Xitu Group International Holdings Limited (stock code: NASDAQ: MGIH) successfully listed on the NASDAQ on April 4, 2023. The company is a comprehensive paper packaging solution provider in China. Frost & Sullivan (hereinafter referred to as 'Frost & Sullivan') has provided exclusive industry advisory services for Xitu Group International Holdings Limited's listing in the United States, and we hereby extend our warmest congratulations on its successful listing.
Xitu Group International Holdings Limited (hereinafter referred to as 'Xitu Group') successfully went public on April 4, 2023, issuing 1.25 million ordinary shares at an issue price of $4, raising approximately $5 million.
During the process of listing in the US, 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 relevant parts of the prospectus (such as the overview, competitive advantages and strategy, industry overview, business, and other important sections), helping the issuer communicate with the SEC and investors, assisting investors in quickly understanding the market ecosystem and competitive landscape, and assisting the issuer in completing various SEC feedbacks on industry-related issues.
Investment highlights
The company is a one-stop solution provider for printing services, including flexographic and offset printing, pre-press and post-press services such as printing consulting;
The company possesses an integrated product system that provides flexographic and lithographic printing services, capable of providing internal and external packaging for clients in various industries;
The company has obtained various certifications related to packaging printing, such as ISO9000, ISO14000, ISO18000, etc.;
The company's factory has passed the inspection by ICTI (International Toy Industry Committee);
The company's production facilities are strategically located close to major customers and suppliers, allowing for the immediate application of China Guangdong Province's main infrastructure.
Overview of the Chinese Printing Market
Printing refers to the process of reproducing information (including text, images, etc.) from manuscripts onto various printing substrates such as paper and boxes through plate making, ink application, and pressure. The main purpose of printing is to achieve a large-scale replication of the original content. According to applications, there are three types of printing:
Publication and printing:Publishing and printing is the process of reproducing manuscripts, drawings, photographs, and other works through printing and other mechanical or chemical methods, and arranging them into a published form. Publishing and printing are mainly used for producing various books, magazines, and newspapers.
Packaging Printing:Packaging printing is the process of printing text and images on packaging materials (including paper, plastic, metal, etc.). Its main application is in printing the internal and external packaging of various consumer goods, such as the printing of paper boxes, bottles, and cans.
Commercial printing:Commercial printing is the process of transferring artworks onto a piece of paper or card. The main products of commercial printing include official reports, business and promotional materials, promotional flyers, name cards and catalogs, checks, and other secure documents.
Industrial chain
Generally speaking, the value chain of the printing market can be divided into three segments:
The upstream includes printing equipment and raw material suppliers. They produce the necessary facilities and raw materials for the printing industry, such as various printing machines, paper, etc.
The midstream includes various types of printing enterprises. They process raw materials according to the requirements or manuscripts of downstream customers. Now, a few companies have started expanding their business by adding a large number of value-added services.
The downstream customers of the printing industry are very diverse, including enterprises, governments, institutions, and individual consumers.
Source: Frost & Sullivan report
China's printing market scale
The revenue scale of the Chinese printing market has grown from 1,271.2 billion yuan in 2016 to 1,366.0 billion yuan in 2020, with an annual compound growth rate of 1.8%. Driven by government supporting policies such as the 'Development Outline for China's Printing Industry from 2006 to 2020' and 'Opinions on Further Strengthening Plastic Pollution Control', these are catalysts for the development of the Chinese printing market. Coupled with the improvement in automation levels and the trend of online shopping, it is expected that the Chinese printing market will reach 1.574 billion yuan in 2025 and continue to grow. It will reach 1.574 billion yuan in 2025, with a compound annual growth rate of 3.2% from 2021 to 2025.
In 2020, within the Chinese market, packaging printing accounted for 77.9% of the entire printing market share. This proportion is expected to reach 81.2% by 2025. Over the past decade, packaging printing has been the largest sector in the printing market. Compared with commercial printing and publication printing, packaging printing is also the fastest-growing segment because it shows a positive correlation with key industries such as fast-moving consumer goods and food. Although business documents and publications can be partially replaced by electronic materials, packaging printing is less affected by new media technology.
Market size of China's printing industry by application
(In terms of sales revenue, 2016 - 2025E)
Source: Frost & Sullivan report
In 2020, offset printing reached RMB 435.1 billion, accounting for 31.9% of the market share. The compound annual growth rate from 2016 to 2020 was 4.1%. It is expected that by 2025, it will reach RMB 559 billion, with a compound annual growth rate of 5.3% from 2021 to 2025. Flexographic printing and gravure printing ranked second and third in 2020. Their market shares were 29.1% and 21.8% respectively in 2020, with a compound annual growth rate of 3.8% and 1.0% from 2016 to 2020. It is estimated that these two markets will continue to grow to RMB 508.7 billion and RMB 312.4 billion, with annual compound growth rates of 0.9% and 0.7%.
Market size of China's printing industry by printing method
(In terms of sales revenue, 2016 - 2025E)
Source: Frost & Sullivan report
Within the Chinese market, the Yangtze River Delta region accounted for the largest share in the printing market in 2020, at 35.9%. The Pearl River Delta region ranked second with a share of 22.9%, followed by the Bohai Rim region with a share of 17.4%.
In 2020, the total printing revenue in the Yangtze River Delta region was RMB 490.5 billion, while the printing revenues in the Pearl River Delta region, Bohai Rim region, and other regions of China were RMB 313.1 billion, RMB 238.2 billion, and RMB 324.1 billion respectively. It is expected that the Pearl River Delta region will witness the fastest growth in the printing industry, with a compound annual growth rate of 4.7% from 2021 to 2025. The growth of the packaging market, the upgrading of consumption patterns, the demand for improved marketing activities, and technological innovation are the main drivers of the printing market.
Market size of China's printing industry by printing method
(In terms of sales revenue, 2016 - 2025E)
Source: Frost & Sullivan report
Driving factors of the Chinese printing market
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Supportive policies of the Chinese government
In the past decade, the government has introduced a series of policies to support the transformation and development of the printing industry, such as the '2006-2020 China Printing Industry Development Outline', the 'Implementation of Green Printing Strategic Cooperation Agreement', and the 'Printing Industry Development Plan for the 13th Five-Year Period', which have pointed out the direction and path for the development of the printing industry.
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The rapid development of intelligent facilities
The application of intelligent facilities will accelerate the transformation of the printing industry into modern manufacturing. Although this process will lead to a significant investment in capital, it can improve companies' operational efficiency and capabilities to overcome unforeseen crises such as COVID-19 and reduce operating expenses. This is because with advanced intelligent technologies and equipment, printing enterprises can abandon their traditional business model that relies heavily on labor and instead develop stable, efficient, and low-cost modern models.
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The rise of online shopping
The increasing popularity of e-commerce has led to a high demand for printed materials, especially in the packaging printing market. This is because more online shopping means a greater need for packaging boxes and printed materials. In addition, printing companies can collaborate with sellers to design and produce packaging boxes with personalized elements. For example, printing the seller's company name, logo, and other special items on packaging boxes to attract potential customers. If printing companies adapt to this trend, they will expand their service scope and generate substantial revenue.
Click at the end of the articleRead the original textView the prospectus
Frost & Sullivan has extensive research experience in the packaging and printing industry, assisting well-known enterprises in successfully accessing the capital market. Successful listings include: Huanlong Holdings (2260.HK), Fenmei Packaging (0468.HK), Jifeng Packaging (1820.HK), Aoshi Global (1540.HK), Jingya Printing House (8391.HK), Global Printing House (8448.HK), Junqiu Holdings (8485.HK), Wanli Printing (8385.HK), Xinxing Printing (1975.HK).
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*The above order is not sequential and is arranged in reverse chronological order based on listing time.
