Naixue-Backed Tianye Innovation’s Beijing Stock Exchange IPO Application Accepted

This is an English adaptation of a FoodBud historical article originally published on June 17, 2022.

FoodBud reported on June 17, 2022 that Tianye Innovation, a fruit-and-vegetable ingredient supplier backed by Naixue, had its application accepted for an IPO on the Beijing Stock Exchange after moving from China’s NEEQ market.

At the end of 2021, Tianye Innovation signed an IPO tutoring agreement with Guohai Securities and filed tutoring materials with the Guangxi securities regulator, initially planning a Shenzhen Stock Exchange listing. In 2022, it switched to the Beijing Stock Exchange.

One possible reason was the listing-related investor terms Tianye Innovation had signed.

In 2021, Tianye Innovation raised RMB 96.6 million through a private placement from investors including Naixue, Shenzhen Huicheng, and Auntie Shanghai. Naixue invested RMB 38.64 million, while Auntie Shanghai invested RMB 3.22 million.

Under that private-placement agreement, Tianye Innovation committed to completing a qualified listing on the Shanghai Stock Exchange or Shenzhen Stock Exchange by December 31, 2024. If it failed to do so within the specified period, it would need to repurchase the privately issued shares. The repurchase price per share was set as: RMB 3.22 x (1 + investment capital cost x holding days / 365) minus any per-share cash dividends already received before repurchase.

Ingredient Focus

Tianye Innovation’s main products include raw fruit juice, quick-frozen fruit and vegetables, and fresh fruit processed from tropical fruit and vegetable ingredients.

Its raw juice customers are mainly beverage manufacturers and tea-drink chain brands. Its quick-frozen fruit and vegetable customers are mainly food processors with cold-chain distribution and processing capabilities, which can store, repack, and process the products before selling them to end users in bakery, foodservice, dairy, and other sectors.

For the Beijing Stock Exchange IPO, Tianye Innovation planned to raise RMB 476 million, mainly for factory construction in Hainan.

According to its 2021 annual report, Tianye Innovation generated RMB 460 million in revenue, up 72.57% year on year, and net profit of RMB 65.178 million, up 210%.

On a product-sales basis, Tianye Innovation benefited from large customers in new-style tea drinks: revenue from its raw fruit juice products rose 178.4% year on year in 2021.

Tea Chains Became Core Customers

The change in Tianye Innovation’s top-five customer list shows a growing dependence on Naixue.

In 2019, its major customers were still beverage and food companies such as Nongfu Spring, Sunjuice, and Coca-Cola. CoCo was the fifth-largest customer.

By 2020, Naixue had quickly become Tianye Innovation’s second-largest customer. In 2021, Naixue became its largest customer, contributing RMB 92.06 million in sales, equal to 20% of Tianye Innovation’s annual sales.

Tianye Innovation’s other four largest customers in 2021 were ChaPanda, Nongfu Spring, A Little Tea, and Auntie Shanghai, contributing RMB 66.06 million, RMB 53.64 million, RMB 53.21 million, and RMB 48.18 million in sales respectively. The top five customers together accounted for 68% of sales.

One notable supplier relationship also appeared in the 2021 annual report: Guming ranked third among Tianye Innovation’s top five suppliers. Tianye Innovation purchased RMB 17.75 million from Guming that year, equal to 5.9% of annual procurement.

FoodBud framed Tianye Innovation as a typical case of tea-drink brands investing in a core supply-chain company and supporting its listing and capacity expansion.

Note: IPO, fundraising, listing-deadline, and forward-looking figures are historical as of June 17, 2022.