HDL.NASDAQSuper Hi International Holding LTD

F-1/A: Super Hi International Holding Ltd. Files Amendment for U.S. IPO, Aiming to Expand Global Hot Pot Brand

Sentiment:

Amendment to Registration Statement (Form F-1)

📋All filings for Super Hi International Holding LTD
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Super Hi International Holding Ltd., operator of Haidilao hot pot restaurants, files an amendment to its F-1 registration statement for a U.S. IPO, seeking funds for global expansion and technological enhancements.

Capital raiseThe company is offering 2,692,700 American depositary shares, or ADSs.The underwriters have a 30-day option to purchase up to an additional 403,900 ADSs from the company at the initial public offering price less the underwriting discount.We estimate that the net proceeds from this offering will be approximately US$48.80 million, or approximately US$56.82 million if the underwriters exercise their option to purchase additional ADSs in full, at an assumed initial public offering price of US$21.35 per ADS, based on the closing price of our ordinary shares and exchange rate set forth on the cover page of this prospectus, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.We intend to use the net proceeds of this offering as follows: (i) approximately 70% for strengthening our brand and expanding our restaurant network globally; (ii) approximately 10% for investing in our supply chain management capabilities, such as building more central kitchens; (iii) approximately 10% for research and development to enhance digitalization and other technologies used in our restaurant management; and (iv) approximately 10% for working capital and other general corporate purposes.
Worse than expectedThe company incurred a net loss of US$4.5 million for the three months ended March 31, 2024, as compared to a net profit of US$5.6 million for the three months ended March 31, 2023.The primary reason for the net loss is net foreign exchange losses of US$13.0 million mainly contributed by unrealized foreign exchange losses during the three months ended March 31, 2024, which amounted to losses of US$1.8 million for the three months ended March 31, 2023.

Summary

  • Super Hi International Holding Ltd., a leading Chinese cuisine restaurant brand, is pursuing an initial public offering (IPO) in the United States.
  • The company plans to list its American Depositary Shares (ADSs) on the Nasdaq Stock Market under the symbol HDL.
  • The IPO aims to raise capital for strengthening the Haidilao brand, expanding the restaurant network globally, investing in supply chain management, and enhancing digitalization.
  • As of December 31, 2023, Super Hi operates 115 self-operated Haidilao restaurants in 12 countries across four continents.
  • The company's financial performance shows revenue growth, with US$686.4 million in 2023 and a net profit of US$25.3 million.
  • The company faces risks including competition, food safety incidents, and fluctuations in exchange rates.
  • The offering consists of 2,692,700 ADSs, with an option for underwriters to purchase an additional 403,900 ADSs.
  • Entities controlled by Mr. Yong Zhang will own 45.66% of the outstanding shares after the offering.

Sentiment

Score: 6

Explanation: The document presents a mixed sentiment. While the company shows revenue growth and expansion, it also faces risks and incurred net losses in the past. The recent quarterly results show a loss, but the company is taking steps to address the issues. The sentiment is cautiously optimistic.

Positives

  • The company has a proven management philosophy that enables sustainable international expansion.
  • The company has achieved strong growth and margin expansion in the past three years.
  • The company has a strong local know-how and international operating capabilities.
  • The company has a seasoned management team with a corporate culture that prescribes acting with kindness.
  • The company's restaurant level operating profit margin significantly improved from 4.1% in 2022 to 9.0% in 2023.

Negatives

  • The company incurred net losses in 2021 and 2022.
  • The company faces intense competition in the international market for catering services.
  • The company may fail to maintain or enhance brand recognition or reputation.
  • The company's multi-jurisdiction operations may lead to increasing risks and uncertainties and the company's management system may not be effective to address risks and uncertainties in the company's international restaurant operations.
  • The company may fail to retain existing guests or attract new guests, and the company's financial condition and business operations may be materially and adversely affected.

Risks

  • The company's historical financial and operating results may not be indicative of future performance.
  • The company faces risks related to food safety incidents and food-borne illnesses.
  • The company will continue to expand its restaurant network, which may increase risks and uncertainties.
  • Rising interest rates could negatively impact the company's performance and restaurant expansion plans.
  • An active trading market for the ADSs may not develop and the trading price for the ADSs may fluctuate significantly.

Future Outlook

The company intends to continue growing its international Haidilao brand, enhance the dining experience, strategically optimize and expand its restaurant network, and identify opportunities for organic growth and potential acquisitions.

Industry Context

The company operates in the intensely competitive international catering service industry, facing competition from local Chinese cuisine restaurants and international chains. The international market for Chinese cuisine restaurants is expected to grow from US$306.1 billion in 2022 to US$445.2 billion in 2027, with hot pot being one of the fastest-growing segments.

Comparison to Industry Standards

  • The document states that Super Hi International Holding Ltd. was the third largest Chinese cuisine restaurant brand in the international market in terms of 2022 revenue.
  • The document states that Super Hi International Holding Ltd. was the largest Chinese cuisine restaurant brand originating from China in the international market in terms of 2022 revenue.
  • The document states that Super Hi International Holding Ltd. was the largest Chinese cuisine restaurant brand in the international market in terms of number of countries covered by self-operated restaurants as of December 31, 2022.

Related Party Transactions

  • The company purchases hot pot soup flavoring and Chinese-style compound condiment products and other related supplies from Yihai International Holding Ltd., a company controlled by Mr. Yong Zhang.
  • On October 31, 2023, the company sold all of its equity interest in JAPAN HAI Co., Ltd., a wholly-owned subsidiary of our company, to Newpai, a wholly-owned subsidiary of HDL Group, for a cash consideration of US$17.4 million.
  • Loans were made to and by subsidiaries of HDL Group from time to time, prior to the completion of the Group Reorganization.

Stakeholder Impact

  • Shareholders: Potential for increased value through company growth, but also risk of price fluctuation.
  • Employees: Continued employment and potential for career advancement with company expansion.
  • Customers: Enhanced dining experience and wider availability of Haidilao restaurants.
  • Suppliers: Increased business opportunities through expanded supply chain.
  • Creditors: Potential for increased financial stability and repayment capacity.

Next Steps

  • The company will continue to grow its international Haidilao brand.
  • The company will enhance its dining experience and propagate Chinese culinary heritage internationally.
  • The company will enhance restaurant performance and explore new sources of revenue.
  • The company will strategically optimize and expand its restaurant network.
  • The company will identify opportunities for organic growth and seek potential acquisition opportunities.

Key Dates

DateDescription
1994Haidilao's roots in Sichuan, China.
2012Opened first restaurant in Singapore.
May 6, 2022SUPER HI INTERNATIONAL HOLDING LTD. incorporated in the Cayman Islands.
December 20, 2022Record Date for HDL Group's distribution of SUPER HI shares.
December 30, 2022Ordinary shares listed on the HKEx.
June 12, 2024Annual General Meeting of the company.

Keywords

Haidilao, IPO, ADSs, restaurants, hot pot, international expansion, Chinese cuisine, financial results

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