Core Viewpoint - Liuliu Guoyuan Group Co., Ltd. is preparing for an IPO on the Hong Kong Stock Exchange, driven by a shift towards bulk snack channels, but faces challenges including declining product prices and significant debt obligations [1][4][6]. Company Performance - Revenue for Liuliu Guoyuan is projected to grow from 11.74 billion yuan in 2022 to 16.16 billion yuan in 2024, with net profit increasing from 0.68 billion yuan to 1.48 billion yuan during the same period [2]. - The company holds a 7.0% market share in China's plum product industry, ranking first by retail sales in 2024 [1][2]. Channel Strategy - The transition from a distribution model to a bulk snack model has resulted in 28.8% of sales coming from major chain snack stores in 2024, with the top two clients suspected to be Mingming Hen Mang and Wancheng Group [2]. - The shift to bulk snacks has led to a significant increase in sales volume but has also resulted in price reductions for key products [3]. Pricing and Cost Challenges - The average selling price of plum snacks has decreased from 39.4 yuan/kg in 2022 to 35.2 yuan/kg in 2024, while the price of plum jelly has dropped from 25.8 yuan/kg to 18.6 yuan/kg [3]. - Raw material costs have increased, with prices for green plums rising by approximately 8.33% and imported plums by 27.78% from 2020 to 2024, contributing to a decline in gross margin from 39.6% in 2022 to 32.1% in 2024 [3]. Capital and Debt Obligations - Beijing Sequoia, an early investor, is exiting the company, requiring repayment of 1.35 billion yuan in principal and 1.26 billion yuan in interest, which is about 85% of the company's projected net profit for 2024 [5][6]. - The company has a cash balance of only 78.04 million yuan as of the end of 2024, insufficient to cover the interest payment, leading to further financing needs [6]. Future Outlook - Liuliu Guoyuan must complete its IPO by December 31, 2025, to avoid potential redemption requests from new investors, which could exacerbate its financial difficulties [6].

Core Viewpoint - Liuliu Guoyuan Group is preparing for an IPO in Hong Kong, facing challenges such as declining product prices and significant financial obligations due to investor exit [1][9][11] Financial Performance - Revenue from 2022 to 2024 is projected to grow from 1.174 billion to 1.616 billion yuan, with net profit increasing from 68 million to 148 million yuan [2] - The company holds a 7% market share in China's plum product industry, ranking first by retail sales [1] Business Model and Market Dynamics - The shift from a distribution model to a bulk snack model has led to 28.8% of sales coming from major chain snack stores in 2024 [4] - The company’s main products, dried plums and plum jelly, have seen price declines despite increased sales volume [5][7] Pricing and Cost Challenges - The average selling price of plum jelly dropped from 25.8 yuan/kg in 2023 to 18.6 yuan/kg in 2024, while the average price of dried plums fell from 39.4 yuan/kg in 2022 to 35.2 yuan/kg in 2024 [5][7] - Raw material costs have increased, with prices for green plums rising by 8.33% and imported plums by 27.78% from 2020 to 2024 [7] Profitability Concerns - The gross margin for dried plums decreased from 39.6% in 2022 to 32.1% in 2024, while the overall gross margin fell from 40.1% in 2023 to 36.0% in 2024 [7] Capital and Investment Issues - Beijing Sequoia, an early investor, exited in 2024, imposing a significant financial burden on the company, including 126 million yuan in interest payments [1][11] - The company must complete its IPO by December 31, 2025, or face potential buyback demands from new investors [11][12] Cash Flow and Financial Health - As of February 2025, the company had only 51.04 million yuan in cash, with interest-bearing bank loans totaling 310 million yuan, indicating a severe cash flow issue [12]