According to Bloomberg, informed sources revealed that the Chinese tea brand Gu Ming Holdings Limited has begun assessing investor interest in its initial public offering (IPO) in Hong Kong, expected $Guming Holdings Limited 古 (810553.HK)$ to start accepting investor subscriptions after the Spring Festival, with this IPO potentially raising up to 0.3 billion USD (approximately 2.34 billion HKD).

Gu Ming submitted applications on January 2, 2024, and December 15, 2024, respectively. Following the disclosure of the prospectus after the hearing on January 12, 2025, Goldman Sachs and UBS Group will act as joint sponsors.

Main Business

Gu Ming steadily expands its store network through a regional encrypted store strategy. As of September 30, 2024, it has established a presence in 17 provinces across the country, and has built a store network in eight provinces exceeding the critical scale (more than 500 stores in a single province), with over 2,000 stores in Zhejiang.

Gu Ming has established a store network far exceeding the critical scale in the aforementioned eight provinces. In 2023, based on GMV, Zhejiang, Fujian, and Jiangxi were the earliest to reach the critical scale, and the company's market share among fresh tea brands across all price ranges is also the largest in the Industry.

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.

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.

Shareholder Structure

The controlling shareholders of Guming are Wang Yun'an, Pan Pingping, Qi Xia, and Ruan Xiudi, who, as acting in concert, collectively hold approximately 79.50% of the shares through their respective intermediary entities.

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