FAST NEWS: No Juice for Fruit Giant Hongjiu on Hong Kong Trading Debut

The latest: Chongqing Hongjiu Fruit Co. Ltd. (6689.HK), one of China’s three fresh fruit giants, made a subdued debut in its first day of trade on Monday. The company’s public offering attracted 2,086 investors who bought 846,000 shares, only 60% of the total 1.4 million shares on offer.

Looking up: Hongjiu became the first Chinese fruit giant to go public in Hong Kong, beating Shenzhen Pagoda, which submitted an IPO application in early May.

Take Note: The offering’s lukewarm response meant the stock could only price at HK$40, the lower end of the IPO price range. The deal raised about HK$500 million ($64 million), far below the company’s rumored target of $300 million.

Digging Deeper: Established in October 2002, Hongjiu’s main business is fruit distribution. The company has grown rapidly in recent years by focusing on the sale of high value fruit to China’s increasingly affluent consumers. The company has recorded strong growth over its last three financial years despite the pandemic, including a compound annual growth rate of 122.4% in sales revenue and a 118.5% compound annual growth rate in non-IFRS adjusted profit during that time. Following the IPO, the company’s latest market capitalization reached HK$12.4 billion, up 47.6% from the HK$8.4 billion valuation at the time of its last financing round in 2020.

Market Reaction: Hongjiu rose as much as 3% after the stock started trading Monday morning, but closed unchanged at its IPO price of HK$40 at the midday break. It recorded anemic half-day turnover of HK$40 million.

Translation by Jony Ho

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