On December 16, 2020, Blue Moon Group (06993.HK, hereinafter referred to as “Blue Moon”) was officially listed on the main board of the Hong Kong Stock Exchange. The stock price surged 13.07% on that day, and the closing price was finally at HK$14.88 per share. The company’s market value reached 85.5 billion Hong Kong dollars, becoming the first Chinese large daily chemical company to go to Hong Kong.
Blue Moon was founded in 1992 by the founder and current CEO Luo Qiuping. Its predecessor was TD Company, which was mainly engaged in degreasing and cleaning products. After that, the company further developed and launched household cleaning and care products. Today, Blue Moon’s main products cover three categories: clothing cleaning care, personal cleaning care and household cleaning care. In 2019, the company’s operating income reached 7.05 billion Hong Kong dollars.
Hillhouse over 20 times return
With the IPO of Blue Moon, the “good relationship” between the company and institutional shareholders also spread.
Hillhouse is the earliest and largest institutional investor in Blue Moon. As early as 2010, it exclusively invested in Blue Moon’s Series A financing with US$45 million, and an additional US$1.03 million in 2011. Before the IPO, Hillhouse held 10% of the shares and was Blue Moon’s largest external investor and the second largest shareholder of Blue Moon.
In this IPO, the market value of Hillhouse’s 500 million Blue Moon shares reached 7.38 billion Hong Kong dollars. Together with the 230 million Hong Kong dollar dividends received by Blue Moon in the previous period, the overall book value may exceed 20 times.
Looking back on the growth history of Blue Moon, it can be said that it has repeatedly accurately “stepped on” the industry development trend. In 2000, the company began to get involved in the field of personal care and hygiene products, and launched a bacteriostatic hand sanitizer. This product was “hard to find a bottle” during the SARS period in 2003 and has since made its reputation.
Then, in 2008, when most domestic consumers were still accustomed to using laundry detergent, foreign brands had not yet begun to push laundry detergent products in the country. Blue Moon took the lead in launching laundry detergent products, and then established the company’s fine “Hegemony” status in different areas. According to the Frost & Sullivan report, Blue Moon’s market share in China’s laundry detergent market has ranked first for 11 consecutive years (2009 to 2019).
In 2012, when most of the daily chemical giants concentrated on offline hypermarket channels to “firepower”, Blue Moon also deployed online sales simultaneously. Today, online retail channels have become the fastest-growing sales channel in China’s household cleaning and care industry. According to the data, as of 2019, Blue Moon’s online sales channels accounted for 47.2% of revenue. Among them, laundry detergent online channel retail sales ranked first, with a market share of 33.6%, ranking second in the Chinese laundry detergent company market. More than twice the share. In the first half of 2020, Blue Moon’s online channel revenue accounted for 58.8%.
What is interesting is that Blue Moon’s layout of laundry detergent and online channels all have a certain degree of credit.
In 2008, Hillhouse founder and CEO Zhang Lei persuaded the Blue Moon founder Luo Qiuping and his wife to occupy the laundry detergent category, because this has a good chance of becoming China’s next daily chemical giant. Both Luo Qiuping and his wife are graduate students in chemistry. They are idealists in their own right. They love making real “good products”, and they hit it off with Zhang Lei. Therefore, under Hillhouse’s suggestion, Blue Moon took the lead in launching the deep clean laundry detergent in the domestic market that year, and invested a lot of resources in market cultivation, and began to educate consumers to change laundry habits. Finally, Blue Moon cultivated China’s laundry detergent market.
In the past few decades, the growth rate of China’s laundry detergent market has far exceeded that of laundry powder and laundry soap, and the penetration rate of laundry detergent has risen from single digits to 44%.
When Blue Moon deployed its online channels in 2012, it was also a pillar of JD.com’s investors at that time. It also brought together Blue Moon and JD.com exclusive cooperation to help Blue Moon open the online channel market. The cooperation with JD.com has also brought a new year to Blue Moon’s channel transformation.
The market is optimistic about the future development prospects of Blue Moon
Through this IPO, Blue Moon successfully raised more than 9.5 billion Hong Kong dollars. The company also used this listing to consolidate its own “moat.” In this fundraising, the company has several major investment directions. One is business expansion, including capacity expansion and the development of laundry service business; the second is to increase the company’s brand awareness, further enhance the company’s sales and distribution network, and increase the company’s product penetration; It is to increase the company’s R&D strength; the fourth is to develop and strengthen the company’s information technology infrastructure; the fifth is to supplement the company’s working capital.
Luo Qiuping, founder and CEO of Blue Moon, said at the listing ceremony: “In the future, we will continue to adhere to the consumer-centric approach and innovation as the driving force to provide a complete set of household cleaning solutions.”
According to the Frost & Sullivan report, although the new coronavirus epidemic has reduced the total retail sales value of consumer products in China by 19% in the first quarter of 2020, the new coronavirus epidemic has less negative impact on the home cleaning and care industry. People began to change their home daily life and cleaning habits (including more frequent washing of hands and clothes, and regular home disinfection). The epidemic has actually increased the demand for household cleaning and care products.
West China Securities stated in a research report that in the long run, the new crown epidemic has raised the hygiene awareness of Chinese consumers and stimulated the demand for clothing, household cleaning and personal care, and the future prosperity of the household cleaning industry will increase. In 2019, the scale of China’s laundry detergent market reached 27.2 billion yuan. It is expected to maintain a compound annual growth rate of 13.6% in the next five years. The current market penetration rate of concentrated laundry detergent in China is less than 10%. Sales will also maintain rapid growth at a compound annual growth rate of 19.7%. At the same time, China’s hand sanitizer market has reached 2.7 billion yuan in 2019 and is expected to grow at a compound annual growth rate of 25.3% in the next five years.
Zhongtai Securities also issued a research report stating that the China National Clearing Market still has a large gap with mature markets such as the United States and Japan in terms of per capita expenditure and product penetration. In 2019, China’s overall home cleaning market reached 110.8 billion yuan, and it is expected to maintain a compound annual growth rate of 8.7% in the next five years. Among them, Blue Moon continues to help its products sink into the low-tier market by virtue of its brand and channel advantages, which opens up new growth space for the company and its future development prospects are worth looking forward to.
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