Hot Pot Chain Haidilao’s Early Gains Evaporate on IPO Day
(Beijing) — Shares of hot pot chain Haidilao International Holding Ltd. gave back nearly all of their early first-day gains Wednesday in a wild trading debut in Hong Kong.
Haidilao’s stock closed 0.11% higher at HK$17.82 ($2.28) after opening up 5.6% and rising as high as 10% in early trading. The company had set its initial public offering (IPO) price at HK$17.80 — the top of its range — but its shares fell back to that price several times over the course of the day.
Founded in 1994, Haidilao had never raised funds on the public equity market.
At HK$17.82 a share, the hot pot chain finished its first day as a public company with a market cap of HK$94.4 billion, exceeding the valuations of some of its Hong Kong-listed peers, including hot pot chain Xiabuxiabu Catering Management (China) Holdings Co. Ltd.
Haidilao co-founder and Chairman Zhang Yong told Caixin that he chose to list in Hong Kong instead of on the Chinese mainland because listing on the latter looks difficult.
“It isn’t that easy for catering companies to list on the Chinese mainland, where the number of listed ones is very small. I think we are as good as, if not better, than the ones that have already been blocked,” Zhang said.
Only three catering companies are listed on the Chinese mainland, but more than twice that number are on the Hong Kong Stock Exchange. The average price-to-earnings ratio of Hong Kong-listed food companies was 17.2 last year, according to Essence Securities, but Haidilao’s ratio was 68, based on its IPO price.
Operating more than 360 restaurants in China and other markets that include Singapore and Japan, Haidilao will expand further abroad, said Zhang, adding that the best-performing overseas restaurants are in Singapore.
Contact reporter Coco Feng (firstname.lastname@example.org)
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