New Stock News | Shubao International files for a second listing on the Hong Kong Stock Exchange, specializing in infant and child care products in emerging markets on the Eurasian continent.

According to the disclosure of the Hong Kong Stock Exchange on November 13th, Savile International Group Limited (referred to as Savile International) has once again submitted its listing application to the main board of the Hong Kong Stock Exchange, with SUNNY FORTUNE as its exclusive sponsor. It is reported that the company had submitted its application to the Hong Kong Stock Exchange on May 10th of this year. According to the prospectus, Savile International is mainly engaged in the development, production, and sale of disposable sanitary products for personal use in China, focusing on infant care products in the emerging markets of Eurasia. According to a report by Frost & Sullivan, based on the export value in 2023, Savile International is the second largest exporter of disposable infant care sanitary products from China to Russia, accounting for approximately 3.7% of the market share based on the export value of infant care sanitary products in China in 2023. During the historical period, Savile International mainly relied on contract manufacturing to market and sell infant care products to foreign markets, and exported its core infant care products to foreign brand owners, bringing their respective brands to emerging markets in Eurasia such as Russia and Southeast Asia, where most of the income was generated during the historical period. In recent years, benefiting from the explosive growth of e-commerce in Russia and the thriving development of its own brands, the company has expanded to produce and supply infant care products and solutions for several top children's goods retailers in Russia, helping them establish or enhance their own brand image in the region. The Russia-Ukraine war has also shifted the demand of Russian customers from international brands to their own brands. Therefore, during the historical period, Savile International's revenue from the Russian market increased significantly. Savile International mentioned that in the past few years, Chinese younger consumers have favored digital platforms and turned to affordable high-end brands, thus expanding its "Direct-to-Consumer" (D2C) sales model, marketing and directly selling brand products through its own digital stores or third-party stores operated on several third-party pure digital platforms in China. The company has expanded its brand product range to include its core product categories, namely infant care, female care, and adult incontinence products. The top retailer in Russia was the second largest customer for Savile International in the 2021 fiscal year and the largest customer in the 2022 fiscal year, 2023 fiscal year, and the first five months of 2024, accounting for approximately 11.8%, 31.5%, 48.7%, and 35.7% of the total revenue of the company in the respective periods. According to public information, the top retailer in Russia is the largest children's goods retailer in Russia, with more than 1,100 stores operating in Russia and Kazakhstan in June 2022, serving around 450 million Russian users in 2021. According to the audited financial statements for the year ended December 31, 2021, it has been in operation for over 75 years, with annual revenue of approximately $1.8 billion in 2021. During the historical period and up to the latest feasible date [November 5, 2024], the top retailer in Russia appointed Savile International as the sole contract manufacturer to produce and supply infant care products under one of its major infant care in-house brands. During the historical period, the company entered into four consecutive supplemental agreements with the top retailer in Russia. In December 2023, the company renewed a supply agreement with the top retailer in Russia without a target purchase quantity, valid until December 31, 2030. In terms of production, Savile International has an automated production base. As of May 31, 2024, the company's production base was located in Jinjiang City, Fujian Province, with a total annual capacity of over 100 million pieces. As of May 31, 2024, the Jinjiang production base had 17 production lines producing core products, each production line mainly consisting of a fully servo machine. In terms of financials, the revenue of Savile International for the fiscal years 2021, 2022, 2023, and the first five months of 2024 were approximately RMB 263 million, RMB 408 million, RMB 655 million, and RMB 281 million, with corresponding net profits of approximately RMB 10.06 million, RMB 41.86 million, RMB 58.90 million, and RMB 19.20 million. Savile International stated in its prospectus that during some of the historical periods, the company's operating activities generated negative cash flows, which may have an adverse impact on its business, financial condition, operational performance, and prospects. In the first five months of 2024, Savile International recorded a net outflow of operating cash flows of approximately RMB 46.1 million, mainly attributable to a change in operating funds of approximately RMB 67.5 million. The main contributing factor to the outflow was an increase in trade and other receivables of approximately RMB 69.5 million during the first five months of 2024. The net outflow of operating cash flows may impair the company's ability to make necessary capital expenditures, limit operational flexibility, and have an adverse impact on the company's ability to meet its working capital requirements.