Zhouheiya fast food chain to list in HK

De­spite lower val­u­a­tion there, com­pa­nies seek to avoid long IPO queue in the main­land

China Daily (USA) - - BUSINESS - By LUOWEITENG in Hong Kong sophia@chi­nadai­lyhk.com


The ini­tial pub­lic of­fer­ing of Zhouheiya, a Hubei province­based fast food chain known for its spicy-braised duck neck and other ready-to-eat snacks, opened for sub­scrip­tion in Hong Kong on Tues­day, look­ing to raise up to HK$3.3 bil­lion ($425.7 mil­lion).

The braised food pro­ducer and re­tailer, sched­uled to make its trad­ing de­but onNov 11, will sell 424 mil­lion shares at an in­dica­tive range be­tween HK$5.8 and HK$7.8 apiece.

Founded in 2002 in­Wuhan, Hubei prov­ince, Zhouheiya beefed up its busi­ness foot­print in 38 cities across 12 main­land prov­inces with 715 self-op­er­ated re­tail stores.

Ex­ec­u­tive Di­rec­tor Hao Lix­iao told a news con­fer­ence in Hong Kong on Mon­day that the com­pany is al­ways look­ing to ex­pand into the Hong Kong and Ma­cao mar­kets. How­ever, he didn’t re­veal ade­tailed time­line, adding that the firm still deals with the lo­cal li­censes, not to mention that prod­uct re­search and the buildup of sales net­works also takes time.

Zhouheiya’sHong Kong IPO high­lighted an in­dus­try­wide trend of main­land duck-food man­u­fac­tur­ers float­ing pub­lic shares. Com­peti­tors like Jiangxi Huang­shanghuang Group listed in Shen­zhen back in 2012, while Hu­nan Juewei has been stuck for more than two years in the Chi­nese main­land’s clogged pipe­line of IPOs.

“Such a trend in­di­cates that growth of main­land duck-food chains has some­what run into a bot­tle­neck which pushes them to raise cap­i­tal via pub­lic list­ings as a growth booster,” said Zhu Dan­peng, a re­searcher at theChi­naBrandRe­search In­sti­tute.

With ri­val Hu­nan Juewei be­ing trapped in­abig log­jamof main­land IPO fil­ings, Zhouheiya’s de­ci­sion to join in a clus­ter of main­land food com­pa­nies float­ing in Hong Kong ap­pears to be a time-sav­ing move.

The IPO log­jam that has long be­set main­land cater­ing com­pa­nies ac­cess­ing main­land cap­i­tal mar­kets was spot­lighted when high- and mi­dend restau­rant chain Xiao Nan Guo Restau­rants Hold­ings, and hot­pot chain Xi­abu Xi­abu turned toHong Kong to list in 2014.

Choos­ing Hong Kong as a list­ing des­ti­na­tion helps com­pa­nies jump the long IPO queue in the Chi­nese main­land, but low val­u­a­tion in the Asia’s fi­nan­cial hub re­mains a sure thing. In par­tic­u­lar, Hong Kong in­vestors still view food stocks listed there as gen­er­ally ex­pen­sive op­tions, which may ex­plain why some be­lieve shares of Zhouheiya are priced a bit too high, saidHan­nahLi, a Hong Kong-based strate­gist with­UOBKayHian.

the num­ber of Zhouheiya’s self-op­er­ated re­tail stores across 12 prov­inces in the Chi­nese main­land


Two em­ploy­ees weigh prod­ucts at a Zhouheiya store at a rail­way sta­tion in Wuchang, Hubei

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