Core Viewpoint - LXJ International Holdings Limited, the parent company of Anhui Laoxiangji Catering Co., Ltd. (referred to as "Laoxiangji"), has filed a prospectus for an IPO on the Hong Kong Stock Exchange, following previous unsuccessful attempts to list on the A-share market. The company has experienced a slowdown in revenue and net profit growth in recent years, raising concerns about its financial health and operational challenges [1][11]. Financial Performance - Laoxiangji's revenue from 2022 to 2024 was reported at RMB 45.28 billion, RMB 56.51 billion, and RMB 62.88 billion, with year-on-year growth rates of 58.38%, 24.80%, and 11.27% respectively [4][5]. - The net profit for the same period was RMB 2.52 billion, RMB 3.75 billion, and RMB 4.09 billion, with year-on-year growth rates of 86.67%, 48.81%, and 9.07% respectively [5][6]. - In the first four months of 2025, revenue and net profit growth further slowed to 9.9% and 7.3% respectively [6]. Profitability Metrics - The gross profit margins for Laoxiangji from 2022 to 2024 were 20.3%, 23.3%, and 22.8%, which are significantly lower than competitors such as Xiaocaiyuan and Green Tea Group, whose margins were 66.14%-68.49% and 63.70%-68.92% respectively [2][9]. - The proportion of raw materials and consumables to revenue increased from 37.0% in 2022 to 42.7% in the first four months of 2025, indicating rising costs impacting profitability [8]. Corporate Structure and Control - Laoxiangji is a family-owned business, with the founding family holding 92.02% of the voting rights. The key stakeholders include Shu Xiaolong (70.78%), Shu Wen (15.02%), and Dong Xue (6.22%) [12][11]. - The company has made multiple attempts to go public, with three A-share applications submitted between 2022 and 2023, ultimately withdrawing due to regulatory challenges and timing issues [11]. Regulatory and Compliance Issues - Laoxiangji has faced multiple administrative penalties related to food safety, with 13 incidents reported from 2022 to 2024, resulting in fines and warnings [2][13]. - Specific violations included using expired ingredients and failing to meet hygiene standards, which have raised concerns about the company's operational practices [13][14].

Core Viewpoint - Laoxiangji is attempting to become the "first Chinese fast food stock" by applying for a listing on the Hong Kong Stock Exchange after multiple failed attempts to go public in A-shares [3][8]. Group 1: Company Overview - Laoxiangji is the largest Chinese fast food brand, with a market share of 0.9% in the Chinese fast food industry, ranking first in the Chinese fast food sector by transaction volume in 2024 [4]. - The company has experienced revenue growth from 4.528 billion yuan in 2022 to 6.288 billion yuan in 2024, with net profits increasing from 252 million yuan to 409 million yuan during the same period [4][5]. - As of April 2025, Laoxiangji operates 1,564 stores across 58 cities, with 911 being company-owned and 653 being franchise stores [5]. Group 2: Business Model and Expansion - Laoxiangji has accelerated its store openings through a franchise model, adding an average of 118 new stores annually [4][5]. - The number of franchise stores has significantly increased, with 565 franchise stores by 2024, while the number of company-owned stores has decreased from 1,007 to 914 during the same period [5][6]. - Franchise stores account for a growing share of revenue, with franchise store income rising from 8.2% to 19.3% in early 2025, while company-owned store income decreased from 89.6% to 77.7% [5]. Group 3: Financial Performance - In the first four months of 2025, Laoxiangji reported revenue of 2.12 billion yuan, a year-on-year increase of 9.9%, and a net profit of 174 million yuan, up 7.3% [4]. - The gross profit margin for the first four months of 2025 was 24.2%, compared to 22.8% in 2024 [4][10]. - The average daily sales per company-owned store were 16,000 yuan, while franchise stores averaged 12,400 yuan, indicating a 20% lower performance for franchise stores [7]. Group 4: Ownership and IPO Plans - Following failed attempts to list on A-shares, Laoxiangji's early financial investors exited before the IPO, leading to a family-controlled structure with the founder's family holding 92.02% of voting rights [8][10]. - The company plans to use the funds raised from the IPO to enhance its supply chain, expand its store network, improve IT capabilities, and strengthen brand marketing [10].

Core Viewpoint - LXJ International Holdings Limited, the parent company of Anhui Laoxiangji Catering Co., Ltd., is attempting to list on the Hong Kong Stock Exchange again after a failed attempt earlier this year, amid declining performance metrics and food safety issues [1][3]. Group 1: Company Performance - Laoxiangji's revenue and net profit growth have slowed in recent years, with total revenues of RMB 4.53 billion, RMB 5.65 billion, and RMB 6.29 billion from 2022 to 2024, showing year-on-year growth rates of 58.38%, 24.8%, and 11.27% respectively [7][9]. - The company's net profit for the same period was RMB 252 million, RMB 375 million, and RMB 409 million, with growth rates of 86.67%, 48.81%, and 9.07%, indicating a decline in growth to below double digits by 2024 [8][9]. - Laoxiangji's gross profit margin fluctuated from 20.3% in 2022 to 23.3% in 2023, then down to 22.8% in 2024, which is significantly lower than its competitor Xiaocaiyuan, which maintained a gross margin above 66% [9][10]. Group 2: Business Strategy and Expansion - The updated prospectus outlines that the funds raised from the IPO will be used for enhancing supply chain integration, expanding the store network, improving IT capabilities, and increasing brand promotion [3]. - Laoxiangji has shifted its business model to include franchising, with the number of franchise stores increasing from 118 to 653, while the number of directly operated stores decreased from 1,007 to 911 [7][8]. Group 3: Food Safety Issues - Laoxiangji has faced multiple administrative penalties for food safety violations, with 13 stores receiving 13 penalties between 2022 and 2024 due to issues such as using expired ingredients and failing to meet hygiene standards [12]. - The company reported a total of 857 complaints related to food freshness, service quality, and other issues, prompting it to enhance internal control measures to mitigate risks [12][16].