Selling Paper Bag Packaging to KFC and Uniqlo for a Few Cents Apiece, This Company Earns RMB 800 Million a Year — and It's Racing Toward an IPO

On June 10, Fujian Nanwang Eco-Friendly Technology Co., Ltd. (hereinafter "Nanwang Technology"), the paper bag supplier to KFC, McDonald's, Uniqlo and Heytea, submitted its prospectus (application draft, the same below), aiming to make a dash for the ChiNext board of the Shenzhen Stock Exchange.

Main product categories of Nanwang Technology. Image source: screenshot from Nanwang Technology's official website

Nanwang Technology's main products are eco-friendly paper bags and food packaging. Eco-friendly paper bags are mainly used for take-away packaging of consumer goods, covering social consumption fields such as apparel, footwear and hats, snack foods, catering, supermarkets and department stores, and pharmacies; food packaging, meanwhile, must meet food direct-contact standards and is used in QSR (Quick Service Restaurant) outlets, coffee and tea drinks, bakery, snack foods, conference venues and so on.

Going to McDonald's or KFC to take away a burger, buying clothes at Uniqlo and carrying them home, ordering a cup of Heytea for delivery... none of these consumption scenarios would be complete without eco-friendly paper bags.

With the implementation of the "plastic ban" and the spread of environmental awareness, replacing plastic bags with paper bags has become a trend, and eco-friendly paper bag manufacturers have also begun to attract attention.

Nanwang Technology adopts a mode of purchasing based on sales. In terms of sales, in 2020,

Nanwang Technology sold 917 million eco-friendly paper bags, with sales revenue of RMB 468 million and an average selling price of RMB 0.51 each

; and sold 3.652 billion units of food packaging, with sales revenue of RMB 366 million,

and an average selling price of RMB 0.10 each

In terms of profitability, from 2018 to 2020, Nanwang Technology achieved operating revenue of RMB 513 million, 692 million and 848 million respectively, and net profit attributable to the parent company of RMB 56.6257 million, 63.9901 million and 66.0464 million respectively, basically in a steady growth trend.

The prospectus shows that

in 2020, Nanwang Technology's top five customers were Baisheng Foods (KFC), Wallace, Tokyo Art (Uniqlo Japan's packaging material supplier), Lexin Trading (McDonald's) and Xingmi Technology (Heytea)

, with sales amounts of RMB 178 million, 136 million, 71.5037 million, 46.9249 million and 29.8526 million respectively.

Some of Nanwang Technology's product styles. Image source: screenshot from Nanwang Technology's prospectus (application draft)

From 2018 to 2020, KFC was Nanwang Technology's largest customer for three consecutive years, with sales accounting for more than 20% each year. In addition to the above five major customers,

Nanwang Technology also provides paper products for brands such as Xtep, Yishion, Erke, ANTA, Starbucks, Wallace and Mixue Bingcheng.

It is worth mentioning that among Nanwang Technology's top five customers from 2018 to 2020, the Chinese domestic fast-food brand Wallace (NEEQ-listed: Huashi Foods, 836475.OC) was consistently ranked second, with sales accounting for more than 15%,

and it has many related-party relationships with Nanwang Technology.

In terms of investment in technology R&D, Nanwang Technology disclosed in its prospectus that the company's product innovation is mainly reflected in structural innovation, functional innovation and material application innovation. It has developed innovative products such as the small-U bag, three-dimensional cup holder, hand-tear bag, bag-in-bag, insulated bag and zipper bag, and projects currently under development include "Research and Development of a Sealable Paper Bag with Tear Function," "Development and Research of Automated Roll-Fed Square-Bottom Paper Bag Technology with Small U-Notch," and "Research and Development of an Automatic pH and Viscosity Control System for Water-Based Ink."

However, in terms of R&D investment, Nanwang Technology still lags somewhat behind the industry leaders. In 2020,

Nanwang Technology's R&D investment accounted for 2.91% of total revenue,

less than Yuto Technology (4.21%), Jinjia (4.84%) and Meiyingsen (4.25%)

——This article is reproduced from China Packaging Network (pack.cn), original link: http://news.pack.cn/show-377753.html