The endorsement of Jinzai Deep Sea Fish by Wang Han and Deng Lun is particularly memorable. In 2019, Jinzai Deep Sea Fish sold 1.228 billion bags, ranking first in the industry. As the parent company of Jinzai Deep Sea Fish, Huawen Food has become the number one brand of fish snacks.

According to international market research firm Frost&Sullivan, the retail market size of leisure food in China is expected to reach 1.3 trillion yuan in 2020. The market potential of leisure snacks in China is enormous. The leisure snack market is developing rapidly. As a leading enterprise in fish leisure products, Huawen Food (003000. SZ) seized the opportunity to successfully go public, consolidated its industry position with the help of the capital market, and kept up with the pace of the times.

Leading enterprises seize the trillion dollar market

With the steady growth of residents' income levels and the continuous improvement of domestic material living standards, the consumption level of residents is also steadily increasing. According to national statistics, in 2019, the per capita consumption expenditure of urban residents in China reached 28100 yuan, and the per capita consumption expenditure of rural residents reached 13300 yuan. At the same time, residents' consumption needs have shifted from satisfying hunger to promoting health, with consumption scenarios tending towards leisure and entertainment. The proportion of leisure food consumption continues to increase. However, there is still a significant gap between the per capita consumption of leisure food in China and developed countries. According to data from iMedia, the per capita consumption of leisure snacks in China was 75.3 yuan in 2019, while the per capita consumption of leisure snacks in the United States and the United Kingdom was 860 yuan and 742.1 yuan, respectively. There is significant room for improvement in the consumption of leisure food in our country. According to Frost&Sullivan data, the retail market for China's snack food industry has grown from 401.4 billion yuan in 2010 to 914.6 billion yuan in 2017. In 2017, leisure food consumption accounted for about half of total food consumption, with a compound annual growth rate of 12%. It is expected that by 2020, the retail market size of leisure food in China will reach 1.3 trillion yuan.

The market size of leisure food continues to expand, and the industry has achieved rapid growth, further accelerating the capitalization of leisure food enterprises. Previously, Juewei Food (603517. SH) and Yanjinpuzi (002847. SZ) were successively launched in the secondary market and received high attention and popularity. As the top two Hunan compatriots, Huawen Food naturally did not want to be outdone. Huawen Food is a modern food enterprise specializing in the research and development, manufacturing, and sales of traditional flavor snack foods. It mainly produces and sells a series of products such as flavored fish products, flavored bean products, and flavored meat products. It has two major production bases in Yueyang and Pingjiang, covering an area of 300 acres and employing over 1500 people. After years of industry accumulation, Huawen Food has entered the forefront of the two major sub categories of leisure fish products and leisure bean products. Now, the successful listing of Huawen Food has further solidified its leading position in the leisure fish products industry. The China Securities Journal once pointed out in an article that "in the domestic leisure food market, especially with the rapid growth of leisure braised products, Chinese food products listed are expected to accelerate their development through the capital market, further consolidating their leading position in the leisure braised fish products industry

Jinzai Deep Sea Small Fish Annual Sales of 1.228 Billion Bags

In April 2020, data from the China Aquatic Products Circulation and Processing Association showed that from 2017 to 2019, the revenue of the leisure fish products category of Chinese food was 650 million yuan, 699 million yuan, and 685 million yuan respectively, ranking first in the leisure fish products industry in terms of sales scale. Among them, Jinzai Deep Sea Fish, a subsidiary of Huawen Food, sold approximately 1.228 billion packs in 2019.

According to the prospectus of Huawen Food, the company specializes in the processing of flavored dried small fish by using carefully selected equipment to automate precision processing and quality control of raw materials, such as removing heads, impurities, and grading, to maintain the compact and chewy texture of dried small fish; In terms of flavor dried tofu processing, the company uses spiral slurry separation technology, biological coagulant pulping technology, segmented drying technology, seasoning technology and special bittern formula to keep the taste of dried tofu crisp. At the same time, Huawen Food has established a strict procurement control process, production management process, and quality management system to ensure product quality and safety. In 2016, Huawen Food was rated as a "2016 Hunan Province Quality Credit AAA Enterprise" by the Hunan Provincial Quality and Technical Evaluation Center. In January 2020, Huawen Food was awarded the "Yueyang Mayor Quality Award" by the Office of the People's Government of Yueyang City. Chinese food products have certain quality advantages.

Huawen Food is one of the snack brands that laid out online channels earlier. In recent years, Huawen Food has gradually increased its investment in e-commerce, established e-commerce operation centers, strengthened investment in online product marketing and e-commerce software and hardware, enriched the variety of online products, optimized the aesthetics of online stores and interactive content with consumers, and improved the layout of consumers' online shopping experience. According to the industry ranking of ready to eat fish snacks on Taobao and Tmall, from 2018 to 2019, the sales revenue of Jinzai Deep Sea Fish was 80 million yuan and 81 million yuan respectively, ranking first in the industry in online sales for two consecutive years. Chinese food has formed an online channel layout integrating Tmall, Jingdong, Pinduoduo, Suning Yigou, Tiktok, Kwai, WeChat applet, etc. In addition, the offline channels of Chinese food have also achieved considerable success. From 2017 to 2019, Jinzai Deep Sea Fish, a subsidiary of Huawen Food, ranked first in the industry with sales of 660 million yuan, 699 million yuan, and 685 million yuan, respectively. Offline channel sales accounted for 90% of its total sales. Chinese food has reached cooperation with Wal Mart, Carrefour Century Hualian and other well-known chain stores. As of now, there are over 1000 offline cooperative distributors of Huawen Food.

Huawen Food received 300 million yuan investment from "Lenovo" companies

Huawen Food was established in 2010. The founder, chairman, and general manager of the company, Zhou Jinsong, and his wife Li Bingyu, collectively hold 44.62% of the company's shares and jointly control Huawen Food.

Zhou Jinsong was born in August 1972 in Pingjiang County, Yueyang, Hunan Province. It is worth mentioning that although Pingjiang County, the birthplace of Zhou Jinsong, was a national poverty-stricken county at that time (now lifted out of poverty), it has a long cultural heritage in the food industry. Among them, Changshou Jianggan was listed as a tribute to the court during the Kangxi period.

At first, Zhou Jinsong relied on selling food products to make a living, and then followed his uncle who worked in Pingjiang dried soy sauce to learn the technique. In 1990, Zhou Jinsong and his family opened a small workshop for making dried soy sauce, beginning their journey of entrepreneurship in the snack food industry. Due to the relatively saturated market for dried soy sauce in Pingjiang, Zhou Jinsong left his hometown and headed north to Luoyang, Henan to produce dried soy sauce.

In 1997, the output value of Zhou Jinsong's dried soy sauce exceeded one million yuan. At that time, Zhou Jinsong's fellow villagers began to follow the trend and invest in setting up factories to produce soy products in various places. According to incomplete statistics, Zhou Jinsong once led 100000 people to establish leisure food enterprises across the country.

In 2009, as industry competition intensified, Zhou Jinsong's soy sauce business was affected. Zhou Jinsong began to focus on the research and sales of flavored leisure products. Based on years of experience in seasoning research and market research, Zhou Jinsong has entered the fish market.

In 2010, Zhou Jinsong founded Huawen Food and created the "Jinzai" brand by taking the character "Jin" from his own name.

In 2016, Huawen Food received a 300 million yuan investment from Jiawo Group, a subsidiary of Lenovo Holdings (3396. HK), which is the largest strategic investment in the domestic leisure food industry in recent years. Jiawo Group will transfer all equity of Huawen Food to its wholly-owned subsidiary Jiawo Agriculture. Jiawo Agriculture currently holds 19.8% equity of Huawen Food and is the second largest shareholder of the company.

At that time, Chen Shaopeng, Chairman of Jiawo Group, said, "Jiawo Group hopes to build Huawen Food into a leading leisure food brand enterprise in China through this strategic cooperation with Huawen Food, providing Chinese consumers with more delicious and healthy leisure food

In recent years, Huawen Food Capital has received support from "Lenovo Group" and its performance has been impressive. From 2017 to 2019, Huawen Food achieved operating revenues of 767 million yuan, 805 million yuan, and 895 million yuan respectively, with net profits of 76 million yuan, 115 million yuan, and 118 million yuan respectively. Huawen Food has achieved stable growth in performance for three consecutive years.

In the first half of this year, the COVID-19 suddenly broke out, and domestic factories were delayed to start construction. Although the production and operation of Huawen Food are subject to certain restrictions, it has little impact on the overall revenue of the company in the first half of the year. From January to June 2020, the company achieved a revenue of 451 million yuan, a year-on-year increase of 2.55%; Deducting non recurring net profit of 45 million yuan, a year-on-year increase of 5.78%, the company's performance continues to maintain a steady growth trend.

Huawen Food aims to be a disseminator of Chinese cuisine culture and create a globally influential leisure food company. Why did you eat Jinzai deep-sea fish? What's your impression?