Detergent Giant Blue Moon Cleans Up in Hong Kong IPO

China’s biggest detergent maker, Blue Moon, cleaned up in its debut on the Hong Kong Stock Exchange Wednesday with its shares closing 13% higher, spurred by significantly increased profits from Covid-19 demand for disinfectants.

Backed by private equity firm Hillhouse Capital Group, Blue Moon Group Holdings Ltd. raised HK$9.58 billion ($1.24 billion) in the IPO, selling 747 million shares at HK$13.16 apiece. That gives it a valuation of HK$85.5 billion.

The funds raised could increase to HK$11 billion if international underwriters, including BNP Paribas and Citigroup, exercise over-allocation options to issue up to 15% more of the total shares.

Nearly 90% of the funds raised will be allocated by Blue Moon to marketing, expansion of distribution networks and increased production capacity, according to the company’s prospectus.

A boom in disinfectant sales helped drive Blue Moon’s net profit in the January to June period to HK$302 million, up 38.6% year-on-year. Its revenue dropped one-tenth in the same period to HK$2.4 billion due to weaker demand for fabric care products.

The 28-year-old detergent giant is seeking to modernize its operations by collaborating with e-commerce platforms to cater to younger Chinese who prefer shopping online.

Revenue generated via online sales platforms rose 7 percentage points last year to make up 47.2% of Blue Moon’s revenue, the company’s prospectus showed. This beat an average 22.8% online penetration rate for the country’s household care sector.

The company’s online revenue share climbed further to 58.8% in the first half of 2020, partly contributing to robust growth in profit.

Contact reporter Lu Yutong (yutonglu@caixin.com)

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