(Yicai Global) Nov. 24 -- Shares of Zhongjing Foods tripled in value when they began trading for the first time after the contender to popular Chinese sauce maker Laoganma banked CNY994 million (USD151 million) in its initial public offering.

Zhongjing Foods [SHE: 300908] rose 204 percent to CNY120.80 (USD18.30) on the Shenzhen Growth Enterprise Market yesterday, up from its IPO price of CNY39.74, giving the shiitake mushroom sauce producer a market cap of more than CNY12 billion (USD1.83 billion). The stock gave up some of that gain today, falling 3.2 percent to close at CNY116.95.

Set up in 2002, Zhongjing Food is in competition with big names in the sauce and condiment business such as Foshan Haitian Flavouring and Food as well as Laoganma Special Flavour Foodstuffs, China’s largest maker and seller of chili products, which has over 20 lines including hot sauce.

Henan province-based Zhongjing plans to expand its product line-up and develop more popular items, Vice Chairman Zhu Xincheng said, adding that the firm will also increase its research and development to sell to restaurants and beyond.

Proceeds from the IPO will go to build a production line with output of 30 million bottles of seasoning sauce a year, a production line with an annual output of 1,200 tons of seasoning ingredients, a marketing network, and also for working capital.

Zhongjing Food is a niche player and its market penetration, stock availability, and national operations are not very satisfactory, food analyst industry analyst Zhu Danpeng said, according to the Beijing Business Today. Its profits and product range also hamper its competitive ability, he said.

The company’s net profit rose 45 percent to CNY64.5 million in the six months ended June 30 on revenue of CNY349 million due to channel expansion and as more people ate at home following the coronavirus outbreak. It posted net profits of CNY7.9 million in 2017, CNY8.1 million in 2018 and CNY9.1 million last year on revenues of CNY517 million, CNY530 million and CNY628 million.

First-half sales of its shiitake mushroom sauce, which the firm first brought out in 2008, came in at 25.75 million bottles.

Editor: Peter Thomas