Wantian Cultivates Big-Name Backers With Green Story

Key Takeaways:

• Food distributor China Wantian has attracted two major funds and a local real estate magnate to its plans to become a major food distributor
• The company is expanding beyond its original Hong Kong base to supply healthy foods and related services in the larger Greater Bay Area 

By Lau Chi Hang

China Wantian Holdings Ltd. (1854.HK) is far from a household name, racking up losses in the past three years, boasting a market capitalization of just HK$1.2 billion ($153 million) and daily turnover of less than HK$1 million most days. It’s a classic nobody among the more than 2,000 companies listed on the Hong Kong Stock Exchange.

That made it all the more surprising when the private investment arm of local real estate magnate Peter Lee, co-chairman and managing director of Henderson Land (0012.HK), took a recent stake in the company. The two sides said they would jointly explore green development opportunities in the Greater Bay Area of South China’s Pearl River Delta region that is home to 80 million and includes Hong Kong. 

Lee wasn’t the only one enamored with this obscure company. Wantian also won over U.S. fund giant Franklin Templeton and the Mainland-based China Asset Management earlier this year when they subscribed to nearly 62 million new shares sold by the company in a rights offering in June.

So, why has Wantian suddenly become the apple of so many high-profile investors’ eyes? That requires a brief history lesson to explain.

Previously known as Goal Forward Holdings Ltd., Wantian’s founder is Liu Chi Ching, a former chef whose company mostly supplied fresh fruits and vegetables to Hong Kong caterers. Liu listed his company on Hong Kong’s smaller Growth Enterprise Market (GEM) in 2016, before graduating to the city’s Main Board in 2019.

Power Shift 

Goal Forward’s business is nothing to write home about, with annual revenue of HK$200 million or less. But its story changed in 2021 when regional tycoon Hooy Kok Wai acquired 67% of the company, leaving only 13% with Liu. That shift, which saw Hooy take over as chairman while Liu became vice chairman, marked the start of a major transformation.

Hooy is a Singaporean Chinese who started his own business in 1980, mainly selling cosmetics. During a trip to his ancestral homeland with third-generation Malaysian Chinese businessman Yuen Kim Koo in 1993, the two saw big potential in the Pearl Delta city of Zhongshan near Macau. With encouragement from the Zhongshan and Malaysian governments, they set up Perfect (China) Co. Ltd., a maker of health foods, personal care and household products and cosmetics.

While Goal Forward mainly sold fresh foods in Hong Kong, Hooy saw much bigger potential for the company and renamed it China Wantian, with a bigger mandate of supplying an entire chain of green food in the larger Greater Bay Area. After repackaging itself as a company focused on environmental protection and green concepts, the company quickly diversified its portfolio and expanded it across the Greater Bay Area.

Three-Pronged Development

Wantian’s new business came to encompass three major areas: green food supply, green catering and environmental technology. Hooy began improving Wantian’s green food supply chain last year by acquiring Shenzhen Fengyuan, a Mainland Chinese supplier to the Greater Bay Area of live cattle from the Inner Mongolia and Xinjiang regions, as well as fruits, vegetables and seafood. That acquisition has helped Wantian to post steady gains in its green food supply transactions and boost its market share.

Last month, Wantian also formed a tie-up with Tianji Capital Holding Group, under which Wantian sourcesfruits from Southeast Asia, while Tianji oversees its distribution on the Mainland. China Wantian said thecompany will introduce fresh fruits from Southeast Asia to the Greater Bay Area, aiming to achieve up to HK$10 billion in sales over the next three years.

Wantian is also building a presence in the green dining business. It operates multiple green food restaurantsthat target young consumers in downtown Zhongshan, hoping to raise its brand awareness in the area and boost its customer base and market share. The strategy appears to be working, with restaurants providing a steady source of demand for Wantian’s upstream business as a food distributor.

In the environmental technology business, Wantian plans to set up green farms on building rooftops, allowing Greater Bay area primary and secondary school students to participate in rooftop farming, while also addinggreen elements to buildings. The company also intends to provide environmental protection products, equipment and systems to customers in the area by drawing on its existing customer base, and is now seeking business partners and investments to help it achieve that goal.

Hooay’s big plans have been good food for Wantian’s stock, which has risen nearly ninefold since early 2021.Its revenue growth has been less impressive, rising from HK$186 million in 2018 to HK$202 million last year.

Chasing A Bigger Market 

With so much green in its story, it’s not difficult to see how Wantian could win the hearts and dollars of big names like Peter Lee and Franklin Templeton. It also doesn’t hurt that the company is well positioned for big business as increasingly affluent Mainland Chinese – including millions in the affluent Greater Bay Area – pay more attention to their health, especially since the pandemic. 

The big names may also be attracted by Wantian’s expansion strategy. It goes without saying that Hong Kong is quite a limited market, with a modest 7 million residents. But the Greater Bay Area is far larger with its 80 million people spread over several major cities in close proximity, and makes a much better story for investors. It’s another story whether Wantian can actually tap that goldmine. But there’s no question that at least such a story shows the company’s big potential as a regional player, rather than confined to a single city.

Those two concepts appear to be what’s drawing investor votes to the company, though it’s still too early to say whether Wantian’s green dreams will ultimately yield fruit. The big investors certainly seem to like the story, though their modest HK$20 million combined bet is really just a drop in the bucket for such mega institutional fund managers.