Yesterday, there was sudden speculation in snack stocks in the Hong Kong stock market, of which$CEC International (00759.HK) $At one point, it rose by more than 10%.$premium product 360 (02360.HK) $It ended four consecutive declines and rose more than 11% in the afternoon. TodayYuping 360 continued its upward trend yesterday, rising 6.25% to HK $3.740, with a turnover of 3.592 million lots and a total market capitalization of HK $3.74 billion.

It is worth pointing out,Premium 360 has risen 200 per cent since it went public in January.

Source: Futu Securities

Best Mart 360Holdings Limited is a snack food retailer. Since it started its business in 2013, the company has operated chain retail stores under its own brand, providing a variety of prepackaged snack foods and other grocery products imported mainly from overseas. Roughly divided into: chocolate and confectionery, packaged baked products and snacks, nuts and dried fruits, miscellaneous food and other products.

Five years after its opening, it landed on the Hong Kong Stock Exchange on January 11, 2019. Up to now, the company's largest shareholder, long Yi Holdings Co., Ltd., accounts for 75% of the shares.

The revenue is equal to the compound growth rate of stores.

According to the company's prospectus, the company's revenue from March 31, 2016 to March 31, 2018 was HK $472 million, HK $689 million and HK $1.076 billion respectively, representing a compound growth rate of about 50.8 per cent in the past three fiscal years, according to the app inquiry.

The company's net profit increased from HK $12.5 million in 2016 to HK $53.6 million in 2018, with a compound annual growth rate of about 107.5%. Up to now, the company's sales volume ranks second only to 0759.HK among the seven largest snack food retailers in Hong Kong.

Specifically, in terms of the main situation of its income, the top three are income from the sale of chocolate and candy, packaged baked products and snacks, nuts and dried fruits, which accounted for 24.1%, 27.9% and 18.5% of the total revenue in the four months ended July 31, 2018, respectively.

It is worth pointing out,The company's rapid growth in revenue in recent years is mainly due to the gradual rapid expansion of the number of its retail stores. The number of stores has increased from 32 in 2016 to 70 in 2018, with a compound growth rate of 49%. It can be seen that the growth rate of revenue and the number of stores are almost the same.

As of the last practicable date of the prospectusThe company has a total of 85 retail stores, including 31 street-facing shops, 48 retail stores in shopping malls located in communities or residential areas, and 6 retail stores in transportation hubs. The company also ranks first among the top seven retailers with retail revenue of about HK $15.4 million per retail store.

Based on the nature of the above retail business and other reasonsThe main customers of premium 360 are also public street customers. In the three fiscal years ended March 31, 2018 and the four months ended July 31, 2018, YouPin 360 street sales accounted for about 99.1%, 99.5%, 99.5% and 99.8% of the company's total revenue, respectively.

However, it should be noted that in the three financial years from March 31, 2016 to March 31, 2018, the total assets of YouPin 360 were HK $114 million, HK $179 million and HK $216 million respectively, and the liabilities were HK $99.214 million, HK $139 million and HK $123 million, respectively.The asset-liability ratio is 87.29%, 77.88% and 56.84% respectively. Although the asset-liability ratio is decreasing year by year, it is still higher than 50% of the total assets.There are certain risks for food retail enterprises.

Hong Kong snack food retailers benefit from mainland visitors?

Hong Kong, as a famous shopping paradise, has all along attracted tourists from all over the world to come together for shopping, and it has also become one of the important driving forces for mainland tourists to visit Hong Kong. It is not to mention that mainland tourists come to Hong Kong to "buy" and wantonly cut their hands on holidays. Hong Kong snack food retailers take advantage of this site to gain a lot of business opportunities.

Data show that in the nearly five years from 2013 to 2017, the number of visitors to Hong Kong as a whole showed an upward trend, from 54.3 million in 2013 to 58.5 million in 2017, with a compound growth rate of 1.9 per cent from 2013 to 2017.

Among themThe compound growth rate of Chinese tourists is 2.1%. Although the number of visitors to Hong Kong declined in 2016 due to a change in the visa policy for Shenzhen residents, it immediately rebounded in 2017, when Chinese tourists accounted for 76% of the total number of visitors to Hong Kong in 2017.

In addition, the consumption habits of mainland tourists, such as food, tobacco and alcohol, have also contributed to the rapid development of the relevant retail market. As a result, retail sales of snack food in Hong Kong grew at a compound annual rate of about 6.4 per cent from 2013 to 2017 and are expected to grow by 5.7 per cent in the next few years, with overall sales reaching HK $6.5 billion in 2022.

Since 2018, withOpening of the Hong Kong section of the Guangzhou-Shenzhen-Hong Kong high-speed rail and the opening of the Hong Kong-Zhuhai-Macao BridgeIt is more convenient for mainland visitors to visit Hong Kong.The concept of Guangdong-Hong Kong-Macau Greater Bay AreaWith continuous stimulation, under the impact of the three major events, the number of tourists visiting Hong Kong has reached a new high. Data displayIn November 2018, the number of visitors to Hong Kong reached 5.995 million, an increase of 20.6% over the same period last year. Of these, 4.6314 million were mainland visitors to Hong Kong, an increase of 25.8 per cent over the same period last year.

However, the convenience of transportation also brings corresponding problems:Overnight visitors decreased significantly, while the retail sector contributed mainly from overnight visitors.Data show that during the period from February 4 to early February 10, New Year's Eve, the number of mainland visitors to Hong Kong soared by 31.6% to 1.4 million. However, the volume of retail sales in Hong Kong still recorded a provisional estimate of 10.4% decline in February.

In addition, since April 2018, due toThe exchange rate of the Hong Kong dollar against the RMB is gradually rising.It also limits the consumption desire of mainland tourists to a certain extent.

Based on the above two points, up to now, the development of Hong Kong's retail industry has improved, but it is still in a state of decline. According to the data released by the Census and Statistics Department of the Hong Kong Special Administrative region in early MayThe value of total retail sales in March was provisionally estimated at HK $39.7 billion, a slight year-on-year decline of 0.2 per cent. After deducting price changes, total retail sales fell 0.8 per cent in March.

Conclusion

It is mentioned in the "snack Food Industry Development report under the background of consumption upgrading" recently released by the Ministry of Commerce.The snack food industry has stepped into the fast lane, showing the characteristics of "fast, wide, many and changing", and has become the most promising and active industry in the FMCG market in the future.In terms of the current overall environment, under the impact of many external uncertainties, the growth of retail sales in Hong Kong has slowed down, butWith the continuous growth of inbound tourism and the impact of upgrading consumption, it may be able to bring support.

As for the newly listed premium 360, its current business model is still relatively single and traditional, focusing on store revenue. While expanding its stores rapidly, it has to face the pressure of high rent and high labor. At the same time, with the rapid development of Internet e-commerce, mainland tourists' choice of imported snacks has long been not limited to retail stores, under the background of the gradual improvement of the general environment in the future, it is worth considering how to find a suitable mode of operation, reduce costs and grasp e-commerce channels on the high rent and high labor per inch of land.