Investor net Xie Yingjie

In recent years, “fast health” has become a new fashion for young people, and fresh stewed nutritional food is deeply sought after, among which the representative is fresh stewed bird’s nest. Xiamen yanzhiwu Bioengineering Co., Ltd. (hereinafter referred to as “yanzhiwu”), which takes this as its main business, plans to seize the victory and attack the capital market to become the “first share of bird’s nest”.

Founded in October 2014, yanzhiwu focuses on R & D, production and sales of normal temperature instant bird’s nest, fresh stewed bird’s nest and dry bird’s nest. In the first half of 2021, Yan Zhiwu delivered the form to the HKEx without success; After eight months, he turned to a shares and submitted the listing application to the CSRC at the end of 2021. So far, there is no latest progress.

Prior to the submission of the prospectus, the related parties of yanzhiwu established a number of dealer Companies and were acquired by yanzhiwu, resulting in a sharp decline in the proportion of related party transactions; The company also paid dividends five times in three years, with a cumulative dividend amount of 250 million yuan, resulting in a decline in Book funds. In this IPO, yanzhiwu plans to raise 1 billion yuan to invest in the construction of ecological industrial park.

High value marketing drives up performance

Modern research shows that the main components of bird’s nest are water, lipid, sialic acid, protein, amino acid, carbohydrate and so on, and there is no specific medicinal component. In the current brand publicity of bird’s nest industry, the sialic acid contained in bird’s nest may have special effects.

In order to create the concept of fast health care, Yan Zhiwu invests about 30% of its revenue in advertising and marketing every year. From 2018 to June 2021 (hereinafter referred to as “the reporting period”), the company’s sales expenses reached 230 million yuan, 310 million yuan, 320 million yuan and 170 million yuan, accounting for 32%, 33%, 25% and 24% of the operating revenue respectively.

At the same time, Yan Zhiwu also adopted the marketing scheme of price for quantity. During the reporting period, the ex factory unit price of instant bird’s nest bowl decreased from 180.88 yuan to 158.86 yuan, and the unit price of fresh stewed bird’s nest also decreased from 134.55 yuan to 51.52 yuan.

In terms of the average purchase price of materials used, Wanyan products decreased from 13 yuan / g in 2018 to 11.31 yuan / g in the first half of 2021. So is this based on changes in the bird’s nest market, or has the company lowered the grade of raw materials?

It is worth mentioning that among the top five suppliers of the company, “Pt. Esta Indonesia” was punished in 2015 because the nitrite of 7.7kg baiyanwo Yanzhan exceeded the standard.

After the average purchase price decreased, the profit space of yanzhiwu increased. Taking the bowl swallow of 138g / bowl as an example, its official price is 298 yuan, and its bird’s nest feeding amount is 3.7g per bowl, with a cost of about 41.8 yuan, which is about seven times higher than the price.

With the help of many marketing schemes, the sales volume of bird’s nest products increased from 5.22 million bowls to 15.27 million bowls from 2018 to 2020.

From 2018 to the first half of 2021, the revenue of Yan Zhiwu reached 720 million, 940 million, 1.29 billion and 707 million yuan, and the net profit attributable to the parent company was 63.29 million, 79.1 million, 120 million and 63.68 million yuan.

Government subsidies also contributed a lot. During the reporting period, they were 3.155 million yuan, 15.832 million yuan, 17.022 million yuan and 1.7286 million yuan respectively, accounting for 4.2%, 17.16%, 10.8% and 2% of the total profits of the current period respectively.

Urgent need to establish brand barriers

With the “quick health” standing in the tuyere, giants have entered the bird’s nest market. For example, the new retail giant HEMA fresh has launched a tonic store. The main products are Yanzhan and instant bird’s nest; Tongrentang, a well-known traditional Chinese medicine brand, is also arranging bird’s nest drinks.

Under the high competition of the industry, the inventory of yanzhiwu was at a high level for most of the reporting period. During the reporting period, the book value of the company’s inventory was 137 million yuan, 90.7714 million yuan, 254 million yuan and 250 million yuan respectively, accounting for 45.2%, 24.5%, 45.4% and 47% of current assets.

Correspondingly, the gross profit margin of the company decreased to 43.53% in 2020, above 48% in the past two years, and has recovered to 47% in the first half of 2021; According to the prospectus, the average gross profit margin of bird’s nest industry exceeds 50%.

The company said that the decline in gross profit margin was mainly due to the strengthening of market promotion by the manufacturers of fresh stewed bird’s nest. Under the background of increasing competitive pressure, Yan Zhiwu carried out promotional activities and appropriately reduced the sales price of online products.

This also confirms from the side that Yan Zhiwu urgently needs to establish its own brand barrier. According to the prospectus, the company’s R & D team has more than a dozen papers published in core journals, 12 invention patents, 6 utility model patents and 4 design patents, and has won many provincial and municipal awards such as “2018-2019 science and Technology Award (Special Award) of China Food Industry Association”.

But in fact, Yan Zhiwu’s R & D investment is not high. From 2018 to June 2021, the R & D expenses of yanzhiwu were 13.05 million yuan, 18.74 million yuan, 17.66 million yuan and 9.56 million yuan respectively, accounting for 1.35% of the revenue from 1.8%.

Although yanzhiwu claims to have made many new progress in the research and development of bird’s nest products, its health care effect has not been officially affirmed. According to the website of the State Administration of market supervision, Xiamen yanzhiwu Sinong Food Co., Ltd., the main body of yanzhiwu processing bird’s nest, holds a food production license, that is, all products produced by the company are cans and beverages.

In terms of new products, the company said it had developed bird’s nest zongzi and bird’s nest moon cakes. According to the prospectus, the latter is manufactured by a third party. The third party is called Shanghai Juqi International Trade Co., Ltd. its main business is cosmetics and has more than a dozen corresponding filing information of cosmetics.

Acquisition of dealer companies before IPO

It will take time to establish brand barriers. In order to ensure performance, yanzhiwu is deeply bound with dealers.

According to the prospectus, from 2018 to the first half of 2021, the sales amount of yanzhiwu to related parties was 137 million yuan, 168 million yuan, 166 million yuan and 107 million yuan respectively, accounting for 18.93%, 17.65%, 12.79% and 15.18% of the revenue.

The prospectus shows that there are a large number of related party customers among the company’s top five dealers, with the second largest customer being Zhongda