Two Food Companies on the Beijing Stock Exchange: Gaishi Foods and Zhulaoliu

This is an English adaptation of a FoodBud historical article originally published on January 4, 2022.

When the Beijing Stock Exchange opened on November 15, 2021, 81 companies made up its first batch of listed businesses. The exchange was positioned to improve direct financing access for innovative small and midsize companies, including specialized and niche operators.

Among food-related companies, two names were listed: Gaishi Foods and Zhulaoliu.

Gaishi Foods: ready-to-eat chilled appetizers, with Haidilao as its top customer

Gaishi Foods develops, produces, and sells ready-to-eat appetizer-style chilled dishes, mainly seafood and edible mushroom products. Its brands include “Gaishi,” “Shanzhenyuan,” “Beiguo Zhichun,” and “Gaishi Xiang.” Its products are sold in Japan, the United States, Europe, Southeast Asia, and other markets.

At the time of the article, Gaishi Foods had a market value of RMB 1.28 billion.

From 2017 to 2020, revenue was RMB 136 million, RMB 190 million, RMB 230 million, and RMB 219 million, respectively. Net profit attributable to shareholders of the listed company was RMB 7.101 million, RMB 19.683 million, RMB 30.933 million, and RMB 26.636 million. Excluding the impact of the pandemic, revenue and net profit were broadly on a steady growth track.

For the first three quarters of 2021, Gaishi Foods reported revenue of RMB 230 million, up 50.24% year on year. Net profit attributable to shareholders was RMB 28.8355 million, up 61.60%. In the third quarter alone, revenue reached RMB 105 million, up 76.62%, while net profit attributable to shareholders was RMB 16.3342 million, up 119.32%.

Gaishi Foods had historically relied heavily on overseas sales. According to its public offering prospectus disclosed in late December of the prior year, overseas sales accounted for 74.18%, 58.31%, and 54.80% of main business revenue from 2017 to 2019. The share was declining but remained high.

As the overseas share fell, domestic sales rose. The most visible driver was Haidilao, the hot pot chain.

According to the prospectus, Gaishi Foods’ major customers include restaurant chains and food manufacturers, such as Haidilao, Anjoy Foods, Xijiade Dumplings, and Japan’s Kanesada Foods. Haidilao’s share of Gaishi Foods revenue rose from 4.42% in 2017 to 24.00% in 2018 and 28.32% in 2019. In the first half of 2021, Haidilao accounted for 27.69% of revenue. Japan’s Kanesada Foods was Gaishi Foods’ largest customer in 2017, but Haidilao became the company’s largest customer from 2018 onward.

Customer concentration also increased. Sales to the top five customers accounted for 25.54%, 40.21%, and 44.67% of revenue from 2017 to 2019, and 51.53% in the first half of 2020.

Zhulaoliu: more than RMB 200 million a year from fermented bean curd

Zhulaoliu traces its roots to the 1990s in Hunchun, a small county-level city in eastern Jilin Province. Its founder, Zhu Xianming, started with RMB 2,000 in borrowed money and a rented factory, building what was then a fermented bean curd brand called “Fumin.”

Over about three decades, the business moved from Hunchun to Changchun and grew into “Zhulaoliu,” a leading condiment company in Jilin Province. Previously listed on the NEEQ Select, Zhulaoliu transferred to become one of the Beijing Stock Exchange’s first listed companies and the first condiment company traded there.

At the time of the article, Zhulaoliu had a market value of RMB 1.75 billion.

Zhulaoliu was listed on the New Third Board on January 12, 2015. Its main business is the R&D, production, and sale of fermented bean curd, cooking wine, and pickled cabbage. On May 25, after approval by the National Equities Exchange and Quotations, the company was listed on the NEEQ Select on May 27 and shifted to continuous auction trading.

After approval of its Select listing application, Zhulaoliu planned to issue no more than 23.45 million shares, with a floor price of no less than RMB 9.00 per share, and expected to raise about RMB 206 million. Of that, about RMB 125 million was planned for production-base capacity expansion, RMB 53.3655 million for marketing services and information systems, and RMB 27.5844 million for R&D center upgrades.

Once the production-base expansion project reached full operation, the company expected to add 15,000 tons of fermented bean curd capacity and 1,500 tons of cooking wine capacity.

According to the public offering document, Zhulaoliu generated revenue of RMB 210 million, RMB 189 million, and RMB 256 million from 2018 to 2020. Net profit was RMB 40.349 million, RMB 24.547 million, and RMB 49.603 million, respectively.

By the end of 2020, fermented bean curd, pickled cabbage, and cooking wine accounted for 84.88%, 12.10%, and 2.60% of revenue, respectively. Their gross profit shares were about 87.08%, 10.58%, and 2.13%. At the same time, annual capacity stood at 25,000 tons for fermented bean curd, 8,700 tons for pickled cabbage, and 2,000 tons for cooking wine.

In the third quarter of 2021, Zhulaoliu reported revenue of RMB 200 million, up 13.63% year on year. Net profit attributable to owners of the parent was RMB 44.339 million, up 23.05%.

According to the 2020 annual report, Zhulaoliu’s main sales region was Northeast China. Combined sales revenue in North China and East China grew 55.65% year on year.

In 2020, Zhulaoliu’s top five customers accounted for 12% of sales revenue. Its top five suppliers accounted for 49% of procurement, indicating relatively concentrated supply. The third- and fourth-ranked suppliers mainly provided packaging products.

Note: market capitalization, offering, capacity-expansion, and forward project figures are historical figures from the original January 4, 2022 article.