上市捷报丨沙利文助力十月稻田集团股份有限公司成功赴港上市(9676.HK)

October Paddyfield Group Co., Ltd. (Stock Code:9676.HK) on2023year10month12The company successfully listed on the main board of Hong Kong's capital market. It is one of China's leading and rapidly growing kitchen staple food enterprises, dedicated to providing pre-packaged high-quality rice, whole grains, beans, and dried goods products for Chinese consumers. Frost & SullivanFrost & Sullivan,Frost & Sullivan, referred to below as the 'Frost & Sullivan team', provides exclusive industry advisory services for the listing of October Ricefield Group Co., Ltd. We hereby extend our warmest congratulations on its successful listing.

October Paddyfield Group Co., Ltd. (hereinafter referred to as 'October Paddyfield') was established on2023year10month12The company plans to go public on the 1st of July5,340.7510,000 sharesHstocks, thereof90%For international distribution,10%For public offering. The issue price per share is15.36HK$, with the net amount of raised funds being approximately7.16HK$10 billion.

During the process of listing in Hong Kong this time, Frost & Sullivan mainly undertook the following tasks: helping the issuer accurately and objectively understand its positioning in the target market, using objective market data to discover, support and highlight the issuer's competitive advantages, assisting the issuer, investment banks and other intermediaries in completing the writing of relevant parts of the prospectus (such as the overview, competitive advantages and strategy, industry overview, business and other important chapters), helping the issuer complete communication with the Hong Kong Stock Exchange and investors, assisting investors in quickly understanding the market ecosystem and competitive landscape, and assisting the issuer in completing feedback on various industry-related issues from the Hong Kong Stock Exchange, etc.

Investment highlights

The company is one of China's leading and rapidly growing kitchen staple food enterprises;

The company strategically positions itself in five core grain-producing regions of China to form a strong core product competitiveness;

The company has multiple well-known brands to provide a rich product matrix;

The company has a multi-channel sales network covering the national market, as well as an excellent supply chain management and quality control system;

The company has a management team that shares a common mission and is highly visionary.

According to a report by Frost & Sullivan, by2022Annual Revenue, Company:

Ranked fifth among market participants in Chinese kitchen staple food;

Ranked third among market participants in pre-packaged rice, whole grains, beans, and seeds in China;

Ranked first among market participants in pre-packaged high-quality rice in China;

Ranked first among retail market participants of pre-packaged Northeast rice products in China;

Ranked first among market participants in China for prepackaged high-quality whole grains, beans, and seeds;

Among the top five Chinese kitchen staple food market participants,2020Year-end2022The fastest-growing company by annual compound revenue growth rate over the year.

Overview of the Chinese Kitchen Staple Food Market

With the continuous growth of per capita disposable income and the upgrading of consumption, the Chinese kitchen staple food industry has been growing steadily. According to a Frost & Sullivan report, in terms of revenue, the market size of the kitchen staple food industry has shifted from2018Renminbi in [year]16,510RMB billion growth to2022Renminbi in [year]18,623yuan,2018Year-end2022The compound annual growth rate reaches3.1%are expected to2027RMB will reach21,957yuan,2022Year-end2027The annual compound growth rate is expected to be3.3%Market demand is increasing day by day, driving the growth of multiple brands and products. In addition, the rapid development of online channels, the emergence of grocery retail channels, and the digital transformation of traditional channels have greatly improved customers' consumption experience and further expanded consumption scenarios, thus promoting the continuous growth of China's kitchen staple food industry.

Data source: National Bureau of Statistics,OECD,USDAFrost & Sullivan report

According to packaging specifications, rice, whole grains, beans, and seed products can be further divided into pre-packaged and bulk products. Among them, pre-packaged products are more favored by customers due to their convenience of transportation, better preservation of quality, freshness, and taste. With the continuous growth of per capita disposable income, Chinese customers' attention to food quality has increased. Therefore, more customers tend to purchase pre-packaged rice, whole grains, beans, and seed products, thereby stimulating an increase in the market growth rate of pre-packaged products.

According to a Frost & Sullivan report, in terms of revenue, the market size of the pre-packaged rice, coarse grains, beans and seed industries is from2018Renminbi in [year]1,505RMB billion growth to2022Renminbi in [year]2,086yuan,2018Year-end2022The compound annual growth rate reaches8.5%are expected to2027The yuan will further reach3,249yuan,2022Year-end2027The annual compound growth rate is expected to be9.3%.

Data source: National Bureau of Statistics,OECD,USDAFrost & Sullivan report

Overview of the Chinese Rice Industry

In China, rice refers to edible commercial rice that is made from polished or browned rice or semi-finished rice grains through milling processes, removing part or all of the outer husk. The upstream of the rice industry value chain mainly refers to rice cultivation, with participants including rice farmers or enterprises; the midstream mainly involves rice production and related transportation and storage; the downstream mainly refers to the circulation and sale of rice.

According to packaging specifications, rice products can be divided into pre-packaged and bulk products. Specifically, pre-packaged rice refers to products that are already packaged before sale, suitable for direct sale without the need for unpacking. The weight of pre-packaged rice products generally does not exceed25kilograms. Prepackaged rice is convenient for transportation and can better maintain product quality, freshness, and taste, thus being highly favored by customers. According to a Frost & Sullivan report, the prepackaged rice market in China is growing rapidly, with its scale from2018year1,074Increase by Yuan2022Renminbi in [year]1,292Yuan, with a compound annual growth rate reaching4.7%Expected2027RMB will reach1,641yuan2022Year-end2027The annual compound growth rate is expected to be4.9%.

Data source: National Bureau of Statistics, Ministry of Commerce of ChinaOECD,USDAFrost & Sullivan report

According to product positioning, the pre-packaged rice market can be further divided into pre-packaged premium rice and pre-packaged ordinary rice. Pre-packaged premium rice refers to that with a broken grain rate not higher than15%, and the retail price is at least higher than the industry average10%Pre-packaged rice. Compared to pre-packaged ordinary rice, pre-packaged high-quality rice usually has a finer texture and higher nutritional value due to its favorable growing environment, refined planting management, and standardized production processes.2022In the year, the average retail price of pre-packaged high-quality rice exceeded7.4yuan/kilograms, while the average retail price of pre-packaged ordinary rice is about6.6yuan/kilogram.

Benefiting from the increase in per capita disposable income, consumption upgrading, and a preference for branded products, the demand for pre-packaged high-quality rice has been strong in recent years. Therefore, the growth rate of China's pre-packaged high-quality rice market is much higher than that of the overall pre-packaged rice market. Calculated by income, the market scale of China's pre-packaged high-quality rice market2018Renminbi in [year]464RMB billion growth to2022Renminbi in [year]650Yuan, with an annual compound growth rate of8.8%estimated2027The year is coming to an end914yuan,2022Year-end2027The annual compound growth rate is expected to be7.1%The rapid growth trend of the pre-packaged high-quality rice market is increasingly highlighting the high-quality trend in the rice industry.

Data source: National Bureau of Statistics, Ministry of Commerce of ChinaOECD,USDAFrost & Sullivan report

According to a Frost & Sullivan report, China's rice-producing areas can be divided into five major regions: Northeast, East China, Central China, Southwest, and others. Other producing areas include South China, Northwest China, and North China.

Benefiting from a unique growth environment (black soil, long planting period, etc.), Northeast rice products, which originate from Northeast China, are generally considered to have higher quality. They possess a fresh rice aroma, plump grains, are chewy and elastic, soft and slightly sticky when entering the mouth, and provide a lingering aftertaste. Therefore, pre-packaged Northeast rice enjoys a market-leading position with strong growth momentum and advantageous prices. According to Frost & Sullivan's data, in2022In the year, ranked first in terms of revenue was pre-packaged Northeast rice, with a market share of43.6%,2018Year-end2022During the year, it maintained the highest annual compound revenue growth rate among all production areas.

Yu2020year,2021year2022In [year], the industry average selling price of pre-packaged high-quality rice products made from rice grown in Northeast China was approximately RMB6.0CNY/kg, RMB6.1CNY/kg and RMB6.1CNY/kg, higher than the average selling price of rice products in China (as of2020year,2021year2022The annual amounts are approximately RMB4.9CNY/kg, RMB5.0CNY/kg and RMB5.0CNY/kg)

In terms of revenue, the market scale of pre-packaged Northeast rice is7.7The annual compound growth rate of2018Renminbi in [year]418RMB billion growth to2022Renminbi in [year]563yuan, and it is expected to reach2027The annual growth will reach RMB776yuan2022Year-end2027The annual compound growth rate is expected to be6.6% . The market scale of China's pre-packaged Northeast rice products in the retail market, measured by revenue, is2018Renminbi in [year]226RMB 10 billion has increased significantly to2022Renminbi in [year]362Yuan, with an annual compound growth rate of12.5%, and it is expected to be9.9The annual compound growth rate increased to2027Renminbi in [year]580RMB 100 million, showing a strong growth momentum in the retail market. This is due to its ability to meet consumers' upgraded needs and provide a more convenient shopping experience.

Source: National Bureau of Statistics, Frost & Sullivan report

Overview of China's Whole Grain, Bean and Seed Industry

Whole grain products refer to processed whole grain grains, usually including grains other than rice, wheat, corn, and soybeans. Whole grain grains can be divided into two main categories: cereals (such as millet, sorghum, barley, and buckwheat) and tubers. Legumes and seed products refer to the seeds of leguminous herbs and edible oilseeds, including black beans, red beans, sesame seeds, peanuts, etc. Benefiting from the continuous development of grain processing technology, the grain loss rate during processing has been decreasing year by year, while the grain yield has been increasing year by year. The production of whole grains, legumes, and seed products has continued to grow over the past three years. At the same time, the growing health awareness of customers and the popularization of dietary balance concepts have further promoted the growth of the whole grain, legume, and seed industry.

According to packaging specifications, miscellaneous grains, beans, and seed products can be divided into pre-packaged products and bulk products. Pre-packaged products refer to those that are already packaged before sale, suitable for direct sale to end customers, and should not be split for sale. The product weight generally does not exceed25kilograms. The increasingly standardized production and processing procedures for pre-packaged whole grains, beans, and seed products meet customers' needs for food health and safety. The market size of the pre-packaged whole grains, beans, and seed industry, measured by revenue, is from2018Renminbi in [year]431RMB billion growth to2022Renminbi in [year]794Yuan, with an annual compound growth rate of16.5%, expected2027The year will reach Renminbi1,608yuan,2022Year to2027The annual compound growth rate is expected to be15.2%.

Source: National Bureau of Statistics, Frost & Sullivan report

Chinese rice, miscellaneous grains, beans and seeds Market competition pattern

The pre-packaged high-quality rice industry in China is relatively fragmented, according to a report by Frost & Sullivan.2022Year, China before5The total income of market participants in the large-prepackaged high-quality rice market accounted for11.1%Among them, the market share of October paddy fields reached about4.0%.

Source: Frost & Sullivan report

press2022In China, the retail market for pre-packaged Northeast rice products generated revenue of [X] billion yuan in October, with the October Rice Field ranking first among all competitors, holding a market share of9.7% . In addition,2020Year-end2022In [year], the annual compound growth rate of rice field income ranked highest among the top five companies in the market. The table below shows this:2022Details of the top five companies in China's pre-packaged Northeast rice retail market by revenue for the year:

Source: Frost & Sullivan report

press2022In terms of revenue for the year, October saw the rice field ranked first among Chinese pre-packaged coarse grains, beans and seed market participants, with a market share of0.7%. The following table contains columns.2022Details of the top five companies in China's pre-packaged coarse grains, beans and seeds market based on revenue for the year:

Source: Frost & Sullivan report

China's pre-packaged rice, miscellaneous grains, beans and seeds

Industry growth drivers and future trends

Prepackaged products are becoming increasingly popular.

Customers' consumption habits are gradually shifting from purchasing bulk products to pre-packaged ones due to their convenience of transportation, as well as their better ability to maintain quality, freshness, and taste. Therefore, pre-packaged rice, cereals, beans, and seed products are more popular among customers and have diverse consumption scenarios. In terms of revenue, the market share of pre-packaged rice, cereals, beans, and seed products in China's overall market for rice, cereals, beans, and seed products is from2018year14.9%Grew to2022year19.4%, and is expected to2027Year-on-year further growth to25.7%and2022Market share of Japan and South Korea in the corresponding region52.9%and41.8%In comparison, China's pre-packaged rice, miscellaneous grains, beans, and seeds market has great potential and is expected to achieve sustainable development.

According to a Frost & Sullivan report, China's per capita disposable income is expected to2022Renminbi in [year]36,883Yuan growth to2027Renminbi in [year]52,849yuan2022Year-end2027The annual compound growth rate for the year reached7.5%Driven by per capita disposable income and consumption upgrading, Chinese customers pay more attention to factors such as nutrition, quality, freshness, and taste when making purchasing decisions and are willing to pay a higher price for high-quality products. By income, the market for pre-packaged high-quality rice The proportion of the market scale of the venue to the overall market scale of pre-packaged rice is2018year43.2%increased to2022year50.4%estimated2027Will reach in55.7%.

Tends towards branded products

Brand loyalty and customer stickiness are very important because the rice, whole grain, and legume and seed industries have already begun and are expected to continue upgrading and developing, including greater customer demand for high-quality, healthy, and fresh products. The demand for, preference for branded products, and the retail landscape are constantly evolving. It is foreseeable that companies with continuously updated and diversified product portfolios will stand out, further driving brand growth and forming a virtuous cycle. The market for pre-packaged rice, whole grains, beans, and seeds in China is highly fragmented, according to2022Based on revenue for the year, the total market share of the top five companies is8.9%In comparison, the top five companies in the edible oil, flour, and condiments markets each account for approximately60%,21%and15%market share.

The ever-evolving sales pipeline

It is expected that the online and offline sales channels for rice, whole grains, beans, and seeds will be integrated, enabling enterprises with multi-channel sales network operations to build an economic moat. Compared to traditional channels, online and grocery retail channels can provide a more convenient consumption experience and a wider variety of products, making them increasingly favored by customers, especially the younger generation. In terms of revenue,2022Year-end2027The annual compound growth rates of online and grocery retail pipelines for rice, miscellaneous grains, beans, and seeds are expected to be15.3%and13.1%, much higher than that of traditional pipelines in the same period0.7%Annual compound growth rate. In addition, with the shift in customer habits and the continuous emergence of new sales channels, various retailers are accelerating their digital transformation, continuously integrating the operations of online and offline channels to broaden their customer base.

Favorable regulatory policies

With the further deepening of agricultural industrialization, the Chinese government has increased its support for leading enterprises in the 'agriculture, rural areas, and farmers' sector. By enhancing the competitiveness, influence, and driving force of agricultural brands, it is accelerating the implementation of rural revitalization and building an upgraded rural industry chain with full industrial chains. The General Office of the Ministry of Agriculture and Rural Affairs issued the 'Agricultural Brand Premium Cultivation Plan (2022 - 2025(annual)), and at the same time, the cumulative allocation of central financial reward and subsidy funds exceeds RMB130Yi Yuan to support the National Modern Agricultural Industrial Park, as well as over90Yi Yuan supports towns and townships to focus on the leading industries of their regions. Therefore, leading enterprises are encouraged to collaborate with farmers' cooperatives, family farms, and individual households. Thus, it is essential to fully leverage the importance of agricultural brands in comprehensively promoting rural revitalization and accelerating the modernization of agriculture and rural areas, thereby unlocking brand benefits.

View the prospectus

Frost & Sullivan has extensive research experience in the food and beverage industry, assisting well-known companies in successfully listing on capital markets. Recent successful listings include:Davis Commodities（ NASDAQ: DTCK), Zhenjiao Lidu 6979.HK), Dazhi Shares 1405.HK), Bai Guoyuan2411.HK), Aroma2147.HK), Weilong9985.HK), Shuangcai Zhuang2321.HK), Youran Animal Husbandry9858.HK), Jiǔjiǔ Wáng1927.HK), Yum China9987.HK), Nongfu Spring9633.HK), Fengxiang Food9977.HK), Simore6969.HK), China Feihai6186.HK), China National Tobacco Corporation International6055.HK), Premium360（2360.HK), Wugu Millhouse1837.HK), Baby Tree1761.HK), Haidilao6862.HK), sustainable agriculture8609.HK), Longhui Holdings1007.HK), Xinhong International1587.HK), Yiyuan Liquor Industry8146.HK), Jierong International2119.HK), Bingshi International1705.HK), Nissin Foods1475.HK), Asian groceries8413.HK), Zhouhei Duck1458.HK), COFCO Meat1610.HK), Yihai International1579.HK), Zhongdi Dairy (1492.HK), Dali Foods3799.HK), Manor Ranch1533.HK), Wanzhou International0288.HK) etc.