Core Viewpoint - The company Mingming Henmang Group, a leading player in the snack retail sector, has submitted its IPO application to the Hong Kong Stock Exchange, marking its entry into the public market [1][2]. Financial Performance - The company has experienced significant revenue growth, achieving revenues of 4.29 billion RMB in 2022, 10.30 billion RMB in 2023, and projected 39.34 billion RMB in 2024, representing an over eightfold increase in three years [6][7]. - Despite the impressive revenue figures, the company has maintained low profit margins, with gross profit margins of 7.5% in 2022, 7.5% in 2023, and 7.6% in 2024, which are lower than its competitor Wancheng Group's 10.76% during the same period [10][11]. Business Model - The company's business model is characterized by a low-cost, high-volume strategy, focusing on a wide range of products and a significant presence in lower-tier cities, with approximately 58% of its stores located in county towns and rural areas [4][8]. - The franchise model has become a mainstream choice in the snack retail industry, with 99.5% of the company's revenue coming from supplying products to its franchise stores [11][13]. Market Competition - The competitive landscape is intensifying, with both Mingming Henmang and its rival Wancheng Group aggressively expanding their store networks, leading to market saturation in certain areas [14][15]. - Both companies have implemented substantial franchise support policies to attract and retain franchisees, resulting in a significant increase in the number of franchise stores for Mingming Henmang from 994 in 2022 to 7,241 in 2024 [17]. Strategic Shifts - The company is shifting its strategy to focus on higher quality and differentiated products, moving away from solely competing on price [22][25]. - Mingming Henmang has initiated a self-branding strategy, launching its own product lines to improve profit margins and enhance its market image [24][26][28]. Future Outlook - The company plans to allocate 70% of the funds raised from its IPO for store expansion, indicating a continued focus on growth [18]. - Additionally, Mingming Henmang is exploring new retail formats, such as community discount supermarkets, to diversify its offerings and meet broader consumer needs [29][30].

Core Viewpoint - Hunan Mingming Hen Mang Commercial Chain Co., Ltd. has submitted its IPO application to the Hong Kong Stock Exchange, aiming to leverage its dual-brand strategy and significant market presence in the snack retail sector [1] Company Overview - Mingming Hen Mang operates two brands: "Snacks Very Busy" and "Zhao Yiming Snacks," which were merged in November 2023, maintaining a dual-brand strategy [1] - The company is projected to achieve a gross merchandise value (GMV) of RMB 55.5 billion in 2024, with over 1.6 billion transactions [1] - As of December 31, 2024, Mingming Hen Mang will have 14,394 stores, making it the largest snack retail chain in China by GMV [1] Business Model - The company employs a low-margin, high-volume strategy, achieving profitability through high sales efficiency, low expense ratios, and rapid inventory turnover [3] - Gross margins are reported between 7.5% and 7.6%, with net profit margins increasing from 1.7% to 2.1% from 2022 to 2024 [3] - The company simplifies its supply chain by sourcing directly from manufacturers, which allows for competitive pricing, with average prices approximately 25% lower than those in offline supermarkets [3] Market Dynamics - The snack retail sector is experiencing rapid expansion, particularly in lower-tier cities, with a focus on cost-effectiveness and product variety [2][5] - The market is currently characterized by intense price competition, with a growing demand for both cost-effectiveness and quality among consumers [2] - The market for snack retail is projected to continue growing, with a compound annual growth rate (CAGR) of 6.5% in lower-tier markets from 2019 to 2024 [5] Competitive Landscape - The industry is undergoing consolidation, with larger brands acquiring smaller ones, leading to a significant reduction in the number of regional snack brands [6] - Approximately 100 regional snack brands have disappeared in 2024, with expectations that over 50% of smaller companies will be eliminated by 2025 [6] - Mingming Hen Mang emphasizes the importance of balancing cost-effectiveness with product quality to maintain competitive advantage in the evolving market [6] Future Plans - The company plans to use the proceeds from its IPO to enhance supply chain capabilities, upgrade store networks, empower franchisees, and invest in brand development and technology [6]

Investment Rating - The report indicates a positive investment outlook for the functional beverage industry, highlighting its rapid growth and structural changes within the market [1]. Core Insights - The functional beverage sector is leading the growth in China's soft drink market, driven by health-conscious consumer trends and the demand for energy and nutritional products [15][20]. - The market for functional beverages is expected to grow significantly, with a projected compound annual growth rate (CAGR) of approximately 8.3% from 2019 to 2024, increasing from RMB 111.9 billion to RMB 166.5 billion [17][20]. - Energy drinks dominate the functional beverage market, accounting for 66.9% of the total market share in 2024, while sports drinks are the fastest-growing segment [20]. Industry Status - The functional beverage industry is experiencing structural growth, with a notable shift towards healthier options, leading to a decline in traditional sugary beverages [11][12]. - The overall soft drink market in China is projected to reach RMB 1,250.2 billion in 2024, with a CAGR of 4.7% from 2019 to 2024 [12][15]. - The market share of functional beverages within the soft drink category is expected to increase from 11.3% in 2019 to 13.3% in 2024 [16]. Industry Trends - The report emphasizes the importance of offline consumption scenarios, which are crucial for building consumer loyalty in the functional beverage market [30][36]. - The growth of online sales channels is significant, with a projected CAGR of 14.0% from 2019 to 2024, although offline channels still dominate the market [32][35]. - The increasing disposable income of consumers is driving the demand for soft drinks, with per capita consumption in China expected to reach 197.8 liters in 2024, indicating substantial growth potential [39]. Competitive Landscape - The report highlights a low concentration in the competitive landscape, with the top five companies holding a combined market share of 61.6%, leaving ample room for long-tail market opportunities [53]. - Eastroc Beverage leads the market with a 26.3% share, benefiting from its penetration in lower-tier cities and a large packaging strategy [53]. - The energy drink market is characterized by a dual oligopoly, with Eastroc and Red Bull dominating, while new entrants face challenges in establishing brand recognition and distribution networks [57]. Company Case Studies - Eastroc Beverage has shown explosive growth, with revenues increasing from RMB 69.78 billion in 2021 to RMB 158.39 billion in 2024, driven by its flagship product and innovative new offerings [62]. - Huabin Group, despite facing legal challenges, managed to maintain a revenue of RMB 210.9 billion in 2024, although its market share has declined significantly due to competition from local brands [70].