(Yicai Global) July 14 -- Haidilao International Holding, a Chinese hotpot chain, is seeking to spin off its overseas business unit for a listing in Hong Kong.

Super Hi International Holding submitted its application to Hong Kong Stock Exchanges and Clearing yesterday. At the same time, Haidilao said it intends to open outlets in new markets such as the United Arab Emirates and Spain.

The plan was expected. On July 11, the Chengdu-based restaurant operator said it is considering spinning out Super Hi. Upon completion, the initial public offering would become the third listing for Haidilao’s actual controller Zhang Yong after Haidilao and condiments brand Yihai International Holding.

Haidilao is seeking growth elsewhere after the Covid-19 pandemic hit its eat-in catering business in China. The firm closed more than 300 restaurants last year, leading to an impairment loss of more than CNY3.7 billion (USD549.1 million).

The major hotpot chain acknowledged that the IPO plan involves risks. Haidilao has little or no experience in operating restaurants in the UAE and Spain so it may not be able to predict market changes in these regions, according to the prospectus. Moreover, it relies on local authorities for licensing, which may cause delays.

Haidilao has opened restaurants around the world, including the United States, Australia, Vietnam, Singapore, and the United Kingdom, according to its website. Last year, its overseas business made USD310 million in revenue, up from USD230 million in 2019, resulting in a compound annual growth rate of nearly 16 percent, based on yesterday's statement. Such revenue recovered in the first quarter of this year to USD109 million, up 60 percent from a year ago.

Hotpot is eaten best at restaurants, data suggest. Even abroad, people tend to prefer going to the restaurant as Haidilao's takeout hotpot and sales of hotpot sauces have not really taken off. In the first quarter, the company's eat-in business overseas earned USD105 million in revenue, making up more than 96 percent of the total.

The expected listing failed to spur a stock price rally. Haidilao's stock price [HKG: 6862] closed down 2 percent at HKD16.7 (USD2.10).

Editor: Emmi Laine, Xiao Yi