DDC and Hewen Launch Joint Venture to Scale Ready-Made Convenience Meal Business, Backed by USD 15M Profit Commitment

Rhea-AI Summary

DDC Enterprise (NYSEAM: DDC) has announced a binding agreement to form a joint venture with Hewen Agricultural Technology to scale ready-to-eat (RTE) meal solutions in Mainland China. The partnership combines DDC's innovative brands with Hewen's production expertise to serve e-commerce platforms, restaurant chains, and direct-to-consumer brands.

Key highlights of the deal:

• Hewen commits to generating USD 15 million in profits for the JV over the next five years
• Annual profit target of RMB 20 million (USD 3 million) starting 2025 for 4 years
• Annual dividends will be distributed to shareholders based on ownership ratio
• The JV will become one of DDC's consolidated subsidiaries
• DDC will grant Hewen restricted shares, unlocked based on profit achievement over 5 years

Positive

• Secured USD 15M profit commitment over 5 years
• JV becomes a consolidated subsidiary, expanding production and distribution
• Annual guaranteed profits of USD 3M starting 2025 for 4 years
• Expansion into China's growing RTE market with established partner

Negative

• Potential share dilution from restricted stock issuance to Hewen

Insights

Financial Analyst

This joint venture represents a potentially transformative opportunity for DDC Enterprise. The $15 million profit commitment over five years is extraordinary considering DDC's current market capitalization of just $10.8 million. In practical terms, Hewen is guaranteeing profits exceeding DDC's entire market value.

The agreement's structure offers substantial upside while minimizing downside risk. Hewen's commitment to generate annual profits of approximately $3 million beginning in 2025 provides significant recurring revenue visibility. With the joint venture becoming a consolidated subsidiary, these profits will flow directly into DDC's financial statements, though exact shareholding percentages remain undisclosed.

The performance-based restricted share mechanism creates strong alignment between partners while protecting current shareholders from immediate dilution. Shares unlock progressively only as profit targets are met over the five-year period. The annual dividend distribution requirement ensures DDC realizes immediate cash benefits rather than just accounting gains.

This deal effectively provides DDC with manufacturing scale and expanded distribution without major capital expenditure requirements. While execution risks always exist, the binding profit commitment and performance-based equity structure significantly mitigate financial concerns and create a compelling risk-reward profile for DDC shareholders.

Food Industry Specialist

This strategic partnership addresses two fundamental challenges in scaling food businesses: brand differentiation and production infrastructure. By combining DDC's innovation-driven brands with Hewen's manufacturing capabilities, the joint venture creates an integrated model that can move quickly in China's rapidly evolving ready-to-eat market.

The multi-channel distribution strategy targeting e-commerce platforms, restaurant chains, and direct-to-consumer brands provides diversified revenue streams while capitalizing on China's digital ecosystem. Particularly noteworthy is the mention of Douyin (TikTok's Chinese version), where food content and commerce have proven exceptionally effective at driving conversion.

The $15 million profit commitment demonstrates Hewen's confidence in both market opportunity and operational execution. This partnership allows DDC to accelerate market penetration without independently developing manufacturing expertise and facilities – typically the most capital-intensive and operationally complex aspect of food business expansion.

For a smaller company like DDC, this agreement provides immediate scale advantages typically only available to much larger competitors. The structure as a consolidated subsidiary means DDC maintains strategic control while benefiting from Hewen's production capabilities and local market expertise – a compelling combination in China's competitive but opportunity-rich prepared foods market.

Strategic partnership targets China’s booming ready-to-eat market, combining DDC’s innovative brands with Hewen’s production expertise

NEW YORK--(BUSINESS WIRE)-- DDC Enterprise, Ltd. (NYSEAM: DDC), (“DayDayCook,” “DDC,” or the “Company”), a leading multi-brand Asian consumer food company, today announced a binding agreement to form a joint venture (JV) with Hewen Agricultural Technology Limited, a premium prepared-meal producer, to scale delivery of ready-to-eat (RTE) solutions for major e-commerce platforms, restaurant chains, and direct-to-consumer brands in Mainland China. Hewen has committed to generating USD 15 million in profits for the JV over the next five years, with annual dividends distributed to shareholders. The joint venture will become one of DDC’s consolidated subsidiaries and is expected to further expand its production capability and distribution network in the market.

“This partnership accelerates our mission to redefine convenience in Asian cuisine,” said Ms. Norma Chu, Chairwoman and CEO of DDC. “By combining DDC’s innovation-driven brands with Hewen’s localized production expertise, we’re poised to capture the fast growing demand for high-quality, health-focused meal solutions across China’s digital and offline ecosystem.”

“Our collaboration with DDC is a milestone in advancing China’s prepared-food industry,” added Mr. Wenbo Qin, CEO of Hewen. “With shared values in quality and scalability, this JV will set new benchmarks for culinary excellence and operational efficiency in the RTE sector.”

Pursuant to the binding term sheet, Hewen committed to leverage its existing production capability and product development know-how to further expand its business reach in the market to more e-commerce platforms, major restaurant chains, and DTC brands on social platforms like Douyin (Tiktok). It also committed to DDC that the Joint Venture will have an annual profit of more than RMB 20 million (approximately USD 3 million) in 2025 and for the following 4 years. All after-tax profits of the Joint Venture will be distributed as dividends every year according to the shareholding ratio of the Joint Venture partners.

DDC will grant Hewen restricted shares. The shares will be issued within 10 business days after the Joint Venture is established. These restricted shares will be unlocked according to the actual achievement of the Joint Venture’s profit committed by Hewen over the next 5 years.

ABOUT DAYDAYCOOK

DayDayCook is on a mission to share the joy of Asian cooking culture with the world, offering a suite of accessible and healthy ready-to-eat, ready-to-cook, and ready-to-heat products that cater to the global palate. DayDayCook has evolved from a culinary content authority to a multi-brand powerhouse, curating a broad range of products that champion authenticity, nutrition, and convenience. The company's growing portfolio includes DayDayCook, Nona Lim, Yai’s Thai, Omsom, MengWei, and Yujia Weng. Follow the Company on LinkedIn.

ABOUT HEWEN

Hewen Agricultural Technology was founded in 2015, specializes in producing pre-made and convenience meal solutions providing catering services and RTE products, emphasizing health, convenience, and premium quality. Its customer base includes renowned brands like Haidilao, Xi Bei, and Dingdong Maicai, the company delivers standardized culinary solutions while maintaining a focus on innovation and market expansion. Committed to shaping healthier trends in Chinese cuisine, it continues to strengthen its industry leadership through advanced production know-how and customer-centric offerings.

Forward-Looking Statements

Certain statements in this press release are forward-looking statements, including, for example, statements about completing definitive agreements with Huwen Agricultural Technology to form a joint venture to expand sales and distribution network in the Mainland China market, NYSE and SEC compliance, estimated revenue, margins, cash and growth and expansion. These forward-looking statements involve known and unknown risks and uncertainties and are based on the Company’s current expectations and projections about future events that the Company believes may affect its financial condition, results of operations, business strategy and financial needs. These forward-looking statements are also based on assumptions regarding the Company’s present and future business strategies and the environment in which the Company will operate in the future. Investors can find many (but not all) of these statements by the use of words such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “likely to” or other similar expressions. The Company undertakes no obligation to update or revise publicly any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company’s registration statement and other filings with the SEC.

Source: DDC Enterprise, Ltd.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250402115505/en/

Investors:

Jeff Ervin

jeffervin@daydaycook.com

Source: DDC Enterprise, Ltd.

FAQ

What is the profit commitment in DDC's joint venture with Hewen?

Hewen committed to generating USD 15 million in profits over 5 years, with annual profits of RMB 20 million (USD 3 million) starting 2025.

How will DDC's joint venture profits be distributed to shareholders?

All after-tax profits will be distributed as annual dividends according to the shareholding ratio of the Joint Venture partners.

What markets will DDC and Hewen's joint venture target?

The JV will target e-commerce platforms, restaurant chains, and direct-to-consumer brands in Mainland China's ready-to-eat market.

What is the structure of DDC's equity agreement with Hewen?

DDC will grant Hewen restricted shares, issued within 10 days of JV establishment, which will unlock based on achieving profit commitments over 5 years.