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Quick Take: Culinary Investors Lick Their Chops for Hong Kong IPOs

Photo: IC
Photo: IC

Hong Kong has for years been attracting food tourists. And now, food investors as well.

Since the beginning of July, six companies in the food and beverage sector have applied to float their shares on the Hong Kong Stock Exchange, according to the companies’ respective regulatory filings. Two of them are aiming at a listing on the main board, while the remaining four plan to go for the Growth Enterprise Market (GEM), which caters to smaller companies with a weaker profit record.

Analysts have said restaurant operators are ideal listing candidates, given their usually simple business models and strong cash flows.

LH Group and Top Standard Corp., two Hong Kong-based restaurant operators, applied to the Hong Kong bourse on Friday for an initial public offering (IPO) at the main board and GEM respectively.

LH Group operates 10 brands and 35 restaurants in Hong Kong, mainly serving Chinese and Japanese cuisine. By the end of 2016, the company earned HK$740 million ($94.6 million) in revenue and HK$40.6 million in net profit, according to its financial statement. Top Standard Corp. currently owns four restaurants in Hong Kong, where diners can order light Cantonese dishes, spicy Sichuan food, or Japanese cuisine. In 2016, the company generated HK$72.9 million in revenue and HK$10.7 million in net profit.

Another IPO candidate is Royal Dynasty International Holding Co. Ltd., which runs Hui Lau Shan, a Hong Kong-based dessert-shop chain. The company currently owns 895 restaurants around China and abroad, including in the U.S. and Canada, according to the company’s IPO application document filed on Aug. 25 to the Hong Kong bourse. In 2016, Royal Dynasty earned 860 million yuan ($131.6 million) in revenue and 72.9 million yuan in net profit.

Contact reporter Dong Tongjian (tongjiandong@caixin.com)

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