Blue Moon finally has the latest news!

According to several media reports, Blue Moon, a maker of laundry detergent, passed a listing hearing on the Hong Kong Stock Exchange on November 12. It is proposed to raise US $1 billion (about HK $7.75 billion).

It was four and a half months before the Blue Moon submitted its prospectus.

Blue Moon, in addition to the detergent "number one" title, behind there is a Hillhouse "halo"-Hillhouse Capital has been "running" behind it for ten years.

In previous years, whenever there is a high-level "halo" of new shares listed on the Hong Kong stock market, they all rose on the first day of listing.

However, the reality in front of us is that under the factors such as ants "drawing blood" and so on, a number of new stocks in the Hong Kong stock market have broken continuously recently. Xiansheng Pharmaceutical, which includes the halo of Hillhouse above its head and the hot pharmaceutical sector, also fell 19.85% on its first day of trading.

So, what will the blue moon do this time with the concept of "Hillhouse"?

In this regard, focused on Hong Kong stocks hit the new market of private equity firms, also spoke.

Blue Moon is rumored to be listed on the Hong Kong Stock Exchange and intends to raise US $1 billion.

According to several media reports, Blue Moon, a maker of laundry detergent, passed a listing hearing on the Hong Kong Stock Exchange on November 12.

It is reported that Blue Moon plans to raise 1 billion US dollars, the exact amount of which will be determined after the roadshow in the next week or so.

In fact, if the $1 billion raised is the final amount, it is also in line with previous rumors.

It has been nearly five months since Blue Moon first submitted its listing application on the Hong Kong Stock Exchange. During this period, Blue Moon postponed its listing plan again and again in view of the market reaction and avoiding the listing of Ant Group.

It is reported that Blue Moon management has started a large number of non-trading roadshows and met with a lot of institutional investors long before the National Day.

Annual net profit exceeds HK $1 billion

According to public data, Blue Moon, founded in 1992, is a consumer-centered and innovation-driven home cleaning solution provider. It has 73 products in three series: clothing cleaning care, personal cleaning care and household cleaning care.

From 2017 to 2019, its operating income was HK $5.632 billion, HK $6.768 billion and HK $7.05 billion, respectively, representing a compound annual growth rate of 11.9 per cent.

On June 30th, Blue Moon formally filed its prospectus, with Bank of America Merrill Lynch, China International Capital Corporation and Citi as co-sponsors.

From 2017 to 2019, the company's earnings grew at a compound annual rate of 11.9%. In 2019, the company realized income of HK $7.05 billion and a profit of HK $1.08 billion.

The gross profit margin of the company's three major products is as high as 65%, of which the gross profit margin of household cleaning care products is as high as 66.6%, and that of clothing cleaning care products is 63.9%.

Why is Hillhouse optimistic about the blue moon?

In fact, it is important for capital markets to expect Blue Moon that Hillhouse Capital, one of Asia's largest private equity firms, has been running with it for a decade.

Hillhouse was an early investor in Blue Moon, investing $45 million in 2010 and holding 10 per cent of Blue Moon through HCM before going public.

Photo: from the Blue Moon prospectus

What is the logic of Hillhouse investing in Blue Moon?

Zhang Lei, founder of Hillhouse Capital, has said that investing in Blue Moon is based on the grasp of trend changes brought about by long-term research. This is what Zhang Lei said:

• Since 2008, there has been a general trend of consumption upgrading in China, when many basic consumer goods categories were occupied by multinational corporations.

• Among them, Procter & Gamble Co and Unilever occupy the household laundry detergent market, but they are satisfied with the huge share of the detergent market. On the one hand, they no longer regard the groundbreaking research and development of new products as the company's core work, and the proportion of R & D investment continues to decrease. Instead, the focus of research and development has shifted to improving existing products, instead of developing new products as changers of the rules of the game, thus ignoring the opportunity for consumption upgrading.

• On the other hand, there is a misjudgment on the specifications of China's middle class and high-end consumer market, not paying attention to the high-end laundry liquid products. But the result of our long-term research is that Chinese consumers are in urgent need of innovative high-end market segments, so we encourage Blue Moon, which focuses on hand sanitizer, to seize this opportunity.

• In the first two years after our investment, in order to complete the transformation, Blue Moon changed from a profitable hand sanitizer to a strategically lossmaking laundry detergent company, but by 2014, Blue Moon's sales began to grow substantially. Sales in the laundry detergent industry are more than Procter & Gamble Co and Unilever combined.

• It can be said that Blue Moon is a classic case of local brands winning over multinational brands in emerging markets. It is worth mentioning that the price of Blue Moon detergent can maintain a premium compared with other multinational brands, which is also very rare.

Private placement: it is unlikely that Hong Kong new stocks will break in the future.

As a matter of fact, companies listed on Hong Kong stocks recently have begun to break again. For example, the head of the Hillhouse "halo" of the first voice pharmaceutical, first service holdings and other stocks, all disappointed investors on the day of the listing.

At present, people are more concerned about whether the follow-up Hong Kong new stocks will encounter this situation again.

In this regard, Li Jinlong, general manager and fund manager of Reagan Fund, an institution that began to hit new stocks in Hong Kong in the early years, said, "the recent breakage of new stocks is concentrated in late October, more accurately starting from the first Service Holdings on October 22. The main reason is that property service companies have recorded good returns in the past two or three years. As a result, more and more real estate development companies are splitting their property sectors to raise funds.

With the excessive enthusiasm of the market for property management stocks, the price-to-earnings ratio is getting higher and higher, which finally leads to an inevitable break. another main reason is that it happened to be in the purchase period of Ant Group at that time. 1.55 million retail investors in Hong Kong alone applied for purchase, and the amount of purchase reached 1.3 trillion. Although Ant Group could not be listed for various reasons, this rainbow effect still occurred. As a result, the undertaking funds in the market are limited and individual stocks break seriously. "

Li Jinlong further analyzed, "looking at the five new shares listed in November (as of November 13), only Yao Ming Juno broke on the first day, but so far it has also risen by more than 25%, which shows the existence of blood-drawing phenomenon in Ant Group." "

Li Jinlong stressed, "the current situation is that the Ant Group incident has come to an end, and then the issuance of PE of property stocks is bound to decline, otherwise institutions and retail investors will not apply for purchases, so a large proportion of breaches at the end of October will be the superposition of several extreme events, and there is a great possibility that they will occur at the same time in the future. "

Private equity: the company has discussed the listing of Blue Moon several times.

For the blue moon new shares can avoid breaking, Li Jinlong analysis said, "if the price-to-earnings ratio is not particularly exaggerated, blue moon break probability is still relatively small." Its sponsor Bank of America Corporation (BOFA), CICC, Citigroup in recent years to do the project failure rate is still very low, as the Blue Moon this ticket is still very popular, I believe that there will be green shoes protection, so even if the worst break occurs, investment banks in the green shoes mechanism, will also let the break in a very small range. "

Li Jinlong revealed that the company had arranged for researchers to write a report when Blue Moon submitted form A1, and there had been several internal discussions on the listing of Blue Moon.