[IPO] HPO "Will Sustain Growth by Strengthening Overseas Markets and Entering the Pet Market"

[Asia Economy Reporter Yoo Hyun-seok] "Considering the strengthening of online and overseas market strategies along with the new pet business to be launched, we expect to achieve high growth again this year."

Lee Hyun-yong, CEO of HPO, announced this plan at the initial public offering (IPO) briefing held on the 26th at the Conrad Hotel in Yeouido, Seoul.

Founded in 2012, HPO is a health functional food company that develops, manufactures, and distributes health functional foods not only in Korea but also in Asia and Europe, including China, based on the global premium brand 'Denps (Denpeuseu)'.

According to separate financial statements, the average annual sales growth rate over the past three years reached 54.3%. Last year's sales amounted to 103.8 billion KRW. The operating profit margin was also recorded at 19.2%. In 2020, the consolidated financial results including overseas subsidiaries and manufacturing affiliates showed sales of 142.7 billion KRW and operating profit of 25.6 billion KRW, with an operating profit margin of 18%. The sales composition by product was 58.8% (about 61 billion KRW) for probiotics, 24.1% (about 25 billion KRW) for vitamins, and 17.1% (17.7 billion KRW) for others (Omega-3, collagen, etc.).

Since last year, HPO has been expanding new product launches under the Denps brand while strengthening online and mobile sales channels. In addition, it is also reinforcing its overseas markets. In China, in 2019, it launched 'Hi&GoGo Denmark Organic Milk Powder (Hi&GoGo)', targeting growing children aged 3 to 14, a segment previously untapped.

Hi&GoGo was listed in December last year at Sam’s Club, China’s top membership warehouse club operated by Walmart. Sales increased from 400 sets in January this year to over 2,000 sets in April. Within four months of listing, it was selected as a 'National Event' product by Sam’s Club. The 'National Event' products are promotional items featured by Sam’s Club focusing on their main sales products. Additionally, at CBME (Children Baby Maternity Expo), one of the world’s top three baby expos held in Shanghai, Hi&GoGo was selected as one of the top three customer-preferred products in the milk powder category.

HPO recently launched Hi&GoGo in a can format, familiar to Chinese consumers, instead of the existing single-use small packaging, to actively expand the Chinese market. A company official stated, "Along with Hi&GoGo, probiotic products are also showing steady growth, and online market entry is actively progressing mainly through Tmall and JD.com. Last year, sales in China reached 9.4 billion KRW, and confirmed sales for 2021 already amount to 7 billion KRW."

In Japan, steady sales are being made mainly through home shopping channels. In September last year, the company successfully entered Japan’s top home shopping channel, Shop Channel. It plans to launch on Kansai TV Home Shopping in May. Currently, probiotic products (product name 'Denmark Biostory') are being sold in the Japanese market. Vitamin products are also scheduled for release. In the second half of this year, the company plans to launch specialized products such as women’s probiotics on Amazon to actively enter the U.S. market.

HPO also plans to newly enter the pet food market, where it can directly utilize its already secured global raw material suppliers and European local networks. To this end, it established a subsidiary, Copenhagen Recipe, in September last year and is currently developing products. It has also invested in and established a collaborative system with a pet platform company that owns the largest animal hospital network in Korea. HPO expects to launch feed and nutritional supplement products as early as the third quarter of this year.

Lee Hyun-yong, CEO of HPO, said, "Having worked at a major distribution company, I have witnessed the rise and fall of countless products and learned that companies with brands loved by consumers can sustain growth. I want to make Denps a health functional food brand loved by global consumers."

He added, "The funds raised through this IPO will be used to expand Denps’ overseas markets. We will maximize sales and profitability through digital marketing and utilize the funds for the successful market entry of the new animal nutrition business."

Meanwhile, HPO announced that the effectiveness of the securities registration statement (equity securities) submitted on the 2nd has taken effect. With the approval of the Financial Supervisory Service, the listing process will proceed as scheduled. The total number of shares offered is 3,987,632. The expected offering price is set between 22,200 and 25,400 KRW, with the total expected offering amount ranging from 88.5 billion to 101.3 billion KRW. The price will be finalized after demand forecasting on the 27th and 28th. Subscription will be accepted from the 3rd to the 4th of next month. The company plans to be listed on the KOSDAQ market on May 14. The lead underwriter is Daishin Securities.

This content was produced with the assistance of AI translation services.