Chinese food company Bestore Food Co Ltd officially listed its shares on the Shanghai Stock Exchange on Monday. The company had listed its shares through the exchange's first-ever online initial public offering (IPO) ceremony.
The Wuhan-based snack producer mentioned that it intends to use the proceeds of the IPO to develop new high-end snacks over the next decade. The company aims to meet China's growing appetite for high-quality snacks and other food items. As of the moment, high quality, safe, and healthy snack items account for the majority of China's snack food sector.
The food company had previously worked with colleges and research institutions to develop new technologies that can be applied to its products. The collaborations have resulted in the creation of a number of unique products, including the company's additive-free preserved plums and its popular meal substitute powders. Last year, the company announced that it had established its own food science research and development unit.
BeStore president, Yang Hongchu, mentioned in a statement that he never imagined that the company would be the first to conduct an online IPO. He added that the debut will be the starting point for the company's strategy for the next decade.
During its first day of trading, Bestore's shares had surged by more than 44 percent above its initial IPO price. The company closed at 11.9 yuan per share during its first day. Bestore expects to raise roughly 488 million through its public listing. Bestore generates most of its profits from the sale of its popular meat-based snacks, packaged nuts, candies, and pastries.
Over the past couple of years, the company has rapidly shifted its business to focus more on its online channels. The company has so far closed a number of its brick and mortar stores and shifted its focus on establishing its online presence. The company has already established partnerships with major e-commerce platforms, including Alibaba Group's Taobao marketplace.
For the first two quarters of 2019, BeStore reported net sales of around 3.5 billion yuan. The company managed to generate net profits of 195 million yuan for the period, marking a significant 73 percent year-on-year increase. Online sales for the period accounted for about 45.2 percent of the total.
China's snack food sector has continually grown over the past decade. Consulting firm Frost & Sullivan China revealed that from 2011 to 2018, the country's snack food sector has grown at an annual compound growth rate of 12.3 percent. For 2019, the company estimates that the industry is easily worth well above 2 trillion yuan.
