Core Viewpoint - Anhui Laoxiangji Catering Co., Ltd. is aiming to become the "first stock of Chinese fast food" by updating its IPO prospectus for the Hong Kong Stock Exchange, after previously withdrawing its A-share IPO application in August 2023 [1] Company Overview - Laoxiangji is the largest Chinese fast food brand, holding a 0.9% market share in the Chinese fast food industry and ranking first in terms of total transaction volume in 2024 [1] - The company was founded in 2003 by veteran Shuceng Xuan, starting with a store named "Feixi Laomujin" in Hefei, Anhui Province, specializing in the signature dish "Feixi Laomujin Soup" [1] - The brand was upgraded in 2012 to "Laoxiangji," offering a variety of dishes primarily made from chicken, pork, beef, vegetables, rice, and seafood [1] Business Model and Expansion - Laoxiangji has adopted a "direct-operated + franchise" store network model since exploring franchising in 2020, balancing quality and expansion [2] - As of April 30, 2025, Laoxiangji operates a total of 1,564 stores, including 911 direct-operated and 653 franchise stores, with an overall increase of 85 stores since 2025 [2] Financial Performance - The revenue for Laoxiangji in 2022, 2023, and 2024 was 4.528 billion, 5.651 billion, and 6.288 billion yuan respectively, with net profits of 252 million, 375 million, and 409 million yuan [2] - In the first four months of 2025, the revenue reached 2.12 billion yuan, representing a year-on-year growth of 9.84%, while net profit was 174 million yuan, up 7.41% from the previous year [2]

Core Viewpoint - The recent food safety controversy surrounding the company, particularly the allegations regarding the use of coloring agents in its products, raises questions about its upcoming IPO and the scrutiny of its fundamentals in the capital market [1][3][18] Group 1: Food Safety Concerns - The company faces scrutiny over its "Farmhouse Steamed Eggs" and raw eggs, which were reported to contain coloring agents, coinciding with its third attempt at an IPO [1][3] - Previous issues, such as the "180-day free-range chicken" controversy, led the company to release a comprehensive internal traceability report, which, while detailed, raises questions about the actual execution of food safety standards [3][4][5] - The effectiveness of the company's food safety management relies on continuous execution and improvement, as outlined in the PDCA cycle, rather than just the establishment of standards [4][5] Group 2: Financial Performance and Expansion - The company's revenue increased from 4.528 billion RMB in 2022 to 5.651 billion RMB in 2023, with a projected 4.678 billion RMB for the first three quarters of 2024 [6][7] - Net profit rose from 252 million RMB in 2022 to 375 million RMB in 2023, with 367 million RMB reported for the first three quarters of 2024 [6][7] - The average consumer price at company-owned stores decreased from 29.7 RMB in 2022 to 27.6 RMB in the first three quarters of 2024, indicating pressure on profit margins [9] Group 3: Market Position and Competition - The company claims to be the leader in the Chinese fast-food industry, but its market share is only 0.8%, highlighting a lack of significant brand barriers in a fragmented market [13][14][16] - The competitive landscape is intensifying, with regional brands and established players like KFC and McDonald's increasing their presence and adapting their menus to local tastes [16][17] - The company has faced challenges in maintaining investor confidence, as evidenced by the buyback of shares from previous investors, indicating uncertainty about its long-term growth prospects [16][17]