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WDG sells products across three categories: seasoned flour products, vegetable products and bean-based and other products. According to Frost & Sullivan (F&S), in terms of retail sales value in 2020, WDG ranked first among all spicy snack food enterprises in China, with a market share of 5.7%, and ranked first in each of the seasoned flour product and spicy vegetable snack product categories.
Overall revenue growth has been strong at 23% YoY in 2019 and 21.7% in 2020 driven both by an increase in volumes and prices over 2018-20. Along with strong revenue growth, WDG gross profit growth has been even stronger, with gross profit growing by 25-31% YoY over 2018-20. PAT grew at 25-38% over 2018-20.
On the flip side, the industry remains highly fragmented and WDG has a small market share. Furthermore, most of the margin improvement has been driven by a drop in raw material costs, which has been reversing.
We covered various aspects of the deal in our previous notes, Weilong Delicious Global Pre-IPO - Fast growth, spicy valuation and Weilong Delicious Global Pre-IPO - PHIP updates - Mixed bag 1H21 performance. In this note, we will undertake a peer comparison and talk about valuations.
Weilong Delicious Global Pre-IPO
Weilong Delicious Global (WDG), a spicy snack food company in China, aims to raise around US$1bn in its Hong Kong IPO.WDG sells products across three categories: seasoned flour products, vegetable products and bean-based and other products. According to Frost & Sullivan (F&S), in terms of retail sales value in 2020, WDG ranked first among all spicy snack food enterprises in China, with a market share of 5.7%, and ranked first in each of the seasoned flour product and spicy vegetable snack product categories.
Overall revenue growth has been strong at 23% YoY in 2019 and 21.7% in 2020 driven both by an increase in volumes and prices over 2018-20. Along with strong revenue growth, WDG gross profit growth has been even stronger, with gross profit growing by 25-31% YoY over 2018-20. PAT grew at 25-38% over 2018-20.
On the flip side, the industry remains highly fragmented and WDG has a small market share. Furthermore, most of the margin improvement has been driven by a drop in raw material costs, which has been reversing.
We covered various aspects of the deal in our previous notes, Weilong Delicious Global Pre-IPO - Fast growth, spicy valuation and Weilong Delicious Global Pre-IPO - PHIP updates - Mixed bag 1H21 performance. In this note, we will undertake a peer comparison and talk about valuations.
Underlying
Weilong Delicious Global
Provider
Aequitas Research
Aequitas Research is a leading ECM research firm with a focus on IPOs and placements/follow-on offerings across the Asia Pacific with deal size of over USD100m.
Since 2015, we have covered 400+ IPOs and 450+ placements with a hit rate of 73% and 65%, respectively. We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic analysis.
Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis. We also provide a more quant driven analysis on placement/follow-on offerings.
Markets that we cover include:
Hong Kong,
China ADRs,
India,
Japan,
Australia, and
ASEAN.
Hong Kong,
China ADRs,
India,
Japan,
Australia, and
ASEAN.
Sumeet Singh
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