(Yicai Global) July 18 -- The sole supplier of hotpot soup flavorings to China's leading hotpot brand Haidilao listed on the Hong Kong Stock Exchange on July 13 as Yihai International Holding Ltd. (HKG:1579) in a HKD750 million (USD96.7 million) initial public offering.
Yihai was spun off from Haidilao owner Sichuan Haidilao Catering Co. and plans to launch a condiment series in September-October. Yihai boasts brand and first-mover advantages as the sole supplier of Haidilao, which has established itself as a leading hotpot brand in pursuit of high-end, ultimate customer experience.
Yihai was incorporated in the Cayman Islands as an investment holding company in 2013. Haidilao founders Mr. Zhang Yong and his wife Ms. Shu Ping together have an almost 48 percent stake in the company.
At present, over 50 percent of Yihai's operating income comes from related-party transactions with Haidilao. Haidilao's rapid business expansion in recent years led to 168 percent growth in Yihai's operating income over the past two years.
Yihai said 30 percent of the funds raised in the IPO would go to building a production base (phase 1) in Bazhou, Hebei; 20 percent will be spent on potential strategic acquisitions; 25 percent will be used for product promotions and branding operations; and the remainder will be spent on research and development.
According to studies conducted by Frost & Sullivan on the hotpot condiment market last year, Yihai ranks No.2 with a market share of almost 8 percent, while the top five players together account for almost 31 percent, indicating that the market is highly fragmented and offers plenty of room for expansion.
As consumer spending rises, the pricing gap between high-end products and their low-end counterparts narrowed. However, in the case of the hotpot condiment market where ingredients and product quality vary greatly from brand to brand, demand for high-end products will continue to grow.