Berry good prospects

Nancy Li

Inner Mongolia Yuhangren Sand Industrial, a Chinese supplier of seaberry products, has applied for an initial public offering in Hong Kong with BOC International as its sole sponsor.

Sea buckthorn is a popular native species in China and the plant's seaberries are rich in vitamins and minerals, as well as antioxidants and other plant compounds potentially beneficial to health.

The seaberries are now considered a superfood and can be used to make beverages and purees while the pulp and seeds are also used to make seaberry or sea buckthorn oil and health supplements.

Yuhangren, the worldwide largest supplier of seaberry products by processing volume in 2023, is also one of the suppliers with the most diversified product matrix on a global scale, according to a Frost & Sullivan report.

Its portfolio of 39 products is categorized into barrelled puree, health supplements, sacheted puree, beverages and others.

In 2023, approximately 82.46 million yuan (HK$90.46 million) or 37.5 percent of its revenue came from barrelled puree extracted from fresh seaberries.

The puree is usually sold to downstream brands for further processing at an average price of 15,000 yuan per tonne and a gross margin of around 40 percent.

Yuhangren's second largest source of business - health supplements, including sea buckthorn oil-filled capsules and sea buckthorn tomato tea polyphenols soft capsules, earned it 60.11 million yuan or 27.3 percent of the total revenue in 2023.

The gross margin for health supplements - its most profitable line - climbed from 52.5 percent in 2011 to 64 percent in 2023, while overall gross margin increased from 40.2 percent to 46.1 percent over the same period.

Yuhangren's total revenue increased from 147 million yuan in 2021 to 187 million yuan in 2022 and 220 million yuan in 2023 and its net profit more than doubled during the three years from 20.92 million yuan in 2021 to 46.17 million yuan in 2023.

Inner Mongolia Yuhangren Sand Industrial was spun off by Yuhangren High-Tech in May, ahead of its listing application.

Yuhangren's parent has been in the sea buckthorn business since 1995 and the spin-off has the exclusive license for the manufacture, research and development of the portfolio.

Yuhangren has 44 global distributors and its products are sold in restaurants, supermarkets, convenience stores and other retailers in China.

Its flagship store on Chinese e-commerce platform Taobao sells a package of 120 sea buckthorn oil capsules for 1,198 yuan, which works out to 10 yuan per capsule.

However, Yuhangren says the approximate selling price of its health supplements in 2023 ranged from 0.6 yuan to 4.8 yuan per capsule.

Yuhangren also warns that a slowdown in consumer demand could affect its revenues, while global trade protectionism including trade barriers, sanctions and boycotts could also harm its international sales.