Recently, Shandong Xinjufeng Technology Packaging Co., Ltd. (hereinafter referred to as "Xinjufeng") started subscription and plans to list on the GEM. The sponsor is CITIC Securities .
Xinjufeng's issuance price is 18.19 yuan per share, with an issuance price-to-earnings ratio of 51.87 times , which is higher than the industry's average static price-to-earnings ratio (15.43 times) in the last month, and higher than the average static price-to-earnings ratio attributable to the parent company's shareholders after deducting non-recurring gains and losses in 2021. The exceeds 60.54%, and there is a certain bubble of .
The number of shares issued in this public offering does not exceed 63 million shares, accounting for 15% of the total share capital after issuance. At the time of listing, the market value of Xinjufeng was around 7.6 billion . Due to the recent good sentiment in new stocks, there may be a certain room for growth on the first day.
Xinjufeng was founded in 2007. The company's main business is the research, development, production and sales of sterile packaging .
According to the prospectus, the actual controllers of the company are Yuan Xunjun and Guo Xiaohong. Before this issuance, the shareholders of Beijing Jingjufeng were Yuan Xunjun and Guo Xiaohong. Yuan Xunjun and Guo Xiaohong respectively held 50% of the shares of Beijing Jingjufeng. Yuan Xunjun and Guo Xiaohong indirectly held 26.54% of the shares of the issuer through Beijing Jingjufeng. At the same time, Yuan Xunjun is the general partner and executive partner of the issuer's shares Tibet Chengrongxin and Zhuhai Jufengrui. Yuan Xunjun actually controlled 10.20% of the shares of the issuer through Tibet Chengrongxin and Zhuhai Jufengrui. Yuan Xunjun and Guo Xiaohong totally controlled 36.74% of the shares of the issuer.
It is worth noting that Xin Jufeng's road to the capital market of A shares is also quite tortuous. As early as June 2017, Xin Jufeng once hit the Shanghai Stock Exchange Main Board, but failed its first IPO. Now it has turned to GEM , and it is finally only one step away from listing. If you look closely at its business development, there are still some pains.
Image source: China Securities Regulatory Commission official website
01 Is it difficult to increase revenue?
Xinjufeng's main products are roller-type sterile packaging.
Simply put, sterile packaging is a material with high technical content in liquid packaging products. It can effectively preserve the nutrients of liquids. It has the characteristics of no refrigeration, long shelf life, light shielding, heat insulation, sterile, low cost, and easy transportation. It is widely used in packaging containers of foods such as liquid milk and non-carbonated soft drinks.
In fact, the business has a certain market space. It should be noted that the downstream industry of sterile packaging belongs to the consumer goods fields such as food and beverages, and the downstream industry's prosperity is closely related to the total retail sales of consumer goods. Apart from the disruption of the epidemic, under the upgrading of consumption, with the steady growth of the demand for downstream dairy and non- carbonated beverages, the overall scale of the sterile packaging market is on the rise.
During the reporting period, Xinjufeng achieved operating income of RMB 935 million, RMB 1.014 billion and RMB 1.242 billion, respectively, benefiting from the development dividend and growing rapidly; however, the net profit was RMB 116 million, RMB 169 million and RMB 157 million, respectively, with certain fluctuations. It is worth noting that in the past three years, the company has paid two cash dividends for , totaling 100 million yuan in cash dividends (including tax).
During the reporting period, Xinjufeng's main business gross profit margin was 30.48%, 34.47%, and 27% . Although overall it is higher than the level of comparable companies, it shows certain fluctuations.
Specifically, pillow bag is its advantageous product . The company's core liquid milk customers' demand for this product has been increasing, resulting in the continuous increase in the scale of this revenue. However, its share declined in 2021, mainly due to the fact that the company further increased its sales of brick and diamond bag products that year.
During the reporting period, Xinjufeng's capacity utilization rate was 71.72%, 77.59% and 82.58%, respectively, increasing year by year, but it was not saturated. This IPO plans to raise 540 million yuan, mainly for the expansion project of 5 billion packages of sterile packaging materials, and the production project of 5 billion packages of new sterile packaging sheet materials.
02 The largest customer is also a shareholder
In fact, Xinjufeng's customer concentration is relatively high , which is mainly due to the high concentration of downstream liquid milk industry. The customers are mainly Yili , New Hope , Xiajin Dairy , Eurasian Dairy, Manor Ranch, Guangze Dairy, Jule Food, Haihe Dairy and other well-known domestic liquid milk manufacturers.
During the reporting period, the company's sales revenue from the top five customers accounted for 91.78%, 89.16% and 89.95% of the main business revenue. Among them, the sales revenue of to Yili accounted for more than 70% of the main business revenue, and there is a certain business dependence.
attracts attention, according to the prospectus, in August 2015, Yili held 20% of the issuer's equity (diluted to 18% in October 2016) and became an affiliated party. The transactions between the two parties constitute related transactions; in March 2020, Yili transferred 13.2% of the equity to the outside world, and the shareholding ratio of was reduced to 4.80% , and no longer belonged to the legal person holding more than 5% of Xinjufeng's shares; after March 2021, according to the "Shenzhen Stock Exchange GEM Stock Listing Rules" and other regulations, 12 months from the date of change in March 2020, the two parties no longer constitute related transactions, and the transactions between the two parties no longer constitute related transactions.
You should know that Xinjufeng and Yili’s business cooperation has been in for nearly 12 years. Leading customers have a certain degree of stability. However, once there is a major adverse change in related business cooperation, it may directly affect its profitability and the interests of shareholders. It still needs to increase customers to develop and maintain certainty in operating performance.
03 Can't the foreign-funded brand be?
looks at the market competition landscape. At present, international sterile packaging companies still dominate the industry. Foreign suppliers such as Tetra Pak , SIG and other foreign investors have a greater say. In contrast, domestic sterile packaging suppliers such as Xinjufeng do not have much presence.
In fact, after international sterile packaging companies entered the Chinese market, they used the strategy of bundling and selling with packaging materials to make dairy companies highly dependent from filling machines to packaging materials supply, and once occupied more than 90% of the market share of China's sterile packaging market.
public data shows that in 2020, the market share of sales volume of sterile packaging suppliers in the domestic liquid milk market was: Tetra Pak accounted for 61.1%, SIG accounted for 11.3%, Fanmei Packaging accounted for 12.0%, Xinjufeng accounted for 9.6% (8.9% and 9.2% in 2018 and 2019 respectively), and other suppliers accounted for 6.1%.
Although Xinjufeng claims to be the largest sterile packaging material supplier for domestically controlled , in comparison, the company has been established for a short time and still has certain shortcomings in terms of capital, human resources, technology accumulation, etc. If you want to improve market competitiveness, you need to strengthen R&D level, enrich product categories, broaden sales channels, drive diversification of product application areas, and thus improve profitability.
During the reporting period, Xinjufeng's R&D expenses were RMB 221,900, RMB 4,386,100, and RMB 8,323,900, respectively, accounting for 0.02%, 0.43%, and 0.67%, respectively, with a relatively low proportion. The R&D expense ratio of is significantly lower than the average value of comparable companies, and needs to be further improved.
Xinjufeng expects to achieve operating income of approximately RMB 1.121-1.208 billion from January to September 2022, a year-on-year increase of approximately 30.00% to 40.09%. Due to the high price of commodity in the first half of this year, it has a certain impact on the company's costs. The net profit in the first half of the year has slightly decreased compared with the same period. However, the decline in commodity prices since June is obvious. It is expected that the company's net profit from January to September 2022 will be approximately RMB 111-132 million, with a year-on-year change of approximately -5.24% to 12.68%.
04 Conclusion
Driven by consumption, the sterile packaging industry has a certain room for growth, and domestic entrants such as Xinjufeng are expected to gain development opportunities by taking advantage of the domestic substitution. However, in comparison, based on its own weaknesses in technology, processes, materials, etc., it still needs to wait and see carefully in the later performance.
This article is from Gelonghui New Stock
