龙丰集团赴港IPO：谢少海家族持股100%关联交易存隐忧 短期借款高达6.25亿港元偿债缺口巨大

Core Viewpoint - Long Fung Group, Hong Kong's largest drugstore retailer, has submitted its application for a mainboard listing on the Hong Kong Stock Exchange, potentially becoming the first local drugstore retail stock. However, its rapid growth is overshadowed by risks such as reliance on offline channels, high current liabilities, and family governance issues [1][9]. Financial Performance - Long Fung Group's revenue growth is remarkable, with income rising from HKD 1.094 billion to HKD 2.460 billion from FY2023 to FY2025, reflecting a compound annual growth rate (CAGR) of 50%. In Q1 FY2026, revenue increased by 42.5% year-on-year, and net profit surged by 130.7%. However, the sustainability of this profit structure is questionable, as the company reported a loss of HKD 27.14 million in FY2023, and while it turned profitable in FY2024, the net profit margin fell from 7.2% to 6.9%, below competitors like Watsons [2][10]. - As of June 30, 2025, the company had a net current liability of HKD 332 million and short-term borrowings of HKD 625 million, with cash and cash equivalents at only HKD 33.608 million, indicating a significant debt repayment gap. The interest coverage ratio stands at 6.5 times, and rising financing costs during Hong Kong's interest rate hike cycle may further squeeze profit margins [2][10]. Business Model and Supply Chain Risks - The business model of Long Fung Group is heavily reliant on offline channels, with 97.2% of revenue coming from physical stores and only 1.7% from online sales, which have declined from HKD 44.637 million in FY2023 to HKD 42.682 million in FY2025. This contrasts sharply with the average online penetration rate of over 20% in Hong Kong's retail sector, highlighting a lag in digital transformation [3][11]. - Over 50% of the company's procurement relies on parallel import channels, which can reduce costs by 10-15% but also exposes the company to compliance risks regarding product labeling. Long Fung has previously received warnings from customs for labeling issues, and tighter regulations or lawsuits from brand owners could disrupt supply chain stability [3][11]. Governance and Related Party Transactions - Long Fung Group has a highly concentrated ownership structure, with the Tse family holding 100% of shares through TTK Holding, leading to a family-controlled board. While this governance model allows for efficient decision-making, the lack of checks and balances may pose risks [4][12]. - As of June 30, 2025, receivables from related parties amounted to HKD 289 million, representing 39.33% of current assets, raising concerns about potential fund occupation risks [4][12]. Operational Compliance and Competitive Pressure - The company has aggressively expanded its store count from 13 to 29 in recent years, but same-store sales growth has plummeted from 64% to 5.6%, indicating a cannibalization effect between new and existing stores. Additionally, several stores have faced regulatory warnings for building or usage violations [5][13]. - The competitive landscape is intensifying, with the Hong Kong drugstore retail sector growing at only 6.2%, while Long Fung's growth rate is at 21.1%, significantly above the industry average. However, with competitors like Watsons and Mannings ramping up promotions, the sustainability of this growth is in question. Inventory turnover days have increased to 68 days, raising the risk of inventory impairment if consumer demand falls short [5][13][14]. Industry Context and Future Opportunities - Long Fung's rise coincides with a reshuffling period in Hong Kong's drugstore industry, where former leaders like Sa Sa and Bonjour have lost their luster, while Watsons and Mannings continue to expand. Long Fung aims to balance local customer needs and tourist demand with its strategy of "reputation from pharmaceuticals, profit from beauty," but its dependence on tourism remains a vulnerability [6][15]. - The IPO fundraising plan is intended for store expansion, IT system upgrades, and supply chain optimization. The company urgently needs capital to alleviate financial pressures, but investors should scrutinize three key transformation areas: breaking into online channels, regional expansion, and modernizing governance. The ability to convert 30 years of brand trust into sustainable competitive advantage will determine the reshaping of Hong Kong's drugstore industry [6][15]. Conclusion - Long Fung Group's IPO represents a significant test for the valuation of local retail brands in Hong Kong. Its supply chain resources, local customer trust, and product category advantages form a competitive moat, but risks related to financial leverage, governance structure, and channel singularity cannot be overlooked. The company's path to capitalization will not only test its business model but also serve as a window into the resilience of Hong Kong's economy [8][16].