China snack maker Weilong raises $549m, pursues HK IPO

CPE is the largest external holder after the pre-IPO round with a 2.32% stake. Hillhouse is second with 1.17%, followed by Tencent Holdings and Yunfeng Capital with 0.64% apiece. Other investors include Sequoia Capital China, Duckling Fund, Hosen Capital, and Oceanpine Capital, according to a prospectus.

The pre-IPO round represents Weilong's only external equity funding since its inception. The founder, Weiping Liu, and his family hold more than 92% of the company.

Weilong ranks first in China’s spicy snack niche by retail sales value, according to Frost & Sullivan, with a market share of 5.7%. It ranked 11th among all snack food companies with a presence in China and seventh among all mainland snack food businesses, accounting for 1.2% of the overall market.

Founded in 1999, Weilong aims to turn authentic Chinese gourmet cuisine into casual snack food. It has become a well-recognized brand, especially among younger generations. About 95% of its consumers are under 35, and 55% are under 25.

Inspired by traditional Chinese recipes, the company started with seasoned flour products, commonly known as latiao. Its product line has since expanded to include snacks made from vegetables such as kelp and snacks made from soybeans.

Latiao is the core product, but its revenue share has fallen from 78.6% in 2018 to 65.3% in 2020. Vegetable products have seen the fastest growth, accounting for 28.3% of revenue last year, up from 10.8% in 2018. Meanwhile, sales of soybean-based products have declined. Their revenue share fell to 6.4% in 2020 from 10.6% in 2018.

Weilong’s total revenue has climbed from RMB2.75 billion ($427 million) in 2018 to RMB3.38 billion in 2019 and RMB4.12 billion last year, far exceeding the 4.1% annual growth rate of the broader snack food industry in China. Over the same period, the company's net profit has risen from RMB476 million to RMB658 million to RMB818 million. The net profit margin was 19.9% in 2020.

More than 90% of the revenue is realized offline, via a network of 1,900 distributors covering 570,000 retail points of sale. Weiling has sought to strengthen its presence on major e-commerce platforms, however, with revenue from online channels increasing from RMB250.8 million in 2019 to RMB381.8 million in 2020.

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• Topics
• Greater China
• IPO
• Consumer
• China
• Food
• Hillhouse Capital Management
• Sequoia Capital
• Tencent
• Yunfeng Capital
• Hosen Capital
• Oceanpine Capital
• Citic Private Equity