Source丨Zebra Consumption In the highest mountain in southern Jiangxi, Qiyunshan, the south sour jujube that was once only favored by beasts has been turned into treasure by Qiyunshan Food. The company's pioneering south sour jujube cake has a history of 33 years. With this trump product, it firmly holds the top position in the south sour jujube food industry. Relying on the south sour jujube forest resources in Chongyi County, Jiangxi, the company has developed multiple categories beyond the cake, including south sour jujube pellets, south sour jujube jelly, and soft candies. However, its market share in the domestic fruit snack industry is only 0.6%, ranking ninth. Despite the dual endorsement of green food and geographical indication products, the south sour jujube cake still cannot shake off its local specialty background. How to remove the "rustic" flavor, turn a small category into a big brand, and adapt to the ever-changing FMCG market, Qiyunshan Food may still have a long way to go. Rushing to Hong Kong Stock Market In August, in the hinterland of the Qiyun Mountains in southern China, the south sour jujube trees are full of ripe fruits. This is also the beginning of the production season for Jiangxi Qiyunshan Food Co., Ltd. (hereinafter referred to as: Qiyunshan Food). Tourists traveling to Jiangxi have probably tasted south sour jujube cake in local specialty stores. Its unique sweet and sour taste makes it hard to stop eating. South sour jujube cake is a very small category in fruit snacks. Qiyunshan Food, after more than 30 years of accumulation, has become the king of this niche track. According to the prospectus, in 2024, calculated by retail sales, it holds a 32.4% share in the south sour jujube cake food market, ranking first in the industry. From 2022 to 2024, the company's operating revenue was 217 million yuan, 247 million yuan, and 339 million yuan respectively. During the same period, net profit attributable to the parent company was approximately 26 million yuan, 24 million yuan, and 53 million yuan respectively. During the period, gross margins were 47.24%, 48.82%, and 48.61% respectively. The company's sales mainly rely on offline channels, especially offline distributors. From 2022 to 2024, their revenue share was 86.2%, 85.0%, and 88.4% respectively. Leading fruit snack companies such as Liuliumei and Haoxiangni have annual revenues of tens of billions. In comparison, Qiyunshan Food's scale is not large, but this has not hindered its pursuit of the capital market. Last week, the company submitted hearing materials to the Stock Exchange of Hong Kong, sounding the clarion call to rush to the Hong Kong stock market. The proposed fundraising is for increasing production capacity, expanding sales networks, improving R&D capabilities, and storage capacity. Living off the Mountain South sour jujube trees are a subtropical tree species, mainly distributed in Jiangxi, Hubei, Guangdong, Guangxi, and Yunnan provinces. Currently, only Chongyi County in Jiangxi is the only "China's Hometown of South Sour Jujube" officially recognized by the National Forestry and Grassland Administration. Chongyi County is located at the junction of the Nanling and Luoxiao Mountains. Its unique natural environment has nurtured rich and high-quality south sour jujube forest resources. The county has a total area of about 342,700 mu of wild and cultivated south sour jujube, estimated at 2.07 million plants. In 2023, the county's fresh south sour jujube output was about 30,000 tons. Relying on abundant raw material resources, in 1992, Qiyunshan Food produced its first south sour jujube cake, entering the fruit snack market and eventually becoming a leader in this niche field. From 2022 to 2024, the company's south sour jujube cake product revenue was approximately 193 million yuan, 209 million yuan, and 294 million yuan respectively, accounting for 88.7%, 84.7%, and 86.7% of total revenue in each period. During the period, product gross margins ranged from 47.3% to 48.9%. The company believes that the growth in revenue of its main product comes from increased brand recognition and also the growth in the number of distributors. During the period, the number of offline distributors increased from 140 to 199. Price may also be a factor that cannot be ignored. From 2022 to 2024, the average selling price of the company's south sour jujube cake decreased from 41.2 yuan/kg to 39.3 yuan/kg, while sales volume increased from 4,677.7 tons to 7,485.8 tons. In addition to south sour jujube cake, Qiyunshan Food has also launched south sour jujube pellets, south sour jujube jelly, south sour jujube soft candies, and other fruit and vegetable cakes. In the snack industry, fruit snacks are one of the fastest-growing subcategories in recent years. Market institutions predict that the market size will increase from 99.5 billion yuan in 2024 to 151 billion yuan in 2029, with a compound annual growth rate of 8.7%, higher than the overall snack market's growth level of 5.5%. Local Specialty Snacks The history of Qiyunshan Food can be traced back to the Chongyi Food Factory established in 1979, mainly engaged in the production and sale of pastries, preserved fruits, and beverages. In the late 1990s, 51 employees of Chongyi Food Factory jointly funded the acquisition of the factory's ownership and restructured it into a joint-stock enterprise in 1997. In 2000, Qiyunshan Food took over the business operations, assets, and liabilities of Chongyi Food Factory and began to focus on the production and sale of south sour jujube-related foods. Liu Zhigao, the old factory director of Chongyi County Food Factory, led a group of old food factory workers to start the struggle. The south sour jujube cake market is small and has a strong "local specialty" background. Over the years, Qiyunshan Food has been telling the story of "green" + "geographical indication" products. Since 1997, the company has continuously obtained "green food" certification; in 2018, south sour jujube cake was recognized as a national geographical indication protected product. To get rid of its dependence on the single product of south sour jujube cake, during the reporting period, Qiyunshan Food invested over 10 million yuan annually in R&D, gradually extending products from pastries to soft candies, jujube jelly, and other categories. Qiyunshan Food is controlled by a group of old Chongyi Food Factory workers. According to the prospectus, as of the latest practicable date, Chongyi Food Factory holds 75.00% of the company's equity, and Yunzhishang Limited Partnership holds 25.00%. Among them, the company's executive directors Liu Zhigao, Zhu Fangyong, Liu Jiyan, Yang Yulan, Huang Zhongming, and Ling Huashan collectively hold 68.79% of Chongyi Food Factory and 68.32% of the partnership interests in Yunzhishang Limited Partnership, all being controlling shareholders. Liu Zhigao and Liu Jiyan are brothers and have significant say in internal decision-making. They serve as chairman and general manager, and vice chairman and deputy general manager, respectively. At the same time, Liu Zhigao holds 24.25% and 16.46% of Chongyi Food Factory and Yunzhishang Limited Partnership respectively, while Liu Jiyan holds 14.69% and 11.89% in these two institutions respectively.