On December 15, 2024, Guming Holdings Limited (referred to as "Guming") from Hangzhou, Zhejiang, submitted a prospectus to the Hong Kong Stock Exchange, intending to go public in Hong Kong. This is a subsequent application following the invalidation of its submission on January 2, 2024.

Gu Ming received the notice of registration for overseas issuance and listing from the China Securities Regulatory Commission on December 9, 2024, intending to issue no more than 0.441 billion overseas listed ordinary shares.

Guming prospectus link:

https://www1.hkexnews.hk/app/sehk/2024/106987/documents/sehk24121500095_c.pdf

Main Business

Gu Ming, as an industry-leading, fast-growing Chinese ready-to-drink beverage company, is committed to providing consumers with fresh, delicious, consistent, and affordable high-quality products, deeply cultivating the sinking market, focusing on fruit tea beverages, milk tea beverages, coffee beverages, and other products. Mr. Wang Yunan, the founder of Gu Ming, opened the first "Gu Ming" store in 2010 in Daxi Town, Wenzhou, Zhejiang.

According to the Zhenzhong consulting report, based on the sales volume (GMV) of commodities in 2023 and the number of stores as of December 31, 2023, "Guming" is the largest brand of ready-to-drink tea shops in China, and also the second largest brand of ready-to-drink tea shops in China across all price ranges. As of December 31, 2023, Guming had a store network of 9,001 stores, and it is expected to expand to 9,778 stores by September 30, 2024 (with 9,771 franchise stores and directly managed 7 stores).

As of September 30, 2024, among the franchisees who have opened "Guming" stores for more than two years, an average of 2.9 stores are operated by each franchisee, with 71% of franchisees operating two or more franchise stores. In 2023, the single-store operating profit of Guming's franchisees reached 0.376 million RMB, and the single-store operating profit margin of the franchisees was 20.2%, while the estimated single-store operating profit margin of the ready-to-drink tea shop market in China during the same period was approximately 10%-15%. Particularly in fourth-tier cities and below, the single-store operating profit of franchisees in 2023 was 0.386 million RMB. In the first nine months of 2024, Guming's single-store GMV was 1.7763 million RMB, with an average daily GMV of about 6,500 RMB, an average daily number of cups served of 386, and an average GMV per cup of 27.7 RMB, with each store having an average of 234 orders per day.

Guming adopts a regionally encrypted store-opening strategy to steadily expand its store network. As of September 30, 2024, layouts have been established in 17 provinces nationwide, with networks exceeding critical scale (more than 500 stores in a single province) set up in eight provinces, including over 2,000 stores in Zhejiang. Guming has established a store network significantly beyond critical scale in the aforementioned eight provinces, achieving critical scale first in Zhejiang, Fujian, and Jiangxi in 2023 based on GMV, making it the industry leader in market share among ready-to-drink tea shop brands across all price ranges.

As of September 30, 2024, the number of Guming stores in second-tier cities and below accounted for 80% of the total number of stores. Additionally, 40% of the stores are located in towns and villages away from city centers. According to the Zhenzhong consulting report, the proportion of stores in these areas is the highest among the five largest ready-to-drink tea shop brands in China.

Guming's revenue mainly comes from selling goods and equipment to franchisees as well as providing services, including the sale of commodities and equipment, franchise management services (including initial franchise fees, ongoing support service fees, and providing training and other service revenues), and a small portion from direct store sales.

Shareholder Structure

The prospectus shows that Guming's shareholder structure before listing

Mr. Wang Yunan holds 43.21% of shares through the family trust Modern Leaves Limited;

Ms. Pan Pingping holds 2.76% of shares through the family trust Spring Equinox Drinks Limited;

Mr. Qi Xia holds 19.78% of shares through the family trust Chivalrous Lancers Limited;

Mr. Ruan Xiudi holds 13.74% of shares through the family trust Cousin Tea Limited;

The employee stock ownership platform Thriving Leafbuds Limited (Chief Financial Officer Meng Hailing, Chief Technology Officer Qiang Yu, and other employees) holds 3.87%;

The employee stock ownership platform Nascent Sprouts Limited (Executive Director Jin Yayue 0.78%, Cai Yunjiong 0.97%, Chief Operating Officer Li Jifeng and other employees) holds 3.43%;

Meixing Private Equity Fund (GP) holds 8.00% of shares through Peking Meiming and Peking Meiyan;

Sequoia holds 4.00% of shares through Max Mighty Limited;

Coatue Management, controlled by Philippe Laffont, holds 1.00% through Coatue 34.

Star Budding Capital, controlled by Wang Yimiao, holds 0.20% through Abbeay Street Capital.

Management team.

The Board of Directors of Guming consists of 9 directors, including:

• 5 executive directors: Mr. Wang Yun'an (Founder, Chairman of the Board, Chief Executive Officer), Mr. Qi Xia (President), Mr. Ruan Xiudi, Ms. Jin Yayu, Mr. Cai Yunjing;

• 1 non-executive director: Mr. Huang Yaoxin (Managing Director of Meixing Private Equity);

• 3 independent non-executive directors: Mr. Luo Weijie (Chief Financial Officer of StarHub (CC3.SI)), Ms. Zheng Xiaodong (Professor at Zhejiang University), Mr. Li Jianbo (CEO of Yonghui Caishixian).

In addition to the Executive Directors, the senior management includes Mr. Li Jifeng, Chief Operating Officer, Mr. Meng Hailing, Chief Financial Officer, and Mr. Qiang Yu, Chief Technology Officer.

Company Performance

The prospectus shows that in the past years of 2021, 2022, 2023, and the first nine months of 2024, Gu Ming's revenue was RMB 4.384 billion, 5.559 billion, 7.676 billion, and 6.441 billion respectively, with corresponding net income of RMB 0.024 billion, 0.372 billion, 1.096 billion, and 1.120 billion, and corresponding adjusted net income of RMB 0.77 billion, 0.788 billion, 1.459 billion, and 1.149 billion.

Intermediary Team

The main intermediary team for this IPO includes: Goldman Sachs and UBS Group as co-sponsors; Ernst & Young as its auditor; Shi Hui and Shi Da as its lawyers in China, and lawyers in Hong Kong and the USA respectively; Jing Tian Gong Cheng and Jia Li as its Brokerage lawyers in China and Hong Kong respectively; Zhuang Shi Consulting as its industry advisor.