According to the Securities Times APP, as disclosed by the Hong Kong Stock Exchange on November 13, SHUBAO International Group Limited (referred to as SHUBAO International) once again submitted its IPO application to the main board of the Hong Kong Stock Exchange, with SUNNY FORTUNE as its exclusive sponsor. It is reported that the company submitted documents to the Hong Kong Stock Exchange on May 10 this year.

According to the prospectus, SHUBAO International is mainly engaged in the development, production, and sale of disposable sanitary products for individuals in China, focusing on infant and child care products in the emerging markets of the Eurasian continent. According to a Frost & Sullivan report, based on the export value in 2023, SHUBAO International is the second largest exporter of infant and child care disposable sanitary products from China to Russia, accounting for about 3.7% of the market share in China's export of infant and child care disposable sanitary products in 2023.

During the reporting period, SHUBAO International mainly relied on contract manufacturing to market and sell infant and child care products to foreign countries, and exported its core infant and child care products to foreign brand owners, bringing their respective brands to emerging markets on the Eurasian continent, such as Russia and Southeast Asia, which were the main sources of income during the reporting period. In recent years, benefiting from the explosive growth of e-commerce in Russia and the vigorous development of its own brands, as confirmed by Frost & Sullivan, the company has expanded to produce and supply infant and child care products and solutions to several top children's goods retailers in Russia, helping retailers establish or enhance their own brand image in their respective regions. The Russia-Ukraine war has also shifted Russian customers' demand from international brands to their own brands. Thus, during the reporting period, SHUBAO International's revenue from the Russian market has significantly increased.

In recent years, Chinese young consumers have favored digital platforms and turned to cost-effective high-end brands. The company has therefore expanded its Direct-to-Consumer (D2C) sales model, marketing and selling branded products directly to end consumers by operating its own online stores or third-party stores on multiple pure digital platforms in China. The company has expanded its range of branded products to include core product categories such as infant and child care, women's care, and adult incontinence.

Russia's top retail chain is SHUBAO International's second largest customer in the 2021 fiscal year, and the largest customer in the 2022, 2023 fiscal years, as well as the first five months of 2024, with revenues accounting for approximately 11.8%, 31.5%, 48.7%, and 35.7% of the company's total revenue for the respective periods. According to public information, the top Russian retail chain is the largest children's goods retailer in Russia, operating approximately 1,100 stores in Russia and Kazakhstan as of June 2022, with about 0.45 billion Russian users in 2021. According to the audited financial statements for the year ended December 31, 2021, it has been in operation for over about 75 years, with annual revenue in 2021 of about $1.8 billion.

During the reporting period and until the latest practicable date [November 5, 2024], the top Russian retail chain appointed SHUBAO International as the exclusive contract manufacturer for one of its main infant and child care own brands, to produce and supply infant and child care products. During the reporting period, the company entered into four consecutive supplemental agreements with the top Russian retail chain. In December 2023, the company renewed a supply agreement with the top Russian retail chain without a target purchase quantity, with a term expiring on December 31, 2030.

Production-wise, SHUBAO International has an automated production base. As of May 31, 2024, the company's production base is located in Jinjiang City, Fujian Province, with a total capacity of over 1000 million pieces per year. As of May 31, 2024, the Jinjiang production base has a total of 17 production lines producing core products, each production line mainly consisting of a fully servo machine.

In terms of finance, in the 2021 fiscal year, 2022 fiscal year, 2023 fiscal year, and the first five months of 2024, Shubao International's income was approximately RMB 0.263 billion, 0.408 billion, 0.655 billion, and 0.281 billion respectively. During the same period, the annual profits were approximately RMB 10.006 million, 41.86 million, 58.9 million, and 19.209 million respectively.

In its prospectus, Shubao International mentioned that during certain historical periods, the company's operating activities generated negative cash flows, which may have adverse effects on its business, financial condition, operational performance, and prospects. In the first five months of 2024, Shubao International recorded a net outflow of operating cash flow of approximately RMB 46.1 million, primarily attributed to changes in operating funds of approximately RMB 67.5 million. The main factor leading to the outflow was an increase of approximately RMB 69.5 million in trade and other receivables in the first five months of 2024. The net outflow of operating cash flow may damage the company's ability to make necessary capital expenditures, restrict operational flexibility, and adversely affect the company's ability to meet its working capital needs.