Author | Jin Nuobaoya Editor | He Xiang
Production | Retail Business Finance ID: Retail Finance
Although it has created a new concept of "daily nuts", Wallon Food failed to become the driver of the track as expected. In the face of the achievements of "friends and merchants" in negotiating food, three squirrels, good shops, Yanjin shops and Laiyifen, all of which have been listed on A-share market, However, Wallon terminated the IPO of the main board of Shanghai Stock Exchange when he came to the door.
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On September 4, the Shanghai Stock Exchange issued the Decision on Terminating the Initial Public Offering of Qingdao Wolong Food Co., Ltd. and Listing on the Main Board of Shanghai Stock Exchange. The letter of decision shows that the reason for the termination of the review is that CITIC Securities Co., Ltd., the sponsor of Wolong Food, submitted an application for withdrawal of insurance to Shanghai Stock Exchange.
Source: Shanghai Stock Exchange
It is reported that Wallon Food submitted its listing application to the Shanghai Stock Exchange in June 2022 and updated its prospectus in March this year. In this IPO, the company originally planned to raise 700 million yuan for production intelligent transformation and intelligent storage logistics center construction projects, brand image and omni channel sales network construction projects and supplement working capital.
Source: Shanghai Stock Exchange
Citing relevant reports from China Singapore Jingwei, people from the Wolong Food Securities Department said that the termination of the IPO was voluntarily applied by the management after comprehensive consideration. As for whether the IPO will be re launched, "it depends on the discussion of the subsequent leaders."
According to Retail Business Finance, The failure of Wolong Food on the market is expected, but there are two points worth noting First, before the termination of IPO, the company has not replied to the first round of inquiry sent by Shanghai Stock Exchange; Second, compared with the situation that enterprises voluntarily withdraw their listing applications, the small probability event that "the sponsor institution submits the cancellation application alone" indicates that Wallon is less likely to re impact the listing in a short time.
01 Both revenue and profit fell, and growth stagnated
There are local chickens in the front and Wolong food in the back. Regardless of external factors, the two enterprises have more or less risks on key issues such as sustainable profitability, performance authenticity and business compliance.
The data disclosed in the prospectus of Wolong Food also proves that its performance is not very optimistic.
In the first half of this year, the performance of Wolong Food was cut by half compared with the same period last year, and its revenue and profit also showed a downward trend year by year. From 2019 to the first half of 2022, the operating revenue of Wolong Food will be 1.165 billion yuan, 889 million yuan, 1.108 billion yuan and 436 million yuan respectively, of which the revenue in 2020 will decline by 23.7% year on year.
Source: Volon Prospectus
Walloon, which has been established for less than 8 years, was supposed to be a new brand in the rapid development period in the food field, but it never expected to fall into a period of revenue stagnation.
The data in the first half of 2022 shows that its revenue is less than 40% of 2019, only 37 million yuan.
Source: Volon Prospectus
For the 2022 annual performance, Wallon did not give an optimistic forecast.
The official said that it is expected to achieve revenue of 1 billion yuan to 1.2 billion yuan in 2022, a decrease of 9.74% to an increase of 8.31% compared with the same period last year.
The expected net profit attributable to the parent company is also close to halving. It is estimated that the net profit attributable to shareholders of the parent company after deducting non recurring profits and losses in 2022 will range from 70 million yuan to 90 million yuan, a year-on-year decrease of 40.43% to 23.41%.
In terms of both revenue and profit, Wallon has fallen into the mire of decline, and even has a certain gap compared with companies in the same industry.
Taking the first half of 2022 as an example, the revenue of five companies in the same industry reached billions of yuan, including 4.114 billion yuan, 4.895 billion yuan, 2.678 billion yuan, 2.312 billion yuan and 1.21 billion yuan respectively for three squirrels, good products stores, Qiaqia Food, Laiyifen and Yanjin stores. Net profit was 82 million yuan, 195 million yuan, 352 million yuan, 111 million yuan and 129 million yuan respectively. In the first half of 2022, the revenue and net profit of Wolong Food will be 446 million yuan and 27 million yuan respectively.
Figure: Comparison of revenue and net profit of the same industry
In this regard, Wallon explained in the prospectus that there are two reasons: first, the impact of the epidemic has impacted the sales of offline channels; Second, the depreciation of RMB caused the rise of raw material costs, which affected the gross profit margin.
From the perspective of revenue growth rate and revenue structure, it is obviously difficult for Wallon to present a future with brand prospects to the capital market, and this road to IPO is bound to be thorny.
02 Chengya nuts, loser nuts
According to the prospectus, Wolong Food was founded in 2016, and was the first to launch "daily nuts" products in China, which promoted the birth and development of small package mixed nuts industry. Mixed nuts represented by "daily nuts" once contributed more than 90% of its income.
It can be said that since the birth of Wolong, it has been firmly bound to "Daily Nuts", and Daily Nuts is the inspiration source of founder Yang Guoqing when he founded Wolong.
Source: Wallon official website
In 2015, Yang Guoqing had been exploring the field of nut import and export trade for many years. During a party with foreign friends, Yang Guoqing realized the selling pain point of the nut industry: most of the nuts with shells are packed in large bottles prepared for the New Year, which is not convenient for daily consumption.
Yang Guoqing further thought: Why not make a shellless instant nut product? This product can combine a variety of nuts to produce different flavors, and divide them into small bags for easy carrying. This way can kill two birds with one stone, which not only solves the existing pain points of nut products, but also promotes the concept of balanced nutrition, in line with the trend of consumers' diversified and healthy food preferences.
As a result, "Daily Nuts" came into being and became very popular, and even created a sub category of "Daily Nuts" in the nut industry. Then other nut giants such as Qiaqa and Three Squirrels followed suit and launched similar products.
Source: Network
Unfortunately, as the initiator of "Daily Nuts", Wolong is obviously weak in consumer mental cultivation and concept building, and the brand awareness of the initiator is not popular.
Although we are not stingy in the promotion, the effect is not ideal.
From 2019 to the first half of 2022, the promotion expenses of Wolong Food will be 83.2956 million yuan, 81.909 million yuan, 96.4818 million yuan and 33.7023 million yuan, respectively, accounting for 43.77%, 45.81%, 44.67% and 33.73% of the total expenses.
Source: Volon Prospectus
Wolong also used to use traffic star Gong Jun as the brand ambassador, and frequently used brand implantation to brush the sense of presence in a large number of films and TV plays. However, its online marketing play is still conservative, less involving various trendy brand co branding, IP image building and other play methods, and lacks Internet genes.
Source: Network
It is right to open the market with the idea of "blockbuster", but it is difficult for a brand to rely on a single product to gain a foothold in the market. It is often based on the hot single product to expand the market, and then continue to research and develop new products to establish a complete product matrix to continuously develop into a comprehensive brand.
As the main business line is relatively single and highly dependent on the "daily nuts" category, there is not enough core brand barriers established, and Wallon is also lagging behind in market share.
According to the survey data of the Prospective Industry Research Institute, from 2019 to 2021, the top 5 enterprises in China's mixed nut industry include Wolong Food, Three Squirrels, Qiaqia Food, Good Product Store and Herb Flavor. In 2019, the market share of Wolong Food once reached 13.0%, ranking the first in the industry. After that, its market share declined for two consecutive years. By 2021, its market share will only account for 7.2%, ranking the third in the industry.
Source: GF Securities Research Report
This is true of Wallon's competitors.
No matter three squirrels or Qiaqa or Liangpin stores, they are all large and comprehensive snack brands. Nuts are just a small category among them, and such a small proportion has taken the first place in Wolong nut market in a short time.
Source: Volon Prospectus
From 2019 to the first half of 2022, the revenue from mixed nut products accounted for 92.14%, 85.73%, 75.74% and 69.62% of Wallon's main business revenue, respectively. Although the proportion has declined, it still accounts for nearly 70%. Wallon also clearly realized that "single product structure" is one of the risks it is currently facing.
03 The advantages are not outstanding and the cost performance ratio is lost
Compared with the "lavish spending" on marketing expenses, Wallon appears to be "withholding and searching" on product innovation and product research and development.
Although the proportion of R&D expenses in revenue of Walloon has increased year by year, in the first half of 2022, the proportion is only 0.21%, while the proportion of sales expenses is close to 23%.
Compared with the amount, the R&D expense in the first half of 2022 is only 910000 yuan, less than 1% of the sales expense.
Source: Volon Prospectus
Wallon realized the problem, so in recent years, it has laid out new categories, such as single nut, nut derivatives, nut products with a variety of new flavors, etc., but it basically focuses on nuts, which is too narrow compared with other competitors.
First of all, the cost of Wolong's independent production has not decreased, which may be due to technical reasons or the failure to grasp the advantages of the core supply chain, resulting in high customer price and lower cost performance than similar products.
Unlike three squirrels, Baicaowei and other branded products, Wolong insists on the mode of independent production, so as to firmly control the production process and make the product quality more convincing.
However, due to independent production and selection of raw materials, Wolong is also a bit higher than its competitors in terms of customer price, which makes it difficult to achieve high cost performance.
Take the best-selling products for example, they are all daily nut gift boxes with the same weight. The post coupon price of Wallon is 31% higher than that of three squirrels.
Source: Taobao
Secondly, in terms of market education, Wallon did not highlight its own advantages.
Although it has always focused on the concept of "only good nuts", there is not enough education at the consumer cognitive level, and it is far from enough to rely solely on thin text propaganda.
Source: Network
Just as other branded products on the market will also carry out similar promotion and inducement for product categories, while Wallon does not give play to its differentiation advantages, consumers will naturally not favor Wallon alone when facing homogeneous products.
Once the brand awareness is similar and the category is the same, the cheaper one will naturally be more favored by consumers. It can be seen that the proportion of Walloon City is declining year by year, and it is expected to be surpassed by three squirrels.
Although in the official website, Wallon also said that it has strict control over quality, and its own factory has become one of the few enterprises in the nut industry with "BRCGS certification" reaching Grade A. However, in the new consumption era when consumers make decisions quickly, the fragrance of wine is also afraid of the depth of the alley, and Wolong, which is unable to establish brand awareness in the minds of consumers, seems to be unable to play a good hand, and all of them fall into the hands.
Source: Wallon official website
In terms of shareholding dynamics, Wallon also has weird operations.
Huang Xufeng and Zhang Liye, who used to be co founders in the early days of the enterprise, hold 35% shares in total. But on the eve of the company's preparation for the IPO, two original shareholders withdrew their shares successively, leaving Yang Guoqing alone.
On the eve of IPO, we chose to clear our positions and leave the market. It is unknown whether we are not optimistic about the future development of the company or have irreconcilable contradictions with the company's business philosophy.
However, in the face of the rich snack giants and other new competitors on the nut track, from the category pioneer to the declining performance in the past three years, Wallon has been living on its laurels. If Wallon has not made substantive changes, it will still be more difficult to go public.
