This is an English adaptation of a FoodBud historical article originally published on November 23, 2021.
Nayuki’s Tea said it wanted to work with more suppliers through commercial or equity partnerships, and did not rule out building its own capabilities, in order to improve supply-chain stability and secure better pricing.
FoodBud previously reported that Nayuki’s first investment after listing was a stake in a supply-chain company: Tianye Innovation Co., a company listed on China’s National Equities Exchange and Quotations, or NEEQ. Tianye’s fundraising was mainly intended to supplement working capital and repay debt.
In this private placement, Nayuki subscribed for 12 million shares for RMB 38.64 million. Auntie Shanghai subscribed for 1 million shares for RMB 3.22 million.
According to Tianye’s 2021 interim report, Nayuki’s 12 million-share subscription would make it Tianye’s third-largest shareholder.
In the first half of 2021, Nayuki was Tianye’s largest customer, with purchases of RMB 42.92 million, accounting for 19.6% of Tianye’s revenue. ChaPanda ranked second with RMB 34.86 million in purchases, while Auntie Shanghai ranked third with RMB 24.38 million.
According to Tianye’s 2020 annual report, Nayuki was its second-largest customer, with full-year purchases of RMB 25.65 million, or 9.63% of Tianye’s annual revenue. Sichuan-based ChaPanda was Tianye’s fifth-largest customer, with RMB 16.48 million in purchases that year.
In 2019, the only tea-drink brand among Tianye’s top five customers was CoCo.
Tianye specializes in processing tropical fruit and vegetables. Its main products include tropical raw fruit juice and quick-frozen tropical fruit and vegetables. Tianye listed on NEEQ in February 2015 and entered the innovation tier. On May 8, 2015, it changed to market-maker trading, with a PE ratio of 16 times and a market capitalization of about RMB 780 million.
In July 2019, Tianye announced the termination of its listing guidance process. The announcement said Tianye and Hualong Securities had signed a guidance agreement in February 2018 for a proposed A-share IPO and listing, and had filed the relevant materials with the Guangxi branch of the China Securities Regulatory Commission. On March 16, 2018, Tianye obtained the IPO guidance registration form from the Guangxi regulator. Its attempted move from NEEQ to the A-share market had not succeeded.
Tianye’s upstream industry is tropical fruit and vegetable cultivation. Downstream customers for raw fruit juice include food and beverage companies such as Nongfu Spring and Coca-Cola. Downstream customers for quick-frozen tropical fruit and vegetables are mainly cold-chain logistics service providers, with end users in foodservice, baking, dairy and related sectors.
Tianye’s cultivation model combines centralized planting and sales with distributed farmer management. Tropical fruits such as passion fruit and dragon fruit require higher investment and technical capability, making large-scale cultivation difficult for individual farmers. Tianye handles land preparation, seedling cultivation and scaled planting, while farmers manage designated plots, including pruning, spraying and fertilizing. The company provides machinery, fertilizer, pesticides and technical guidance, then organizes harvest and external sales once the fruit matures.
Its procurement sources include owned bases, individual suppliers and imports. Tianye mainly buys raw fruit from individual suppliers that have planting acreage, capital strength, sales channels and stable relationships with partner growers, transport providers and loading/unloading staff. Since 2015, Tianye has imported durian from processing companies and fruit import-export traders in exporting countries to develop products such as quick-frozen durian and freeze-dried durian.
Its production model is seasonal production with year-round sales, and production based on sales demand. Sales plans are prepared according to annual operating plans, estimated demand and prices, customer quality requirements and delivery schedules, then reviewed by the general manager’s office and departments including production, procurement and finance. In daily production, the production, quality-control, procurement and finance teams develop monthly and weekly plans based on raw material prices, capacity and process flow. Some quick-frozen fruit and vegetable processing is outsourced.
Its sales are mainly direct sales. Raw fruit juice customers are primarily beverage manufacturers. Quick-frozen fruit and vegetable customers are mainly food-processing companies with cold-chain distribution and processing capabilities, which can store, repack and process the products before selling them to end users in baking, foodservice and dairy. Fresh fruit customers include agricultural-product distribution service companies and individuals.
Tianye’s revenue in the first half of 2021 was RMB 220 million, up 105.2% year on year. Full-year revenue was expected to reach RMB 450 million. Net profit attributable to shareholders of the listed company was RMB 38.67 million, up 423.3% year on year. First-half revenue was already close to the company’s full-year 2020 revenue.
In 2020, Tianye’s full-year revenue was RMB 270 million, down 8.3% year on year, mainly because the pandemic caused a sharp decline in revenue from the imported durian business. Net profit was RMB 21.86 million, up 8.4% year on year.
Within 2020 revenue, raw fruit juice, quick-frozen fruit and vegetables, and fresh fruit generated RMB 150 million, RMB 47.15 million and RMB 11.94 million, respectively.
Tianye sits in the second layer of Nayuki’s three-tier supply-chain structure. The first layer is agriculture, mainly tea farmers and fruit growers.
The second layer is processors. These companies wash fruit, and in some cases can provide cleaned fruit directly to Nayuki. For fruits such as strawberries and mangoes, processors may also peel or cut the fruit; some fruit may need to be crushed, frozen or refrigerated before being sent to Nayuki’s logistics centers.
Nayuki’s main cooperation focus is the second layer. That cooperation is not limited to equity investment; it can also include long-term commercial agreements. The most important point is not necessarily the absolute lowest price, but the ability to respond to potential supply shocks and ensure stable supply, which requires deeper collaboration.
Nayuki said it hoped to work with more suppliers through commercial or equity partnerships, while not ruling out building its own capabilities, to ensure supply-chain stability and more favorable pricing.
Note: IPO, investment and forward-looking revenue figures are historical and reflect the article’s original 2021 context.