image credit: Bamboo Works
Key Takeaways:
Zhengxin is reportedly planning a Hong Kong IPO, even as the store count for its chicken chain has contracted from 25,000 to 9,545 over the last five years
Whether the downsizing is positive or negative, representing a ‘rightsizing' or collapse, may depend on a closer look at the company's financials when they become public
By Edith Terry
Its business may be shrinking, but that isn't stopping China's "Chicken King" from charging ahead with plans for a $300 million IPO.
That's the word on the street, following a Bloomberg report late last month that Shanghai Zhengxin Food Group Co., China's largest homegrown fried chicken chain, might soon join the pipeline of some 500 companies waiting to go public in Hong Kong. Although quickly denied by the company, the report included enough juicy details to keep the rumor mills churning about Zhengxin and founder Chen Chuanwu's plans for the company.
In addition to the fundraising target, the Bloomberg report also said Zhengxin is working with domestic banking heavyweights Galaxy Securities and CICC as advisors for the deal.
Zhengxin joins a short list of other chicken chains also chasing Hong Kong IPOs. Homegrown rival LXJ International and Taiwan's Ting-Qiao, operator of the Dicos chain, have both publicly filed for listings, though neither has made it to market yet.
KFC, operated by Yum China (NYSE:YUMC) (9987.HK), still rules China's fast food chicken roost, with over 13,000 restaurants nationwide. But at its peak in 2021, Zhengxin's more budget friendly chicken briefly topped KFC with its 25,000 outlets across China. It has shrunk considerably since then, though an IPO may provide the feed it needs for another run.
Zhengxin's "Chicken King" logo, featuring a stylized rooster wearing a crown, symbolizes its aspirations in the sector. It has 188 franchises in Shanghai alone and is present through most of China. Unlike KFC, which runs traditional sit-down restaurants, Zhengxin typically uses a much smaller format more like takeaway chicken stands with very limited or no seating.
In its early days, after the chain's launch in 2012, well-known comic actor Huang ...
