On May 10, 2024, Soft International Group Ltd. (“Shubao International” or “Baby Shubao” for short) from Jinjiang, Quanzhou, Fujian, submitted a prospectus on the Hong Kong Stock Exchange to be listed on the Hong Kong Main Board.

Link to Baby Shubao's prospectus:

https://www1.hkexnews.hk/app/sehk/2024/106446/documents/sehk24051001322_c.pdf

Main business

Baby Shubao, founded in 2010, is mainly engaged in the development, production and sale of personal disposable hygiene products in China, focusing on baby care products in emerging markets in Eurasia. Baby Shubao vertically integrates its production business, covering product development, non-woven production, raw material procurement, production, quality control, warehousing to logistics management in all core product categories, and focuses on the “direct to consumer” (D2C) sales model. It helps many third parties in China directly market and sell branded products to end consumers on pure digital platforms.

As Baby Shubao expanded its D2C brand product business in China, its foreign contract manufacturing business also continued to grow, and exported the company's core baby care products to foreign brands, bringing their respective brands to emerging markets in Eurasia, such as Russia, Southeast Asia, and Kazakhstan. According to the Frost & Sullivan report, it is the second-largest exporter of disposable hygiene products for infant care from China to Russia in terms of 2022 export values.

In addition to manufacturing, marketing and selling its own brand products, Baby Shubao also produces and sells baby care products for corporate customers (mainly independent retailers and diaper brands) as an ODM.

Baby Shubao's core product range includes baby care, women's care, and adult incontinence.

• Baby care products mainly include baby walking pants and baby diapers, followed by baby wipes. The company provides a variety of affordable to premium baby diapers for use by premature infants to older children. Toddler walking pants are absorbent material in the form of small underwear and can be used for toilet, swimming, and other training programs in early childhood. As of December 31, 2023, there were about six categories, including about 140 SKUs, incorporating a variety of vivid character designs, covering seven main sizes from newborn to XXXL. The company mainly uses its own brand “Baby Shubao” to promote and sell branded baby care products;

• Feminine care products, such as menstrual pants and wet wipes, are mainly marketed and sold in China under its own brand “May Whisper”, with about 20 SKUs on December 31, 2023;

• Adult incontinence products, specially designed for the elderly, to manage mild, moderate and severe incontinence, including diapers, pull-ups, and wet wipes. They are mainly marketed and sold in China under their own brand “Kang Shubao”, and had about 15 SKUs on December 31, 2023.

The company's flagship infant care brand “Baby Shubao” was rated as “2016 Fujian Famous Brand Product” by the Fujian Provincial People's Government. Baby Shubao was also named “China's Top Ten Baby Diapers Industry Companies in 2018” by the Household Paper Professional Committee of the China Paper Association. In addition, the company was shortlisted in the 2021 revised list of the main drafting units for the currently applicable national standard for disposable infant diapers.

Shareholder structure

According to the prospectus, the shareholder structure of Ying Shubao before listing,

Mr. Yan Peikun holds a total of 90% of the shares through Softo BVI, Wish BVI, and Wish BVI respectively, with 58.95%, 16.00%, and 15.05% respectively.

Mr. Tsang Kwok-tung held 6.05% and 3.95% of the shares through Aspiring BVI and Ambition BVI respectively, for a total of 10%.

Directors and Executives

The board of directors of Baby Shubao consists of 8 directors, including:

• 4 Executive Directors: Mr. Yan Peikun (Chairman), Mr. Zeng Guodong (CEO), Mr. Zhou Jiahao (Director of Production), Mr. Gao Yue (Assistant Chairman, Director of Procurement);

• 1 non-executive director: Mr. Cai Hao.

• Three independent non-executive directors: Ms. Liang Jiaying, Mr. Wong Tai Wai, and Mr. Wu Kangzheng.

In addition to the executive director, executives include Vice President Ms. Yan Jiawei, R&D Manager Mr. Jiang Shukun, and Warehouse and Logistics Manager Mr. Zhan Guoqiang.

* Yan Peikun is Yan Jiawei's father, Zhou Jiahao's father-in-law, and Gao Yue's aunt;

* Zhou Jiahao is Yan Peikun's son-in-law, Yan Jiawei's brother-in-law, and Gao Yue's cousin;

* Gao Yue is Yan Peikun's cousin and cousin of Zhou Jiahao and Yan Jiawei;

* Ngan Ka-wai is Ngan Pei-kun's daughter, Zhou Jiahao's wife and cousin of Gao Yue.

Company performance

According to the prospectus, in the past 2021, 2022 and 2023, Baby Shubao's operating income was RMB 263 million, 408 million yuan, and 655 million yuan, respectively, and the corresponding net profit was RMB 10.221 million, 40.791 million, and 57.249 million yuan, respectively.

Intermediary team

Ying Shubao's intermediary team for this IPO mainly includes: Nisjin Capital as its sole sponsor; CIA Zhonghuan as its auditor; Tianyuan and Morgan Lewis as its corporate Chinese lawyers and Hong Kong lawyers; Hongzhan International as its property valuer; and Frost Sullivan as its industry advisor.