Hello, I'm Lu Xian. I research investment fields and share overseas information.

The previous post shared about Shandong Baogai. Today, let's look at a fruit snack company—Qiyunshan Food. The company mainly sells Southern Jujube Cake and Southern Jujube Granules, ranking first in its niche market and having been profitable consecutively. The focus is on its market cap of less than HKD 1 billion, the lack of cornerstone investors in its offering structure, and the decline in revenue and profit in 2025.

1. IPO Overview

Company Name: Jiangxi Qiyunshan Food Co., Ltd. (02797.HK)

Global Offering: 25,000,000 H Shares

Hong Kong Public Offering: 2,500,000 H Shares

International Offering: 22,500,000 H Shares

Offer Price: HKD 5.00—HKD 8.00

Board Lot: 500 Shares

Minimum Subscription Fee: HKD 4,040.35

Cornerstone Investors: None

Greenshoe: Yes

Sponsor: Zhongtai International

Reallocation Mechanism: Mechanism B

Subscription Period: June 30—July 6

Allotment Results Announcement: July 7

Grey Market Trading Time: July 8, 16:15-18:30

Listing Date: July 9

Market Cap: Approximately HKD 500 million—HKD 800 million

Group A Tail: 1,000 lots

Group B Head: 1,500 lots

Top Hammer: 2,500 lots

2. Company Fundamental Analysis

Qiyunshan Food primarily produces Southern Jujube Cake, Southern Jujube Granules, Southern Jujube Jelly, Southern Jujube Soft Candy, and other fruit and vegetable cakes. The company launched its first Southern Jujube Cake in 1992, with sales primarily through offline distributors.

Based on retail sales in 2025, the company ranks first in China's Southern Jujube food market with a 29% market share. However, within the entire fruit snack industry, it only ranks ninth with a 0.56% market share. The company has an advantage in its niche, but its overall scale is limited.

From 2023 to 2025, the company's revenue was RMB 247 million, RMB 339 million, and RMB 314 million, respectively; net profit was RMB 23.71 million, RMB 53.20 million, and RMB 48.93 million, respectively. Gross profit margins were 48.8%, 48.6%, and 51.3%, respectively, while the net profit margin increased from 9.6% to 15.6%.

In 2025, revenue declined by 7.5% and net profit declined by 8%. The main reasons were reduced orders from its largest customer and the timing shift of the Chinese New Year, which led to some peak-season sales being recognized earlier, in 2024. During the same period, sales and marketing expenses increased to RMB 80.69 million.

Product concentration is high. In 2025, Southern Jujube Cake revenue was RMB 266 million, accounting for approximately 84.8% of total revenue; Southern Jujube Granules revenue was RMB 37.57 million. These two products together contributed over 96% of revenue, making the company directly vulnerable to changes in consumer taste.

Sales channels are also concentrated. In 2025, offline distributors contributed 86.3% of revenue. The company works with 230 offline distributors. The top five customers accounted for 33.7% of revenue, with the largest customer accounting for 12.8%, indicating that reliance on a single customer is not exceptionally high.

The company's operating cash flow in 2025 was only RMB 1.84 million, significantly lower than the RMB 106 million in 2024. Inventory reached RMB 63.44 million, with a turnover period of 134 days. Southern Jujube is mainly harvested from August to December each year, mostly sourced from local farmers, making supply subject to seasonal and weather influences.

During the track record period, the company had two instances where product mold testing failed to meet national standards. Although this did not cause significant operational impact, quality issues can directly affect brand reputation and consumer trust for a food company.

In terms of valuation, based on the offer price, the company's market cap is approximately HKD 500 million to HKD 800 million. Roughly calculated based on 2025 net profit, the P/E ratio is about 9 to 14 times, which is not expensive. The company has no borrowings, and cash and cash equivalents at the end of 2025 were approximately RMB 115 million.

3. IPO Subscription Analysis and My Action

The specific capital allocation for this batch of 15 IPOs is in the Planet group. The advantages of Qiyunshan Food are that it is already profitable, with decent gross and net profit margins, and a very small market cap. The initial Hong Kong public offering is only 5,000 lots, with a board lot subscription fee of about HKD 4,000, indicating limited available shares.

The disadvantages are the lack of cornerstone investors, only Zhongtai International as the sponsor, and a generally average offering structure. Although there is a greenshoe, listing expenses are approximately HKD 33 million, accounting for about 20.3% of the estimated total funds raised, which is a relatively high financing cost.

The fundamentals also cannot be described as high-growth. Both revenue and profit declined in 2025, products are concentrated in Southern Jujube Cake, and sales are highly dependent on offline distributors. The company ranks first in its niche market, but the overall category size is limited.

Overall, Qiyunshan Food's valuation is not high, and its profitability and cash reserves are more solid than those of most small-cap IPOs. The small market cap and limited public shares are favorable for short-term trading, but the lack of cornerstone investors, declining revenue, and food safety record will suppress expectations. Although Liuliumei gave a pleasant surprise before, there are more choices in this batch, so I won't gamble on it.

My Action: I will not subscribe.

$QIYUNSHAN FOOD(02797.HK)