Core Viewpoint - Yuwang Bio Nutrition Co., Ltd. has submitted an IPO application to the Hong Kong Stock Exchange, aiming to expand its production capacity and market presence in the high-purity fish oil sector [1][4]. Company Overview - Yuwang Bio is the largest supplier of food-grade refined fish oil globally, holding an 8.1% market share in 2024, and has been the top manufacturer of fish oil soft capsules in China from 2022 to 2024 [4][5]. - The company’s product matrix includes refined fish oil (31.0% of total revenue in 2024), fish oil soft capsules and dietary supplements (67.0%), and pharmaceuticals and others (2.0%) [4]. Financial Performance - Revenue has shown steady growth from 534 million yuan in 2022 to 661 million yuan in 2023, and projected to reach 832 million yuan in 2024. In the first half of 2025, revenue was 343 million yuan with a net profit of 22.76 million yuan [4][7]. - The gross profit margin decreased from 26% in 2024 to 20.7% in the first half of 2025, attributed to falling raw fish oil prices and changes in product mix [4][7]. Market Trends - The demand for high-purity fish oil is increasing due to rising health awareness and aging populations. The global fish oil nutritional products market is highly concentrated, with the top five manufacturers accounting for 32.4% of the market share in 2024 [5]. IPO Use of Proceeds - The IPO funds are intended for expanding production capacity in China and overseas, upgrading high-purity fish oil production lines, brand promotion, and working capital to solidify global market position and explore emerging fields like pet fish oil [7]. Compliance Issues - The company has disclosed multiple compliance issues in its prospectus, including underpayment of employee social security and housing fund contributions exceeding 10 million yuan, and non-compliance in bank loan usage totaling up to 131 million yuan [7]. - There are risks associated with potential penalties and fines due to these compliance issues, which could adversely affect business and operational performance [7].

Core Viewpoint - Yuwang Bio is facing multiple challenges, including raw material supply and overseas market dynamics, which necessitate its rapid entry into the capital market to expand production capacity and enhance brand promotion [2][3]. Financial Performance - Yuwang Bio's revenue from 2022 to 2024 was approximately 534 million, 661 million, and 831 million RMB, with net profits of about 67 million, 102 million, and 125 million RMB respectively [3]. - In the first half of 2025, the company experienced a 27.13% year-on-year decline in revenue to approximately 343 million RMB, with net profit dropping 74.01% to about 23 million RMB [3]. - The revenue breakdown shows that refined fish oil contributed 36.7%, 30.8%, 31.0%, and 26.2% to total revenue from 2022 to 2025, while fish oil soft capsules and other dietary supplements accounted for 60.8%, 66.2%, 67.0%, and 72.6% respectively [3][4]. Market Position - Yuwang Bio holds an 8.1% share of the global market for refined fish oil, positioning it as the leading player in the industry [3]. - The company relies heavily on overseas markets, with non-China market revenue accounting for 47.3%, 53.0%, 60.9%, and 55.0% of total revenue from 2022 to the first half of 2025 [5]. Supply Chain Challenges - The company lacks strong bargaining power in the supply chain, with raw material costs constituting 87.4%, 89.9%, 88.8%, and 86.7% of total sales costs from 2022 to the first half of 2025 [6]. - Yuwang Bio's main raw material, crude fish oil, is primarily imported from Peru, making it vulnerable to fluctuations in fishing quotas and environmental conditions [9]. Pricing and Sales Trends - The average selling price of high-purity fish oil increased from 128,000 RMB per ton in 2022 to 221,000 RMB in 2024, while sales volume decreased from 197 tons to 140 tons [10]. - In the first half of 2025, the average selling prices for high-purity and medium-purity fish oil were 133,000 RMB and 74,000 RMB per ton, with sales volumes of 50 tons and 454 tons respectively [10]. Brand Development - Yuwang Bio has developed four major brands targeting different consumer segments, but its C-end product performance remains weak, contributing less than 3% to total revenue during the reporting period [12][14]. - The company has 45 proprietary dietary supplement products as of June 30, 2025, but C-end revenue was only approximately 12 million, 15 million, 17 million, and 9.05 million RMB in the respective years [14]. Leadership and Strategic Focus - The company is currently led by Liu Ruicui, who took over in 2015 and has focused on contract manufacturing (CDMO) as the primary business model [17][18]. - As of the first half of 2025, CDMO dietary supplement product revenue accounted for 70.0% of total revenue, indicating a strong emphasis on contract manufacturing [18].

Core Viewpoint - Yuwang Bio is facing significant financial challenges, including a 74% drop in net profit and high debt levels, while also engaging in controversial dividend practices that may jeopardize future shareholder interests [1][6][9]. Financial Performance - Yuwang Bio reported revenues of 5.34 billion, 6.61 billion, 8.32 billion, and 3.43 billion for the years 2022 to 2025 H1, with net profits of 0.67 billion, 1.02 billion, 1.25 billion, and 0.23 billion respectively, indicating a 27.13% decline in revenue and a 74.01% decline in net profit for 2025 H1 compared to the previous year [3][5]. - The company's gross profit margins decreased from 25.4% in 2022 to 20.7% in 2025 H1, contributing to the decline in net profit [3][5]. Market Position - Yuwang Bio is the largest supplier of food-grade refined fish oil globally, holding an 8.1% market share as of 2024 [3][5]. - The global market for food-grade fish oil has experienced a compound annual growth rate (CAGR) of -6.76% from 2020 to 2024, with a projected CAGR of 6.65% from 2025 to 2029, indicating limited growth potential [5]. Debt and Dividend Practices - The company's debt-to-asset ratio was over 90% in 2024 and remained above 83% in 2025 H1, while it declared a controversial dividend of 3.2 billion, exceeding its net profit for the three years from 2022 to 2024 [1][6][9]. - The 3.2 billion dividend was characterized as a "clearance dividend," which is defined as exceeding 80% of net profit over three years, raising concerns about the impact on future shareholder interests [8][9]. Internal Control Issues - Yuwang Bio reported a total of 1.59 billion in illegal bill financing and 2.42 billion in misallocated loan funds, totaling over 4 billion, indicating significant internal control failures [2][10][12]. - The company attributed these violations to a lack of familiarity with regulatory requirements, placing blame on the financial manager, which raises questions about overall governance and internal controls [12][13].