousin respectively.
In other words, the core management of the entire company, except for the vice president of sales and marketing Zhang Xiaosan, the other executives are relatives. (Non-executive directors and 3 independent directors are not included) Before the public offering, their family held 92.17% of the shares.
Image source: Weilong prospectus
According to the “Hurun Report” released on October 27,Liu Weiping and Liu Fuping tied for No. 223 on the total list with a net worth of 28 billion yuan, becoming the second richest man in Henan Province and the richest man in Luohe City, Henan Province。
Before 2017,The two founders of Weilong Company, Liu Weiping and Liu Fuping, have only high school diplomas., But in July 2017, through online learning, they got a degree in administrative management from Chongqing Southwest University. Liu Weiping also entered Hupan University in 2018.
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High marketing costs
Sales channels rely on third-party distributors
It is worth mentioning that the development of the spicy strip industry has not been smooth sailing. In 2005, CCTV revealed that a spicy strip factory in Pingjiang County illegally added prohibited additives. Since then, the road to “demonization” of spicy strips has officially started. Due to the lack of industry standards and corresponding regulations, a large number of black workshops have produced a large number of spicy strips that do not meet the standards. For a while, negative news about spicy strips flew all over the world: “From the taste of using your feet to make it with toilet paper; spicy strips contain plastic.”
Since then, the entire spicy strip industry has plummeted, but Weilong has gone against the current.
On the one hand, investing heavily in the supply chain to increase production capacity and ensure food safety. Weilong spent millions to purchase a production line from Europe in 2006, changing the packaging machine from semi-automatic to fully automatic. And in the following two years, continuous optimization, in 2014, built a standard aseptic production line.
On the other hand, Weilong also uses marketing methods to create a sanitary and safe spicy bar brand image. In 2015, Weilong invited professional photographers to enter the production workshop to take photos of the company’s assembly lines and production workshops. Through this method of publicizing the production process, it showed the image of product hygiene and safety.
Most importantly, Weilong caught up with the hot wave of Latiao internet celebrities.
In 2014, a video was swiped on a social platform. In the video, a foreign teacher took the spicy strips from a Chinese student and ate them curiously and fell in love with spicy strips. Spicy strips, once considered “junk food,” went so far abroad to fight against Lao Gan Ma.
After that, Weilong was out of control on the road of marketing. Weilong has successively settled on social and e-commerce platforms, and has gone further and further on the “road of no return” of hot spots. From 2015 to 2016, Weilong’s many marketing actions have received huge traffic attention, and it has become the new darling of traffic for a while.
In 2016, when the iphone7 was released, Weilong started a wave of out-of-the-loop marketing operations: all the page designs of its website imitated Apple, and even created the word Hotstrip, which is divided into: hot (辣) strip (条).
Image source: Weilong Delicious official Weibo
In addition, Weilong also began to invite stars such as Zhao Wei and Yang Mi to be brand spokespersons, which immediately opened up the popularity. Weilong was among the first companies to try live broadcasts. The internet celebrity Zhang Quandan was hired to conduct live broadcasts in the Weilong food workshop.
Image source: Weilong Delicious official Weibo
Since then, Weilong has gained a great reputation through product, marketing and brand shaping.
The popularity gradually opened up,Weilong’s marketing costs have also risen。
The prospectus shows that from 2018 to 2020, Weilong’s sales expenses climbed from 235 million yuan to 371 million yuan. Among them, promotion and advertising expenses also increased from 26.809 million yuan to 46.658 million yuan.Advertising expenses in 2020 will increase by more than 50% year-on-year。
Screenshot source: Weilong prospectus
Another problem is that even after years of development,Weilong’s sales channels still rely on third-party distributors。
Prospectus disclosure, 2020,Weilong’s offline dealers account for 90.7% of total revenue, And online distributors’ sales accounted for only 5.6% of total revenue. As of December 2020, Weilong’s distribution and sales network in China includes 1950 offline dealers and 570,000 retail terminals, of which about 70% of the retail terminals are located in the sinking market.
Screenshot source: Weilong prospectus
Was fined for unqualified sampling
Food safety is still the key
Although Weilong is favored by young people, he is not relieved.
Weilong relies too much on a single product of spicy sticks, and the growth foundation of spicy sticks is not stable enough, lacking protection barriers for differentiated competition. On the other hand, La Tiao companies seek to go public,Food safety is an inevitable issue。
In 2020 Weilong’s total revenue, flour products accounted for 65.3%, and vegetable products accounted for 28%. This means that most of Weilong’s income comes from spicy strips,The spicy bar has not gotten rid of the “unhealthy” label。
Spicy bar has its special background and is a substitute in itself. In 1998, the main raw material soybean of Pingjiang County, Hunan’s dried soy sauce industry experienced a substantial decline in production capacity, and the dried sauce industry was affected. Some business owners use flour instead of soy flour, add chili, pepper, cumin and other condiments, and invented spicy spicy noodles instead of dried sauce.
The good taste of spicy strips mainly comes from various additives. At present, there are still nearly 20 kinds of ingredients in Weilong spicy strip products, including glyceryl monostearate, disodium nucleotides, tert-butyl hydroquinone, monosodium glutamate and other additives.
Although Weilong advertises “clean and hygienic”, it has repeatedly appeared on the black list of food safety sampling inspections.. According to public information, among the judicial cases involved in Pingping Foods (a wholly-owned subsidiary of Weilong Trading) so far, the number one cause is product liability disputes, with as many as 39 cases. In 2015, Luohe City Quality Supervision and Inspection Bureau issued a penalty notice stating that the self-burning and large gluten produced by Pingping Foods used substandard products as qualified products. Ordered it to stop production and sales of substandard products and fined a total of 85,700 yuan.
In September 2018, the former Hubei Food and Drug Administration issued an announcement showing that Weilong and other brands of spicy strips were unqualified. However, this time there was a “fight” due to different local standards. It is reported that during the sampling inspection in Hubei at that time, Weilong’s batches of spicy sticks “pro-mouth roasting” and “small gluten” were found to have illegally added food preservatives such as sorbic acid and dehydroacetic acid. At that time, Weilong Foods took the “Henan Spicy Tiao Standard” as its basis and believed that its spicy noodle production complied with the regulations.
The health problem of spicy strips has attracted much attention from inside and outside the industry. Relevant departments require that spicy strips are managed uniformly in accordance with the production license category of “convenience foods, seasoned noodles”, and manufacturers must use food additives in accordance with the relevant provisions of the “National Food Safety Standards for the Use of Food Additives” (GB 2760).
At present, Weilong and other companies have standardized production, but there is still no national mandatory standard issued in the industry, and the implementation standards for Weilong products are still enterprise standards such as Q/LHPP0004S. Each of its commissioned factories also use the company’s own standard production.
In order to get rid of the dependence on spicy strips, Weilong is actively expanding egg products, vegetable products (kelp), beans and other categories. However, industry insiders believe that these new areas have mature brands, including three squirrels, Liangpinpu, Yanjinpu, Jinzai and other brands. Weilong ranks seventh among all snack food companies, accounting for 1.2% of the overall market share in terms of retail sales. Weilong’s advantage in the spicy strip field will disappear, and there will be a gap between the scale and the leading enterprises, and competition will be in place. Passive position.
It is worth noting that industry insiders revealed that the taste of spicy noodles will drop significantly after 30 days of production, so the freshness of spicy noodles must also be guaranteed. However, Weilong’s inventory turnover days in 2018, 2019 and 2020 were 51 days, 60 days and 67 days, respectively, which continued to increase, which adversely affected product freshness.
In this regard, Zhu Yi, associate professor of the School of Food Science and Nutritional Engineering, China Agricultural University, believes thatFrom the perspective of food safety, there are no hidden dangers in the products of major manufacturers such as Weilong, but from the perspective of health, the current spicy strips are not worth encouraging. From the perspective of future development, as long as La Tiao does not rest on its laurels, boldly innovate in the selection of ingredients, and with its deep audience base, it can continue to develop.
Edit|Duan Lian Du Bo
Proofreading|He Xiaotao
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