Helens’ First Half-Year Report After Listing: Gross Profit From Own-Brand Drinks More Than Quadrupled

This is an English adaptation of a FoodBud historical article originally published on September 29, 2021.

In the first half of 2021, Helens’ average daily sales per directly operated bar rose from RMB 8,700 in the first half of 2020 to RMB 11,900, up 36.8% year on year.

On September 29, Helens released its first half-year report after listing. First-half revenue reached RMB 870 million, up 303.6% year on year, with adjusted net profit of RMB 80.63 million.

Store Growth

Helens continued to expand rapidly in the first half of 2021. Store count increased from 351 on December 31, 2020 to 471 by the end of June 2021.

By September 24, 2021, the chain had grown further to 584 stores, covering 24 provincial-level administrative regions and 104 cities.

As of September 24:

• First-tier cities: 74 stores
• Second-tier cities: 329 stores
• Third-tier cities: 180 stores

Daily Sales by City Tier

Average daily sales per directly operated bar increased to RMB 11,900 in the first half of 2021, compared with RMB 8,700 a year earlier.

Sales improved across first-, second-, and third-tier cities. The company’s second- and third-tier city bars outperformed first-tier city locations: second- and third-tier bars averaged about RMB 12,000 in daily sales, while first-tier city bars averaged RMB 9,900.

For same-store data, Helens reported 133 same stores. Same-store sales in the first half rose 103.7% year on year. Across those 133 stores, same-store average daily sales totaled RMB 1.776 million, equal to RMB 13,350 per store per day.

Helens defines “same stores” as stores that operated for at least 100 days during each of the six-month periods ended June 30, 2020 and June 30, 2021.

Own-Brand Products

Gross profit from Helens’ own-brand alcoholic beverages reached RMB 420 million as of June 30, 2021, compared with RMB 79.77 million in the same period of 2020, more than quadrupling year on year.

In the first half of 2021, revenue from own-brand products was RMB 680 million, accounting for 78.5% of total revenue.

Within that:

• Helens beer: RMB 100 million, or 11.9% of total revenue
• Ready-to-drink flavored alcoholic drinks: RMB 400 million, or 47.1%
• Snacks: RMB 170 million, or 19.5%

Third-party branded alcoholic drinks fell from 27.8% of revenue in the prior-year period to 18.4% in the first half of 2021.

Other revenue included RMB 21.9 million from consumables such as tissues, and RMB 5.13 million from mobile-device charging services plus a small amount of franchise-fee revenue. As of March 31, 2021, all Helen’s bars were directly operated; in the second quarter of 2021, the company generated no franchise-fee revenue.

Costs and Labor

Raw materials and consumables costs increased from RMB 73.9 million in the first half of 2020 to RMB 270 million in the first half of 2021, up 267.5%. The increase was mainly driven by rapid growth in store count and business scale.

As of June 30, 2021, Helens had 1,927 direct employees and 5,421 outsourced staff, with most employees located in China.

For the six months ended June 30, 2021, total employee benefit expenses, including directors’ remuneration, were RMB 310 million, up 394.4% year on year.

Listing Costs, Cash, and Borrowings

Listing expenses were RMB 0 for the six months ended June 30, 2020 and RMB 25.1 million for the six months ended June 30, 2021, mainly consisting of professional service fees related to the listing.

Cash and cash equivalents were RMB 24.3 million as of December 31, 2020 and RMB 2,620 million as of June 30, 2021, according to the reported figures.

As of June 30, 2021, Helens had total bank borrowings of RMB 55 million. Of that, RMB 30 million was secured by a personal guarantee from Feng Shaoming, the father-in-law of Wang Zhenpeng, the company’s senior vice president of finance and a former director of one of the group’s subsidiaries. The guarantee was expected to be released after the relevant bank borrowing was repaid in January 2022.

Promotion and advertising expenses rose 438.7%, from RMB 3.1 million in the six months ended June 30, 2020 to RMB 16.7 million in the six months ended June 30, 2021.

IPO Proceeds and Market Value

Helens planned to raise HKD 2.5 billion from its listing, with 70% intended for expansion.

At the time of the article, Helens’ market capitalization was HKD 27.4 billion.

Note: IPO proceeds, market capitalization, borrowing guarantees, and forward-looking expansion plans are historical figures from the 2021 report period.