Chu Orange's listing plan postponed by one year: can a fruit-growing company successfully land on the capital market?
“Chu Orange” was founded in 2002 by Chu Shijian, the former “tobacco king” of Yunnan, and after 2012 it began to gain high recognition in the market, forming the “Chu Orange” brand. Chu's Agriculture is committed to using modern agricultural technology and a standardized management system for fruit cultivation. At present, Chu's Agriculture has two orange brands under its umbrella: one is Chu Orange, and the other is Yunguan Orange.
Chu Yibin revealed that within the foreseeable time period, the limit on Chu Orange's output has already approached its ceiling, while for Yunguan Orange, Chu Yibin said that its increase will be clearly visible in about the next 3 years. He said that this industry is still in a relatively difficult early stage, but over the past two to three years, the company's internal revenue has averaged double-digit growth, which may already be at the upper-middle level in the cultivation industry, yet it is far behind the development of the e-commerce industry. In this regard, he revealed, “But we are still confident. To catch up is too much to claim, but we can work hard to get closer.”
Public reports show that the fixed assets of the main operating company of Chu Orange have exceeded 100 million yuan. In 2017, the output value of the single product Chu Orange already reached 300 million yuan. This year, the total output is expected to be 20,000 tons, and Yunguan Orange is expected to produce more than 11,000 tons. Regarding the listing, Chu Yibin said that in China, listing an agricultural cultivation business is a very difficult thing, but for the needs of agricultural industry development and for the company to have long-term development, Chu's Agriculture will face the difficulties head-on.
But other materials also show that Chu Orange's founder Chu Shijian was averse to entering the capital market. He once said in 2012: “Investment companies all want to take a sum of money from shareholders after listing. After listing, I would be the one getting the money, but the shareholders would lose out. I'm afraid people will point fingers behind my back.” Yet Chu Yibin claimed that the decision to list was already made by Chu Shijian at the end of 2017.
Some views hold that if Chu's Agriculture successfully lists, it may open a new chapter for China's agricultural cultivation industry in the capital market. At present, there are few listed companies in China mainly engaged in fruit cultivation. And Chu's Agriculture, as an A-share listing, currently has only two products, Chu Orange and Yunguan Orange. If it suffers force majeure such as natural disasters, it will have a major impact on the company's financial condition.
At present, in addition to mainly promoting the sales of Yunguan Orange and trial cultivation of agricultural products such as apples and pomelos, Chu's Agriculture has also begun to explore the business model of brand licensing and downstream derivative products, in order to explore a path of horizontal development for the company. Chu Yibin also admitted, “In China, listing an agricultural cultivation business is a very difficult thing. I do not want the industry to submit to the needs of capital amid the conflict between industry and capital, and end up dragging the industry down. We retain the right to choose. When the opportunity matures and all the problems faced by the cultivation industry are solved, development will have a better foundation. Our listing is for the next step forward.”