Food Brands' IPO Rush: Duck necks to preserved plums, to the markets they come
Updated 22:51, 29-Sep-2018
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Staying with IPOs. Many food brands are trying to go public. Haidilao's listing is just one example. The products they sell may be cheap, but as Chen Tong shows us, the food companies have big plans.
The hotpot brand Haidilao, duck neck food chains Juewei Foods and Zhou Heiya, and snack retailer Laiyifen. The brands are well-known and very affordable, and their leadership and popularity as specialty foods has made them popular enough to go public. What they gain from doing that, of course, is cash in hand. Preserved food maker Ziyan Foods, for example, is planning to IPO in the next two or three years. The company hopes the financing will help them open overseas markets.
ZHAO HANLI, VP OF OPERATIONS SHANGHAI ZIYAN FOODS "Going public will help us improve our management team. That will give us more strength, which we will need because we are gradually preparing for overseas expansion and that will take more staff and legal knowledge."
What makes these companies so ambitious is their market success so far. Juewei Foods, for example, saw year-on-year profits increase 33 percent in the first half of this year, while Haidilao saw a year-on-year profit increase of 22 percent last year. Going public based on this kind of local success is an effective way to turn themselves from local brands into national and even international brands.
YANG ZHONGNING, INVESTMENT CONSULTANT INDUSTRIAL SECURITIES "But considering the issue of food safety, these companies will want to run their own operations. But that takes capital, so that's why they want to go public."
The fact these companies can consider listing reflects the fast growth of China's consumption sector. Previously people may have only cared about food prices, but now they prefer to buy well-known brands. And this shift in consumer desire has fueled the brands' growth.
YANG ZHONGNING, INVESTMENT CONSULTANT INDUSTRIAL SECURITIES "In the future, even more advantages will accrue to big brands. Preserved foods are another example, where we see that good brands now stand out."
But experts are quick to point out, that not every well-known food brand is guaranteed a listing, as regulators' scrutiny of IPOs in the A-share market is becoming more strict. Well-known domestic food brand Teway Foods has tried for IPO approval five times, and still on the waiting list. Popular snack food maker Three Squirrels is also still on the waiting list after the regulator raised questions about the company's application.