Pre-packaged Meal Company Guoquan Goes Public with a 16.4 HKD Billion Market

Consumer Staples, Financials Author: Yuehan Li Nov 03, 2023 03:56 AM (GMT+8)

Driving the Upgrade of the Catering Industry.

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On November 2, Guoquan Food (Shanghai) Co., Ltd., a prominent brand in the at-home hotpot and barbecue product industry, debuted on the Hong Kong stock market with shares priced at HKD5.98.

Boasting a diverse product line of 755 SKUs, Guoquan Food offers a wide range of meal options, including hotpot and barbecue items, beverages, ready-to-cook kits, one-person meals, fresh food, western cuisine, and snacks. This company offers diverse options to customers, including ready-to-eat and ready-to-cook prepared ingredients.

Although the IPO lacked a specified price range, the final offering price landed at HKD5.98 per share, with 68,802,800 shares accessible worldwide. This action is projected to produce roughly HKD411 million in gross proceeds and HKD357 million in net proceeds.

Guoquan has an ambitious plan for the funds raised, allocating 40% to open and manage new stores, another 40% to enhance production capacity and efficiency, 10% to establish a product development center, upgrade equipment, and procure necessary resources, and the remaining 10% for working capital and general corporate needs.

Impressively, Guoquan secured HKD221 million in subscriptions from four investors, including Hengshun Group, Jinding Capital, COFCO Capital Fund, and Glory Grace Group.

The bulk of Guoquan Food's earnings stem from the sale of products to franchisees, a network that has grown rapidly over the years. Established in 2017, Guoquan now boasts an impressive 10,025 branded retail locations, 99% of which are owned by franchisees.

Chairman Yang Mingchao views this IPO as a considerable stride towards reinforcing their omni-channel sales network, expanding their business outreach and operational efficiency, and increasing revenue. Ensuring food safety is still a top priority for Guoquan Food.

The company's financial performance indicates stable growth, with operating revenues of CNY 2.965 billion, CNY 3.958 billion, and CNY 7.173 billion reported in the first four months of 2020, 2021, and 2022, respectively. Projections for 2023 indicate that the company will achieve CNY 2.078 billion in operating revenues. Although 2020 and 2021 incurred losses due to investments in expanding their network and building brand awareness, the company is expected to reach profitability by 2022.

An upward trend in gross margins implies a positive outlook. They achieved margins of 11.1%, 9.0%, 17.4%, 13.8%, and 21.1% for 2020, 2021, 2022, and the four months ending April 30, 2022 and 2023.

Over the years, Guoquan has successfully attracted more than CNY2.5 billion in funding from notable investors.

As of press time, Guoquan's share price was HKD5.98, with a total market capitalization of HKD16.378 billion.