The noodles and convenience food firm reported its retail tranche to be 32 times oversubscribed.
Nonetheless, this pales in comparison to recent high-profile IPOs such as the Yixin Group and Razer, who received investor demand several hundred times the number of shares on offer.
Nissin Foods will price the float at HK$3.54 a share, which is near the lower end of the indicative range between HK$3.45 and HK$4.21 per share.
The company issued about 268,580,000 shares, of which 90% or 241,722,000 shares were for international offering and the remaining 10% or 26,858,000 shares were for Hong Kong public offering.
Further expansion in China
Of the proceeds, the company said that 45% will go to upgrading and the further expansion of production plants and facilities, while 30% will go to strategic partnerships or acquisitions.
“Nissin Foods will continue to strengthen its leading positions in the Hong Kong and People’s Republic of China (PRC) premium instant noodle markets, and further expand its business in the PRC,” the company said on the eve of the commencement.
Nissin Foods will expand its shares in the frozen food and other food product markets in Hong Kong and China, and enhance its brand recognition and awareness there.
The company promised to continue to “discover new values by product innovation” and enhance its research and development capabilities, as well as expand its product offerings.
It also said it will further extend its sales and distribution network in China.
The company added: “The group aims to pursue appropriate strategic partnership or acquisition to achieve both horizontal and vertical business integrations”.
Continued growth despite recent dip
Nissin Foods accounted for 65.3% of retail sales value and 62.6% of retail sales volume of the Hong Kong instant noodle market in 2016, according to Frost & Sullivan.
However, the company has had a tough couple of years.
For the year ended 31 December 2016, Nissin registered revenue of $2.63b (zero growth year-on-year) while net profit dropped 10.4% year-on-year to $90.8m, from $101.3m in 2015. Core net profit amounted to $162.6m in 2016, down 20.6% year-on-year from $204.8m in 2015.
For the six months ended 30 June 2017, Nissin Foods had a net profit of $91.6m compared to $106.7m in the first half of 2016 — a decrease of 14.2% — though revenue edged 1.6% higher to $1.34bn.
In spite of this, in March, Nissin Foods acquired 51% equity interest of MC Marketing & Sales (Hong Kong) Limited and began to distribute beverage, processed food and sauce products of a number of brands in Hong Kong and Macau.
Nissin Food Holdings in Japan was founded in 1948 by Momofuku Ando, the “founder of instant noodles”. The Tokyo-listed convenience food firm is best known for Nissin Cup Noodles and Demae Itcho (known as Chu Qian Yi Ding in Chinese markets) premium instant noodles.
A spin-off, Nissin Foods was established in Hong Kong in 1984. Since 2009, the company has expanded further into China.
The company’s trading debut on the main board of the Hong Kong Stock Exchange is set for today, Dec 11.