Tianjin Yihong Packaging’s ChiNext IPO Filing Accepted, with Mengniu as Top Customer and RMB 370 Million Fundraising Plan

The packaging industry may be set to add another listed company. On June 29, the Shenzhen Stock Exchange website showed that the ChiNext IPO application of Tianjin Yihong Intelligent Packaging Technology Co., Ltd. — Yihong Packaging — has been accepted. The company generated RMB 1.033 billion in revenue in 2020, and Mengniu Group is its largest customer.

Eight wholly owned subsidiaries, with annual revenue above RMB 1 billion

Yihong Packaging’s prospectus shows that it develops, designs, manufactures and sells color packaging boxes, water-based printed packaging cartons and other products. These items are used mainly in dairy, food, health supplements, cosmetics, online education, alcoholic drinks and beverages, electronics and e-commerce.

The company currently operates eight wholly owned subsidiaries: 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.; and 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 intensified market expansion, keeping revenue on a continuous growth path while net profit has improved markedly overall. From 2018 to 2020, revenue was RMB 882 million, RMB 936 million and RMB 1.033 billion, respectively, while net profit reached RMB 19.2501 million, RMB 51.9281 million and RMB 51.0277 million.

Color packaging boxes remain the company’s main revenue engine. In 2018–2020, sales from this category were RMB 603 million, RMB 649 million and RMB 706 million, representing 70.30%, 70.52% and 70.22% of main business revenue. Revenue from water-based printed packaging cartons and other products is smaller but still exceeds RMB 100 million each year and is trending upward.

Mengniu Group holds the top customer position for Yihong

With customized R&D and design capabilities, a fast-response supply chain and advanced production processes, Yihong Packaging continues to meet varied customer requirements. After years of development, it has built partnerships with well-known Chinese companies including Mengniu Group, Three Squirrels, Junlebao, Zuoyebang, Pien Tze Huang and Delixi.

Mengniu Group is Yihong Packaging’s largest customer. In 2020 alone, Mengniu contributed RMB 682 million in operating revenue, equal to 65.99% of Yihong Packaging’s total revenue. This indicates a high level of customer concentration and a substantial revenue weighting toward Mengniu.

Yihong Packaging explained in the prospectus that Mengniu Group sets strict requirements for supplier certification and overall strength, and that once a stable partnership is formed, the two sides tend to become interdependent. Mengniu places large order volumes with the company, and as those volumes rise, Yihong’s sales show customer concentration.

As a key supplier partner to Mengniu Group, Yihong Packaging has received several Mengniu awards, including “Best Business Partner Award,” “Best Promotional Materials Business Partner Award” and “Class A Supplier.” During the reporting period, Mengniu’s procurement from Yihong remained stable, with no major swings.

At the same time, drawing on extensive experience in paper packaging material design and production, Yihong Packaging has expanded into other industries in recent years, adding customers such as Zuoyebang in online education and Delixi in low-voltage power distribution. This has gradually improved its business mix and operational risk resilience.

RMB 370 million fundraising planned for four projects

Yihong Packaging plans to publicly issue no more than 37.9 million ordinary RMB shares, aiming to raise RMB 370 million. The proceeds will mainly fund 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.

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., focus on upgrading existing production lines. Once operational, they are expected to improve equipment and processes, raise efficiency and expand capacity for downstream customers.

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., are intended to expand and establish production bases in East China and Northwest China. After commissioning, they should help Yihong Packaging develop the Yangtze River Delta and Northwest markets, increasing its overall market share.

Overall, these fundraising projects align with Yihong Packaging’s strategic goals and core business. Their implementation is expected to expand capacity and service coverage, refine existing product lines and strengthen the company’s core competitiveness, profitability and industry position.

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