Core Viewpoint - The infant food market in China is experiencing steady growth, driven by the increasing awareness of health and nutrition among new parents, with companies like Ying's and Grandpa's Farm competing for market share [2][4]. Industry Overview - The Chinese infant food market is projected to grow from approximately RMB 31.7 billion in 2020 to about RMB 39.4 billion by 2024, with a compound annual growth rate (CAGR) of around 5.6%, and expected to reach approximately RMB 51.2 billion by 2029 [2]. - The market is characterized by competition among brands such as Ying's, Grandpa's Farm, Little Blue, and Qiu Tian Man Man [2]. Company Performance - In 2024, Ying's is expected to achieve revenue of RMB 1.97 billion, while Grandpa's Farm is projected to generate RMB 875 million in the same year [4]. - Grandpa's Farm reported revenues of RMB 622 million in 2023, RMB 875 million in 2024, and RMB 780 million in the first three quarters of 2025, with adjusted net profits of RMB 76 million, RMB 103 million, and RMB 90 million respectively [4]. Market Positioning - According to the 2024 rankings, Ying's holds the top position in the infant food market with a market share of 5.7%, while Grandpa's Farm ranks second with a market share of 3.3% [3]. - The top five companies in the market collectively account for 14.2% of the total market share [3]. Marketing and R&D Expenditure - Grandpa's Farm has invested significantly in marketing, with sales and distribution expenses amounting to RMB 201 million, RMB 306 million, and RMB 283 million for 2023, 2024, and the first three quarters of 2025, respectively, representing 32.3%, 35.0%, and 36.3% of total revenue [5]. - In contrast, Ying's has maintained a sales expense ratio of around 35%, with R&D expenses accounting for less than 1% of revenue [7]. Production and Quality Concerns - Grandpa's Farm relies heavily on third-party OEM manufacturers for production, with its own factory expected to start small-scale production in October 2025 [8]. - Ying's has a stronger in-house production capability, although it still relies on outsourcing for 55.1% of its production in 2024 [8]. Consumer Feedback - As of January 6, there have been 206 complaints regarding Grandpa's Farm on the Black Cat Complaints platform, highlighting issues such as product quality and safety [9]. - Both leading companies face challenges related to high marketing costs and reliance on outsourcing, which may impact their profitability and growth potential [9].

Core Viewpoint - Liuliu Mei, a leading brand in the plum snack industry, is preparing for an IPO on the Hong Kong Stock Exchange after previously failing to list in A-shares, raising concerns about declining profit margins and low R&D investment [2][5]. Company Overview - Liuliu Guoyuan, the parent company of Liuliu Mei, is a major player in the Chinese fruit snack market, with its main products categorized into three types: dried plums, western plums, and other plum-related products [3]. Market Position - According to Frost & Sullivan, Liuliu Guoyuan has ranked first in the green plum and western plum snack sectors by retail sales from 2021 to 2024. However, the market ceiling is evident, with the overall snack market in China projected to grow from 13,440 billion RMB in 2024 to 17,558 billion RMB by 2029 [5]. Financial Performance - The company reported total revenues of 1.174 billion RMB, 1.322 billion RMB, and 1.616 billion RMB for the years 2022, 2023, and 2024, respectively, with net profits of approximately 68 million RMB, 99 million RMB, and 148 million RMB during the same period [5][6]. Profit Margin Trends - Despite revenue growth, the gross profit margin has been declining, with figures of 38.6%, 40.1%, and 36.0% for the years 2022, 2023, and 2024, respectively. The margins for core products like dried plums and western plums have also decreased [6][7]. Marketing and R&D Expenditure - The company has invested heavily in marketing, with sales and distribution expenses exceeding 900 million RMB over the reporting period, accounting for 24.1%, 23.4%, and 19.2% of total revenue [8][10]. In contrast, R&D spending has been low, totaling less than 77 million RMB over three years, with a R&D expense ratio of only 1.2% in 2024 [11]. Ownership and Shareholder Actions - The company is primarily controlled by its founders, who hold 87.77% of the shares. Notably, major shareholder Beijing Sequoia chose to cash out before the IPO, selling its shares for 261 million RMB [11]. Food Safety Concerns - Food safety is critical for the company, which has faced multiple complaints and regulatory actions related to product quality. There have been nearly 300 complaints, with issues such as contamination and spoilage frequently reported [12][13][16].