Core Insights - The global nutritional supplement industry is experiencing rapid growth, with fish oil as a significant segment, leading to increased market demand [1] - Yuwang Biological Nutrition Co., Ltd. has submitted an IPO application to the Hong Kong Stock Exchange, aiming to capitalize on health consumption trends, but faces challenges from its reliance on an OEM model and raw material price fluctuations [1][2] Market Position - Yuwang Biological is the largest supplier of food-grade refined fish oil globally, holding an 8.1% market share, but faces intense competition as the top five players account for 32.4% of the market [1][2] - The global refined food-grade fish oil market is projected to be approximately $1.33 billion, representing less than 1% of the total global nutritional supplement market, which is estimated at $467.61 billion by the end of 2024 [2] Financial Performance - From 2022 to 2024, Yuwang Biological's revenue grew from 534 million yuan to 832 million yuan, with a compound annual growth rate (CAGR) of 24.81%, while net profit increased from 67.3 million yuan to 125 million yuan, with a CAGR of 36.46% [2] - However, in the first half of 2025, the company's revenue dropped by 27.13% to 343 million yuan, and net profit fell by 74.01% to 22.76 million yuan [3] Product Dependency - Yuwang Biological's core products, including refined fish oil and fish oil soft capsules, accounted for over 97% of total revenue during the reporting period, indicating a lack of product diversification [3] - The company plans to expand its product range to include pet-grade and pharmaceutical-grade fish oil, but has not yet achieved significant sales in these areas [3] Business Model and Client Dependency - The company has shifted from a domestic brand strategy to an overseas OEM model, with revenue from non-China markets increasing from 47.3% to 60.9% from 2022 to 2024 [4] - Yuwang Biological relies heavily on third-party trade companies for sales, with over 52% of revenue coming from these channels, which limits direct consumer engagement and brand promotion [8][9] Raw Material Cost and Profitability - The company has a high dependency on imported raw materials, with raw materials accounting for over 86% of total sales costs, and fish oil costs significantly impacting profitability [12][13] - The price of raw fish oil surged to nearly 70 yuan per kilogram in 2023 and 2024, compared to around 25 yuan per kilogram from 2018 to 2021, leading to a decline in gross margins [13][14] Dividend Policy and Financial Health - In 2024, Yuwang Biological declared a dividend of 320 million yuan, exceeding its net profit for the period, raising concerns about its financial sustainability [16][20] - As of June 2025, the company had cash and cash equivalents of 123 million yuan, barely covering short-term bank loans of 120 million yuan, indicating potential liquidity issues [15][20]