Shares in Chinese hotpot chain Haidilao sizzle on HK debut

The entrance to one of the outlets of Haidilao, one of China's most popular hotpot chains, in Hong Kong, on Sept 10, 2018.
The entrance to one of the outlets of Haidilao, one of China's most popular hotpot chains, in Hong Kong, on Sept 10, 2018.PHOTO: REUTERS

HONG KONG • China's premier hotpot chain Haidilao International soared as much as 10.3 per cent in early trading on its Hong Kong debut yesterday after raising nearly US$1 billion (S$1.37 billion) in its initial public offering (IPO).

Shares opened at HK$18.80, up from an IPO price of HK$17.80, which was already at the top end of its target range, and reached HK$19.64 at one point.

The Sichuan hotpot operator is known for its good customer service.

The restaurant operator said it would use proceeds from the offering to push its global expansion, repay loans and improve food safety-related technology.

The chain has run into trouble before, with a Beijing outlet under fire last year over allegations of a rat-infested kitchen and dirty dishes.

Mr Zhang Yong, 47, founded the chain in 1994 after years working in a tractor factory. He earned 14 million yuan (S$2.8 million) stewarding the company last year, according to a company prospectus.

The chain has kept to its roots and boiling chilli pepper-laden water to cook frozen meat remains a fan favourite. It has expanded rapidly, adding more than 30 restaurants per year since 2015. Revenue has also jumped, with its 341 restaurants earning 647 million yuan on sales of 7.3 billion yuan for the six months ending in June.

The restaurant operator said it would use proceeds from the offering to push its global expansion, repay loans and improve food safety-related technology.

Said strategist Linus Yip at First Shanghai Securities: "Investors will watch closely how well the company can control costs and maintain high growth when its network is already very big."

AGENCE FRANCE-PRESSE, BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on September 27, 2018, with the headline 'Shares in Chinese hotpot chain Haidilao sizzle on HK debut'. Print Edition | Subscribe