Following the listing of the three "Zhou X" gold jewelry brands - Chow Tai Fook, Chow Sang Sang and Chow Tai Sang, Hong Kong stocks may usher in another major gold brand surnamed Zhou, that is, Zhou Tai Fu.
In fact, this is the fourth time that it has knocked on the door of the capital market, and the first three times it failed in A-shares. The reason for repeated defeats and battles was revealed by industry insiders to be because Liuliufu had signed a VAM agreement with domestic investors. The explanation given by Zhou Liufu in the prospectus for this IPO in Hong Kong is:
"Considering that the listing of Hong Kong stocks can obtain foreign capital and enter overseas markets, which can also make the company more widely accepted by the market, the company decided to IPO in Hong Kong."
June 2024 is the time for Saturday Fu to submit the prospectus to the Hong Kong Stock Exchange, I have to say that this time point is well grasped, and the "gold fever" continues, which can not only take advantage of this hot spot to increase the possibility of a successful IPO, but also publicize a Saturday Fu brand, which is a very slippery marketing strategy.
I believe many friends should know that although Liuliufu also starts with the surname "Zhou", the founder who really established the brand is not surnamed Zhou, but was founded by Li Weipeng and Li Weizhu brothers from Chaoshan. According to the prospectus, the Lee brothers also succeeded in becoming billionaires by selling gold jewelry.
From 2017 to the time before the submission of the table, the two Li Weizhu brothers received a total of at least 1.523 billion yuan. Especially in the first three months of submitting the statement, Li Weizhu and his brothers cashed out 604 million yuan. In other words, regardless of whether it is listed or not, the brothers make a lot of money anyway.
Chaoshan Brothers has paid dividends of more than 1.5 billion in 7 years
To summarize the entrepreneurial history of the founder Li Weizhu brother in one sentence, it is that if you want gold to sell well, you must choose a good surname.
Li Weizhu founded Liuliufu in 2002, after working for a bank in his hometown of Chaoyang, which is why he contacted a jeweler to give him the idea of opening his own shop to sell jewelry. So in 2002, Li Weizhu opened the first jewelry inlay factory in Shuibei Village, Shenzhen, China's largest gold jewelry trading and distribution center.
In 2004, Liuliufu brand company was established, jointly invested by Li Weipeng and Chen Chuangjin 1 million yuan, and the following year Chen Chuangjin transferred 50% of his shares to Li Weizhu, and Li Weizhu's brothers officially became the actual controllers of Liuliufu, as of the submission of the table, the two brothers held a total of 93.69% of the shares.
In fact, the earliest Saturday blessing was not called Saturday blessing, but Sunday blessing, which was renamed Saturday blessing in 2012. Later, when Saturday Fook opened in Hong Kong in 2016, the popular star Carina Lau was invited, and Carina Lau had doubts at that time, "At first, I thought it was Chow Tai Fook or Luk Fook Jewelry, but later I learned that it was Saturday Fook." ”
Therefore, Brother Li Weizhu understands marketing. It is worth mentioning that Lee Weizhu's university major is marketing.
As mentioned at the beginning of the article, the dividends received by these two have exceeded 1.5 billion yuan in the past 7 years.
The first dividend was in 2018 (the year before the first planned A-share IPO), when Saturday Fuzheng wanted to introduce foreign investment institutions, and the company paid a dividend of about 174 million yuan. After that, in 2020 and 2021, the company paid dividends of 300 million yuan and 150 million yuan respectively, totaling 450 million yuan.
The largest dividend was in the three months before the submission of the Hong Kong Stock Exchange, the company temporarily paid two cash dividends, totaling 645 million yuan, and Li Weizhu's brothers received about 604 million yuan through this dividend.
The annual revenue is 5.1 billion yuan, and there are more than 4,300 stores
According to Frost & Sullivan's data, in terms of the number of domestic stores in China, Liuliufu has ranked among the top five brands in China's jewelry market for seven consecutive years from 2017 to 2023, ranking fourth; The number of offline stores in southern China, where the company started, ranks third among Chinese jewelry brands.
According to the prospectus, as of December 31, 2023, the total number of offline sales network stores of Liuliufu reached 4,383, covering 31 provinces, 301 prefecture-level cities and prefecture-level administrative regions. From 2021 to 2023, the total number of stores will be 3,764, 4,052, and 4,383 respectively, of which the number of franchised stores will be 3,694, 3,974, and 4,288 respectively, accounting for 98.14%, 98.08%, and 97.83% of the total number of stores.
There are only 95 self-operated stores in Liuliufu.
In terms of overall revenue, from 2021 to mid-2023, the company's revenue will be RMB2.783 billion, RMB3.102 billion, and RMB5.150 billion respectively; The net profit in the same period was about 425 million yuan, 575 million yuan and 660 million yuan respectively. The year-on-year growth was 11.4% in 2022 and 66.0% in 2023.
Among them, franchisees have contributed most of the revenue to Liuliufu, accounting for more than 50% of the revenue in the past three years. From 2021 to 2023, the revenue obtained by Liuliufu by the franchise model will be 1.667 billion yuan, 1.641 billion yuan, and 2.853 billion yuan respectively, accounting for 59.9%, 52.9%, and 55.4% of the total revenue respectively.
Under the franchise model, the average revenue contribution per franchise store increased from $460,000 in 2021 to $690,000 in 2023, and the average gross profit contribution per franchise store increased from $190,000 in 2021 to $220,000 in 2023.
In the development of Liuliufu, online sales can also not be ignored. From 2021 to 2023, Liuliufu's revenue from online sales will be 739 million yuan, 1.072 billion yuan, and 1.746 billion yuan respectively, accounting for 26.6%, 34.6%, and 33.9% of the company's total revenue in the same period, respectively.
According to Frost & Sullivan, Saturday Funeng ranks first among national jewelry companies when it comes to selling gold jewelry online.
When it comes to online, it is linked to marketing to burn money, so the company's online gross profit margin has not been high. In 2021, the gross profit margin of Liuliufu's online sales was 27%, and in 2023, the data will be 17.3%, which is explained in the prospectus as for low-price promotions and for the increase in sales of gold bars with lower gross margins.
Let's talk about profitability. Liuliufu has been profitable for three consecutive years, and from 2021 to 2023, the company's net profit in the same period will be about 425 million yuan, 575 million yuan, and 660 million yuan respectively. In 2023, revenue and net profit will increase by 66.0% and 14.7% year-on-year, respectively.
Compared with the well-known gold jeweler Chow Tai Fook, the current Zhou Tai Fook is still at the primary school level. In 2023, Chow Tai Fook will achieve an operating income of 88.131 billion yuan and a net profit attributable to the parent company of 5.011 billion yuan - equivalent to the annual income of Liufu in 2023. However, in terms of growth, Chow Tai Fook is far inferior to Saturday Fook, with the former's product gross margin continuing to decline, from 22.4% in FY2023 to 20.5% in FY2024.
Elementary school students are not tall enough, but they grow quickly.
Three failed landings on A-shares, and the gold boom continues
Although the prospectus said that Liuliufu switched to Hong Kong stocks because he wanted to contact foreign capital and go overseas, from the experience of wanting to IPO A-shares three times, going to Hong Kong seems to be a helpless move.
The first time Liufu wanted to IPO happened in 2019, when Li Weizhu's brothers hoped to land on the Shenzhen Stock Exchange. However, due to the influence of the accounting firm "Genzon Pearl River" where he was employed, the IPO review was terminated. Genzon Zhujiang is a long-term audit institution of Kangmei Pharmaceutical, and was investigated by the China Securities Regulatory Commission in the Kangmei financial fraud case, which eventually led to the failure of Liuliufu's first IPO.
It is worth mentioning that in 2018, Liuliufu introduced external institutional investors, and Li Weizhu's brothers signed a VAM agreement for the IPO. It is said that it is also because of this agreement that Liufu has to try to IPO again and again.
The second time was in 2020, Liuliufu submitted listing application materials again, but due to the abnormally substantial growth of its main business income: its franchise model accounted for about 80% of its revenue, and the reasons and reasonableness of the average sales of new franchised stores were much higher than those of existing stores, and the door of A-shares was still closed.
The third time is in 2022, and it is still the main board of the Shenzhen Stock Exchange. At that time, due to the implementation of the comprehensive registration system, in November 2023, the Shenzhen Stock Exchange disclosed information that due to the withdrawal of the application documents by the sponsor of Fuhe on Saturday, the Shenzhen Stock Exchange finally decided to terminate its listing review.
Whether Saturday Fu can succeed in IPO depends on this fourth situation.
Finally, let's talk about the gold fever.
In the past, gold's largest customer base was mainly the elderly, but in recent years, young people have begun to catch up. According to the 2021 China Gold and Jewellery Consumption Survey White Paper released by the World Gold Council, 76% of gold shop consumers are currently in the 25-35 age range, with 18-24-year-olds increasing their willingness to buy gold jewellery from 16% in 2016 to 59% in 2021.
Young people are crazy to buy gold with the concepts of "saving money is better than saving gold beans" and "buying funds is better than buying gold beans". Gold has also lived up to the expectations of young people, with returns on investment exceeding 8 times since the end of 2000, higher than 6 times that of US equities and 2 times that of global bonds.
Suffice it to say, among the dizzying array of investment options, gold seems to be the most reliable at the moment. (Author/Joy Source/China Investment)