On July 30, the Hong Kong Stock Exchange documents showed that Xiao Cai Yuan International Holdings Co., Ltd. further appointed Guoyuan Securities Brokerage (Hong Kong) as its overall coordinator. Accordingly, as of the date of the announcement, the Company has appointed China Thailand, UBS and Guoyuan Securities (Hong Kong) as its overall coordinators.
Synthesis | Company Announcement Prospectus Edit | Arti
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Xiao Cai Yuan is one of the well-known chain restaurants in China's popular and convenient Chinese catering market, ranking among the top restaurants in the industry in terms of business scale and growth rate. According to Frost & Sullivan, the mass convenience Chinese catering market is a sub-market of the Chinese food market, with a unit price of less than RMB 100.
Since its establishment in 2013, the company has been committed to providing consumers with home-cooked dishes and thoughtful service at affordable prices, and has turned "Little Vegetable Garden" into a "family kitchen" for Chinese people that is widely recognized by customers.
As of the Latest Practicable Date, Xiao Cai Yuan had 623 directly operated stores in operation, covering 135 cities or counties in 13 provinces in China. At present, the company's main store operation area is located in East China, and the company has also expanded its store network to other parts of China.
According to Frost & Sullivan, in terms of store revenue in 2023, "Xiao Cai Yuan" ranked first among all brands in China's mass convenience Chinese catering market, with a unit value ranging from RMB50 to RMB100, accounting for 0.2% of the market share. In terms of revenue, the mass convenience Chinese catering market size with a unit value between RMB50 and RMB100 was RMB2,252.9 billion in 2023, accounting for approximately 55.2% of the overall Chinese catering market.
China's economic and social development is undergoing complex and profound historical changes. The per capita disposable income of urban residents has increased steadily and the growth rate has gradually flattened, and the rising urbanization rate and demographic structure change are conducive to the growth of the mass catering market.
Against this backdrop, the fast-growing Chinese catering market caters to the rigid, growing and "delicious" dining needs of the general public, with a large scale and huge growth potential, with a market size of RMB3,618.7 billion in 2023, making it the largest segment in China's catering market.
The mass Chinese catering market is expected to grow at a CAGR of 9.1% from 2023 to 2028 to reach RMB5,587.1 billion by 2028. In particular, in 2023, the market size of the mass convenience Chinese catering market with a unit price of less than RMB50 and RMB50 to RMB100 will be RMB1,365.8 billion and RMB2,252.9 billion, respectively, and is expected to reach RMB2,137.6 billion and RMB3,449.5 billion respectively by 2028, both of which have huge scales.
In 2021, 2022 and 2023, Xiaocai Garden achieved rapid growth and maintained profitability, outperforming the industry level in the following aspects. In terms of revenue, the Company increased from RMB2,646 million in 2021 to RMB3,213 million in 2022 and further increased to RMB4,549 million in 2023. In 2023, the company's revenue increased by 41.6% compared to 2022.
The total number of directly operated stores of the Company increased from 278 at the beginning of the Track Record Period to 542 as of December 31, 2023. Same-store sales at "Little Vegetable Garden" stores increased by 1.2% from 2021 to 2022 and by a further 20.8% from 2022 to 2023.
In terms of store-level operating margin, the Company recorded store-level operating margin of 15.9%, 14.2% and 19.7% in 2021, 2022 and 2023, respectively. The Company's net profit increased from RMB227 million in 2021 to RMB238 million in 2022 and further increased by 124.0% to RMB532 million in 2023. In 2021 and 2022, the Company's net profit margin was 8.6% and 7.4%, respectively, and increased to 11.7% in 2023.
For the four months ended April 30, 2024, the Company recorded steady expansion and growth in store network, revenue and net profit compared to the same period in 2023, with a relatively stable net profit margin of 11.5%. For the four months ended April 30, 2024, Xiao Cai Yuan opened 62 new stores, with revenue and net profit of RMB1,680 million and RMB194 million, respectively.
According to the prospectus, Xiaocaiyuan insists on on-site cooking to provide consumers with healthy and fresh dishes, which are different from prefabricated dishes and gain long-term trust from consumers. Based on consumer preferences and feedback, the company regularly updates its menu to include new dishes and seasonal specials. In order to ensure that consumers get a "delicious and inexpensive" dining experience, the company has carried out reasonable pricing of dishes, and achieved a unit price of RMB50 to RMB70 for dine-in customers in the company's "Small Vegetable Garden" stores.
As of the Latest Practicable Date, Little Vegetable Garden has established a comprehensive supply chain system consisting of a central kitchen and 12 warehouses in China. The company also has a self-built transport fleet of more than 200 vehicles to ensure the efficient delivery of supplies to each store. The central kitchen and warehouse network enables the company to ensure the stability of supply in the company's stores through stocked products and a centralized procurement process. Each of the company's stores is able to replenish inventory on a daily basis.
The company's central kitchen enables store staff to significantly reduce time and effort on labor-intensive processes such as food roughing and packet preparation, helping the company's stores to operate more efficiently. Because the complex and time-consuming procedures are carried out by the company's central kitchen, the company's stores require less work and numbers of employees at the grassroots level, and can prepare dishes faster using clean dishes.
The Chinese food market in China is highly competitive, mainly reflected in the quality and stability of food, price, dining atmosphere and service, the stable supply of high-quality ingredients, and the qualifications of employees.
According to Frost & Sullivan, China's F&B market has shown a growth trend in the past five years, growing from RMB4,271.6 billion in 2018 to RMB5,289 billion in 2023, with a CAGR of about 4.4% from 2018 to 2023. It is expected to grow further to RMB8,262.7 billion in 2028, growing at a CAGR of approximately 9.3% from 2023 to 2028. According to Frost & Sullivan, in terms of store revenue in 2023, "Xiao Cai Yuan" ranked first among all brands in China's mass convenience Chinese catering market with a unit price between RMB50 and RMB100.
In December last year, Xiaocaiyuan announced the completion of a new round of financing, and the investor was Jiahua Capital. This is the second investment of Jiahua Capital in Xiaocai Garden after the completion of the first round of financing in March last year. As the exclusive investor of Xiaocaiyuan, Jiahua Capital has invested a total of 500 million yuan. This is also the largest financing in the mass convenience catering market in recent years.
The proceeds from the Hong Kong IPO are intended to be used to continuously expand the Company's store network to expand the Company's geographical coverage and increase the Company's market penetration. Enhance supply chain capabilities; upgrading the company's smart equipment and digital systems to improve information technology capabilities; and for working capital and general corporate purposes.