On July 3, 2026, Guangdong Baili Food Co., Ltd. (referred to as "Baili Foods") successfully passed the review by the listing committee of the Beijing Stock Exchange, bringing it one step closer to a formal listing. The company, which calls itself the "largest Western-style condiment enterprise in China," aims to raise approximately 1.164 billion yuan through this IPO. The funds are primarily earmarked for a national headquarters construction project (planned investment of 646 million yuan), the Henry Foods Smart Factory Project (Phase I) (planned investment of 497 million yuan), and an R&D center upgrade project (about 22 million yuan).

However, beneath the surface of growing revenue and net profit, Baili Foods' path to an IPO is fraught with significant operational and capital-related concerns that cannot be ignored. On the operational front, the company's product structure is highly concentrated in a single category of sauces, with over 80% of revenue dependent on "one bottle of sauce." Its reliance on the major catering client Tasting has surged sharply, with this single customer contributing over 10% of revenue, highlighting growing risks associated with customer concentration. On the capital front, several core distributors that previously contributed tens of millions in revenue were "abruptly deregistered" just before the IPO, raising questions about the authenticity of that income. Furthermore, unresolved patent litigation with the global condiment giant, Japan's Kewpie, casts a shadow over the company's operational stability post-IPO.

Beneath Dual Growth Lies Hidden Worries: Highly Concentrated Product Structure and Continuously Slowing Performance Growth Raise Sustainability Questions

From a financial perspective, Baili Foods' performance in recent years appears quite impressive. From 2023 to 2025, the company's revenue was 1.605 billion yuan, 1.912 billion yuan, and 2.149 billion yuan, representing year-on-year changes of +27.35%, +19.11%, and +12.39%, respectively. Its net profit attributable to the parent company was 222 million yuan, 276 million yuan, and 322 million yuan, with year-on-year changes of +41.65%, +24.07%, and +16.65%, respectively. However, behind these robust growth figures, signals of a slowdown are quietly emerging—the company's revenue growth rate has been continuously decelerating from 27.35% in 2023 to 12.39% in 2025.

Breaking down the business, the company's product structure is highly concentrated, with 80% of revenue reliant on "one bottle of sauce." Baili Foods' revenue primarily comes from three segments: sauces, powdered products, and ready-to-eat ingredients, but the category concentration is extremely high. In 2025, sauce-based condiments contributed revenue of 1.729 billion yuan, accounting for 80.59% of total revenue. Powdered condiments generated only 283 million yuan, or 13.2%, while ready-to-eat ingredients brought in just 133 million yuan, or 6.21%.

More concerning is the highly uneven growth across these segments. In 2025, sauce-based products grew by 16.51% year-on-year, while powdered products grew by only 1.63%, and ready-to-eat ingredients actually declined by 9.17%. In other words, almost all of the company's growth momentum is tied to the single sauce-based category. The company also acknowledges in its prospectus that unforeseen factors such as raw material price fluctuations could introduce uncertainty to its profitability. When over 80% of revenue is wagered on one category, any industry cycle fluctuations or changes in raw material prices could have a systemic impact on the company's performance.

In addition to the heavy reliance on sauce-based condiments, the company's dependence on major customers is becoming increasingly severe. In terms of customer structure, Baili Foods' clientele is rapidly concentrating towards large chain catering enterprises like Tasting and Wallace. From 2023 to 2025, the revenue contribution from the top five customers increased from 9.6% to 17.2%. Among these, the "comeback" of Tasting is particularly striking. In 2023, revenue from Tasting was only 17.9769 million yuan, but by 2025 it had soared to 233 million yuan, accounting for 10.83% of annual sales. Tasting thus became the company's largest customer. In contrast, the procurement amount from the former "old client" Wallace remained stable at around 50 million yuan annually.

This means the company's performance is deeply tied to the operational status of the single brand, Tasting. Should Tasting's store expansion slow, its procurement strategy change, or its own operations experience volatility, Baili Foods' performance would face direct impact. The company also admits that if major customers encounter significant operational difficulties, it could adversely affect the stability of its own performance.

Operating under a model of high dependence on a single product category and increasing reliance on major clients, Baili Foods' R&D investment is strikingly disproportionate to its claimed status as an "industry leader." From 2023 to 2025, the company's R&D expense ratio was only 0.60%, 0.77%, and 0.89%, respectively. Comparable companies in the same industry, such as Baoli Foods and Ligao Foods, generally have R&D expense ratios between 2% and 4%. Baili Foods' R&D investment is less than half the industry average. Of the total 1.164 billion yuan raised in this IPO, only 22.1574 million yuan is allocated to the R&D center upgrade, accounting for less than 2%. The low R&D investment forms a stark contrast with high growth expectations—whether the company can continue to attract downstream catering clients without sufficient technological innovation support is a question requiring careful assessment.

Family Control Exceeds 80%, Idle Capacity Despite Fundraising for Doubling Expansion, and the Lingering Cloud of Kewpie Patent Litigation

As of the end of 2025, the actual controllers, husband and wife Xu Weihong and Lu Lianfu, directly and indirectly controlled a combined 66.95% of the company's shares. Adding the shareholdings of their children, Xu Zihao and Xu Xuli, the controlling family collectively holds 82.35% of the voting rights. This highly concentrated family-controlled structure means minority investors have extremely limited say in major company decisions, posing a test to the independence of corporate governance.

Simultaneously, according to capacity data disclosed in the company's prospectus, the capacity utilization rates for Baili Foods' three main business segments during the reporting period were far from saturated. For the core product, sauce-based condiments, the capacity utilization rates from 2023 to 2025 were 78.96%, 82.90%, and 84.85%, respectively, never exceeding 85% over the three years. For powdered condiments, the rates were 82.41%, 89.90%, and 79.75%, dropping to below 80% in 2025. The situation for ready-to-eat ingredients is even more severe, with utilization rates of 60.36%, 62.46%, and 50.25%, falling to around 50% in 2025.

This indicates that the company's existing production lines across all categories have substantial idle capacity. Based on 2025 data alone, idle capacity for sauce-based products was as high as 31,700 tons, and for ready-to-eat ingredients, it exceeded 15,200 tons. With existing capacity far from fully utilized, the necessity for large-scale expansion lacks fundamental support from capacity data.

Against the backdrop of chronically low capacity utilization, Baili Foods plans to raise 1.164 billion yuan through the IPO, with 1.142 billion yuan almost entirely directed towards capacity construction. Upon completion of the funded projects, just the sauce-based product line will add an annual capacity of 161,400 tons, nearly doubling the existing theoretical capacity of 209,500 tons. In 2025, the company's self-produced output of sauce-based products was only 177,800 tons, meaning the new capacity is close to the current annual self-produced output.

Finally, it is noteworthy that Kewpie and Baili Foods have been engaged in litigation for years over patents related to salad dressing. In December 2022, Kewpie accused Baili Foods of infringing its invention patent with its "Baili Roasted Sesame Flavor Salad Dressing," prompting Baili Foods to apply for invalidation of that patent. In 2025, Kewpie asserted infringement of another patent for the classic flavor of the same product, successively initiating administrative mediation, a civil lawsuit claiming approximately 100 million yuan in damages, and an administrative lawsuit for patent invalidation.

Although the China National Intellectual Property Administration has declared the relevant patents invalid, and the court subsequently dismissed Kewpie's infringement lawsuit based on this, Kewpie has not relented. It has filed an administrative lawsuit against the invalidation decision, and the case has been appealed to the Supreme People's Court. On June 26, 2026, the Beijing Intellectual Property Court held a hearing for this case, and as of the signing date of the prospectus, no judgment has been issued. The company acknowledges that the outcome of these patent disputes remains uncertain and that Kewpie may not rule out making other further claims, which could have adverse effects on the company's production, operations, and financial condition. Although some patent lawyers believe Kewpie's chances of winning are low, at the critical juncture of an IPO, any uncertainty regarding legal risks can impact investor confidence.