如无意外将成为“辣条第一股”的卫龙，比以往更需要讲好故事。
Last night, the official website of Hong Kong Stock Exchange updated the listing documents of Weilong. According to sources quoted by Bloomberg yesterday, the company plans to raise shares as soon as Thursday, raising no more than $150 million. Details remain to be discussed.
In fact, although Wei Long started his career with the “five cents hot stick”, he has a “cash ability” that can not be underestimated: last year, his income was nearly 4.8 billion yuan, the profit margin was a bit higher than the industry average, and he was invested by Tencent, Hillhouse and other well-known institutions. So, why does a small spicy stick have the opportunity to “eat” listed companies? What armor and soft ribs does Weilong have?
Make a fortune
Wei Long’s road to the market has been a long one.
Before this update, the company submitted three prospectuses to HKEx in May, November and June 2021 respectively, but no further action was taken after the hearing. At that time, it was reported that Weilong had postponed its listing due to poor market environment.
Until September this year, Bloomberg quoted a source as saying that Wei Long was considering restarting the Hong Kong stock IPO as soon as October, possibly raising $500 million. At that time, it was also said that Wei Long sought a valuation of about 4.7 billion dollars, but the IPO size and timing details may still change.
According to the latest rumors, Weilong’s fundraising has decreased from 500 million to 150 million US dollars.
As for the reasons for this change, Shen Meng, Executive Director of Xiangsong Capital, analyzed to Xiaoshidai that although Weilong has absolute brand power and share advantage in the spicy stick market, the current market environment is not good, and investors’ attitudes towards domestic consumption growth potential have changed. In addition, the global monetary policy adjustment and the looming economic recession have also increased investors’ concerns about future expectations.
If everything goes well, Weilong will successfully land in the capital market more than 20 years after its birth.
According to the “history of prosperity” published on Weilong’s official website, the company was first started in 2001, and its founders were Liu Weiping and Liu Fuping. At that time, Liu Weiping from Hunan went to many cities to look for entrepreneurial opportunities. He went all the way north from Yueyang to Luohe, Henan Province, where he was not familiar with his life. After two days of traveling there, he decided on the product.
“Once, I met an old lady who sold beef gluten noodles on a river bank in Luohe. It was very interesting. I bought a bowl of beef gluten noodles. It tasted very good. I asked her where she made it. I was afraid that I might steal her business. At first, she refused to tell me.” Liu Weiping said with a smile.
After some inquiry, Liu Weiping found a workshop to produce beef gluten noodles, and paid a deposit for the shopkeeper to improve the grinding tools to produce beef gluten noodles with chili powder, which he named “eel strips”. Later, the name was changed to “fish sticks” because it was difficult to write. “Fish sticks” are also called “hot sticks” by more and more consumers because of their unique spicy taste.
Liu Weiping revealed that after he initially decided on the products in Luohe, he asked his brother to bring people to Luohe from his hometown to start his business. At the beginning, they produced artificial meat and bean skin by hand, mixed with Hunan spicy food and sent it to the market for sale. The response was good. However, due to lack of experience in the early stage of entrepreneurship and lax cost control, when workers can receive hundreds of yuan of salary every month, as the boss, he only earns dozens of yuan, and even after the rent is removed, he still loses. To this end, Liu Weiping’s parents have repeatedly dissuaded him from continuing his business.
From the overall performance, Weilong has achieved continuous growth in the past few years. In 2019, 2020 and 2021, Weilong’s total revenue reached 3.385 billion yuan (RMB, the same below), 4.12 billion yuan and 4.8 billion yuan respectively. However, in the six months ended June 30, 2022, its total revenue decreased slightly by 1.8% year-on-year to 2.261 billion yuan.
In terms of profits, Weilong’s profits in 2019, 2020 and 2021 were 658 million yuan, 819 million yuan and 826 million yuan, respectively. However, in the six months ended June 30, 2022, Weilong recorded a loss of 261 million yuan, mainly related to one-time share based payments related to previous investments, partially offset by gross profits increasing from 850 million yuan to 862 million yuan in the same period.
Weilong Performance
In terms of profit margin, Weilong also “outperformed the market”. Its 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 about 10% of China’s leisure food industry in 2021.
Wei Long, with strong ability to attract money, has also attracted many star investors. The prospectus shows that it has previously introduced CPE, CWL Management XVIII Limited, Hillhouse, Tencent, Yunfeng Fund, Sequoia Capital China Fund, Duckling Fund, L.P., Housheng Investment, Haisong Capital and Shanghai Hongluo as investors.
Equity structure of Weilong
The founder brothers of Weilong still hold most shares. According to the prospectus, as of June 30, 2022, about 84% of Weilong’s ordinary shares were held by “Hehe Global Capital”, which was ultimately controlled by Liu Weiping and Liu Fuping. At present, Liu Weiping, 44, is the Chairman and Executive Director of Weilong, and Liu Fuping, 41, is the Executive Director and Vice Chairman of Weilong.
The snack agency also noticed that Sun Yinong, once a Nestle native, served as the CEO of Weilong after reviewing the prospectus. Before Nestle’s divestiture of Yinlu peanut milk and canned eight treasure porridge business, he was the CEO of Yinlu, and earlier worked in Coca Cola system for more than ten years.
In September 2021, Sun Yinong joined Wei Long as the special assistant to the president and was appointed as the CEO in December of the same year. Among Wei Long’s six executive directors, Sun Yinong is also the only one who does not belong to the Liu family.
List of Weilong Executive Directors
Soft rib
From the operating data, Weilong’s spicy stick business seems to be “really fragrant”, but there are also weaknesses that cannot be ignored.
First of all, Weilong, which always feels cheap, has experienced a decline in sales after raising prices. The company said that the sales volume in the ten months ended October 31, 2022 decreased slightly, mainly because of the regional recurrence of COVID-19 in several regions of China; And price adjustment due to the latest product upgrade of major product categories in the first half of 2022.
The prospectus shows that in the first half of this year, Weilong adjusted the prices of seasoned flour products and vegetable products, but did not disclose the range and extent of price adjustment, only saying that “customers need a certain time to deal with the relevant price adjustment”.
It is worth noting that in these two categories
“The dealers are not allowed to sell the products of other companies that belong to the same category or have competitive relations with our products, our counterfeit products or our expired, deteriorated or other defective products.” The above prospectus wrote, but also noted that this clause “has not been used in the standardized contract since 2021”.
As Weilong also allows dealers to sell products to sub dealers, if a dealer withdraws because it does not accept the above requirements, Weilong may lose more outlets.
Wei Long also said in the prospectus that he could not guarantee that “we will not lose any dealers due to competitors, which may cause us to lose some or all of the favorable arrangements with such dealers, and may lead to the termination of our relationship with other dealers”.
Next, how to restore the growth of sales of the blockbuster products, avoid the impact of the demand for healthy food, and cope with more fierce competition are the keys to whether Wei Long can tell a good story about spicy snacks.
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Tencent shares, Yinlu’s former CEO is at the helm, with a loss of 261 million in the first half of the year. Is there any story about Wei Long
从经营数据来看，卫龙的辣条生意看起来是“真香”，但这背后其实也有无法忽视的软肋。
首先，向来给人感觉便宜的卫龙出现了提价后销售下滑的现象。该公司称，截至2022年10月31日止十个月的销售额略有减少，主要是因为COVID-19于中国若干地区的区域性复发；及因在2022年上半年对主要产品类别进行最新产品升级而作出价格调整。
招股书显示，在今年上半年，卫龙对调味面制品、蔬菜制品进行调价，但未披露调价范围和幅度，仅表示“客户需要一定时间应对相关价格调整”。
值得注意的是，这两大品类上半年贡献了卫龙95.5%收入。其中，占比最高的调味面制品销量受到“暂时性的影响”，收入同比减少4.3%至13.41亿元。蔬菜制品收入同比上升加3.1%至8.18亿元，销量“略微减少”，每千克平均售价增长7.3%。
其次，由于辣条被不少人认为是“垃圾食品”，加上消费者越发讲求健康，这也令依赖辣条的卫龙有了“危机感”。
“我们的销售可能受消费者偏好（包括对卡路里及添加剂的膳食担忧）变化的影响。”该公司称。广东省食安保障促进会副会长朱丹蓬也向小食代指出，辣条收入占比较高便是该公司目前面临的问题之一，卫龙正进行一些战略调整，包括产品矩阵等等。
卫龙各品类收入占比
卫龙则表示，为迎合健康休闲食品趋势，其推出了魔芋爽及风吃海带在内的蔬菜制品。与此同时，该公司也试图戒掉“辣条依赖症”。例如，其近期新品规划中并未出现辣条所属品类。
招股书显示，卫龙一般每年开发一到两款以上的新品推向市场，截至最后实际可行日期正在研发的产品已超过四款，计划于2024年推出新的蔬菜制品，并于2023年至2025年推出新的豆制品及其他产品，包括豆制品、肉制品及代餐产品。
此外，卫龙也难以避开更为激烈的行业竞争。招股书引用的弗若斯特沙利文数据显示，中国辣味休闲食品行业的零售额由2016年的人民币1,139亿元增至2021年的人民币1,729亿元，年复合增长率为8.7%，高于中国整体休闲食品行业同期年复合增长率。
“辣味休闲食品在中国消费者中的受欢迎程度与日俱增。随着近年来辣味休闲食品行业的发展，众多食品生产商持续开发新型食品以适应不断变化的消费者偏好。”招股书写道。
事实上，由于辣条或其他辣味零食生产门槛不高，其他大型零食品牌想来“分一杯羹”并非难事。
那卫龙打算如何“防御”呢？小食代翻查招股书留意到，为保护“地盘”，占据线下渠道优势的卫龙制定了一条经销商条款。
“经销商不允许销售与我们的产品属于同一类别或存在竞争关系的其他公司的产品、我们的山寨产品或我们过期、变质或有其他缺陷的产品。”上述招股书写道，但同时注明此条款“自2021年以来未在标准化合同中使用”。
而由于卫龙还允许经销商向次级经销商售卖产品，如果有经销商因为不接受上述要求而退出，卫龙可能会丢掉更多网点。
卫龙也在招股书中表示，其无法保证“不会因竞争对手而流失任何经销商，这可能导致我们失去与该等经销商订立的部分或全部有利安排，并可能导致我们与其他经销商的关系终止”。
接下来，如何令拳头产品销量恢复增长、避免健康饮食需求带来的影响、应对更为激烈的竞争，都是卫龙能否讲好辣味零食故事的关键。
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