Leidi.com Lei Jianping April 6
October Daotian Group Co., Ltd. (referred to as "October Daotian") recently submitted a prospectus for listing on the main board of the Hong Kong Stock Exchange.
The joint sponsors of October Rice Field are Morgan Stanley, CICC, and CITIC Construction International.
Annual revenue of 4.5 billion
October Paddy is a kitchen staple food company with omni-channel brand influence, focusing on providing consumers with high-quality and healthy pre-packaged rice, miscellaneous grains, beans and dry goods.
At the beginning of its establishment, different from the traditional industry’s entrenched offline sales model, October Daotian started from the Internet, fully focused on the rapid rise of e-commerce channel opportunities, quickly seized market share, built online barriers, and achieved rapid expansion by penetrating offline .
According to the data, in 2005, Wang Bing and Ms. Zhao entered the kitchen staple food industry and started the raw grain trade business; in 2011, they established the brands of October Rice Field and Chaihuo Compound; at the same time, they began to cooperate with JD.com to sell products through e-commerce platforms; in 2013 In October, Daotian expanded its e-commerce platform through cooperation with Tmall.
In 2015, October Paddy’s modern production base in Wuchang was put into operation, providing Wuchang rice and other products; in 2016, in addition to the rice category, October Paddy further launched a product line of miscellaneous grains; in 2017, October Paddy’s product categories extended to dry goods , to meet the diverse dietary needs of customers.
In October 2018, Daotian launched the "Fuxiangrenjia" brand to provide Chinese families with rice products of value for money. In 2022, October Paddy will complete the overall layout of Shenyang Xinmin, Wuchang, Tonghe, Songyuan and Aohan five production areas in China.
According to the prospectus, the revenue of October Daotian in 2020, 2021, and 2022 will be 2.327 billion yuan, 3.598 billion yuan, and 4.533 billion yuan respectively; the gross profit will be 405 million yuan, 538 million yuan, and 780 million yuan respectively. The compound annual growth rate of revenue reached 39.6%.
The adjusted net profits of October Paddy in 2020, 2021, and 2022 will be 221 million yuan, 259 million yuan, and 364 million yuan, respectively.
According to the prospectus, in terms of revenue in 2022, October Daotian ranks first in China's high-quality rice industry; in terms of sales revenue from online channels in 2022, the company is the largest company in China's rice, miscellaneous grains, beans and seeds markets, The market share is 10.7%. From 2019 to 2022, it will rank first in China's comprehensive e-commerce channels for rice, miscellaneous grains, beans and seeds for four consecutive years.
At present, October Daotian offline has covered many well-known offline modern supermarket channels, enabling it to more comprehensively reach users in different geographical regions. In recent years, October Paddy has expanded rapidly in modern commercial and supermarket channels, and the compound annual growth rate of revenue from 2020 to 2022 will reach 79.5%. In 2022, it will rank fourth among modern supermarket retailers. As of December 31, 2020, 2021 and 2022, the company has cooperated with 39, 70 and 90 modern supermarket channels respectively. Direct cooperation with modern supermarket channels further enhances the influence of October Daotian brand among customers.
The income of miscellaneous grains, beans and dry goods forms a new growth curve
According to the prospectus, there are a wide variety of staple foods in Chinese kitchens, including rice, miscellaneous grains, beans, flour, dry goods, and corn. The market size has increased from 1.651 billion yuan in 2018 to 1.8623 billion yuan in 2022. It will reach 2,195.7 billion yuan.
With the continuous improvement of Chinese residents' living standards, consumption upgrades and their preference for branded products, the growth rate of China's prepackaged high-quality rice is much higher than the growth rate of the overall prepackaged rice market. In terms of income, the market size of prepackaged high-quality rice From 46.4 billion yuan in 2018 to 65.1 billion yuan in 2022, corresponding to a compound annual growth rate of 8.8%, it is expected to achieve a market size of 91.4 billion yuan in 2027, which increasingly highlights the high-quality trend of the rice industry.
China's rice, miscellaneous grains, beans and seeds markets have begun to unify management and channel integration of online and offline operations, bringing new opportunities for industry development. In addition, with product upgrades and changes in purchasing channels, the branding process of the rice, miscellaneous grains, beans and seeds industries has accelerated, and leading companies in the industry have also benefited from many favorable policies.
In terms of revenue, the market share of prepackaged rice, miscellaneous grains, beans and seeds products in China's overall rice, miscellaneous grains, beans and seeds products market will increase from 14.9% in 2018 to 19.4% in 2022, and It is expected to grow further to 25.7% by 2027. Compared with Japan and South Korea's corresponding market shares of 52.9% and 41.8% in 2022, China's prepackaged rice, miscellaneous grains, beans and seeds markets have huge potential and are expected to achieve sustainable development.
China's prepackaged rice, miscellaneous grains, and beans and seeds market is highly fragmented, with the top five companies having a combined market share of 8.9% in terms of revenue in 2022; in contrast, the top five companies in edible oil, flour, and condiments Accounting for approximately 60%, 21% and 15% of the market share respectively.
As one of the few enterprises in China's rice, miscellaneous grains, beans and seeds industry that has realized the operation of the entire industrial chain, October Paddy covers an important link in the entire industrial chain "from the field to the dining table".
Through the supply chain digital platform to cover the whole link data of procurement, production, transportation and sales, realize the collaborative management of orders, inventory, production capacity and so on. Through close cooperation with various channels, Shiyue Daotian can supervise the important links of the company's industrial chain, enabling the company to collect and analyze consumption data in a timely manner, and synchronize order, inventory and production capacity information. Through efficient supply chain management, October Paddy can deliver goods to designated warehouses or end customers within three days after placing an order, ensuring the freshness and good taste of the products.
Rice products contributed most of paddy field income in October. According to the prospectus, the sales volume of rice products in October Paddy in 2020, 2021, and 2022 will be 1.871 billion yuan, 2.892 billion yuan, and 3.622 billion yuan, respectively, accounting for 80.4%, 80.4%, and 79.9% of the revenue.
In October 2020, 2021, and 2022, the income from miscellaneous grains, beans, and other products will be 367 million, 472 million, and 523 million, respectively, accounting for 15.8%, 13.1%, and 11.5% of the revenue; from dry goods and others Product revenues were 88.226 million yuan, 235 million yuan, and 388 million yuan, accounting for 3.8%, 6.5%, and 8.6% of revenue respectively.
On the whole, income from miscellaneous grains, beans, and other products, and income from dry goods and other products are becoming the second and third curves that drive the growth of paddy field income in October, respectively.
From the perspective of channels, October Paddy’s revenue from e-commerce platforms in 2022 will be 2.657 billion yuan, accounting for 58.6% of revenue, and revenue from online self-operated stores will be 487 million yuan, accounting for 10.7% of revenue ; Revenue from modern supermarket channels was 696 million yuan, accounting for 15.4% of revenue; revenue from direct customers was 452 million yuan, accounting for 10% of revenue; revenue from distribution network was 240 million yuan , accounting for 5.3% of revenue.
Based on JD.com’s sales in 2022, the repurchase rates of rice products under the brands of October Daotian and Chaihuo Compound are 39% and 36%, respectively, which are higher than the industry average repurchase rate of 26%. In October, the repurchase rates of miscellaneous grains, beans and other products under the brands of Paddy Field and Chaihuo Compound were 34% and 32%, respectively, which were higher than the industry average repurchase rate of 19%. The repurchase rate of dry goods and other products under the October Paddy brand was 30%, which was higher than the industry average repurchase rate of 16%.
According to the prospectus, October Daotian will adhere to the positioning of the representative brand of Chinese kitchen staple food, deepen the multi-brand matrix, and enhance the brand potential. Broaden the multi-category product matrix, occupy the category mind, achieve high-quality growth, continue to strengthen the high-quality full-link system from source to dining table, and create barriers to industrial integration. Continue to maintain a strong growth trend, increase the depth of market coverage, increase market share, and obtain more market opportunities.
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