Wumart Hopes Second Time’s a Charm With New Hong Kong Listing

WM Tech Corp. Ltd., owner of Chinese retailer Wumart Stores, is hoping the second time is the charm as it seeks to relist in Hong Kong five years after it delisted from the same bourse citing uncertain market conditions for hypermarkets in China and as it faced growing challenges from rising e-commerce rivals.

Formerly known as WM International Holding Corp. Ltd., the Beijing-based WM Tech filed for another Hong Kong initial public offering on Tuesday saying this time it plans to bundle its two main businesses for the listing — Wumart and Metro China.

The company did not specify the amount of shares it plans to offer in the prospectus or give a timeframe, but said proceeds would be earmarked for investment in expanding its supply chains, continued digitalization of its retail business and opening new offline stores.

Wumart Stores delisted its shares from the Hong Kong bourse in a deal completed in 2016 after nearly three years of trading. However, times have changed and the grocery retailer saw its profits nearly double in 2020 to 726 million yuan ($110 million), from 394 million yuan in 2019, mainly helped by the addition of Metro.

WM Tech completed the acquisition of an 80% share in German wholesaler Metro AG’s China business for an enterprise value of 1.9 billion euros ($2.1 billion) in October 2019. WM Tech saw revenue surge 72% in 2020 to 39.1 billion yuan, of which Wumart accounted for 63% and Metro for 37%.

As of the end of 2020, WM Tech owned 426 brick-and-mortar Wumart supermarkets and 97 Metro outlets across the country, according to its Tuesday prospectus. Its same-store sales had a 4.67% increase last year, in part due to pushing forward with its digitalization of grocery services as the pandemic discouraged offline shopping.

Online retail sales through an app called Duodian, where consumers could place orders, pay for groceries and order home deliveries, accounted for over 70% of WM Tech’s entire sales revenue. WM Tech claims in the prospectus that the app had over 80 million active users as of end-2020.

Citic Securities Co. Ltd., CMB International Capital Corp. Ltd., and Goldman Sachs are underwriters on the deal.

Other than Wumart and Metro, WM Tech also manages the China operations of British home improvement chain B&Q Ltd. and South Korean department store Lotte Co. Ltd.

Contact reporter Anniek Bao (yunxinbao@caixin.com) and editor Michael Bellart (michaelbellart@caixin.com)

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