Tianjin Yihong Packaging Plans IPO, with Mengniu Group as Its Largest Customer

The huge packaging market may soon welcome a new listed enterprise. On June 29, the author learned from the SZSE official website that the ChiNext listing application of Tianjin Yihong Intelligent Packaging Technology Co., Ltd. (abbreviated: Yihong Packaging) has been accepted. The enterprise's 2020 revenue was RMB 1.033 billion, and its largest customer is Mengniu Group.

With eight subsidiaries, annual revenue exceeds RMB 1 billion

According to the prospectus disclosed by Yihong Packaging, the company is a packaging enterprise engaged in the R&D, design, production and sales of color packaging boxes, water-based printed packaging cartons and other products, whose products are mainly used in the fields of dairy products, food, health products, cosmetics, online education, alcoholic beverages or drinks, electronics and e-commerce.

At present, Yihong Packaging has eight wholly owned subsidiaries, namely Inner Mongolia Shengdu Packaging Co., Ltd., Inner Mongolia Yihong Printing & Packaging Co., Ltd., Qiqihar Yihong Paper Products Co., Ltd., Tongliao Yihong Packaging Printing Co., Ltd., Anhui Shangmei Packaging Co., Ltd., Yihong Packaging (Wuhu) Co., Ltd., as well as Ningxia Yihong Intelligent Packaging Technology Co., Ltd. and Daqing Yihong Intelligent Packaging Technology Co., Ltd., both established in 2021.

In recent years, Yihong Packaging has gradually strengthened market development, with operating revenue maintaining continuous growth and net profit improving considerably overall. In 2018–2020, the company's operating revenue was RMB 882 million, 936 million and 1.033 billion respectively, and net profit was RMB 19.2501 million, 51.9281 million and 51.0277 million respectively.

Color packaging boxes are Yihong Packaging's main revenue source; in 2018–2020, sales revenue from this product was RMB 603 million, 649 million and 706 million respectively, accounting for 70.30%, 70.52% and 70.22% of main business revenue respectively. Although the operating revenue of water-based printed packaging cartons and other products is relatively smaller, it is also above RMB 100 million every year and showing a growth trend.

Mengniu Group is Yihong's largest customer

Relying on customized R&D and design capabilities, a rapid-response supply chain system and advanced production processes, Yihong Packaging continuously meets customers' diverse needs. After years of accumulation, Yihong Packaging has established cooperative relationships with many well-known domestic enterprises such as Mengniu Group, Three Squirrels, Junlebao, Zuoyebang, Pien Tze Huang and Delixi.

Among them, Mengniu Group is Yihong Packaging's largest customer. Taking 2020 as an example, Mengniu Group contributed RMB 682 million in operating revenue to Yihong Packaging, accounting for 65.99% of Yihong Packaging's total operating revenue. Clearly, in Yihong Packaging's revenue composition, sales to Mengniu Group are relatively concentrated and account for a heavy share.

In this regard, Yihong Packaging explained in its prospectus that because Mengniu Group has high requirements for supplier certification and comprehensive strength, once a stable cooperative relationship is formed it becomes an interdependent partnership. Mengniu Group places large numbers of orders with the company, and as order volumes increase, the company's sales present a situation of customer concentration.

As an important supplier partner of Mengniu Group, Yihong Packaging has repeatedly won awards from Mengniu Group such as "Best Business Partner Award," "Best Promotional Materials Business Partner Award" and "Class A Supplier." Moreover, during the reporting period, Mengniu Group's purchases from Yihong Packaging were relatively stable, with no major fluctuations.

At the same time, leveraging the extensive experience accumulated in the design and production of paper packaging materials, Yihong Packaging has in recent years continuously developed customers in other industries, such as Zuoyebang in the online education industry and Delixi in the low-voltage power distribution field, thereby gradually improving the company's business structure and enhancing its ability to withstand operational risks.

Plans to raise RMB 370 million for four major projects

This time Yihong Packaging plans to publicly issue no more than 37.9 million ordinary RMB shares to the public, raising RMB 370 million, mainly for the premium packaging production automation upgrade project, the packaging plant upgrade and renovation project, the food packaging production project, and the eco-friendly packaging smart factory construction project (Phase I), among others.

Among them, the "Premium Packaging Production Automation Upgrade Project," implemented by Yihong Packaging, and the "Packaging Plant Upgrade and Renovation Project," implemented by Inner Mongolia Shengdu Packaging Co., Ltd., are mainly upgrades of existing product lines. After the projects are put into production, they can effectively improve equipment and processes, raise production efficiency and expand capacity to meet downstream customers' needs.

Meanwhile, the "Food Packaging Production Project," implemented by Anhui Shangmei Packaging Co., Ltd., and the "Eco-Friendly Packaging Smart Factory Construction Project (Phase I)," implemented by Ningxia Yihong Intelligent Packaging Technology Co., Ltd., mainly expand and establish production bases in East China and Northwest China. After the projects are put into production, they will help Yihong Packaging develop the Yangtze River Delta market and the Northwest market, thereby enhancing the company's overall market share.

In summary, the projects to be invested in with the funds raised by Yihong Packaging this time all revolve around the company's strategic goals and main business. The implementation of the projects will help expand its capacity scale and service scope and improve its existing business product lines, thereby enhancing Yihong Packaging's core competitiveness and profitability as well as its market position in the industry.

——This article is reproduced from China Packaging Network (pack.cn), original link: http://news.pack.cn/show-377690.html