Chinese seafood processor and convenience seafood distributor Xianmeilai Food Co. is once again going for an initial public offering.
This is the third time Xianmeilai Food has filed for an IPO on the stock market listing in Shanghai Stock Exchange, following unsuccessful attempts in 2021 and 2022. The privately owned company is seeking to raise CNY 600 million (USD 96 million, EUR 84 million) to expand its distribution and logistics network as it bets big on growing Chinese demand for convenience meals.
Established in 2006 and operating out of the coastal city of Beihai in southern Guangxi province, Xianmeilai mainly sells prepared vegetable products but also has a sizeable seafood business, including packaged breaded cod and shrimp for retail. The firm, which claims to be the first Chinese “ready-made meals” firm to list publicly, delayed its previous IPO attempts after discrepancies arose in its procurement disclosures, but is trying again to cash in on a theme growing in popularity with investors.
In a report shared with SeafoodSource, market research group Mintel projected 9.9 percent annual growth in Chinese demand for ready-made meals through 2026, when the market will be worth an estimated CNY 346.5 billion (USD 55.4 billion, EUR 48.5 billion). China’s ready-made product market grew 9.6 percent in 2021 to a total retail value of CNY 216.4 billion (USD 34.6 billion, EUR 30.2 billion).
Xianmeilai’s income dropped from CNY 911 million (USD 145 million, EUR 127.5 million) in 2019 to CNY 849 million (USD 135.8 million, EUR 118.8 million) in 2020, before rebounding to CNY 915 million (USD 146.4 million, EUR 128 million) in 2021. The company booked profits of CNY 89.7 million (USD 14.3 million, EUR 12.5 million) in 2019, CNY 90.2 million (USD 14.4 million, EUR 12.6 million) in 2020, and CNY 81.1 million (USD 12.9 million, EUR 11.3 million) in 2021. In 2022, its profits inched up to CNY 85 million (USD 11.9 million, EUR 11.1 million), still below its pre-Covid totals.
Boosting Xianmelai’s outlook is the fact that one of its key customers, restaurant operator Haidilao International Holdings, returned to profitability in 2022, according to a recent circular to investors. The company, best known for its hotpot casual dining restaurant chain, is projecting profits of CNY 1.3 billion (USD 182 million, EUR 169 million) in 2022, compared to a loss of CNY 4.1 billion (USD 574 million, EUR 533 million) in 2021. In 2022, the company’s revenue fell 15.8 percent to CNY 34 billion (USD 4.76 billion, EUR 4.42 billion) as a result of Covid’s impact on demand.
However, Xianmeilai will face off against larger, established players that have also moved or doubled down on ready-made foods, like Guolian Aquatic and Fujian Anjoy Food Co., as well as Sanquan Foods and Zhengzhou Synear Food Co., both of which have built huge scale in pork processing and are now moving into the frozen seafood snack market.
Speaking on condition of anonymity, a seafood executive in Qingdao familiar with the company questioned Xianmeilai’s ability to grow its profits …
Photo courtesy of Xianmelai Food Co.
