Source: Wall Street News

November 2, “Premade Dishes”$GUOQUAN (02517.HK)$It's beating a gong in Hong Kong.

Guoquan Food (Shanghai) Co., Ltd. (“Guoquan” for short) successfully listed in Hong Kong stocks today, with an issue price of HK$5.98 per share. As of press release, the stock price rose slightly by 0.17% to HK$5.99, with a turnover of nearly HK$25 million and a total market value of HK$16.4 billion.

According to the prospectus, Guoquan Foods is a food solutions brand for eating at home. It provides ready-to-eat, instant hot, ready-to-cook, and prepared ingredients, and focuses on at-home hot pot and barbecue products. The product portfolio of pot rings includes eight categories, including hot pot products, barbecue products, beverages, one-person meals, ready-to-cook meal packages, fresh food, Western food, and snacks, for a total of 755 SKUs.

It is worth noting that the current IPO of Guoquan did not set an issue price range, but directly determined that the sale price was HK$5.98, and plans to sell 68.802,800 million shares globally. Based on this calculation, the total amount raised by the pot ring was approximately HK$411 million, and the net amount raised was approximately HK$357 million.

According to the plan, Guoquan plans to use 40% of the capital raised to set up and operate the company's own stores, 40% to improve production capacity and efficiency to enhance the company's supply chain capabilities, 10% to establish product development centers and upgrade and purchase related equipment, and another 10% of working capital and general corporate use.

The IPO has received orders from four cornerstone investors, including: Hengshun Group, Jinding Capital, COFCO Captial Fund, and Xinxin (Hong Kong) Co., Ltd., which subscribed for HK$221 million (approximately US$28.3 million).

Starting with the opening of the first store in Zhengzhou in 2017, until October 11, 2023, the retail terminal network formed by 1,025 brand stores in the pot circle, of which franchise stores account for 99% of the total number of stores.

The revenue of Guoquan Foods mainly comes from the sale of products to franchisees, which is directly driven by its in-store sales.

Yang Mingchao, chairman of Guoquan Foods, said, “As far as Guoquan Foods is concerned,Achieving a Hong Kong stock IPO is not only a milestone, but also means that the company has moved towards a broader development platform.We will use this listing as an opportunity to continue to deepen our omni-channel sales network, continue to expand our business coverage, continue to improve overall operating efficiency and revenue while ensuring food safety, and further strengthen our market leadership position, with a view to bringing long-term sustainable returns to shareholders and investors.

According to some media analysis, from submitting a prospectus on the Hong Kong Stock Exchange on April 3, 2023 to knocking on the Gong Gong on November 2, it took 7 months for the pot industry to go public. During this period, there were many A-share “food and clothing” IPO companies, and there was almost no successful case. Thus, the success of the pot ring may have given hope to these companies awaiting IPOs.

Pot Circle's revenue for the fourth month of this year was 2.08 billion

Essentially, pot rings are a supply chain company. It integrates nearly 300 upstream food suppliers and provides nearly 800 SKUs to tens of millions of consumers through dedicated offline forms.

In 2020, 2021, 2022 and the first four months of 2023 (hereinafter referred to as the “reporting period”), the operating income of Pot Food was 2,965 billion yuan, 3,958 billion yuan, 7.173 billion yuan and 2,078 billion yuan respectively; net profit was -43292 million yuan, -461 million yuan, 241 million yuan and 120 million yuan respectively, turning losses into profits in 2022.

Guoquan Foods said that during the reporting period, the continued increase in revenue was mainly due to the expansion of the store network and the increase in sales of home-cooked food products. Losses in 2020 and 2021 are mainly due to manpower growth and investment in marketing activities for franchisees to support the expansion of the store network and build brand awareness.

In the first four months of this year, the pot industry's revenue was 2,078 billion yuan, down 4% from 2.16 billion yuan in the same period last year.

On the cost side, in 2020-2022, the sales and distribution expenses of pot food were 220 million, 629 million, and 625 million respectively, accounting for 7.4%, 15.9% and 8.7% of revenue. The total sales expenses for the three years were 1,474 billion yuan. Among them, advertising and promotion expenses were 39.921 million, 185 million and 138 million respectively, accounting for 18.1%, 29.4% and 22.0% of sales expenses, respectively.

In 2020, 2021 and 2022, and the four months ending 2022 and April 30, 2023, the gross margin of pot food was 11.1%, 9.0%, 17.4%, 13.8% and 21.1%, respectively. The overall trend is growing.

Since 2020, Guoquan Food has received a total of five rounds of financing, raising more than RMB 2.5 billion. Among investors participating in multiple rounds of financing for Guoquan Foods,It includes companies and institutions such as IDG, Sanquan Food, Maotai Fund, Tiantu Fund, Wumei Technology, and CMB Shenzhen.

edit/new