Chinese restaurant chain Jiumaojiu jumps 56 per cent on Hong Kong debut after completing biggest IPO of new year

Enoch Yiu

Jiumaojiu International’s shares rose on debut in Hong Kong on Wednesday as the Chinese restaurant chain operator completed the city’s biggest stock offering in the new year.

The stock jumped 56 per cent to close at a day high of HK$10.32 on Wednesday, giving it a market value of HK$13.76 billion, while the Hang Seng Index declined 0.4 per cent. About 373 million Jiumaojiu shares worth HK$3.55 billion changed hands, the third most active counter after Tencent Holdings and Alibaba Group Holding.

The performance from two other market debutants, Beijing Enterprises Urban Resources and CTR Holdings were mixed.

Jiumaojiu raised HK$2.08 billion (US$267.4 million) from its global offering by selling shares at HK$6.60 each, the top end of its range of HK$5.50 to HK$6.60 in its flotation exercise. Total proceeds could rise to HK$2.39 billion if an additional allotment of shares is placed out to meet excess demand, making it the biggest among 22 IPO plans unveiled by companies in the past two weeks.

The strong IPO pipeline will add to a banner year in 2019 when Hong Kong upstaged Nasdaq and the New York rivals as the world’s top venue for initial stock offerings. The exchange has ranked top IPO market worldwide seventh times in 11 years despite of the anti-government protests last for seven months already. Seven more companies will start trading on Thursday.

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Among the 22 IPOs unveiled thus far, 20 are slated for the Main Board, compared with 13 in the same month in 2019 and 14 in 2018, according to stock exchange data.

A slew of potential secondary listings from Chinese technology behemoths, such as Yum China, and NetEase, could further boost the market in the coming months, as the city’s stock index compiler started consultation process to consider adding such companies into its key gauges.

Hong Kong’s key index compiler opens the door for China’s technology behemoths to join Hang Seng stock benchmark

“Jiumaojiu is a well-known restaurant group in mainland China, and well-known retail brands are popular with retail investors,” said Gordon Tsui, chairman of the Hong Kong Securities Association. “ The market sentiment is positive in the beginning of this year, which helps the IPO market.”

Guan Yihong, chairman of the company and related parties own 46.08 per cent of the company after the listing, while several cornerstone investors including BlackRock Funds, China Alpha, WT and GSC Fund hold a combined 4.86 per cent of the company. They face a lock-up period between six and 12 months, according to a company filing at the stock exchange.

Hong Kong expected to ‘stay competitive’ as a top IPO destination in 2020, KPMG says

Jiumaojiu operates 328 outlets in mainland China under five brands, and none in Hong Kong for now. 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.

“We want focus on the mainland market first but we will consider opening in overseas markets where there are big Chinese communities such as in North America and Asia,” Guan said, without specifying any specific locations. “We are also keeping an open mind about opening in Hong Kong in future. We are confident in the city.”

Beijing Enterprises Urban Resources, which manages an integrated waste management system, opened at HK$0.69 unchanged from its IPO price. CTR Holding, a Singapore-based construction group, debuted at HK$0.25 in early trading and fell 29 per cent at the close of trading at HK$0.255.

CTR chairman and chief executive Xu Xu Ping said his company’s business is mainly in Singapore but it list here as it is an active market.

“Hong Kong is close to mainland China which is a big market,” Xu told the Post after the listing ceremony. “The Hong Kong stock market is very active. We have confident to the long term prospect of listing in Hong Kong.”

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