A few days ago, P & G, L'Oreal and other packaging companies Zhongrong Printing Group Co., Ltd. (hereinafter referred to as "Zhongrong printing") were approved by the CSRC for IPO registration on the growth enterprise market, which is only one step away from the bell.
In 2021, the revenue of Zhongrong printing was 2.5 billion yuan, ranking first among the listed companies of daily chemical paper packaging in the same industry. However, in the first half of this year, cosmetic packaging manufacturers were generally affected, and they did not make money or made less money.
"Three ventures" IPO, nearly 8 billion in 3 and a half years
Public information shows that Zhongrong printing, founded in 1990, is one of the large-scale packaging and printing enterprises in China, mainly providing packaging and printing services in six fields: personal care, electronic appliances and toys, cosmetics, food and drugs, alcohol packaging and paper products.
In the past four years, Zhongrong printing kept rushing for IPO, which has been the company's "three entries into the palace". In June 2018 and June 2019, Zhongrong printing submitted IPO applications twice, but within a few months, they were withdrawn voluntarily. On April 26 this year, it once again attacked the IPO and planned to land on the growth enterprise market of Shenzhen Stock Exchange. Now it has finally become a "quasi listed" company.
The prospectus shows that from 2019 to January March 2022, Zhongrong printing achieved operating income of 2.063 billion yuan, 2.177 billion yuan, 2.544 billion yuan and 574 million yuan respectively, with growth rates of 9.38%, 5.49% and 16.87%, - 1.44%, and corresponding net profits of 175 million yuan, 186 million yuan, 213 million yuan and 54.59 million yuan.
It is not difficult to find that in the past three years from 2019 to 2021, Zhongrong printing has been increasing year by year in terms of both revenue scale and profitability.
Compared with comparable companies in the same industry, from the perspective of overall performance, the total revenue scale of Zhongrong printing in 2021 is 3-5 times that of other enterprises, temporarily leading.
The latest data shows that in the first half of 2022, Zhongrong printing's operating income is expected to be 1.13-1.25 billion yuan, the net profit attributable to the parent company is expected to be 91-101 million yuan, and the non net profit after deduction is expected to be 87.36-96.56 million yuan. The change ranges of the three are expected to be - 5% - 5%. In this regard, Zhongrong printing said that in the first half of the year, affected by the COVID-19 in Kunshan, Tianjin and other places, the operating income and net profit decreased slightly or remained basically stable.
In fact, in the first half of this year, most of the domestic packaging materials listed enterprises had a difficult time, and their profitability declined. According to blue eye's statistics, the net profits of Jinsheng Xincai, Jiaheng Jiahua, longlide and other enterprises decreased by more than 20%, with a maximum decline of nearly 80%.
From the perspective of comprehensive gross profit margin, from 2019 to 2021, Zhongrong printing's gross profit margin was 25.37%, 23.20%, and 22.10% respectively, showing a downward trend year by year, lower than the industry average gross profit margin in the same period. Regarding the fluctuation of gross profit margin, Zhongrong printing said that it was mainly because the price of paper, the company's main raw material, began to rise continuously since July 2020, which affected the company's production cost.
According to the prospectus, Zhongrong printing will not issue more than 48.3 million shares in this IPO and intends to raise 893 million yuan, which will be used for capacity expansion projects, warehouse construction projects (Kunshan), management information system upgrading projects (Zhongshan), repayment of bank loans and replenishment of working capital.
Daily chemicals account for nearly half, and P & G contributes more than 20%
Since its establishment, Zhongrong printing has focused on the consumer market for 32 years, and the company has established cooperative relations with more than 10 Global 500 enterprises and more than 30 domestic well-known enterprises.
As far as the daily chemical industry is concerned, it mainly serves cosmetics, oral care, personal and home care products and other subdivisions. Zhongrong printing has maintained cooperation with P & G, L'Oreal, baiqueling and other well-known enterprises at home and abroad, of which P & G has cooperated with them for more than 15 years.
The prospectus shows that P & G is the largest customer of Zhongrong printing. From 2019 to 2021, the sales amount of Zhongrong printing to P & G was 480 million yuan, 470 million yuan and 530 million yuan, accounting for 23.50%, 21.86% and 21.01% of the operating income of the same period, respectively, accounting for more than 20%.
In addition, the field of oral cavity is a more prominent field of Zhongrong printing, and it has maintained long-term cooperation with oral care head brands black, crest, Colgate, lengsuanling and Nami.
Among them, Colgate has cooperated with it for more than 10 years. The prospectus shows that in the past two years, the sales amount of Zhongrong printing to Colgate has been increasing. In 2020, Colgate entered the list of the top five customers of Zhongrong printing, and in 2021, it entered the list of the top three customers. The total sales of the two years was 247 million yuan.
Regarding the company's dependence on key customers, the CSRC mentioned in the inquiry that the issuer has formed a closer cooperation relationship with P & G and other customers based on what competitive advantages.
In this regard, Zhongrong printing explained that the company has more than 20 years of packaging experience in the daily chemical industry and provides services to well-known daily chemical enterprises at home and abroad. In the process of cooperation, the company has absorbed advanced production and management experience, and can better provide customized creative design solutions to customers. At present, the printing and packaging industry in the field of daily chemicals has formed its own brand effect.
In general, the daily chemical industry has accounted for the main part, contributing 50% to the revenue of Zhongrong printing. The prospectus shows that from 2019 to 2021, the sales amount of Zhongrong printing's daily chemical business was 1.014 billion yuan, 1.081 billion yuan and 1.209 billion yuan, accounting for 48.29%, 50.37% and 49.74% of the total revenue respectively.
Green environmental protection and lightweight
At present, paper-based printing and packaging are developing in a refined way. Especially under the implementation of the national packaging reduction policy, the advantages of paper-based printing and packaging are more prominent, and there are certain development opportunities.
According to the data, the global paper and paperboard packaging market size was 175 billion US dollars in 2017, and it is expected to maintain an annual compound value-added rate of 4.8%. By 2026, the paper and paperboard packaging market size will reach 266.88 billion US dollars, and the market demand will grow rapidly.
In the broad market, the market competition is fierce and the concentration is low. It is reported that at present, domestic printing and packaging enterprises generally focus on individual downstream segments to carry out differentiated competition. For example, among comparable companies in the same industry, Jinjia shares focuses on the tobacco industry, Xianggang technology focuses on the daily chemical industry, etc.
It is also mentioned in the prospectus that it is still uncertain whether the company can maintain a strong ability to develop creative products in the future and continue to maintain the cooperative relationship with P & G, holly, Mars and other companies. At the same time, there is also the possibility that the development speed of the company's core technology in the future will not be as fast as the technological transformation speed of the industry, resulting in the decline of product competitiveness and the decrease of customer orders.
As a component of "eye economy" and "beauty economy", packaging is an important reference item for consumers to buy products. In the prevalence of environmental protection, not only the practicality and aesthetics of packaging are emphasized, but also the environmental friendliness is required.
The brand side has taken action by using environmentally-friendly paper and recycled paper to make packaging boxes. At the policy level, the national standard "food and cosmetics with restrictions on excessive packaging of commodities" (Revised Version), implemented on August 15 this year, reduces the number of packaging layers and the porosity of packaging, requiring "slimming" of packaging.
This is both an opportunity and a challenge. In view of the current trend of green packaging and new environmental protection materials for daily chemical products, Zhongrong printing began to implement green printing, clean production and sustainable development. At the same time, it was mentioned that if the country introduced strict policies to restrict or regulate product packaging in the future, the demand quantity and price of packaging materials might be reduced, which would have a significant adverse impact on packaging enterprises.
From the perspective of the whole market, the paper printing and packaging market has a promising future, but it also needs enterprises to further strengthen product development and follow the trend of green environmental protection and lightweight.