F-1/A: CCH Holdings Ltd Targets Nasdaq IPO for Malaysian Hotpot Expansion

Malaysian specialty hotpot chain CCH Holdings Ltd plans to list 1.25 million ordinary shares on Nasdaq, aiming to raise up to $5.06 million for strategic expansion and brand building.

Summary

• CCH Holdings Ltd is a leading specialty hotpot restaurant chain in Malaysia, specializing in chicken and fish head hotpot, operating under brands like Chicken Claypot House and Zi Wei Yuan.
• As of the prospectus date, the company operates or licenses a total of 34 restaurant outlets, including 16 company-owned and 14 franchised in Malaysia, and 4 franchised internationally.
• Total revenues decreased by 8.8% from US$9.78 million in 2023 to US$8.92 million in 2024, primarily due to a decline in company-owned restaurant operations.
• Net income significantly increased by 147.8% from US$368,614 in 2023 to US$913,401 in 2024, driven by improved gross profit margins and reduced operating expenses.
• The company plans to offer 1,250,000 ordinary shares in its initial public offering (IPO) on the Nasdaq Capital Market, with an expected price range of $4.00 to $6.00 per share.
• Estimated net proceeds from the IPO are approximately US$4.20 million (or US$5.06 million if the over-allotment option is fully exercised).
• Proceeds will be allocated to restaurant network expansion (40%), brand building and marketing (30%), diversification of peripheral products (20%), and general corporate purposes (balance).
• Mr. Goh Kok Foong, the founder and CEO, will remain a controlling shareholder with 50.49% of voting power post-IPO (or 50.01% if over-allotment is exercised).
• The company qualifies as an 'emerging growth company' and a 'foreign private issuer,' allowing for reduced reporting and corporate governance requirements.

Sentiment

Score: 7

Explanation: The company shows strong net income growth and improved gross margins through cost optimization, and has clear expansion plans in growing markets. However, overall revenue declined, cash from operations turned negative, and there are identified material weaknesses in internal controls, along with significant dilution for new investors. The IPO itself is a positive step for growth.

Positives

• Net income increased significantly by 147.8% from US$368,614 in 2023 to US$913,401 in 2024.
• Gross profit margin improved from 22.6% in 2023 to 27.0% in 2024, reflecting enhanced cost control and operational efficiency.
• Franchise licensing revenue grew substantially by 118.7% from US$0.31 million in 2023 to US$0.67 million in 2024, indicating successful brand expansion.
• The company is recognized as the third largest specialty hotpot restaurant chain in Malaysia by company-owned restaurant revenues in 2024, and its Chicken Claypot House brand is the largest chicken hotpot brand by outlets as of June 30, 2025.
• Strategic expansion plans target existing markets (Malaysia, Thailand) and new international locations (Vietnam, Cambodia, Indonesia, Hong Kong, Taiwan, U.S., UK) with strong growth potentials.
• Central kitchen management ensures consistency, operational efficiency, and benefits from economies of scale in food production and supply chain.
• Strong supply chain capabilities are maintained through established long-term partnerships with suppliers and stringent quality control procedures.
• The management team is dedicated and experienced, with over 15 years in the food and beverage industry.
• The specialty hotpot market in Malaysia is projected to grow at an 8.1% CAGR from 2025-2029, and the U.S. market at a 14.1% CAGR, presenting significant opportunities.

Negatives

• Total revenues decreased by 8.8% from US$9.78 million in 2023 to US$8.92 million in 2024, primarily due to a 19.1% decrease in company-owned restaurant operations revenue.
• Net cash provided by operating activities in 2023 (US$27,428) turned into net cash used in operating activities in 2024 (US$297,730).
• Cash and cash equivalents decreased from US$1,094,705 in 2023 to US$545,472 in 2024.
• Two company-owned restaurant outlets were closed in the second half of 2024 due to significant sales decreases.
• Domestic economic instability in Malaysia has negatively affected market sentiment and consumer spending on dining out.
• Rising employment costs in Malaysia, including a minimum wage increase from MYR1,500 to MYR1,700 effective February 1, 2025, are expected to increase staff costs.
• Identified two material weaknesses in internal control over financial reporting as of December 31, 2024: lack of sufficient U.S. GAAP and SEC reporting personnel, and lack of a formal risk assessment process and internal control framework.
• New investors in the IPO will experience immediate and substantial dilution of US$4.52 per ordinary share at the assumed initial public offering price of US$5.00.

Risks

• Market recognition of brands is crucial; any damage to reputation (e.g., food safety, service quality, negative publicity) could adversely impact business.
• Inability to retain existing customers or attract new ones by delivering high-quality dining experience could materially and adversely affect financial condition.
• Continued success depends on the ability to react to evolving customer preferences and food trends.
• Expansion plans may not be successful due to challenges in identifying suitable locations, managing supply chain, hiring qualified employees, engaging licensees, controlling costs, and obtaining licenses.
• Need for additional financing for expansion; failure to obtain sufficient funding could adversely affect growth.
• Historical financial and operating results may not be indicative of future performance, and historical profitability levels may not be sustained.
• Shortage or interruption in supply of key food ingredients (Chinese garden chicken, grouper fish) could have a material adverse effect.
• Profit margins and operating results are susceptible to fluctuations in raw material costs.
• Reliance on a central kitchen; significant disruption could negatively impact business.
• Food safety concerns and health risks of food offerings could adversely affect business and brand image.
• The specialty hotpot restaurant market in Malaysia is highly competitive.
• Multi-jurisdictional operations expose the company to various risks, including unfamiliar competitive landscapes, different consumer preferences, supplier reliability, intellectual property infringement, economic/political instability, foreign currency fluctuations, and regulatory compliance.
• Rising interest rates could negatively impact performance and restaurant expansion plans.
• Exposure to liabilities under the U.S. Foreign Corrupt Practices Act and anti-corruption/anti-money laundering laws of Malaysia and other jurisdictions.
• The market price of ordinary shares may be volatile or decline regardless of operating performance, potentially resulting in significant losses for investors.
• The company is a 'controlled company' under Nasdaq Listing Rules, allowing reliance on exemptions from certain corporate governance requirements, which may afford less protection to shareholders.
• As an 'emerging growth company' and 'foreign private issuer,' the company is eligible for reduced reporting and corporate governance requirements, which may make its ordinary shares less attractive to investors or afford less protection.
• Shareholders may face difficulties in protecting their interests and enforcing rights through U.S. courts due to the company's incorporation under Cayman Islands law and operations in Malaysia.
• Anti-takeover provisions in the A&R Company Listing Articles could have a material adverse effect on the rights of ordinary shareholders.
• Failure to implement and maintain an effective system of internal controls could lead to inaccurate reporting or fraud, affecting investor confidence and share price.
• Lack of experience of the management team as officers of publicly-traded companies may hinder compliance with the Sarbanes-Oxley Act.
• Future issuances or sales of substantial amounts of ordinary shares in the public market could materially and adversely affect the prevailing market price and the company's ability to raise capital.
• Short selling may drive down the market price of ordinary shares.
• The company does not expect to pay dividends in the foreseeable future, requiring investors to rely on price appreciation for a return on investment.
• As a holding company, the company depends on its subsidiaries to distribute funds for dividend payments or financial obligations.
• Management will have considerable discretion in the application of net proceeds from the IPO, and such uses may not produce income or increase share price.
• There is no assurance that the company will not be a Passive Foreign Investment Company (PFIC) in any taxable year, which could result in significant adverse U.S. federal income tax consequences to U.S. investors.

Future Outlook

The company plans strategic expansion in existing markets (Malaysia, Thailand) and new international locations (Vietnam, Cambodia, Indonesia, Hong Kong, Taiwan, U.S., UK) over the next three to five years, focusing on areas with large Asian communities. It intends to continuously develop new menu items, further upgrade supply chain capabilities, and identify opportunities to expand and diversify its business portfolio, including potentially developing self-operated chicken and fish farms and establishing overseas manufacturing facilities.

Management Comments

• We are committed to providing the most authentic Sichuan hotpot experience with Hong Kong style chicken hotpot traditions, to suit the discerning Malaysian palate.
• With our established brands in specialty hotpot and exclusive signature dishes that are well received by customers, we are committed to further expanding our reach in Malaysia and beyond.
• We believe that our expanding network of restaurant outlets will enhance our brand image, attract more consumers and franchise partners, reduce consumer acquisition costs, promote brand loyalty, and in turn increase sales.
• A growing scale will also enable us to gain more bargaining power over suppliers, which we believe will further lower our costs and expenses as a percentage of our net revenues.
• We are dedicated to continuously improving our negotiating powers with suppliers and reducing procurement costs through bulk purchasing of ingredients and supplies, with the aim to lower overall food costs and enhanced profitability through competitive pricing.
• We believe that the range of management experience promotes diverse perspectives and creative thinking, which in turn results in innovative and effective ways of operating our restaurants and growing our business.
• We trust that our management team's collective experience, the ability to work as a collaborative team and ultimately, and the ability to effectively implement our business philosophy, are critical to our success and will continue to contribute to our growth and expansion.

Industry Context

The catering services industry in Malaysia is fragmented and highly competitive, with the top five specialty hotpot restaurant chains holding 41.7% market share. The specialty hotpot market in Malaysia grew at a CAGR of 2.3% from 2019-2024 and is projected to grow at an 8.1% CAGR from 2025-2029, driven by rising demand for diverse flavors, diverse demographics, increased dining-out amid rising affluence, and positive social media influence. Southeast Asia, Hong Kong, Taiwan, and the U.S. also show strong growth potentials for specialty hotpot, with the U.S. market growing at a CAGR of 13.2% from 2019-2024 and projected at 14.1% from 2025-2029.

Comparison to Industry Standards

• CCH Holdings Ltd was the third largest specialty hotpot restaurant chain in Malaysia in terms of revenues generated by company-owned restaurants for the year ended December 31, 2024.
• The company's Chicken Claypot House brand was the largest chicken hotpot brand in Malaysia in terms of number of restaurant outlets as of June 30, 2025.
• The top five specialty hotpot restaurant chains in Malaysia captured 41.7% of the market share in terms of revenue, with CCH Holdings Ltd holding a 2.5% market share in 2024.
• The Malaysian catering services industry recovered to US$16.5 billion in 2024, slightly exceeding pre-pandemic levels, and is forecasted to reach US$21.6 billion in 2029, representing a CAGR of 5.7% from 2025-2029.
• The specialty hotpot market in Malaysia is expected to grow at an impressive CAGR of 8.1% from 2025-2029, reaching US$391.8 million.
• The market size of specialty hotpot restaurants in Southeast Asia is expected to rise at a CAGR of 7.7% from 2025-2029, reaching US$2,645.1 million in 2029.
• The U.S. market for specialty hotpot is projected to grow rapidly at a CAGR of 14.1% from 2025-2029.

Management Changes

Corporate Governance

Legal Proceedings

• Not currently a party to, nor aware of any threat of, any legal or administrative proceedings that are likely to have any material and adverse effect on business, financial condition, cash flow, or results of operations.
• May be involved in claims or proceedings related to proprietary know-how or intellectual property, including recipes, which could harm brand value.
• Susceptible to brand infringement such as counterfeiting and other unauthorized uses of intellectual property rights, which may require costly litigation to resolve.

Related Party Transactions

• Sales of food ingredients and condiments to related parties (licensees and entities controlled by Mr. Goh Kok E and Mr. Goh Kok Foong) amounted to US$1,190,368 in 2024 (US$1,190,290 in 2023).
• Franchise licensing income from related parties amounted to US$1,190,368 in 2024 (US$1,190,290 in 2023).
• Historically provided interest-free, on-demand loans to Mr. Goh Kok Foong (US$488,920 outstanding as of Dec 31, 2024, settled in June 2025) and Mr. Goh Kok E (US$500,432 outstanding as of Dec 31, 2024, settled in June 2025) for personal use.
• Provided interest-free credit facilities to ZWY Shenzhen (up to US$492,225, maturity Aug 1, 2028; US$489,274 outstanding as of Dec 31, 2024) and Abang Adek Holdings Sdn. Bhd. (up to US$238,617, maturity July 16, 2027; US$238,617 outstanding as of Dec 31, 2024) to support their operations.
• Made capital injections to CCH KCH Sdn. Bhd. (US$87,437), CCH (Sabah) Sdn. Bhd. (US$30,603), and CCH Tasty Sdn. Bhd. (US$17,487) in 2024.
• Amounts due from related parties, current, totaled US$2,697,519 as of December 31, 2024.
• Amounts due to related parties, current, totaled US$177,075 as of December 31, 2024.

Stakeholder Impact

• Shareholders: New investors will experience significant dilution (US$4.52 per share). The controlling shareholder structure may limit minority shareholder influence. No dividends are expected, requiring reliance on share price appreciation.
• Employees: Rising employment costs in Malaysia (minimum wage increase) could impact staff costs. The company aims to attract, retain, and motivate highly experienced personnel for expansion.
• Customers: Expansion plans aim to increase reach and brand loyalty. Continuous menu development and central kitchen management are intended to ensure high-quality and consistent dining experiences. Food safety and evolving preferences are critical for customer satisfaction.
• Suppliers: Strengthening supply chain capabilities and potentially developing self-operated farms could impact existing supplier relationships. Bulk purchasing aims to improve negotiating power.
• Creditors: Increased interest rates could raise borrowing costs. The company relies on cash flow from operations, capital contributions, and bank loans for liquidity.

Next Steps

• Complete the initial public offering and list ordinary shares on the Nasdaq Capital Market under the symbol CCHH.
• Expand the restaurant network in existing markets (Malaysia, Thailand) and new international locations (Vietnam, Cambodia, Indonesia, Hong Kong, Taiwan, U.S., UK) over the next three to five years.
• Continuously develop new menu items for restaurant outlets.
• Further upgrade supply chain capabilities, including potentially developing self-operated chicken and fish farms.
• Diversify the business portfolio by expanding peripheral products (e.g., instant noodles) and sales channels, and establishing manufacturing facilities in international locations.
• Remediate identified material weaknesses in internal control over financial reporting by recruiting U.S. GAAP-knowledgeable staff, establishing a formal internal control framework, and strengthening IT general controls.

Key Dates

Recommendation

While the company demonstrates strong net income growth and improved gross margins through cost optimization, the overall revenue decline in 2024, negative cash flow from operations, and identified material weaknesses in internal controls present notable concerns. The IPO offers capital for strategic expansion into growing markets, which is positive, but new investors face significant dilution. The controlling shareholder structure and reliance on foreign private issuer exemptions also introduce governance considerations. A 'hold' recommendation is appropriate as the company navigates its public listing and executes its growth strategies, balancing the positive profitability trends and expansion potential against the revenue contraction in its core business and internal control issues. Investors should monitor the successful implementation of expansion plans and remediation of internal control weaknesses.

Keywords

Specialty Hotpot, Malaysia Restaurants, Chicken Claypot House, Zi Wei Yuan, IPO, Nasdaq Listing, Restaurant Chain, Food & Beverage, Emerging Growth Company, Foreign Private Issuer, Southeast Asia Expansion, Corporate Governance, Risk Factors, SEC Filing, Financial Performance, Capital Raise, Supply Chain Management, Cayman Islands Company