Want Want launches IPO in Hong Kong on the 26th March 2008. The company’s product is well known and has good financial in its balance sheet. However due to poor market sentiment its stock price falls below its listing price of $HK3.00 and reaches a low of $HK2.53 on second day of trading. Today it closes just below $3.00 at $2.99.
Want Want’s IPO prospectus claim they are one of the leading food and beverage manufacturers in China. They are the market leader in China for several of their key products, including having a market share of 68.6%, 40.6% and 28.5% in rice crackers, flavoured milk and soft candy, respectively, in terms of sales for the six months ended June 30, 2007 according to the ACNielsen Report (a report commissioned by the Company). They believe they are the market leader in China in popsicles, ball cakes and gift packs. Their core brand, “Want Want”, (“旺旺”), which symbolizes prosperity and good fortune in Chinese, is, they believe, the most widely recognized food and beverage brand in China.
Let’s compare it to the Real China. The belows are Want Want’s core products.
There are seven different types of soft sweets & milk flavour sweets in the below. Your author recognises three products; QQ Gummies, QQ Bears & Hot-kid Milk Chewy. I particularly like the QQ Gummies and the Hot-kid Milk Chewy. Warren Buffett buys Coca Cola stocks because he thinks it is a good product. I feel the same way about QQ products. I like their taste very much.
Like many Want Want products the Want Want Rice Crackers can be found in many store and super market in China. My wife used to like it very much. Again, it seems we have a good product here.
The Want Want milk tastes very good. I still drink it from time to time when I am in China. However there is a lot of other type of drinks so I don’t always buy it. This kind of market competition is stated in Tinyi Holding’s company result. So again it seems the story fits in with the Real China.
The below is a spirit which I vaguely recognise from super market shelfs but since I don’t drink strong alcohol I can not comment.
Your author recognises almost all of Want Want’s product, likes and consumes some of them on a regular basis. This is because your author saw Want Want advertisements on TV from Hong Kong and China for many years. I can still remember the Want Want rice cracker advertisement; it is weird, funny and hence memorable. It can be said that these products have their own unique taste. It is important for a company’s products to be unique i.e. there is little difference between two different brands of distill water and therefore consumers can easily switch to another brand of distill water. This is one of Warren Buffett’s methods of valuating a company’s product.
Summary
Want Want’s products are good, unique and widely known & consume in China.
