Chinese restaurant chain Jiumaojiu unveils IPO, sets to be first of 2020 listings in Hong Kong
- Jiumaojiu restaurant group is seeking to raise HK$2.2 billion to fund expansion plan and repay older debt
- Guangzhou-based chain is set to be the first of new stock listings in 2020, adding to a bumper year for Hong Kong
Chinese restaurant chain operator Jiumaojiu International Holdings is planning to be the first of new stock listings in Hong Kong in 2020 as the group seeks to ride a consumption boom.
The company is seeking to raise HK$2.2 billion (US$282 million) from the sale of 333.4 million shares at HK$5.50 to HK$6.60 per share, subject to final pricing, in its Hong Kong stock exchange listing plan, it said in a media briefing on Sunday.
The announcement is an early boost for the local exchange, which upstaged Nasdaq and the New York rivals as the world’s top venue for initial stock offerings in 2019. The benchmark Hang Seng Index rose to a five-month high at the close of trading on December 27.
“We are confident in the investment market in Hong Kong which is an international financial centre,” chairman and chief executive Guan Yihong said. “Having a listing status here will be good for our future development.”
The Guangzhou-based group operates 328 outlets in mainland China under five brands. Two of them, Jiumaojiu and Tai Er, contributed 98 per cent of its turnover. Tai Er, whose pickled fish dish has taken the onshore market by storm, is ranked first among all sauerkraut fish restaurants in China, according to consultancy firm Frost & Sullivan.
Guan said the group plans to triple its outlets to 1,158 between now and 2021, to be funded by 72 per cent of the IPO net proceeds. The balance will be deployed to strengthen its supply and support capabilities, repay HK$210 million of debt and use HK$191 million for working capital.
Of the IPO shares, about 300 million will be set aside for international offering and 33.34 million for Hong Kong investors. Guan said the group is optimistic about the response from investors.
The public offering will start from Monday December 30, through Wednesday noon. The stock is expected to start trading on January 15, likely the first in the new year.
The Jiumaojiu group has grown its network from 141 in 2016, taking on more debt to fuel its growth. Its gearing ratio has thus risen 37.9 per cent as of its last published accounts on June 30, up from 24.1 per cent in 2018.
For the six months to June 30, the group recorded a 87.6 per cent increase in profit to 102.03 million yuan, while turnover rose 41.5 per cent 1.23 billion yuan, according to its listing prospectus.