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].

Core Viewpoint - Liuliu Guoyuan is preparing for a new IPO attempt after previously withdrawing its A-share application in 2019, with significant revenue growth and a new product line, but faces challenges such as over-reliance on plum products and market uncertainties [3][14]. Company Overview - Liuliu Guoyuan was founded in 1999 by Yang Fan in Anhui, initially producing pastries before launching the Liuliu Mei brand in 2001, focusing on plum products [3][4]. - The brand gained national recognition in 2013 after celebrity endorsement from Yang Mi, leading to a significant increase in brand awareness and sales [4][6]. Financial Performance - Revenue for Liuliu Guoyuan has shown consistent growth, with projected revenues of 1.174 billion RMB in 2022, 1.322 billion RMB in 2023, and 1.616 billion RMB in 2024, alongside net profits increasing from 68.43 million RMB in 2022 to 148 million RMB in 2024 [6][12]. - The company holds a leading position in the Chinese fruit snack industry with a market share of 4.9% and in the plum product sector with a market share of 7% [6]. Product Categories - The main product categories include dried plum snacks, western plum products, plum jelly, and other plum-related products, with dried plum snacks contributing 60.3% of total revenue in 2024 [7][8]. - Plum jelly has emerged as a new growth driver, with revenue increasing from 230.3 million RMB in 2022 to 410.4 million RMB in 2024, reflecting a successful product innovation strategy [8][12]. Market Challenges - The company faces challenges such as dependence on plum products, which account for 92.28% of its main business revenue, and vulnerability to fluctuations in raw material prices due to climate conditions [11][12]. - Liuliu Guoyuan's gross margin has been declining, from 40.1% in 2023 to 36.0% in 2024, indicating pressure from industry price wars and raw material costs [12]. IPO Plans and Investor Dynamics - The company plans to use the proceeds from the IPO to expand production capacity, enhance brand awareness, and develop new products [13]. - Prior to the IPO, Sequoia Capital exited its investment, and the company is under pressure to meet a performance guarantee with investors, which may impact its IPO timeline [14][18].