Domino’s Pizza’s Chinese operator, hotpot chain Laowang, among mainland restaurant groups filing for Hong Kong IPOs as they bet on diners returning after Omicron
- Japanese cuisine chain Kamii is also among the catering and restaurant groups seeking investors’ capital
- They are betting diners will regain their appetite for eating out later this year once the outbreak of Covid-19 blighting the country has subsided
Several mainland Chinese restaurant chains have filed for initial public offerings (IPOs) in Hong Kong, betting that diners will regain their appetite for eating out later this year once the current outbreak of Covid-19 blighting the country has subsided.
But for DPC Dash, the exclusive franchisee of Domino’s Pizza in China, Hong Kong and Macau, with 485 stores, the pandemic has had a silver lining.
While operations at its stores in Shanghai and Shenzhen were affected by lockdowns and travel restrictions in March, the pandemic has encouraged Chinese consumers to use the delivery service.
“As a delivery-focused company, we benefited from this trend, as stronger delivery sales drove the continued growth of revenue and average daily sales,” DPC Dash said in its draft prospectus. New York-listed Domino’s Pizza owns about 15.7 per cent of DPC Dash.
It suffered a net loss of 471.1 million yuan (US$73.9 million) in 2021, worsening from 274.1 million yuan in 2020. Bank of America is the sole sponsor of the deal.
With 149 restaurants across 30 cities in China and one in Taipei, Laowang – known for its stewed chicken and pork tripe soup – plans to use the funds raised from the IPO to open another 184 restaurants by 2024, according to its prospectus.
Last year, its average daily restaurant sales slipped to 27,300 yuan (US$4,280), from 31,000 yuan in 2020, due in part to coronavirus containment measures which forced some of its outlets to close temporarily. Net profit plunged 79 per cent last year to 14 million yuan.
CICC and Huatai International are the joint sponsors of the deal.
Kamii Group filed its listing application this week. The operator of Kamii Gourmet Restaurants, with 47 outlets across 18 cities, features “Nihon Ryori”, or traditional Japanese cuisines.
In February it opened a new affiliated brand called Niku, which serves Japanese grilled food, and it aims to expand into hotpot.
Kamii Group’s net profit more than doubled last year to 31.1 million yuan. Guosen Securities (HK) is the sole sponsor of the deal.
Beijing has stuck with its “dynamic zero-case” policy, and Shanghai, China’s financial hub and one of the world’s busiest ports, has been under a citywide lockdown since April 5.
This has led some analysts to dial back their retail sales and growth forecasts for the first quarter.
CICC, for example, said in a research note this month that the surge in Omicron would shave up to 0.7 percentage points off gross domestic product growth in the first quarter, taking it down to about 5 per cent.
Still, economic growth during the second half should recover, to at least 5.5 per cent, according to the UBS Chief Investment Office, after falling below 5 per cent in the first half. Beijing has targeted 2022 full year growth at “around 5.5 per cent”.