“Spicy hot first” is finally coming!
On February 22, Shanghai yangguofu enterprise management (Group) Co., Ltd. (hereinafter referred to as “yangguofu”) officially submitted the prospectus to the Hong Kong stock exchange, with China Securities Co.Ltd(601066) international as its exclusive sponsor.
annual revenue exceeds 1 billion yuan
According to the prospectus, the history of the company can be traced back to 2003, when founder Yang Guofu and his spouse Zhu Dongbo opened the first self operated spicy hot restaurant named after the brand “Yangji spicy hot” in Harbin. In 2007, “Yang Guofu” trademark was registered and used as the brand name of all franchised restaurants. After years of development in North and central China, Yang Guofu, Zhu Dongbo and their son Yang Xingyu jointly established the company in Shanghai in November 2015. In December 2021, the company was reorganized into a joint stock limited company.
According to frost Sullivan, Yang Guofu ranks first in China’s Chinese fast food market in terms of total commodity transactions in 2020 and the number of restaurants as of December 31, 2020. In addition, Yang Guofu ranks first in China’s Chinese spicy perm market in terms of total commodity transactions and revenue in 2020 and the number of restaurants as of December 31, 2020.
In terms of revenue, the total revenue of the company in 2019, 2020 and the nine months ended September 30, 2021 were RMB 1.182 billion, RMB 1.114 billion and RMB 1.163 billion respectively. The realized profits during the period were 181 million yuan, 169 million yuan and 202 million yuan respectively. The net cash used in operating activities was 240 million yuan, 260 million yuan and 200 million yuan respectively.
In addition, the company’s gross profit margin continued to grow during the track record period, from 27.9% in 2019 to 28.7% in 2020, and from 26.8% in the nine months ended September 30, 2020 to 30.2% in the same period in 2021.
In terms of liabilities, Yang Guofu’s total liabilities from 2019 to 2020 and the first nine months of 2021 were 404 million yuan, 460 million yuan and 469 million yuan respectively; The net asset value is 360 million yuan, 528 million yuan and 710 million yuan respectively.
franchise restaurants are the main source of income
It is worth noting that Yang Guofu mainly obtains income through the restaurant operation business division, of which the franchise restaurant business line is the main source of income, while the revenue of the franchise restaurant business line mainly comes from the franchise fee and system maintenance fee charged and the sales of goods to franchisees.
Specifically, the annual revenue of franchised restaurants accounted for 87.6% of the total revenue in 2019, rising to 94.8% by 2020. As of September 30, 2021, the annual revenue of franchise restaurants still accounts for more than 94%. The proportion of self operated restaurants’ income gradually decreased, from 1.4% in 2019 to 0.7% in 2020, and further reduced to 0.5% as of September 30, 2021.
According to the prospectus, as of September 30, 2021, there were 5783 restaurants under Yang Guofu brand, including 3 self operated restaurants in Shanghai, 5759 franchised restaurants in 31 provinces and cities in China and 21 overseas franchised restaurants.
From the perspective of regional division, Yang Guofu’s market focus is mainly in the second and third tier cities. According to the prospectus, in recent years, the proportion of the company’s business income from selling goods in second tier, third tier and lower tier cities has gradually increased. In 2019, 2020 and the nine months ended September 30, 2021, it was 77.0%, 80.8% and 82.6% respectively.
In terms of details of sales expenses, Yang Guofu has increased in marketing and advertising expenses in recent years. According to the prospectus, the relevant expenditure in 2019 was 769000 yuan, accounting for 3.3% of the total; By 2020, it will rise to 2.218 million yuan, accounting for 8.8% of the total; As of September 30, 2021, the relevant expenditure was 4.148 million yuan, accounting for 14.1% of the total.
In addition, as a spicy hot giant, Yang Guofu has also had many food safety problems in recent years. On January 15, the Beijing Consumer Association listed the enterprises with food safety problems on the list of food safety problems, and Yang Guofu Malatang was “on the list”.
Yang Guofu also said frankly in the risk factors in the prospectus that it may be more difficult to maintain the quality of goods and services as the company continues to expand its scale, expand its geographical coverage and expand the categories of goods and services.
Chinese food enterprises get together and go public
Since the fourth quarter of last year, many restaurants, including Yang Guofu spicy hot, Hefu Laomian, hometown chicken, rural base, old aunt and so on, have successively opened the road to listing.
At the end of December last year, my uncle disclosed the guidance and filing publicity documents in Zhejiang securities regulatory bureau and planned to launch an IPO in a shares; On January 6 this year, Laoxiang chicken guanxuan, a Chinese fast-food chain brand valued at nearly 20 billion, announced that it had completed the pre IPO round of financing and was making every effort to sprint for the IPO of the A-share main board; On the eve of the Spring Festival Juewei Food Co.Ltd(603517) announced that Jiangsu Hefu Catering Management Co., Ltd. (i.e. “Hefu Laomian”), a wholly-owned subsidiary of the company with shares of Shenzhen Wangju, plans to implement the overseas listing plan and has signed a restructuring agreement with the relevant shareholders of Hefu Laomian; In addition, the Chinese fast food chain rural base also officially submitted a prospectus on the Hong Kong Stock Exchange on January 25
For catering enterprises to get together for listing, some industry analysts believe that before the epidemic, the cash flow of catering enterprises was generally relatively stable, so the enthusiasm of participating in the capital market was not high. In recent years, due to the continuous impact of the epidemic, the growth rate of revenue slowed down and the demand for funds increased. Catering enterprises also had to start to rely on the power of capital to maintain their development and growth.
On the other hand, from the perspective of capital, in addition to the competitive advantages of enterprises, the broad space and market scale of China’s catering market are also one of the reasons why they choose to enter the Bureau.
According to frost Sullivan data, the market scale of China’s catering market continues to grow steadily based on the total amount of commodity transactions. It is expected to grow to about 6100 billion yuan by 2025, and the compound annual growth rate from 2020 to 2025 is 9.1%. Among them, Chinese catering market is the main segment of Chinese catering market. The market scale will reach about 4800 billion yuan in 2025, and the compound annual growth rate from 2020 to 2025 will be about 9.0%.
In the specific Chinese fast food market, Yang Guofu’s Malatang has ranked first in the total transaction volume and the number of restaurants. Yang Guofu said that thanks to the further development of Chinese takeout services, the scale of China’s Malatang takeout market has also increased rapidly from about 5.5 billion yuan in 2016 to about 34.8 billion yuan in 2020, with a compound annual growth rate of 58.5%, The market scale is expected to reach 70 billion yuan by 2025, and the compound annual growth rate from 2020 to 2025 is about 15.0%.
For fund-raising purposes, Yang Guofu said that the funds will be used to upgrade production facilities and information technology systems, strengthen supply chain capacity, improve R & D capacity, and allocate funds for restaurant network expansion plans in foreign markets in China.
