Shanghai, China-based food-delivery service Pang Pang Xiang (China) Co. has filed for an initial public offering on the Stock Exchange of Hong Kong.
The company hopes to reverse the fortune of other China-based food-delivery companies, including Missfresh and Dingdong Maicai, which have seen their valuations plummet after going public.
Pang Pang Xiang, which originally focused on providing meals to corporate clients, said it made the 70 percent margins this year after switching focus to delivering food to residents confined to their homes during the COVID-related lockdown in Shanghai and other Chinese cities earlier this year. Pang Pang Xiang was one of 70 entities selected by the Shanghai government as a “supply guarantee key unit,” which allowed it to make deliveries during the lockdown, according to the firm’s prospectus.
The company scored a gross profit margin of 50 percent during the first five months of 2022, compared to 34 percent in 2021, with nearly half of its revenue coming from deliveries to clients whose movements were restricted due to COVID-related lockdowns.
The company has faced criticism on Chinese internet platforms like Weibo for seemingly profiting from the lockdown, with many commentators complaining of the high price of food supplied to apartment blocks during the two months when various parts of China’s commercial capital were in lockdown.
It remains to be seen what if any investor appetite appears for Pang Pang Xiang shares if the IPO goes ahead. Even though their share prices surged in March and April 2022 as investors saw earnings potential in COVID lockdowns, Beijing-based Missfresh and Shanghai-based Dingdong have since seen their share prices plunge after investors lost faith in the companies’ profitability outlook.
