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Public company info - Yihai International Holding Ltd. , 01579.HK
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Yihai International Holding Ltd., 01579.HK - Company Profile
Chairman Shi Yonghong
Share Issued (share) 1,047,000,000
Par Currency U.S. Dollar
Par Value 1.0E-5
Industry Food Additives & Flavouring
Corporate Profile Business Summary: The principal activities of the Group are researching and developing, manufacturing, distributing and selling high-quality hot pot condiments, Chinese-style compound condiments and convenient ready-to-eat food products. Performance for the year: The revenue of the Group increased by 25.2% from RMB4,282.5 million for the year ended 31 December 2019, to RMB5,360.0 million for the corresponding period in 2020. Net profit of the Group increased by 23.6% from RMB795.0 million for the year ended 31 December 2019 to RMB982.9 million for the year of 2020. Basic earnings per share increased from RMB0.741 for the year ended 31 December 2019 to RMB0.902 for the year of 2020, and net profit margin decreased from 18.6% for the year ended 31 December 2019 to 18.3% for the year of 2020. Business Review： Sales Channels The Group continued to be the supplier of hot pot condiment products to Haidilao International Holding Ltd. (Stock code: 6862, “Haidilao”) and its subsidiaries (“Haidilao Group”), one of the Group’s related parties, while at the same time, it also provided cooking condiment solutions to Chinese family cooking customers, catering service providers and companies in the food industry. As of 2020, the major products of the Group included hot pot condiments, Chinese-style compound condiments and convenient ready-to-eat food products, and major channels for third-party sales included distributors, e-commerce and catering customers. The Group’s sales to third-party distributors has covered totally 31 provincial regions in China and Hong Kong-Macau-Taiwan regions and 49 countries and regions overseas. Expansion and penetration of third-party channels have always been the most important sales strategy of the Group. The core tasks of the Group in 2020 were to expand the channel coverage in county level, enhance the existing individual products with strong performance, increase the quantity of listed products in sales points, innovate new product sale model and enhance the channel satisfaction. In terms of specific measures, the Group had set satisfaction of distributors and end-points as the starting point and conducted process indicator assessments to the first-tier sales (“Partner(s)”), such as indicators of monthly inventory level of distributors; implementation efficiency of cost investment; logistic satisfaction level of end-sales points; and display performance of end-points, which aim at enhancing sales results of channels and ensuring the relevant indicators were in orders. In the second half of 2020, the Group had conducted an optimizing adjustment to the internal management structure, such as establishing the system of “regional managers”. “Regional manager” system further reorganized the Company’s sales and product research and development teams to categorize the most important products in the business lines of the Company into over 30 small regional teams. Regional manager is responsible for leading the teams to explore the business potential in terms of supply complement, new product research and development, product marketing, and to boost the product opportunity with regional characters, enhance the focus and effectiveness of marketing activities, complement the optimization of regional supply efficiency, and in turn intensify the channel development of different regions. Different from the previous regional management system that only managed sales business, the establishment of regional manager can cultivate quality middle-level management talents with unified thinking mindset of production, research and development and marketing, and further enhance the incentive of first-tier employees and spread the culture of concentration. In 2020, the number of branch storage area increased to 10 by continuously enhancing the logistic efficiency through increasing the utilization of branch storages in multiple areas. This measure allows us to shorten the delivery cycle, increase the distributors’ flexibility in orders and effectively mitigate the level of channel inventory and ensure the control of channels. Furthermore, the improvement of channel efficiency also improved the production date and freshness of end products and better display of products. Moreover, to further ensure the display and sales of key accounts (KA), the Group continued to expand “zero inventory” in hypermarkets. “Zero inventory” replaced the previous method of delivery from distributors to key customers’ hypermarket, the goods would be delivered directly from the Group’s branch storage to the warehouse of the hypermarket, aiming to reduce the number of logistic nodes and save delivery charges. While the specific distributors would be incentivized, the freshness of the products delivered to the supermarket would be improved. A number of branded hypermarket distributors are currently enjoying “Zero Inventory” direct delivery policy, and this policy also benefits individual e-commerce platform customers. In the development of e-commerce channel, the Group continued to adopt the strategy of enhancing interactive experience of consumers, using the flagship store as the major interactive base for brands, enhancing communication among consumers, and providing more heart touching shopping experience for consumers. In 2020, the Group formulated targeted marketing plans on different festivals and promotional campaigns as usual. As at 31 December 2020, the Group had 5 flagship stores on e-commerce platforms such as Tmall.com and JD.com. For the year ended 31 December 2020, the sales revenue of the Group from e-commerce channels was RMB287.3 million, representing a year-on-year increase of 4.5%. For sales to related parties (referring to the Haidilao Group and Shuhai Supply Chain Group), the global COVID-19 pandemic outbreak adversely affected the restaurant business of the Haidilao Group. Notwithstanding the domestic clustering economic activities gradually recovered, the overall catering industry still remained in recovery. Accordingly, as of 31 December 2020, the revenue from sales to related parties of the Group was RMB1,423.5 million, representing a year-on-year decrease of 14.4% as compared to the year of 2019. Products In 2020, the Group continued to explore new product opportunities with the strategy of segmentation of consumption scenarios and customers’ needs, and motivated producers to develop more new products to satisfy market demand under the “project-based system for products”. For the year ended 31 December 2020, new products of the Company included 15 Chinese-style compound condiment products, 23 hot pot condiment products, 13 convenient ready-to-eat food products and 4 snack products. In 2020, product research and development had been the major strategic focus of the Group. The optimization of systems, implementation of product marketing projects and the development of new product supply have gained the attention of senior management. The “Project-Based System for Products” was a research and development strategy for new products implemented by the Group since 2018. During the year, the Group had also carried out further amendments to the system, for the purpose of better in line with the current situation and future development of the group. During the year, the Group had different numbers of new product innovations in three categories, and enhanced the sales of new products through various marketing means along with various seasonal themes and promotional campaigns. In the first half of 2020, the Group promoted new products such as brewed silk noodles and brewed rice, and continued to promote products through various online events, such as “New Year Goods Festival”, “Queen’s Day”, “Foodaholic Festival on 17 May”, “618 Carnival”. During the second half of the year, along with the peak season of hot pot, the Group have launched a marketing campaign, “Hot Pot Festival” in winter and carried out online and offline marketing promotion of a hot pot base, “Eat Alone” and a new hot pot sauce, “Condiment Bar”. The Group have also carried out a theme campaign of “Double Seventh Festival” in Chinese Valentine’s Day for convenient ready-to-eat food products to make themed marketing campaigns for products with limited packages. In respect of Chinese-style compound condiments, the Group carried out marketing campaigns, such as tasting activities for new products and “Family Love Delivery” as the Group had launched many new series of products and promote the brand of “Chopsticks and Kitchen” in retail points to enhance the recognition of the Group’s products in sales points. For the year ended 31 December 2020, the Company added a total of 15 Chinese-style compound condiment products, 23 hot pot condiment products, 13 convenient ready-to-eat food products and 4 snack food. As at 31 December 2020, the Group had a total of sales of 65 hot pot condiment products, 56 Chinese-style compound condiment products, and 24 convenient ready-to-eat food products. Prospects: In 2020, it has been a challenging year for the global economies. The COVID-19 pandemic still caused a material impact on most of the economies in short term. Since the pressure of “guarding against imported cases and preventing a resurgence of the domestic outbreak” in fighting against the pandemic in China is still huge, the positive prospect of domestic economy in long term remained unchanged. The development of global pandemic has numerous uncertainties. In short run, the growth of the Group’s related-party transactions is still under pressure. In terms of the current circumstance, the public hygiene will not cause a negative impact on the retail businesses of condiment and convenient ready-to-eat food products. The market demands remain stable and there is a large room for development of new products. In 2021, the Group will place strategic focus on brand promotion, production research and development, replenishing supplies, channel building, terminal marketing. In respect of brand promotion, the Group will continue to adopt the strategy of “multi-brand” with product categories in existing products by segmentation of application scenarios, numerous product models and flavors, to make attempts in different cuisines, flavors and other condiments. Recently, the promotion of the brand of “Magic Cook (筷手小厨)” has been intensified to enhance the brand popularity and continuously deepen the business development of Chinese-style compound condiments by different online and offline marketing models with launching new flavors. In respect of product development, through innovation in product mix, the scope of business will be widened further. The categories of hot pot condiments, Chinese-style compound condiments, convenient ready-to-eat food and snack food products will continue to evolve with new generations. While reinforcing the existing market positions for popular individual products, the Group will exercise its research and development and market exploration capabilities to enrich the product matrix. In the development of new products, the Group will continue to utilize the incentive strategy of “Project-Based System for Products”, and introduce different new products with unique local flavors and foreign styles. The market exit system will be strictly enforced to adjust the product mix in a timely manner, large-scale individual products will be developed, and non-performing goods will be removed to enhance the comprehensive competitiveness of the products. In respect of channel building, the Group will continue optimizing and developing lower-tier sales channels actively through internal organic growth and outward expansion development strategies, strengthen terminal sales capabilities and develop brand new model for channels to enhance the Group’s market share and industry position constantly. Meanwhile, the staff incentive policies will be enhanced and improved continuously to encourage internal sales staff and external distributors in a practical manner, increase the density of points of sales and enhance the sales efficiency. In respect of e-commerce platform, the focus will continue to be enhancing consumer experience, improving sales efficiency and brand image of the e-commerce platform constantly. In respect of terminal marketing, the Group will continue to carry out online and offline promotions actively, using “Family Love” as the management theme for providing services to distributors and points of sales, enhance the fees utilization efficiency, and optimize the terminal sales efficiency. Meanwhile, the Group will continue to refine the cooperation relationship with distributors, by utilizing branch storages in multiple areas to improve delivery efficiency and implement “Zero Inventory” measures, channel space and distributor potential will be extracted practically and effectively. In respect of overseas business, the Group has basically completed the establishment of a number of overseas branch companies, and continues to replenish overseas supply by the way of constructing overseas factories actively. In 2021, the Group anticipates that more foreign trade products will be produced by overseas contracting factories, and investment in the construction of overseas factories will be pursued actively. A stable local capacity supply for overseas business will not only reduce transportation costs and enhance the flexibility of product mix, but will also facilitate the regional adjustment of product flavors and the research and development of localized products. In respect of supply chain, the Group will continue to build local and overseas factories to complement the global product supplies. Meanwhile, the Group will continue to invest in lean production as well as research and development of equipment automation to enhance efficiency and optimize the supply cost. In addition, the Group plans to establish several industry centers in China and introduce ancillary industries to self-own factories so as to shorten the length of supply chain cycle and form industry groups, optimize and integrate the procurement resources, reduce the costs of transportation and logistics, enhance the efficiency of supply chain and reduce the product costs.

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