Good News on Listing | Frost & Sullivan Assists TEC International Holdings Limited to Successfully List on the Hong Kong Stock Exchange (9658.HK)

Special Seas International Holdings Limited (hereinafter referred to as 'Special Seas International') successfully listed on the Main Board of the Hong Kong Stock Exchange on December 30, 2022. The distribution of Special Seas International shares will be made to eligible shareholders in the form of physical shares, amounting to a total of 557,400,000 shares (equivalent to 90% of Special Seas International's issued capital), based on the respective shareholding percentages of eligible shareholders in Special Seas International as of the record date.

During the process of listing in Hong Kong this time, Frost & Sullivan mainly undertook the following tasks: helping the issuer accurately and objectively understand its positioning in the target market, using objective market data to discover, support, and highlight the issuer's competitive advantages, assisting the issuer, investment banks, and other intermediaries in completing the relevant parts of the prospectus (such as overview, competitive advantages and strategy, industry overview, business, and other important chapters), facilitating communication between the issuer and the Hong Kong Stock Exchange and investors, helping investors quickly understand the market ecosystem and competitive landscape, and assisting the issuer in completing feedback on various industry-related issues from the Hong Kong Stock Exchange.

The company has become a global brand reflecting the traditional Chinese diet culture;

The company possesses strong local knowledge and international operational capabilities;

The company's mature management philosophy supports its sustainable international expansion;

The company is led by an experienced management team and adheres to a people-oriented corporate culture.

According to the Frost & Sullivan report, based on 2021 revenues:

It is the third largest Chinese cuisine brand in the international market;

It is the largest Chinese cuisine brand originating from China in the international market;

Based on the number of countries covered by its self-operated restaurants as of December 31, 2021, the company is the largest Chinese cuisine brand in the international market.

Chinese cuisine is one of the most popular types of dining globally. Initially, Chinese cuisine was brought overseas by early Chinese immigrants. Since the late 20th century, Chinese cuisine brands have begun to expand into major overseas markets such as Southeast Asia, North America, East Asia, Europe, and Australia, and have now spread to more than 130 countries. In 2021, the number of Chinese cuisine restaurants in international markets exceeded 600,000. Chinese cuisine is a window through which China's culture is displayed to the world. As Chinese cuisine becomes increasingly popular, it not only attracts overseas Chinese customers but also local customers from different countries.

In the past, the international catering service market has experienced rapid growth, increasing from $2899.1 billion in 2016 to $3363.2 billion in 2019. Due to the COVID-19 pandemic, the international catering service market experienced a temporary decline in 2020 and began to recover to $2644.0 billion in 2021 as the pandemic was gradually brought under control. With more and more countries lifting restrictions, the international catering service market is expected to continue growing steadily, reaching $3777.1 billion by 2026, with a compound annual growth rate of 7.4% from 2021 to 2026.

The Chinese restaurant market in the international market has steadily increased its percentage share, rising from 9.7% in 2016 to 9.9% in 2021, and is expected to continue growing to 10.8% by 2026. This is mainly due to the increasing acceptance of Chinese cuisine in the international market as Chinese culture becomes increasingly popular, coupled with the continuous innovation of Chinese cuisine to adapt to local customers. The growth rate of Chinese restaurants in the international market will exceed that of the international catering service market, increasing from $261.1 billion in 2021 to $409.8 billion in 2026, with a compound annual growth rate of 9.4%.

Hot pot is one of the most representative Chinese dining styles, with a history of over 1,700 years. Hot pot is cooked slowly on the stove at the table. When the pot boils, ingredients are added to it and cooked on the table. Common hot pot dishes include a variety of selectable ingredients such as slices of meat, fresh vegetables, tofu, wontons, and seafood. After the ingredients are cooked, customers usually dip them in small condiments to enhance their flavor.

Hot pot is one of the most popular Chinese cuisine categories in the international market, accounting for 11.1% of the international Chinese restaurant market revenue in 2021. Before the COVID-19 pandemic, the market scale of hot pot restaurants in the international market had increased from $30.7 billion in 2016 to $37.3 billion in 2019. Affected by the pandemic, the market size dropped to $25.6 billion in 2020. With the easing of the COVID-19 pandemic, the hot pot category has begun to recover, growing to $28.9 billion in 2021. The number of hot pot restaurants in the international market is expected to increase from 134,000 in 2021 to 169,000 in 2026.

Due to the increasing number of hot pot restaurants, the growing popularity of hot pot, its ease in attracting local customers through localization, as well as its high scalability and standardization, the growth rate of hot pot restaurants in the international market is expected to exceed that of other Chinese cuisine. By 2026, it is projected to reach $46.5 billion, with a compound annual growth rate of 10.0%.

Currently, Chinese cuisine is mainly concentrated in regions with a large immigrant population, such as Southeast Asia, East Asia, and North America. These regions account for the vast majority of the total international Chinese cuisine market.

Currently, the international Chinese cuisine market is highly fragmented, with over 600,000 restaurants. In terms of revenue in 2021, Teahouse International ranked third among all Chinese cuisine brands in the international market.

• Economic growth in the international market

Over the past decade, several countries where TE Connectivity International operates have experienced stable economic growth. The gross domestic product (GDP) of all countries where TE Connectivity International operates increased by about 3.1% to 7.8% from 2016 to 2021, except for Japan. Specifically, the nominal GDP of the United States, Singapore, and Vietnam increased by a compound annual growth rate of between 4.2% and 7.8% during the period from 2016 to 2021. According to data from the International Monetary Fund (IMF), despite the COVID-19 pandemic, many countries' economies have recovered from the outbreak of the virus, and their nominal GDP is expected to continue growing in the future.

In addition, the steady growth in per capita disposable income has driven consumption upgrades. From 2016 to 2021, the per capita disposable income of all countries where TH Seafood International operates recorded positive growth ranging from about 0.3% to 7.3%. It is expected that the per capita disposable income of developing countries such as Indonesia, Vietnam, and Malaysia will see higher growth in the future. Due to consumption upgrades, consumers in international markets tend to choose better food, better and more comfortable dining environments, and different cultural experiences.

• The overseas Chinese population is constantly increasing

Overseas Chinese are a massive consumer group for Chinese restaurants (especially those originating from China) in the international market. There are large numbers of Chinese immigrants, students, and travelers in overseas countries such as Singapore and the United States. Over the past few years, the population of overseas Chinese has increased to about 60 million (including their descendants). With the gradual control of the COVID-19 pandemic, it is expected that the overseas Chinese population will continue to grow in the future.

• Chinese food and culture are becoming increasingly popular

In recent years, the influence of Chinese culture has grown with its economic growth and increasing globalization. As the overseas Chinese population and the number of foreign tourists in China continue to increase, Chinese culture is becoming increasingly popular in other countries. For local customers who have not visited China, Chinese cuisine provides them with an opportunity to experience Chinese culture. Therefore, leading Chinese cuisine brands will be able to attract more local customers by offering authentic Chinese dishes that suit local tastes and preferences.

• Increase the penetration rate of catering takeout and diversify revenue sources

During the COVID-19 pandemic, demand for catering and takeout services surged due to the need to maintain social distancing and government restrictions on dine-in services. In many countries, customers have developed the habit of ordering takeout meals because it is more convenient than cooking at home. In addition, many Chinese cuisine brands have developed new revenue channels to offset the decline in dine-in sales. For example, pre-packaged food has become increasingly popular in recent years, especially among those who do not have enough time but still enjoy cooking at home. Pre-packaged food provides another way for guests to enjoy cooking at home simply, quickly, and healthily. Companies with strong supply chain management capabilities can purchase better ingredients and seasonings to provide high-quality pre-packaged products. Many Chinese cuisine brands have also developed other product types that are very popular with customers.

Frost & Sullivan has extensive research experience in the catering and food and beverage industries, assisting many well-known enterprises to successfully list on capital markets. Successful listings include Weilong (9985.HK), Helen's (9869.HK), Youran Muying (9858.HK), Jiulongwang (1927.HK), Yumart (9987.HK), Nongfu Spring (9633.HK), Fengxiang Food (9977.HK), JiuMaoJiu (9922.HK), China Feihe (6186.HK), Fast Food Empire (1843.HK), Taixing Group (6811.HK), China National Tobacco International (6055.HK), Luckin Coffee (LK.NASDAQ), Dolphin King (8096.HK), Youpin 360 (2360.HK), Wugu Mofang (1837.HK), Haidilao (6862.HK), Sustain Agro (8609.HK), Longhui Holdings (1007.HK), Xinrong International (1587.HK), Yiyuan Liquor (8146.HK), Xufulou (1978.HK), Jierong International (2119.HK), Bingshi International (1705.HK), Top Standard (8510.HK), H&M (8371.HK), Kirin Foods (1475.HK), Asia Grocery (8413.HK), Chowking Duck (1458.HK), COFCO Meat (1610.HK), Yihai International (1579.HK), Zhongdi Dairy (1492.HK), Dali Foods (3799.HK), Manor Ranch (1533.HK), Xabu Xabu (0520.HK), Wanzhou International (0288.HK), and others.