Qianwei Central Kitchen Association A Shares Will Welcome "First Share" Of Fried Dough Sticks?

Zhengzhou Qianwei Central Kitchen Food Co., Ltd. (hereinafter referred to as "Qianwei central kitchen") was approved by the development and Examination Committee of China Securities Regulatory Commission on July 8. No accident, the food supplier will open the door of China's capital market, and the A-share market will usher in the first "fried dough sticks".

According to the prospectus, Qianwei central kitchen, founded in April 2012, is mainly engaged in the R & D, production and sales of quick-frozen flour and rice products. It mainly provides customized and standardized quick-frozen flour and rice products for catering enterprises (including hotels, group canteens and rural kitchens). According to the processing methods, the products are divided into four categories: fried dough sticks, baking products, cooking products and dishes Egg tarts and sweet potato balls are the main products of Qianwei central kitchen.

As a food supply chain enterprise, Qianwei central kitchen is not famous in the consumer market at present. But when it comes to its creator, Miss food, which produces dumplings and dumplings, I believe most consumers know something about it.

In April 2012, when Qianwei Co., Ltd. (the predecessor of Qianwei central kitchen) was established, it was a wholly-owned company invested and built by Zhengzhou miss. Before, the actual controller of both parties was the same person.

Although Miss food experienced food safety incidents such as "band aid" dumplings in 2012, its annual revenue is still as high as several billion yuan, accounting for nearly 20% of the market of quick-frozen flour and rice industry, compared with Sanquan food which has been listed. What is puzzling is that Li Wei, the controller of the company, sells Miss food at a low price and chooses a small volume of Qianwei central kitchen to go on the market. The logic of its operation is intriguing.

Missing back?

Looking at the prospectus of Qianwei central kitchen, it is not difficult to find that the company is not only from Miss food, but also from 2017 to 2019, during the whole reporting period, Qianwei central kitchen is hard to get rid of the connection with Miss food.

According to the prospectus, at present, the controlling shareholder of Qianwei central kitchen is gongqingchengzhiji, which holds 62.49% of Qianwei's shares, and Li Wei holds 100% of the shares of gongqingchengzhiji. Therefore, the actual controller of the company is Li Wei. Li Wei, also the founder of Miss food, once led Miss food and the Grand View of the Yellow River across foreign capital markets.

According to media reports earlier, Li Wei, who was born in the media, was well versed in propaganda. Shortly after the founding of Miss food, he invested 4 million yuan to make a commercial film for Miss food, which was broadcast on CCTV. Miss Tangyuan and miss dumplings soon became national famous brand products. Li Wei became the youngest rich man in Henan Province because of missing food.

In August 2006, Li Wei led Miss food to go public in Singapore, with a financing of 2 billion yuan. However, one year after the listing, Miss food was not favored by overseas markets, and its market value was only around 2 billion yuan, far lower than the market value of Sanquan food listed in China in the same period.

In 2012, Li Wei, then chairman and actual controller of Miss food, thought that "the market was light, liquidity was poor, refinancing was difficult, listing costs were high and meaningless", so Li Wei issued an offer to privatize Miss food, and completed the privatization delisting of Miss food at the cost of 533 million yuan. Li Wei's capital operation received a capital return of more than 1.4 billion yuan. In the year of the privatization of Miss food, Qianwei Co., Ltd. was formally established and became a wholly-owned subsidiary of Miss food. Relying on the market system of Miss food, Qianwei Co., Ltd. became a big supplier of Yum! Brands in China when it was founded.

Until the end of 2017 in the reporting period and before Li Wei withdrew from Miss food, Qianwei central kitchen and miss food were actually enterprises under the control of the same controller. Both sides even shared the same factory building and marketing system, and jointly engaged in the R & D, production and sales of quick-frozen flour and rice products.

In May 2016, Qianwei central kitchen completed the shareholding system reform. The promoters were Zhengzhou jizhicheng and Gongqingcheng Kaili, 80% of which were held by Li Wei at that time, with 92% and 8% shares respectively.

In May 2017, Qianwei central kitchen began its marketing guidance. However, problems such as similar business scope, overlapping of some products, interlinked technology, and the same suppliers emerged between Miss food and Qianwei central kitchen.

In order to realize the smooth listing of Qianwei central kitchen, Li Wei, the former controller of Miss food, began to "de Miss" quickly.

In order to solve the problem of horizontal competition with Miss food, Li Wei reached an agreement with Wang Peng, Tian Shuhong, Wang Lijuan and Xu Feng, the management of Miss food. Wang Peng withdrew from Qianwei central kitchen, and Wang Peng transferred all his indirectly held equity of Qianwei central kitchen to Li Wei, and withdrew from the board of directors of the company, and no longer held any position in the company and the controlling shareholder of gongqingchengji, The transfer price is RMB 5.0648 million.

Li Wei withdrew from Miss food and transferred all of his indirectly held shares of Miss food to the management of Miss food, quit the board of directors of Miss food, and no longer held any position. The transfer price of relevant equity was 383 million yuan.

After the completion of the above equity transfer, Wang Peng no longer holds the equity of Qianwei central kitchen, and Li Wei no longer directly or indirectly holds the equity of Miss food. This means that Li Wei gave up his yearning food control right, which he had worked hard for more than ten years, with a price of 383 million yuan.

Qianwei central kitchen believes that the above equity transfer completely eliminates the problem of horizontal competition between the company and miss food, and realizes the independence of the company's operation and finance.

However, the 21st century economic report reporter noticed that half of the core technical personnel of Qianwei central kitchen came from Miss food. The two workshops currently used by Qianwei central kitchen were rented from Miss food. The Yingcai Street plant area was not used until the end of the report period. The hongfengli factory area did not officially purchase from Miss food until April 2019.

Up to now, Qianwei central kitchen's customers and products are still difficult to completely get rid of the connection with Miss food, and its horizontal competition with Miss food, equity transfer and other issues have always been the concern of regulators and the market.

Why does the actual controller "give up the big and seek the small"

What puzzles investors is that Li Wei, the real controller, is willing to give up the control of missing food at a price far lower than expected by the market, and instead brings a smaller Qianwei central kitchen to the market. What kind of strategy is hidden behind it?

According to the prospectus, from 2017 to 2019, Qianwei central kitchen achieved revenue of 593 million yuan, 701 million yuan and 889 million yuan respectively, with net profits of 46.5591 million yuan, 58.6789 million yuan and 74.1213 million yuan, respectively. At the end of each reporting period, the asset liability ratio of the company was 32.38%, 30.79% and 39.66%, which was at a low level.

During the reporting period, the monetary funds of Qianwei central kitchen at the end of the reporting period were 230 million yuan, 157 million yuan and 79.0259 million yuan respectively. The company had no long-term loan, and the short-term loan was 30 million yuan in 2019. The company's non current liabilities totaled only 1.9726 million yuan by the end of 2019.

From the perspective of operation and finance, Qianwei central kitchen has no debt repayment pressure at present.

Even according to media reports, the company plans to raise funds to invest 409 million yuan in Xinxiang Qianwei central kitchen food processing construction (phase III) and headquarters base and R & D center construction projects, according to the construction progress, should be close to the end, no longer need a huge amount of later investment.

Shen Meng, executive director of Xiangsong capital, has publicly said that Li Wei is good at capital operation. Qianwei central kitchen's so-called "de missing" food is more about giving the missing food which is no longer more attractive to the original entrepreneurial team, while he is playing the new concept of central kitchen again.

Some market analysts pointed out that Li Wei abandoned the quick-frozen rice and noodle food giant, missed food, and turned to the operation of Qianwei central kitchen for listing, which could not be ruled out as the consideration of "selecting the best" in their valuation. At present, Miss food and Sanquan food mainly focus on the C-end, both of which jointly occupy 60% of the frozen food market. The imagination space for the revenue growth and valuation premium of Miss food is very limited.

In the current capital market, enterprises with b-end business catering supply chain and "central kitchen" concept are obviously more favored by capital. Taking A-share listed companies as an example, the latest dynamic PE of Sanquan food is only 21.3 times, while that of Anjing food, which has launched b-end business in recent years, is as high as 70 times. The difference in valuation between the two is clear at a glance. In addition, Qianwei central kitchen has previously obtained huge investment from Jingdong, Juewei food and other institutions, and these capitals need to withdraw when they mature. Listing is undoubtedly the best exit channel for these shareholders.

The company is facing greater revenue pressure

Li Wei, who went into business in the 1990s, has already completed the transformation from an industrialist to a capitalist after nearly 30 years of shopping. In addition to the food business, like many of his contemporaries, Li Wei's real estate business is also quite large.

In 2003, Miss Group acquired the assets of Zhengzhou Huanghe Daguan company in the name of its subsidiary Hong Kong Hengsheng, and entered the real estate industry. After that, Li Wei copied the capital operation path of missing food on the Grand View of the Yellow River, and obtained a lot of funds through the privatization mode after listing and financing.

According to the statistics of 21st century economic report, at present, there are 8 overseas enterprises controlled by Li Wei. The main business is equity investment, while the number of domestic enterprises controlled by Li Wei is as high as 47. Most of them focus on real estate development. Among the 47 companies, 33 are mainly engaged in real estate business.

However, compared with the food manufacturing business, Li Wei's real estate sector is still in the cultivation period.

According to its prospectus, among the 47 domestic enterprises controlled by Li Wei in 2019, only Zhengzhou Shenkong enterprise management, Henan Shanshui property and Henan weiruigute packaging achieved meager profits, with net profits of 22000 yuan, 734500 yuan and 354600 yuan respectively. The rest of the enterprises suffered losses, with accumulated losses of 393 million yuan, In particular, the real estate enterprises have all losses and even negative net assets.

According to the investigation by 21st century economic reporter, at present, the real estate projects controlled by Li Wei, such as Henan Hezhi real estate, Zhengzhou haishang real estate, Henan hanhaigang Huiye real estate, Zhengzhou Tianrong real estate, Henan xinhanhai Brandon real estate and Henan xinhanhai real estate are all insolvent and in a state of huge loss.

Li Wei's layout in real estate such as "large capital" has attracted the attention of the CSRC before the meeting.

In the inquiry letter of Qianwei central kitchen, the regulatory authorities worried that the company's actual controller would misappropriate the funds to real estate projects, requiring the actual controller to make it clear that the fund-raising should not be used or used in disguised form for real estate development and related fields, and the sponsor agency and lawyer were required to verify whether there is large amount of capital flow between the actual controller's personal account and the company.

At present, Qianwei central kitchen has successfully passed the meeting, completing the most critical step of listing, and will soon land in the capital market. However, from the company's customers and many other details, the company's future development still faces some challenges.

According to the prospectus, after years of development, Qianwei central kitchen still relies on the largest customer. From 2017 to 2019, the company's largest customer, yum! China and its related parties accounted for 29.95%, 30.20% and 30.72% of the company's revenue respectively. If Yum China reduces orders or even stops cooperation in the future, it will directly lead to the decline of the company's operating performance.

On the other hand, the competition of quick-frozen flour and rice products industry is fierce. According to statistics, there are more than 1.33 million related enterprises engaged in frozen food industry in China, including more than 1.01 million enterprises in operation and existing status. As a low threshold industry without technical content, the industry giants may quickly layout, and small and medium-sized enterprises will enter quickly, and Qianwei central kitchen is facing the risk of difficult market development.

In fact, during the reporting period, the company's performance has achieved high growth, but behind it has shown a certain degree of operational pressure. From 2017 to 2019, the current ratio, speed ratio, accounts receivable turnover rate, inventory turnover rate and other financial indicators of Qianwei central kitchen have continued to decline. The current ratio has decreased from 2.20 times to 0.80 times, the quick ratio from 1.87 times to 0.41 times, the accounts receivable turnover rate from 25.79 times to 20.25 times, and the inventory turnover rate from 11.56 times to 8.68 times. This means that the company will face greater revenue pressure.

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