Source of this article: Times Finance Author: Li Xinting
Haidilao founder Daniel Zhang has another new listed company.
On May 13, Haidilao disclosed with the U.S. Securities and Exchange Commission (SEC) that Haidilao's overseas business, Tehai International, will issue 2,692,700 American Depositary Shares (ADS), which is expected to be traded on the NASDAQ stock market under the symbol "HDL". Upon completion of the Offering, the entities controlled by Daniel Zhang will collectively own 45.66% of the issued shares of the Company, assuming that the underwriters do not exercise the option to purchase additional ADSs.
Tehai International (09658.HK) HK) previously said that the dual listing, if successful, will enhance the company's corporate image and influence in the international capital market and consumer market, and further strengthen the liquidity of its shares. Through the sale, Tehai International will raise more funds to enhance the brand and expand its global restaurant network.
This is only a year and a half since Tehai International was listed on the Hong Kong Stock Exchange in December 2022. If Tehai International successfully lands on NASDAQ, Haidilao founder Daniel Zhang and his wife will launch a new project in Haidilao (06862. HK), Yihai International (01579. HK), Tehai International (09658. HK) ushered in its fourth IPO.
On the evening of the same day, the unaudited financial information for the first quarter of 2024 released by Tehai International showed that in the three months ended March 31, 2023 and 2024, Tehai International recorded a total of 104 same-store stores, with total revenue increasing by 16.6% from US$161 million in the same period last year to US$188 million, and a net loss of US$4.5 million during the period, while Tehai International has just turned a profit in 2023.
Image source: Picture Worm Creative
Overseas heavy positions in Southeast Asia
Tehai International is principally engaged in the catering business outside Haidilao Greater China (including Chinese mainland, Hong Kong, Macau and Taiwan). On the whole, Haidilao goes to sea mainly to transport the "quintessence" of hot pot to overseas Chinese gathering places with the same cultural roots. Southeast Asia, which is close to China and has similar consumer tastes, is an important position of Tehai International.
In 2012, Haidilao opened its first overseas branch in Clarke Quay, Singapore, and more than ten years later, Haidilao's store network has spread to major Chinese communities around the world.
As of December 31, 2023, Tehai International operated a total of 115 Haidilao stores in the international market, of which 70 were located in Southeast Asia, 17 in East Asia, 18 in North America, and 10 in other regions (including Australia, the United Kingdom and the United Arab Emirates).
Despite the early development of overseas territory, the performance of Tehai International has not yet been stable and profitable. Affected by the epidemic and rapid expansion, from 2019 to 2022, Tehai International's revenue was about US$233 million, US$221 million, US$312 million and US$558 million, respectively, and the net loss was US$33.02 million, US$53.76 million, US$151 million and US$41.248 million.
In 2023, due to the recovery of consumption and business adjustment, the performance of Tehai International has improved, and while the revenue has increased, the net profit will reach 25.653 million US dollars, turning losses into profits, and the turnover rate will also increase from 3.3 times/day in 2022 to 3.5 times/day. According to the first quarter report of 2024, the turnover rate of Tehai International in the first quarter increased from 3.3 times per day in the same period of 2023 to 3.9 times per day, and the average daily revenue and same-store sales of each restaurant also increased year-on-year. However, due to foreign exchange losses, in the first quarter, Tehai International had a net loss of US$4.5 million.
On May 14, Lai Yang, a member of the Expert Committee of the China Federation of Commerce and executive vice president of the Beijing Business Economics Association, told the Times Weekly reporter that with the recovery of catering consumption, not only overseas Chinese, but also overseas non-Chinese consumers have considerable demand for Chinese food, and the domestic catering brand market has broad prospects. However, due to the different overseas market environment, the management ability, employee incentive mechanism and product control ability of the company's cross-regional development are greatly tested.
"Under the premise of substantial growth in market demand, the key to whether an enterprise can successfully go overseas lies in management. In terms of controlling management costs, improving operational efficiency, and even supply chain management, enterprises need more attention and investment. Lai Yang analyzed.
Tehai International said in the prospectus that about 70% of the net proceeds from the dual listing will be used to enhance the brand and expand the global restaurant network; About 10% will be used to invest in supply chain management capabilities, such as building more central kitchens; About 10% will be spent on R&D to enhance the use of digitalization and other technologies in restaurant management; Approximately 10% will be used for working capital and other general corporate purposes.
Mr. and Mrs. Daniel Zhang are ringing the bell again
Up to now, Daniel Zhang and Shuping have three listed companies on the hot pot industry map: Haidilao, Yihai International and Tehai International.
Haidilao and Tehai International are the main operators of Haidilao's domestic and foreign stores respectively; Yihai International is engaged in the production and sales of hot pot seasonings, Chinese compound seasonings and convenient fast food products in China and certain overseas countries and regions. As of the end of 2023, Haidilao, Tehai International and Shuhai Supply Chain Group (formerly known as Haidilao's catering supply chain subsidiary) contributed a total of 32.7% of Yihai International's revenue.
Mr. and Mrs. Daniel Zhang Shuping are the controlling shareholders of Haidilao, Tehai International and Yihai International, and as of the end of 2023, the shares jointly held by the three companies accounted for 60.35%, 54.28% and 31.44% respectively. In addition, Daniel Zhang serves as the chairman of the board of directors of Haidilao, Shu Ping serves as the chairman of the board of directors of Tehai International, and Shu Ping and Daniel Zhang serve as executive directors and non-executive directors of Yihai International respectively.
In terms of performance, the couple's hot pot industry has a considerable momentum of development. In 2023, Haidilao's revenue will be 41.453 billion yuan, and the net profit attributable to the parent company will reach 4.499 billion yuan, successfully reversing the performance loss during the epidemic. Since its spin-off from Haidilao in 2016, Yihai International's revenue has also continued to grow, with revenue increasing from 1 billion yuan to over 6 billion yuan in 2023, and net profit reaching 907 million yuan in 2023, a year-on-year increase of 11.2%. Up to now, the total market capitalization of the above three listed companies has exceeded HK$140 billion.
On the "Hurun China Rich List" in 2023, Daniel Zhang and Shu Ping ranked 45th on the list with a net worth of 75 billion yuan. If Tehai International can successfully land on the NASDAQ, the net worth of the couple from Sichuan will rise again, and Haidilao may also further explore the North American market.
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