Wuhan-based snack maker holds online IPO amid outbreak

Major Chinese snack producer Bestore Food Co Ltd made its debut on the Shanghai Stock Exchange on Monday through a first-ever online initial public offering ceremony. The company said it will mainly develop high-end snacks in the next decade to cater to the growing appetites of quality-conscious Chinese consumers.

The Wuhan-headquartered snack retailer gained 44 percent on its IPO price of 11.9 yuan ($1.7) per share on the first day of trading. The company said it will raise 488 million yuan through the IPO.

Bestore, founded in 2006 in Wuhan, Hubei province —epicenter of the COVID-19 outbreak — generated most of its sales from selling meat snacks, nuts, candies and pastries.The snack maker also donated about 25,000 boxes of snacks to doctors fighting against the epidemic in Hubei province, and its donations have exceeded 8.6 million yuan.

"I never imagined we would become the first company to make an online IPO at this special time. The listing of the company is a more important starting point for us. In the next 10 years, our corporate strategy is to develop high-end snacks," said Yang Hongchun, president of Bestore.

"The epidemic won't have a long-term impact on us. We have a good cash flow and ample inventory, and we will maintain sales goals for this year and next," Yang said.

Under the shadow of the outbreak, Bestore closed some of its stores and shifted its business focus online. From Feb 1, Bestore resumed livestreaming sales on Taobao, an e-commerce marketplace of Alibaba Group, and its online orders surged.

Since 2018, Bestore has cooperated with colleges and research institutions, and has applied the latest research findings into the development of its products. For instance, it created additive-free preserved plums and meal substitute powders. Late last year, the company established its own food science research unit.

In the first six months of 2019, Bestore netted sales revenue of 3.5 billion yuan. From these, it generated net profits of 195 million yuan, surging 73 percent year-on-year. During this period, its online sales accounted for 45.2 percent of the total, and sales from its more than 2,200 brick-and-mortar stores made up the rest, according to its earnings report.

From 2016 to 2018, sales at Bestore achieved an annual compound growth rate of 21.95 percent, the company said.

Meanwhile, Shanghai-based snack food chain Laiyifen, Hunan-based Yanjin Shop Food Co Ltd and Tianjin Guifaxiang, one of China's time-honored brands, have all listed on the country's exchanges.

"Healthy, safe and high-quality snacks will account for a larger market share. The increasing share of mid- and high-end snacks will drive overall prices of the sector, and the growth rate of special stores and online sales is expected to be faster than traditional supermarkets," said Neil Wang, president of consulting firm Frost & Sullivan China.

From 2011 to 2018, the snack food sector in China saw an annual compound growth rate of 12.3 percent, according to Frost & Sullivan.This year, the market scale of the sector in China is expected to reach 2 trillion yuan, market research company Ebrun found.

Shi Jing in Shanghai contributed to this story.