• A chef prepares a Peking duck to be served to customers in a Beijing restaurant.

A chef prepares a Peking duck to be served to customers in a Beijing restaurant. (Photo : Getty Images)

Zhouheiya, a fast food chain based in Hubei Province and known for its spicy-braised duck neck and other ready-to-eat snacks, has opened in subscription in Hong Kong, following its initial public offering on Tuesday, Nov. 1, that is expected to raise up to HK$3.3 billion ($425.7 million).

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China Daily reported that the company will start trading on Nov. 11, selling 424 million shares at a range between HK$5.8 and HK$7.8 per share.

Founded in Wuhan, Hubei province in 2002, the braised food producer and retailer has bolstered its presence with 715 self-operated retail stores in 38 cities across 12 provinces in the mainland.

In a news conference on Monday, Oct. 31, Hao Lixiao, its executive director said that the company has been planning to expand into the Hong Kong and Macao markets but did not disclose the exact date. He said the company has yet to apply for local licenses and has to conduct product research as well as build its sales network.

The report said that Zhouheiya's Hong Kong IPO indicates a growing trend among duck-food manufacturers from the mainland that offer public shares. In 2012, its rival Jiangxi Huangshanghuang Group listed in Shenzhen, while Hunan Juewei's IPO has been caught up in the Chinese mainland's IPO filing channel for more than two years.

"Such a trend indicates that growth of mainland duck-food chains has somewhat run into a bottleneck which pushes them to raise capital via public listings as a growth booster," Zhu Danpeng, a researcher at the China Brand Research Institute, said.

According to Zhu, Zhouheiya's move to join other mainland food companies in Hong Kong listing could help the company save time while its rival Hunan Juewei remains in the mainland's logjam of IPO filings.

Many mainland catering companies looking for capital markets have long been caught in the IPO build-up, which was highlighted when Xiao Nan Guo Restaurants Holdings and hotpot chain Xiabu Xiabu listed in Hong Kong in 2014.

The report said that mainland food companies avoid the long IPO line in the mainland by listing in Hong Kong, where investors look at food stocks as expensive options, giving it low valuation. This explains why Zhouheiya share price is high, Hannah Li, a Hong Kong-based financial strategist, said.