China Food

Will the century old wufangzhai hit the “first stock of zongzi” be a “meat stick”?

is easy to form but difficult to transform.
Finally, the capital market will usher in the first share of zongzi.
Recently, Zhejiang Wufangzhai Industrial Co., Ltd. (hereinafter referred to as “wufangzhai”) opened its subscription and planned to land on the main board of Shanghai Stock Exchange.
In fact, the 101 year old wufangzhai’s listing was not smooth. He had changed sponsors frequently. Finally, Zhejiang securities took over the baton from Guangfa Securities and CICC. In January 2022, the IPO of wufangzhai was approved, which also became the first IPO project successfully sponsored by Zhejiang securities this year.
The issuing price of wufangzhai is 34.32 yuan, and the issuing P / E ratio is 22.99 times, which is lower than the average static P / E ratio of the industry in the latest month (33.47 times) and the average p / E ratio of comparable companies (27.49 times). This public offering is 25.1858 million shares, accounting for 25% of the total share capital after the issuance. According to this calculation, its market value at the time of listing is about 3.4 billion yuan, which belongs to small cap stocks. Recently, the market is in a good mood of innovation, adding the good luck of the Mid Autumn Festival and other consumption seasons. With a hundred year halo, it may have a positive boost on the first day of listing.
As we all know, it is not easy for the time-honored brands to survive. Listing is just a brand-new start, and it is still challenging to find a strong way to survive.
The halo of a century old brand
As a traditional food, zongzi has passed through a long history and is now very popular. People always argue whether it is salty or sweet.
According to public data, it is estimated that the market scale of zongzi in China will increase to 10.291 billion yuan by 2024, and the annual compound growth rate from 2020 to 2024 is expected to be 7%.
Wufangzhai began in 1921. The “wufangzhai zongzi” sold by Zhang Jinquan, a businessman from Lanxi, Zhejiang Province, is its prototype, and the name “Wufang” means “Wugu Fangxin”. Because his zongzi is “sticky but not paste, fat but not greasy, fragrant and delicious, and salty and sweet”, it gradually becomes popular.
Image source: Network
In 1956, the public-private joint venture “Rongji”, “Heji” and “Qingji” three “wufangzhai” and “xiangxiangzhai” were merged into one “Jiaxing wufangzhai zongzi shop”. After the changes of the times, Zhejiang Wufangzhai Industrial Co., Ltd. was established after restructuring in 1998 and began to sell to the national market. Wufangzhai is one of the first batch of “Chinese time-honored” enterprises in China. In 2011, wufangzhai zongzi production technology was listed in the national intangible cultural heritage protection list. In 2004, it became a well-known trademark in China. Now it is the head brand in the zongzi industry.
At present, wufangzhai is mainly engaged in food research and development, production and sales with glutinous rice food as the core. It has formed a product group dominated by zongzi and integrating mooncakes, dumplings, cakes, egg products and other rice products. It has two production bases in Jiaxing and Chengdu. By the end of 2021, the company had achieved the goal through direct operation, cooperative operation and
Wufangzhai expects that the operating revenue from January to September 2022 will be about 2.269 billion yuan to 2.317 billion yuan, a year-on-year decrease of about 13.14% to 14.96%; The net profit attributable to the shareholders of the parent company was about 228 million yuan to 230 million yuan, a year-on-year decrease of about 18.83% to 19.31%.  
It has to be said that in addition to the impact of the epidemic, raw materials and other factors, wufangzhai has reached the ceiling in the business of selling zongzi.
As we all know, the entry threshold of zongzi is low, the number of entrants is scattered and the concentration is not high, but the market competition is full. At the same time, as a traditional seasonal food, its consumption scene is relatively limited. At present, wufangzhai is a leading brand, and it is difficult to make a big breakthrough in the operation and development of its main business.
It is not safe to put all eggs in one basket, and seeking diversified development is the way out.
In fact, wufangzhai is also aware of this. In recent years, it has taken zongzi as the starting point, made full use of the Chinese festival scene, developed diversified glutinous rice food, and even expanded its daily sales products, trying to enrich the product matrix and create a high-value product line.
This IPO is intended to raise 762 million yuan, which is mainly used for wufangzhai phase III intelligent food workshop construction project, wufangzhai digital industry smart park construction project, wufangzhai R & D center and informatization upgrading construction project, wufangzhai Chengdu production base upgrading and reconstruction project, etc.
After the project is put into operation, wufangzhai can increase the production capacity of 100 million high-end zongzi series products, 43.5 million baked foods (moon cakes, mung bean cakes, egg yolk cakes) and 13.04 million bags of quick-frozen foods (dumplings, Shaomai, wonton).
Young people win the world?
In addition to rich product lines, wufangzhai, as a century old brand, is adapting to the times and trying to embrace young people.
Public data show that from the early days of the founding of the people’s Republic of China to the present, the number of time-honored enterprises in China has dropped from more than 16000 to more than 1600, and the survival rate is only 10%.
It is not easy for time-honored brands to survive and live well in this new era.
Nowadays, consumers’ resistance to time-honored brands mainly comes from the word “old”. The word “old” here means that it does not meet the market demand and development trend, has no innovation gene, is not attractive enough, and is not “grounded”.
If wufangzhai wants to gain more consumer stickiness, it is bound to solve these pain points.
On the one hand, it began digital transformation, especially to e-commerce. In 2009, it set up an e-commerce team, opened a new mode of “touching the net”, and further expanded its sales channels.
At present, it has established an omni channel marketing network covering commerce, chain stores and e-commerce throughout the country. It can be found that wufangzhai is mainly directly operated, accounting for more than 60%, which is relatively stable. Among them, the revenue from e-commerce sector has increased year by year. Since 2020, the revenue of this sector has exceeded the retail channel, making a lot of contributions.
Will the century old wufangzhai hit the “first stock of zongzi” be a “meat stick”?
五芳斋预计2022年1-9 月营业收入约为 22.69亿元至 23.17亿元,同比下降约 13.14%至 14.96%;归属于母公司股东的净利润约为 2.28亿元至 2.30亿元,同比下降约 18.83%至 19.31%。 
本项目达产后,五芳斋可实现新增年产 10,000 万只高端粽子系列产品、4,350万只烘焙类食品(月饼、绿豆糕、蛋黄酥)、1,304 万袋速冻类食品(汤圆、烧 卖、馄饨)等的生产能力。
公开数据显示,从建国初期到如今,我国的老字号企业由 16000余家降至1600 余家,存活率仅有10%。



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