Group Overview
The group sells dried seafood, marine leisure products and frozen seafood products in China, as well as algae products and fungal products. The Group first procures high-quality raw and processed raw materials, then subcontracts the processing process of raw materials to third parties, and finally packages products at the Group's own packaging facilities or through subcontractors, and sells packaged products under its own brand “Wofeng”. The group also sells unpackaged dried seafood, algae products and fungus products, as well as frozen seafood products in the seafood wholesale market.
In 2016, in terms of retail value, the group's Chinese dry seafood products, Chinese algae products and fungus products accounted for about 0.93%, 0.74% and 0.32% of the Chinese market share.
Industry Overview
According to the ASKCI report, retail sales of dried seafood products in China increased from about 29.4 billion yuan in 2011 to about 41.4 billion yuan in 2016, with a compound annual growth rate of about 7.1%. As the public's purchasing power, health awareness, and public awareness of the health benefits of seafood products increase, it is estimated that the retail value of dried seafood products will continue to grow at a compound annual growth rate of about 6.5% from 2017 to 2021, reaching approximately RMB 56.7 billion in 2021.
Risks
valuations
The Group's business relies on a stable supply of high-quality raw materials. The Group procures raw materials from multiple suppliers, including fisher suppliers and algae product farmers, and procures processed raw materials from corporate suppliers. However, seafood harvesting and algae product varieties are affected by natural conditions. If the weather conditions are unfavorable and the Group is unable to purchase sufficient raw materials, the Group's operations, operating results and financial condition may be significantly and adversely affected.
According to the prospectus, assuming that the global offering was completed on December 31, 2016, 1 billion shares will be issued as expected after the completion of the sale of the underlying shares, equivalent to HK$0.30 to HK$0.36 per share adjusted for unaudited notes (HK$1.00 converted to RMB 0.8742).
