“Science and Technology Innovation Board Daily”, October 3 (Reporter Xu Cihao) The second-generation “pot factory” of Zhejiang's post-85 factory is on the market.

Recently, the kitchenware brand Carrot (Commercial) Co., Ltd. (“Carrot”) was listed on the Hong Kong Stock Exchange. In this IPO, Carrot was priced at HK$5.78 per share and issued a total of 0.1299 billion shares. The net proceeds will be approximately HK$0.693 billion.

On the first day of listing, Carot's stock price was strong. As soon as it opened, it reported HK$9.5 per share, a sharp increase of 64% from the issue price. As of the close of trading on October 2, the stock price closed steadily at HK$9.15 per share. The increase was still as high as 58.3%, and the company's market value jumped to HK$4.9 billion.

It is worth noting that Carrot maintained an independent attitude until the IPO and did not bring in external investors. In this listing, Jingwei Venture Capital and Yuansheng Capital each spent 20 million US dollars and held 5.06% of the shares as cornerstone investors.

The founder couple soared to 3.674 billion

The origin of Carot starts with the second-generation “explosion” of one factory.

According to the “Prospectus”, Carrot's actual control is in the hands of a young couple, Zhang Guodong and Lu Yili. Both were born in Zhejiang in 1988, and have forged an indissoluble bond with the kitchenware manufacturing industry since childhood. In 1992, their parents, Li Huiping and Zhang Zhihui, co-founded Yongkang Tepai Electric Co., Ltd., the predecessor of Carrot.

Li Huiping's daughter, Lu Yili, and Zhang Zhihui's son Zhang Guodong both studied at Griffith University in Australia, studying accounting and marketing. After graduating in 2010, they both joined Carrot.

Later, Zhang Guodong and Lu Yili became husband and wife and took over, becoming Carot's actual controller and core executive. Zhang Guodong served as the chairman and CEO, and Lu Yili was the executive director and chief product officer.

Carot was founded in 2007. In fact, before becoming a brand, Carrot mainly provided OEM services for the international market; in 2013, Carrot first transformed, became an ODM, and had its own R&D team. The business changed from OEM to designing and developing new products for international brands, and even customized business. Brand volume completed its first original accumulation.

Catching up with the fastest e-commerce development stage, Zhang Guodong and his wife launched their own brand CAROTE (CAROTE) in 2016 and began entering online retail. As DTC, they focused on being a brand.

At the beginning of 2022, Carrot divested its production business and switched to a fully outsourced and asset-light model.

Since then, Carrot has upgraded from a traditional production plant at the bottom of the industrial chain to a brand at the top of the industrial chain and integrating industry resources.

Prior to the IPO, Carrot introduced two cornerstone investors, Jingwei Venture Capital and Yuansheng Capital. They invested a total of 40 million US dollars (about HK$0.312 billion), and each company subscribed for 20 million US dollars. The subscription amount accounted for about 42% of the maximum amount raised this time.

According to the prospectus, Zhang Guodong and Lu Yili held 98.60% of Carrot's shares before the listing, making them the largest shareholders. The remaining shareholders are Denk Trade, which holds 1% of shares, and Carote CM holds 0.4% of shares. Among them, Denk Trade is a customer of Carot OEM.

After the listing, Zhang Guodong and Lu Yili held 74.99% of the shares, and the two cornerstone investors each held 5.06% of the shares. The ban period for Cornerstone Investors is 6 months. Based on this calculation, Zhang Guodong and Lu Yili successfully gained a net worth of 3.674 billion with Carrot's successful listing.

Mainly overseas channels

According to the prospectus, in the first quarter of 2021, 2022, 2023, and 2024, Carrot launched 520, 1305, 1,374, and 361 SKUs of its own brand, respectively, and continued to expand its product range.

Today, Carrot's product portfolio includes more than 2,200 SKUs covering different cookware categories, mainly including nonstick pans, cast iron pans and selected cookware sets, kitchen storage boxes, containers, knives, cutting boards, spatulas, ladles, drinking containers, mugs, glasses, air fryers, electric cookware, kitchenware, drinkware, etc.

According to the prospectus, in 2021, 2022, 2023, and the first quarter of 2024, Carrot achieved revenue of 0.675 billion yuan, 0.769 billion yuan, 1.583 billion yuan, and 0.503 billion yuan, respectively. The profit for the period was approximately 0.032 billion yuan, 0.109 billion yuan, 0.237 billion yuan, and 0.089 billion yuan, respectively.

After 8 years, the private label business (hereinafter “Carrot” refers to the brand business) has become Carrot's most important source of revenue.

According to the prospectus, Carrot's own business has grown rapidly in recent years, with revenue growing rapidly starting at 0.283 billion yuan in 2021, reaching 0.531 billion yuan in 2022 and 1.38 billion yuan in 2023, with a compound annual growth rate of 120.7%; it also accounted for 41.9% of total revenue to 69.1% and 87.2%. Revenue of 0.45 billion yuan was achieved in the first quarter of 2024, and its share of total revenue rose to 89.5%.

However, the revenue of the ODM business declined year by year. From 2021 to 2023, it decreased from 0.392 billion yuan to 0.238 billion yuan and 0.203 billion yuan, and 0.053 billion yuan in the first quarter of 2024, accounting for 10.5% of total revenue.

Looking at channels, although Carrot also relies on third-party e-commerce platforms such as Tmall and JD to sell domestically, most of its revenue comes from overseas markets, and last year, due to outstanding sales performance and increased brand awareness in the US and Western European markets, Carrot's overseas revenue more than doubled.

According to the prospectus, for the first quarter of 2021, 2022, 2023, and 2024, mainland China's revenue was 0.163 billion yuan, 0.274 billion yuan, 0.323 billion yuan, and 0.083 billion yuan, accounting for 24.2%, 35.6%, 20.4%, and 16.5% of total revenue, respectively.

Among overseas channels, Amazon and Walmart's revenue grew rapidly. Amazon's revenue alone reached 0.67 billion yuan in 2023, accounting for 48.8%; in the first quarter of this year, it reached 0.235 billion yuan, accounting for 52.2%.