This is an English adaptation of a FoodBud historical article originally published on December 2, 2021.
Xianmeilai Food Co., Ltd. disclosed its IPO prospectus on the China Securities Regulatory Commission website on November 29, 2021, with Everbright Securities as sponsor. The company planned to issue no more than 20 million shares, representing no less than 25% of post-issue share capital, and sought to raise RMB 606 million for a proposed listing on the Shanghai Stock Exchange Main Board.
The proceeds were intended mainly to expand production capacity, improve cold-chain logistics coverage, and supplement working capital.
The largest planned project was an RMB 290 million marine-food industrialization project in Beihai, Guangxi, south of Hong Kong Road and east of Liaoning Road. The project covered 19,897.1 square meters of land and 37,373.1 square meters of gross floor area, including seafood deep-processing workshops, supporting living facilities, a wastewater treatment station, and a guard room.
Xianmeilai planned to add 470 sets of equipment and 2 software systems, with 442 additional employees after completion. The construction period was planned at 3 years. Once fully operational, the project was expected to add annual capacity of 12,000 tonnes of shrimp products and 18,000 tonnes of shrimp paste products.
Over the following three years, Xianmeilai said it would continue focusing on R&D, production, and sales of seafood prepared dishes. It planned to deepen its core shrimp paste and shrimp product lines while selectively expanding into adjacent categories such as seafood dumplings and more processed ready-to-heat products.
On product strategy, the company said it would optimize existing SKUs, including products such as cod paste, and develop market-oriented SKUs such as shrimp dumplings. Based on fish and shrimp as key ingredients, it also planned to expand from ready-to-cook and ready-to-assemble products into ready-to-heat items such as grilled fish and cod products.
On channels, Xianmeilai planned to maintain and develop leading customers across supermarkets, food processors, and chain restaurants, while using both direct sales and distribution to reach lower-tier cities and towns.
Xianmeilai was founded in January 2006. Its core business is the R&D, production, and sale of seafood prepared dishes. Its main products include ready-to-cook items led by shrimp paste, and ready-to-assemble items led by shrimp meat and sashimi.
The company had modern R&D and production bases in Beihai, Guangxi and Zhengzhou, Henan. It also had dozens of sales branches in central cities including Shanghai, Guangzhou, Chengdu, Zhengzhou, Wuhan, and Xi’an.
The company’s IPO counseling sponsor changed during the process. CICC registered IPO counseling with the Guangxi securities regulator on July 20, 2020, then submitted termination materials on July 15, 2021. Everbright Securities registered its counseling work on July 24, 2021.
Before the proposed offering, Zhejiang Yifeng was Xianmeilai’s controlling shareholder, holding 57.95% of the company. The actual controllers were Guo Haibin and Guo Dingqi.
Guo Haibin held 18.28% directly and 57.00% indirectly through Zhejiang Yifeng, for a combined 75.28%. He was the company’s legal representative, chairman, and president. Guo Dingqi, Guo Haibin’s father, held 6.16% directly and served as a director. Ningbo Tongyuan Youbo was identified as a private-equity fund shareholder.
According to the prospectus, Xianmeilai reported revenue of RMB 768 million in 2018, RMB 911 million in 2019, RMB 850 million in 2020, and RMB 409 million in the first half of 2021.
Net profit over the same periods was RMB 58.0249 million, RMB 89.7664 million, RMB 90.2557 million, and RMB 38.9976 million. Net profit after non-recurring items was RMB 57.6178 million, RMB 82.0713 million, RMB 86.8248 million, and RMB 31.5477 million.
Shrimp paste capacity utilization exceeded 100% during the reporting period, mainly due to sales growth.
Xianmeilai’s revenue mainly came from production and sales of seafood prepared dishes. Its core raw materials were shrimp, fish, mollusks, and related seafood products. Raw material costs, including externally purchased products, accounted for more than 80% of operating cost.
The company’s main revenue sources were shrimp paste, shrimp meat, and sashimi. These three categories accounted for 89.13%, 91.13%, 91.51%, and 90.13% of main-business revenue across the reporting periods.
Xianmeilai used direct sales and circulation channels, with circulation subdivided into supermarkets, trade, and distribution. Distributor sales were the main model.
By region, sales were concentrated mainly in East China, Southwest China, and Central China.
Downstream customers included supermarket chains such as Walmart, Yonghui, and RT-Mart; e-commerce and new-retail platforms such as JD.com and Hema; food processors such as Synear and Wanchai Ferry; chain restaurant and food-ingredient companies such as Xiabu Xiabu and Guoquan; and regional trading and distribution companies.
Purchased raw materials included chilled shrimp, frozen shrimp meat, basa, cod, hairtail, mollusks, auxiliary ingredients, and packaging materials.
Shrimp raw materials represented a high share of purchasing: 74.07% in 2018, 72.58% in 2019, 80.03% in 2020, and 69.47% in the first half of 2021, mainly chilled shrimp and frozen shrimp meat. Fish and mollusk purchases, including basa, cod, hairtail, and mollusks, accounted for 20.25%, 20.13%, 12.60%, and 18.09% over the same periods.
Accounts receivable balances were RMB 72.8789 million at the end of 2018, RMB 86.3563 million at the end of 2019, RMB 50.3345 million at the end of 2020, and RMB 60.5119 million at the end of June 2021. These represented 9.49%, 9.48%, 5.92%, and 14.78% of revenue for the respective periods.
The company generally gave food processors and supermarket customers credit terms of 40-60 days. Traders and distributors generally paid before delivery, although some strong, long-term, creditworthy customers received 7-10 day or 30-day terms.
Inventory moved with shrimp procurement seasonality. Inventory book balance fell 10.31% year on year at the end of 2019, mainly because strong sales of shrimp paste and other products consumed more reserved raw materials. It rose 17.48% at the end of 2020 because the company purchased large amounts of chilled shrimp and frozen shrimp meat during the lower-price shrimp harvest season to control procurement costs. By the end of June 2021, inventory balance had fallen 43.74% from the beginning of the period, as the first half was outside the main shrimp procurement season and production mainly used raw materials carried over from the prior year-end.
Note: IPO, fundraising, capacity, and forward-looking figures are historical disclosures from the 2021 prospectus filing.