Global Healthcare Analyst

Tina Banerjee

Equity Capital Markets

Guangzhou Xiao Noodles Catering Management / Equity Capital Markets

Guangzhou Xiao Noodles Catering Management

<ul>
<li>Guangzhou Xiao Noodles Catering Management (XNC HK) launched its Hongkong IPO aiming to raise up to HK$686M. The company plans to sell 97.4M shares at HK$5.64-$7.04 per share.</li>
<li>Xiao Noodles are a Chinese noodle restaurants operator in China. They operate the Xiao Noodles brand in the Chinese Mainland and Hong Kong SAR.</li>
<li>The growth outlook quite justifies the incremental valuation. We think Xiao Noodles issue is attractively priced and investors can surely look to have a share in this secular growth story.</li>
</ul>


Guangzhou Xiao Noodles Catering Management (XNC HK) launched its Hongkong IPO aiming to raise up to HK$686M. The company plans to sell 97.4M shares at HK$5.64-$7.04 per share.
Xiao Noodles are a Chinese noodle restaurants operator in China. They operate the Xiao Noodles brand in the Chinese Mainland and Hong Kong SAR.
The growth outlook quite justifies the incremental valuation. We think Xiao Noodles issue is attractively priced and investors can surely look to have a share in this secular growth story.


Xiao Noodles (XNC HK) IPO: Volume Growth Play Make This Noodles Joint Savoury Enough

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

<ul>
<li>Xiao Noodles’ advantage doesn't come from a single product, but from a set of replicable systematic capabilities.However, investors are concerned growth is driven by capital rather than endogenous healthy growth.</li>
<li>Valuation would be lower than those mature brands that have proven profitability in the short term, but would be higher than the companies that are still exploring profit paths.</li>
<li>Comfortable valuation could be P/E of 15-20x, which indicates arbitrage space. But in long term, business model will be difficult to sustain if there’s no breakthrough in profit margin performance.  </li>
</ul>


Xiao Noodles’ advantage doesn't come from a single product, but from a set of replicable systematic capabilities.However, investors are concerned growth is driven by capital rather than endogenous healthy growth.
Valuation would be lower than those mature brands that have proven profitability in the short term, but would be higher than the companies that are still exploring profit paths.
Comfortable valuation could be P/E of 15-20x, which indicates arbitrage space. But in long term, business model will be difficult to sustain if there’s no breakthrough in profit margin performance.  


Pre-IPO Guangzhou Xiao Noodles Catering Management (PHIP Updates) - Some Points Worth the Attention

<ul>
<li>Although the revenue is growing, net profit margin is low, which is due to Xiao Noodles’ operational model, high costs, products and brand positioning. Key performance indicators declined in 2024.</li>
<li>If competition becomes increasingly fierce and Xiao Noodles’ price reduction strategy continues, the investment return period would be longer, which will affect the Company's future expansion plans and performance growth.</li>
<li>Based on our forecast, pre-IPO valuation of RMB3 billion is expensive. If Xiao Noodles is unable to reverse the trend of declining performance, it will face valuation discounts after IPO.</li>
</ul>


Although the revenue is growing, net profit margin is low, which is due to Xiao Noodles’ operational model, high costs, products and brand positioning. Key performance indicators declined in 2024.
If competition becomes increasingly fierce and Xiao Noodles’ price reduction strategy continues, the investment return period would be longer, which will affect the Company's future expansion plans and performance growth.
Based on our forecast, pre-IPO valuation of RMB3 billion is expensive. If Xiao Noodles is unable to reverse the trend of declining performance, it will face valuation discounts after IPO.


Pre-IPO Guangzhou Xiao Noodles Catering Management - Pain Points in Operation Mode and Profit Margin

APAC IPOs & Placements, Aequitas Research

Troy Wong

APAC IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

<ul>
<li>Guangzhou Xiao Noodles Catering Management (GXNCM) is looking to raise about US$200m in its upcoming Hong Kong IPO.</li>
<li>GXNCM has shown strong growth momentum by expanding its network of corporate-owned restaurants and improving overall profitability, benefiting from post-COVID recovery and economies of scale, with operational performance turning positive.</li>
<li>However, its reliance on price cuts to stay competitive, coupled with weakening same-store sales and a highly fragmented market, raises concerns about long-term sustainability.</li>
</ul>


Guangzhou Xiao Noodles Catering Management (GXNCM) is looking to raise about US$200m in its upcoming Hong Kong IPO.
GXNCM has shown strong growth momentum by expanding its network of corporate-owned restaurants and improving overall profitability, benefiting from post-COVID recovery and economies of scale, with operational performance turning positive.
However, its reliance on price cuts to stay competitive, coupled with weakening same-store sales and a highly fragmented market, raises concerns about long-term sustainability.


Guangzhou Xiao Noodles Catering Management Pre-IPO - Fast-Growing Noodle Chain Navigates Competition

<ul>
<li>Guangzhou Xiao Noodles Catering Management (GXNCM) is looking to raise about US$200m in its upcoming Hong Kong IPO. The deal will be run by CMBI and CLSA.</li>
<li>It's a leading Chinese noodle restaurants operator in China, operating under the Xiao Noodles brand, offering value-for-money cuisines.</li>
<li>Under its dual model of corporate-owned and franchising, it focuses on corporate-owned restaurants in first-tier &amp; new first-tier cities in China.</li>
</ul>


Guangzhou Xiao Noodles Catering Management (GXNCM) is looking to raise about US$200m in its upcoming Hong Kong IPO. The deal will be run by CMBI and CLSA.
It's a leading Chinese noodle restaurants operator in China, operating under the Xiao Noodles brand, offering value-for-money cuisines.
Under its dual model of corporate-owned and franchising, it focuses on corporate-owned restaurants in first-tier &amp; new first-tier cities in China.


Guangzhou Xiao Noodles Catering Management Pre-IPO Tearsheet

China

Guangzhou Xiao Noodles Catering Management (XNC HK)

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Guangzhou Xiao Noodles Catering Management (XNC HK)

Xiao Noodles (XNC HK) IPO: Volume Growth Play Make This Noodles Joint Savoury Enough

Xiao Noodles (XNC HK) launches Hong Kong IPO, aiming to raise up to HK$686M by selling 97.4M shares at HK$5.64-$7.04 each. Investors can subscribe...

Tina Banerjee

Pre-IPO Guangzhou Xiao Noodles Catering Management (PHIP Updates) - Some Points Worth the Attention

Xiao Noodles' growth driven by capital raise concerns for investors about sustainability/profitability ahead, despite replicable capabilities....

Xinyao (Criss) Wang

Pre-IPO Guangzhou Xiao Noodles Catering Management - Pain Points in Operation Mode and Profit Margin

Xiao Noodles faces challenges with low profit margins, declining performance, and potential valuation discounts post-IPO if trends continue....

Xinyao (Criss) Wang

Guangzhou Xiao Noodles Catering Management Pre-IPO - Fast-Growing Noodle Chain Navigates Competition

Guangzhou Xiao Noodles Catering Management plans US$200m IPO in Hong Kong, showing growth but facing challenges with price cuts and market...

Troy Wong

Guangzhou Xiao Noodles Catering Management Pre-IPO Tearsheet

Guangzhou Xiao Noodles Catering Management plans to raise $200m in Hong Kong IPO, led by CMBI and CLSA. Leading Chinese noodle restaurant operator...

Troy Wong

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Xiao Noodles (XNC HK) IPO: Volume Growth Play Make This Noodles Joint Savoury Enough

Xiao Noodles (XNC HK) launches Hong Kong IPO, aiming to raise up to HK$686M by selling 97.4M shares at HK$5.64-$7.04 each. Investors can subscribe...

Tina Banerjee

Pre-IPO Guangzhou Xiao Noodles Catering Management (PHIP Updates) - Some Points Worth the Attention

​Xiao Noodles' growth driven by capital raise concerns for investors about sustainability/profitability ahead, despite replicable capabilities....

Xinyao (Criss) Wang

Pre-IPO Guangzhou Xiao Noodles Catering Management - Pain Points in Operation Mode and Profit Margin

​Xiao Noodles faces challenges with low profit margins, declining performance, and potential valuation discounts post-IPO if trends continue....

Xinyao (Criss) Wang

Guangzhou Xiao Noodles Catering Management Pre-IPO - Fast-Growing Noodle Chain Navigates Competition

​Guangzhou Xiao Noodles Catering Management plans US$200m IPO in Hong Kong, showing growth but facing challenges with price cuts and market...

Troy Wong

Guangzhou Xiao Noodles Catering Management Pre-IPO Tearsheet

​Guangzhou Xiao Noodles Catering Management plans to raise $200m in Hong Kong IPO, led by CMBI and CLSA. Leading Chinese noodle restaurant operator...

Troy Wong

Xiao Noodles' growth driven by capital raise concerns for investors about sustainability/profitability ahead, despite replicable capabilities....

Xiao Noodles faces challenges with low profit margins, declining performance, and potential valuation discounts post-IPO if trends continue....

Guangzhou Xiao Noodles Catering Management plans US$200m IPO in Hong Kong, showing growth but facing challenges with price cuts and market...

Guangzhou Xiao Noodles Catering Management plans to raise $200m in Hong Kong IPO, led by CMBI and CLSA. Leading Chinese noodle restaurant operator...