Core Viewpoint - The article discusses the challenges faced by Liuliu Guoyuan Group, the company behind the popular snack product Liuliu Mei, particularly in terms of supply chain management, pricing power, and financial stability as it prepares for its IPO [1][5][21]. Financial Performance - Liuliu Guoyuan's investment return for Sequoia China over nine years was 93%, with an annualized return rate of 7.6%, which is considered low compared to other cases [5]. - The company's gross profit margin has declined from 40.1% in 2023 to 36.0% in 2024, attributed to rising raw material costs [8][16]. - The net profit margin has shown an increase from 5.8% in 2022 to 9.1% in 2024, but this is considered "inflated" due to government subsidies and tax benefits [18][19]. Supply Chain Issues - Liuliu Guoyuan has struggled with supply chain management, failing to stabilize raw material prices, which has led to increased costs and reduced profit margins [6][9]. - The price of Qingmei has risen from 6.31 yuan/kg in 2016 to 8.72 yuan/kg in 2017, impacting the company's profitability [8]. - The company does not own its orchards and relies on market procurement, which has limited its ability to control costs effectively [9]. Pricing Power and Market Dynamics - The company has faced challenges in maintaining pricing power, with significant price drops in its products, such as a 27.91% decrease in the price of Mei Frozen products in 2024 [10][12]. - The revenue from retail partners has surged from 23% in 2023 to 50.6% in 2024, indicating a growing dependency on large clients, which diminishes the company's bargaining power [12][13]. Financial Risks and IPO Pressure - Liuliu Guoyuan is under significant financial pressure, having to repay Sequoia China's investment, which has strained its cash flow [21]. - The company has initiated emergency financing rounds to cover debts, leading to a valuation discount of 9%-10% compared to previous rounds [21]. - The company faces a series of redemption clauses tied to its financing rounds, which could trigger if it fails to complete its IPO by specified deadlines, posing a severe risk to its operational continuity [23].