Hongjiu Fruit Valued at HK$18.7 Billion on Hong Kong Debut

On Sept. 5, Chongqing Hongjiu Fruit Co. Limited was listed on the Main Board of the Hong Kong Stock Exchange, thus becoming China’s first publicly traded fruit distributor.

Hongjiu Fruit (06689.HK) opened its first day of trading at 40 Hong Kong dollars (US$5.10) per share. The share price rose 3% during the morning session, briefly pushing the company’s market value above HK$19 billion (US$2.42 billion), but closed the day flat, giving Hongjiu Fruit a market value of HK$18.68 billion (US$2.38 billion).

According to the company’s prospectus, over the next three years, approximately 45% of the proceeds from Hongjiu Fruit’s initial public offering will be used to improve the fruit supply chain, around 22% will be spent on branding and product promotion, and 16% will be used to upgrade the digital system and develop an internet platform for the global fruit industry. Around 7% of the proceeds will be used to repay bank loans, with 10% retained to supplement liquidity needs and fulfill other general corporate purposes.

In 2019, 2020 and 2021, Hongjiu Fruit reported gross profit margins of 18.9%, 16.6% and 15.7% respectively, indicating a downward trend. However, in the first five months of 2022, the company’s gross profit margin reached 19.6%, exceeding the annual gross profit margins of the previous three years. This improvement appears to have coincided with the company’s phasing out of its marketing campaign launched in September 2020.

Hongjiu Fruit’s founder Deng Hongjiu remains the company’s largest shareholder, holding 32.78% of the company’s shares. His wife, Jiang Zongying, who holds the position of general manager, is the second-largest shareholder, holding 9.15%. The company’s largest external investor is Alibaba, which invested in Hongjiu Fruit in September 2020 and currently holds 7.76% of its shares.

Image: Unsplash

This article was translated from Chinese. Read the original article.