Core Viewpoint - Yuwang Biological Nutrition Co., Ltd. is transitioning from a well-known consumer brand to a major player in the global refined fish oil supply market, as it prepares for its IPO on the Hong Kong Stock Exchange. The company faces challenges such as declining profit margins, reliance on distribution channels, and brand fatigue, despite its status as the largest supplier of food-grade refined fish oil globally [3][19]. Company Background - Yuwang Biological was founded by Liu Xiqian, who initially focused on non-GMO soybean products and later expanded into the health industry with the establishment of Yuwang Pharmaceutical, which produced the popular "Wang Bule" brain nutrition capsules [4][5]. - The company has evolved under the leadership of Liu Xiqian's son, Liu Rucui, who shifted the focus towards contract manufacturing for international dietary supplement brands, leveraging production capacity and cost advantages [8][9]. Financial Performance - The company reported revenues of approximately CNY 534 million, CNY 661 million, CNY 832 million, and CNY 343 million for the years 2022, 2023, 2024, and the first half of 2025, respectively. Net profits for the same periods were approximately CNY 67.3 million, CNY 102 million, CNY 125 million, and CNY 22.8 million [9][19]. - Yuwang Biological holds an 8.1% market share in the global food-grade refined fish oil market and is the largest manufacturer of fish oil soft capsules in China from 2022 to 2024 [9][19]. Supply Chain and Cost Structure - The company faces significant supply chain risks, particularly related to the sourcing of raw fish oil from Peru, which is susceptible to environmental factors and fishing quotas. The cost of raw materials has consistently accounted for over 86% of sales costs from 2022 to mid-2025 [13][16]. - The gross margin for refined fish oil dropped from 24.7% in the first half of 2024 to 8.3% in the first half of 2025, indicating challenges in maintaining profitability amid fluctuating raw material prices [16][19]. Sales and Distribution - Yuwang Biological relies heavily on third-party traders for sales, with over 50% of total revenue generated through this channel during the reporting period. This reliance has resulted in a loss of pricing power and market control [18]. - The average selling price of fish oil soft capsules decreased from CNY 155,000 per million capsules in the previous year to CNY 99,000 in the first half of 2025, reflecting the impact of market dynamics on pricing [18]. Future Plans - The company aims to raise funds through its IPO to enhance its production capabilities, including establishing overseas facilities and expanding domestic production. It also plans to commercialize its fish oil purification technology and promote its brand in the U.S. and China [19].