Market value of 16.4 billion! "Pre-packaged food" manufacturer Guoquan listed on the Hong Kong Stock Exchange today.

On November 2nd, "Guoquan" made its debut in Hong Kong.

Guoquan Food (Shanghai) Co., Ltd. (referred to as "Guoquan") successfully listed on the Hong Kong Stock Exchange today, with an issue price of HKD 5.98 per share. As of the time of writing, the stock price has risen slightly by 0.33% to HKD 6.00, with a total market value of HKD 16.43 billion.

According to the prospectus, Guoquan Food is a brand that provides home dining solutions, offering ready-to-eat, ready-to-heat, ready-to-cook, and pre-packaged ingredients, with a focus on home hot pot and barbecue products. Guoquan's product portfolio includes eight categories, including hot pot products, barbecue products, beverages, single-serving meals, ready-to-cook meal kits, fresh food, Western cuisine, and snacks, totaling 755 SKUs.

It is worth noting that Guoquan did not set an issue price range for this IPO, but directly determined the offer price at HKD 5.98, intending to globally issue 68.8028 million shares. Based on this calculation, Guoquan's total fundraising amount is approximately HKD 411 million, with a net fundraising amount of approximately HKD 357 million.

According to the plan, Guoquan intends to use 40% of the funds raised to open and operate self-owned stores, 40% to improve production capacity and enhance the company's supply chain capabilities, 10% to establish a product research and development center and upgrade and purchase related equipment, and the remaining 10% for working capital and general corporate purposes.

Guoquan's IPO has received orders from four cornerstone investors, including Hengshun Group, Jinding Capital, COFCO Capital Fund, and Xin Xin (Hong Kong) Co., Ltd., subscribing for HKD 221 million (approximately USD 28.3 million).

Since opening its first store in Zhengzhou in 2017, as of October 11, 2023, Guoquan has formed a retail terminal network consisting of 10,025 brand stores, with franchise stores accounting for 99% of the total number of stores.

Guoquan Food's revenue mainly comes from selling products to franchisees, which is directly driven by in-store sales.

Yang Mingchao, Chairman of Guoquan Food, said, "For Guoquan Food, achieving a Hong Kong IPO is not only a milestone but also means that the company is moving towards a broader development platform. We will take this listing as an opportunity to continue deepening our omni-channel sales network, continuously expanding our business coverage, ensuring food safety, and continuously improving overall operational efficiency and revenue. We will further consolidate our market leadership position, aiming to bring long-term sustainable returns to shareholders and investors."

Media analysis pointed out that from April 3, 2023, when the prospectus was submitted to the Hong Kong Stock Exchange, to November 2, when the listing was made, Guoquan's path to listing took 7 months. During this period, there were hardly any successful cases of A-share "food and shelter" IPO companies.Therefore, the success of Guoquan may have given hope to these companies waiting for IPO.

Guoquan's Revenue of 2.08 Billion in the First Four Months of this Year

Essentially, Guoquan is a supply chain company. It integrates nearly 300 upstream food suppliers and provides nearly 800 SKUs to millions of consumers through offline specialized channels.

During the reporting period from 2020 to 2023, Guoquan's operating revenue for the first four months of each year was 2.965 billion yuan, 3.958 billion yuan, 7.173 billion yuan, and 2.078 billion yuan, respectively; net profit was -43.292 million yuan, -461 million yuan, 241 million yuan, and 120 million yuan, respectively, achieving a turnaround in 2022.

Guoquan Food stated that the continuous growth in revenue during the reporting period was mainly attributed to the expansion of store network and the increase in sales of home dining products. The losses in 2020 and 2021 were mainly due to the increase in manpower and the resources invested in promotional activities for franchisees to support the expansion of store network and establish brand awareness.

In the first four months of this year, Guoquan's revenue was 2.078 billion yuan, a 4% decrease compared to the same period last year.

In terms of expenses, from 2020 to 2022, Guoquan Food's sales and distribution expenses were 220 million yuan, 629 million yuan, and 625 million yuan, accounting for 7.4%, 15.9%, and 8.7% of the revenue, with a total of 1.474 billion yuan over the three years. Among them, advertising and promotion expenses were 39.921 million yuan, 185 million yuan, and 138 million yuan, accounting for 18.1%, 29.4%, and 22.0% of the sales expenses, respectively.

From 2020 to 2022, as well as the first four months ending on April 30, 2022, Guoquan Food's gross profit margin was 11.1%, 9.0%, 17.4%, 13.8%, and 21.1%, respectively. Overall, it showed a growth trend.

Since 2020, Guoquan Food has raised more than 2.5 billion yuan in cumulative financing through five rounds. Among the investors participating in Guoquan Food's multiple rounds of financing are IDG, Sanquan Food, Maotai Fund, Tiantu Fund, Wumart Technology, and China Merchants Bank Shenzhen, among other companies and institutions.