Over thousands of years, tea culture has been deeply rooted in traditional Chinese culture.
However, in such a long-standing traditional industry, despite the huge size of the industry, the industry concentration is still relatively scattered, and it is difficult to form a large-scale effect. The overly fragmented industry pattern and uneven product quality have also led to the fact that there are few large-scale tea companies listed in the current capital market.
Recently, the Hong Kong ** market has ushered in a scarce target in the tea industry - Lancang Ancient Tea (06911).
According to Zhitong Financial APP, Lancang Ancient Tea is conducting a IPO from December 14th to December 19th, and intends to sell 21 million H shares globally (if the over-allotment option is not considered), with an offer price of 104-14.HK$16 in board lots of 200 shares, and is scheduled to be officially listed on the Hong Kong Stock Exchange on December 22, 2023.
With the orderly progress of the company's IPO process and the official ringing of the bell and the imminent listing, Lancang Ancient Tea is also expected to win the title of "Pu'er Tea No. 1" on the Hong Kong Stock Exchange, which will become another important milestone in the capitalization of China's tea industry, which is conducive to promoting further integration of the industry.
In addition, it is worth mentioning that recently, with the successful listing of well-known consumer brands such as Guoquan Food, October Rice Field, and Youbao** in Hong Kong and their stock prices are excellent, and consumer companies such as Tea Baidao have also submitted their statements to the Hong Kong Stock Exchange, the IPO of Hong Kong consumer stocks has picked up significantly
It is a leader in China's tea industry, with a high overall gross profit margin.
According to Zhitong Financial APP, Lancang Ancient Tea is located in the origin of Pu'er tea in Yunnan Province, its brand history can be traced back to 1966, relying on the ancient tea garden of Jingmai Mountain, through the mastery of a number of famous mountains in Yunnan Province first-hand high-quality raw material resources, the company has gradually developed into a benchmark enterprise in the Pu'er tea industry, and is also one of the national key leading enterprises in agricultural industrialization.
On the basis of Pu'er tea, the company has now further extended its product layout to black tea, white tea, flavored tea and other categories, and gradually developed to all categories of tea. As one of the most well-known Pu'er tea brands in China, Lancang Ancient Tea is the third largest Pu'er tea company in China in terms of revenue generated by Pu'er tea products in 2022.
Among them, in the view of Lancang Ancient Tea, the stability of high-quality raw materials is the key to its business success. It is understood that the company's main Pu'er tea producing area, Jingmai Mountain, has a number of themThe largest, oldest and best-preserved in the worldThe ancient tea tree plantation, in September this year, in the Jingmai Mountain areaThe ancient tea tree plantation has been inscribed on the World Heritage List；Lancang ancient tea also wonJingmai Mountain declared the world cultural heritage and successfully commemorated the only official authorization of tea.
Through years of continuous cultivation of Jingmai camellia resources, according to the Frost & Sullivan report, according to the purchase volume,Lancang Ancient Tea was the largest buyer of Jingmai Mountain Ancient Tea Tree Mao Tea during the reporting period。Among them, the vast majority of its flagship tea products are made from high-quality tea from major Pu'er tea producing areas such as Jingmai Mountain.
With Jingmai Mountain becoming a World Heritage Site, the company expects to further increase the popularity of its brand image and products, especially the Pu'er tea products under the company's Jingmai series, thereby stimulating the sales of Pu'er tea products.
According to the prospectus, most of the Lancang ancient tea is harvested from the three major Pu'er tea producing areas in Yunnan, namely Pu'er, Lincang and Xishuangbanna, and has established a strong relationship with more than 100 tea cooperatives in the main Pu'er tea producing areas, which is also conducive to Lancang ancient teaIt is one of the tea companies that is good at quality and its products have been tested by the market for a long time, laying the foundation for the company to accumulate a large number of loyal tea friends and the development of all categories.
As of June 30, 2023, the company has more than 3,700 tons of wool tea and tea in process stored in special warehouses, belonging to more than 15 procurement years, which will help the company respond to changes in market demand in a timely manner and ensure the long-term stable production of products.
Today, with Lancang Ancient Tea as the core brand, the company has developed and built three product lines, "1966", "Tea Mother" and "Yanleng", to meet the diverse needs of different consumer groups such as Pu'er tea lovers, senior tea lovers, mass consumers and new middle-class consumers with strong purchasing power.
It is worth mentioning that the 1966 series, as a classic Pu'er tea product line for Pu'er tea lovers and senior tea lovers, has undergone nearly 20 years of iteration of its cornerstone products, including Wujin and 007, forming a unique flavor "Lancang Flavor".
From the perspective of revenue contribution, 1966 products have also become the cornerstone of the company's stable and strong business growth. From 2020 to 2022 and in the first half of 2023, the company's revenue from 1966 products accounted for more than 65% of the total revenue in the same period, promoting the company's overall performance to grow steadily.
According to Zhitong Financial APP,The overall gross profit margin of Lancang ancient tea is maintained at more than 60%.to maintain a high level. 1966 is the product line with the highest gross profit margin, of which the gross profit margin of ripe tea products remains above 70%, and even reaches 82 by the end of 20224%, which is more eye-catching. Lancang Ancient Tea explained that the company's gross profit margin is mainly affected by the positioning of specific products and the difference in product mix launched in each specific year, among which, ripe tea products need to go through a complex fermentation process, and their value has increased, which also makes the gross profit margin generally high.
In 2020-2022 and the first half of 2023, Lancang Ancient Tea achieved operating income of 40.5 billion, 55.9 billion, 46.3 billion and 23.2 billion yuan, and the corresponding net profit was 12.3 billion, 12.9 billion, 07 billion and 02.4 billion yuan, which maintained a stable profitability despite the impact of the epidemic and other factors. In 2023, the performance will return to the upward channel, and a number of data indicators will repair and grow, and under the trend of rational return of the market, the performance of leading enterprises is expected to take the lead in picking up.
The scarce target of the tea industry, the recovery of the Hong Kong stock IPO market at the end of the year is a favorable signal.
After years of operation, Lancang Ancient Tea is now one of the most prestigious Pu'er tea brands in China, and is one of the very few in ChinaRaw material management, product development, production, end-customer reach and member servicesBoth are one of the most experienced tea companies.
According to Zhitong Financial APP, inIn terms of channel constructionAt present, Lancang Ancient Tea has established a nationwide sales network composed of direct sales networks and distributors, covering online and offline channels, and the offline territory basically covers all provincial-level administrative regions in China.
According to the prospectus,In terms of offline channelsAs of the Latest Practicable Date, Lancang Ancient Tea had 559 offline stores, of which 23 were self-operated stores and 536 were dealer-operated stores, of which approximately 70% of the dealers had been part of its sales network for more than three years. Among them, the optimization of distribution channels has shown that while the distribution revenue is relatively stable, the number of the company's dealer stores has recovered to the level at the end of 2021.
In terms of online channelsThe company expanded its sales channels to e-commerce platforms such as Tmall, WeChat, Douyin, Kuaishou and JD.com, and further expanded the online sales market by continuously expanding its product matrix, promoting a series of exclusive products targeting Internet consumers, and deploying a logistics management system specially designed for e-commerce operations.
It is understood that Lancang Ancient Tea has also signed a lease agreement for the logistics and e-commerce center in Foshan, in addition to the warehousing function, the center will allocate about 190% of the total area is used as an e-commerce base to support e-commerce operations, and all the company's e-commerce team members have been stationed in the e-commerce base as of the latest practicable date, which is conducive to the daily e-commerce operation efficiency such as product development, sales operations, packaging and shipping.
Since July 2023, the company has cooperated with popular celebrities such as former well-known CCTV hosts and KOLs such as well-known anchors in vertical industries to hold a number of e-commerce live broadcasts for **, successfully reaching more end consumers and expanding the brand**. According to live broadcast statistics, the cumulative live broadcast GMV of the brand system in the past six months has exceeded 50 million yuan, boosting the brand to "break the circle".
Judging from the current situation of the industry, Zhu Danpeng, an analyst of China's food industry, once said that tea companies generally do not pay much attention to brand building and rarely enter the stage of brand operation. At the moment when the industry is further standardized, specialized, capitalized and large-scale development, howBuild a brand, operate a brand, and exert brand influenceIt is the top priority of the high-growth and high-quality development of tea enterprises.
According to the Zhitong Financial App, in stores all over the country, Lancang ancient tea is provided to customersProfessional tea tasting serviceand established a well-establishedTea master training systemIt will not only help promote tea culture and enhance its brand image, but also help stores maintain a stable employee retention rate and improve the sales performance of these stores. As of the Latest Practicable Date, there were a total of 328 Company-certified tea masters working in Lancang Ancient Tea System stores.
In addition, Lancang Ancient Tea has also selected stores with large construction area and superior location to strategically position it as:City Loungeto increase brand awareness. Most of the city meeting rooms are located in the bustling areas of first-tier cities and new first-tier cities. As of the Latest Practicable Date, the number of stores located in the Company's City Lounge has reached 39.
With the long-term polishing of raw materials, products, channels and services, Lancang Ancient Tea, which has always been known for its quality, has also accumulated a large number of loyal tea lovers, forming a cornerstone and moat to support the company's stable development.
Nowadays, with the improvement of consumer health awareness in China, as the main branch and growth driver of the Chinese tea market, the Chinese tea market is growing steadily. According to the Frost & Sullivan report, the size of China's tea market is expected to reach 441.2 billion yuan in terms of revenue, with a CAGR of 59%, maintaining a high growth rate, while the compound annual growth rate of Pu'er tea and white tea categories is expected to be 70% and 171%, the growth space is broader.
As one of the leaders in China's tea industry, with the smooth progress of the listing process of Lancang Ancient Tea, the company is expected to become the first mainland tea enterprise in the main capital market, and is expected to enter the rapid development with the help of the capital market, leading the industry to a modern, standardized and large-scale development path.
Some people in the industry believe that the projects raised by the company's listing will be conducive to deepening the moat of Lancang ancient tea. At present, the improvement of concentration and brand power is the inevitable trend of industry development, and Lancang Ancient Tea has first-mover advantages in the integrity of the industrial chain, brand influence, economies of scale, manufacturing process and other aspectsAs the first stock in the industry, it will undoubtedly be a very scarce target, and it is also an important milestone for the development of the tea industry.
It is worth mentioning that Lancang ancient tea has not applied for full circulation. In addition, from the perspective of the cornerstone investor lineup of the company's IPO, the cornerstone investors attracted by the issuance include local state-owned equity investment platforms, well-known public offerings such as Harvest**, as well as professional investors and industry leaders in the consumer industry, reaching about 1HK$1.6 billion subscribedThe investor lineup is stable and the background is strong.
In terms of the macro market, according to the previous public data, from November, none of the 7 new stocks broke on the first day of listing, and a number of IPO companies were listed together, and the Hong Kong stock IPO market showed obvious signs of recovery. Some analysts believe that this is a favorable signal for post-listing valuation and stock price performance for companies such as Lancang Ancient Tea that rushed to list at the end of the year.
In the second half of the year, consumer enterprises are ushering in the regular sales season, with the successful listing of Lancang ancient tea after many years of preparation, injecting confidence into the tea industry and even the successful entry of the large consumption track into the secondary market, the listing of "Pu'er Tea First Share" will be listed alongside the successful application of Jingmaishan as a major event of the year in the tea industry in 2023. For Lancang Ancient Tea, as a scarce target in the tea industry, it is also expected to achieve its own rapid development with the help of the capital market, and its future valuation and market performance are worth looking forward to.