On January 2, 2024, Guming Holdings Limited (“Guming” for short) from Hangzhou, Zhejiang submitted a prospectus on the Hong Kong Stock Exchange to be listed in the Hong Kong IPO.
Link to Gu Ming's prospectus:
https://www1.hkexnews.hk/app/sehk/2024/106123/documents/sehk24010201488_c.pdf
Main business
As an industry-leading and rapidly growing Chinese ready-to-drink company, Gu Ming is committed to providing consumers with high-quality products that are fresh, tasty, consistent, and affordable. In 2010, Mr. Wang Yunan, the founder of Guming, opened the first “Guming” store in Daxi Town, Wenling, Taizhou, Zhejiang.
According to the Insight Consulting Report, in terms of product sales (GMV) in 2023 and number of stores as of December 31, 2023, “Guming” is the largest popular tea shop brand in China, and the second largest ready-to-use tea shop brand in China at full price. As of December 31, 2023, Guming's store network has a total of 9,001 stores (8,995 franchised stores and 6 directly managed stores). In terms of number of stores, it is one of the top five ready-to-drink brands in the world.
Gu Ming has steadily expanded its store network using a geographically encrypted store strategy. As of December 31, 2023, it has established a layout in 15 provinces across the country, and has established a store network of more than a critical scale (more than 500 stores in a single province) in eight provinces, including more than 2,000 stores in Zhejiang. In the first nine months of 2023, Gu Ming achieved more than 25% of the market share of popular ready-made tea shops in the above eight provinces. Among them, in Zhejiang, Fujian, and Jiangxi, which first reached critical scale, the company reached more than 45% of the market share in popular ready-made tea stores during the same period, and its market share among the brands of tea shops with full price is also number one in the industry.
As of December 31, 2023, the number of Gu Ming stores in second-tier cities and below accounted for 79% of the total number of stores. In addition, 38% of stores are located in towns and towns far from the center of the city. According to the Insight and Consultation Report, the above two proportions are the highest among the top five most popular tea shop brands in China by number of stores.
Gu Ming's revenue mainly comes from sales of goods and equipment and services to franchisees, including sales of products and equipment, franchise management services (including initial franchise fees, ongoing support service fees, and revenue from providing training and other services), and a small amount from direct store sales.
Shareholder structure
According to the prospectus, Gu Ming's shareholder structure before listing,
Mr. Wang Yunan holds 43.21% of the shares through the family trust Modern Leaves Limited;
Ms. Pan Pingping holds 2.76% of the shares through the family trust Spring Equinox Drinks Limited;
Mr. Qi Xia holds 19.78% of the shares through the family trust Chivalrous Lancers Limited;
Mr. Ruan Xiudi holds 13.74% of the shares through the family trust Cousin Tea Limited;
Employee shareholding platform Thriving Leafbuds Limited (Chief Financial Officer Mr. Meng Hailing, Chief Technology Officer Mr. Qiang Yu, and other employees), holding 3.87% of the shares;
Employee shareholding platform Nascent Sprouts Limited (Executive Director Ms. Jin Yayu 0.78%, Mr. Cai Yunjiang 0.97%, Chief Operating Officer Mr. Li Jifeng and other employees), holding 3.43% of the shares;
Meixing Private Equity Fund (GP) holds 8.00% of shares through Beijing Meiming and Beijing Meiyan;
Sequoia holds 4.00% of its shares through Max Mighty Limited;
Coatue Management, controlled by Philippe Laffont, holds 1.00% of the shares through Coatue 34;
Star Budding Capital, controlled by Wang Yimiao, holds 0.20% of the shares through Abbeay Street Capital;
Management
Gu Ming's board of directors consists of 9 directors, including 5 executive directors (Mr. Wang Yunan, Mr. Qi Xia, Mr. Ruan Xiudi, Ms. Jin Yayu, Mr. Cai Yunjiang), 1 non-executive director (Mr. Huang Yaoxin), and 3 independent non-executive directors (Mr. Luo Weijie, Ms. Zheng Xiaodong, and Mr. Li Jianbo).
In addition to executive directors, executives include Chief Operating Officer Mr. Li Jifeng, Chief Financial Officer Mr. Meng Hailing, and Chief Technology Officer Mr. Qiang Yu.
Company performance
According to the prospectus, in the past nine months of 2021, 2022, and 2023, Gu Ming's operating income was RMB 4.384 billion, RMB 5,559 billion, and RMB 5,571 billion, respectively. The corresponding net profit was RMB 124 million, 392 million yuan, and RMB 1,002 billion, respectively. The corresponding adjusted net profit was RMB 770 million, 788 million and RMB 1,045 million, respectively.
Intermediary team
Gu Ming's intermediary team for this IPO mainly consists of Goldman Sachs and UBS as co-sponsors; Ernst & Young as its auditors; Shihui and Shida's lawyers in Hong Kong and the US; Jingtian Gongcheng and Jiali's lawyers in China and the Hong Kong brokerage firm respectively; and Insight Consulting as its industry advisors.