The China Securities Regulatory Commission's nine key questions cast doubt on Banu's IPO process.

Author |  Chen Sizhu 

Editor |  Huang Yida

There are certain uncertainties regarding the listing of Banu Hot Pot.

On August 8th, the China Securities Regulatory Commission released a public notice of supplementary material requirements for overseas issuance and listing filings. Among them, it required Banu International to provide supplementary explanations on a total of nine issues in four aspects, including the rationality of the equity structure, data security, the rationality of dividends, and social insurance contributions.

Two months ago, relying on its differentiated positioning of "quality hot pot" and "product - oriented", Banu International submitted a listing application to the Main Board of the Hong Kong Stock Exchange, hoping to become the "third hot - pot stock" after Haidilao and Xiabu Xiabu.

Although "high - end" constitutes Banu's uniqueness, it seems out of step with the current consumption trends. In recent years, Banu has been repeatedly criticized for its high prices. There was the "sky - high price potatoes" at 18 yuan for 5 slices, followed by controversial incidents such as "7 slices of tripe for 78 yuan". Therefore, in the context of the consumption grading trend, it remains a question whether Banu's high - end label can be maintained and win the favor of the capital market.

Although, with policy support, mainland enterprises' enthusiasm for listing in Hong Kong has been high this year. "However, from a long - term perspective, because catering enterprises have relatively low growth potential, the valuations given are not high," Shen Meng, a director of Xiangsong Capital, told 36Kr. "Currently, the overall Hong Kong stock market can only provide limited financing for Banu."

The nine questions raised by the CSRC, which directly point to the core of the company's operations, have also brought new issues to be resolved for Banu's IPO.

In this context, will the capital market buy into Banu's high - end hot - pot story? What impact will the CSRC's inquiries have on Banu's listing?

The "High - End" Story of Hot Pot Still Has Alpha

"If your monthly salary is 5,000 yuan, don't eat hot pot. Just eat spicy hot pot instead."

In February this year, Du Zhongbing, the founder of Banu, made a statement that sparked discussions on the Internet. Although he clarified and apologized for this statement a few days later, Banu's "expensiveness" was already well - known.

Public information shows that Banu Tripe Hot Pot is a Henan - based hot - pot enterprise with "tripe + mushroom soup" as its signature products. In 2004, Du Zhongbing opened the first "Banu" store, and eight years later, he officially renamed it "Banu Tripe Hot Pot", putting forward the slogan "Service is not Banu's specialty. Tripe and mushroom soup are." Since then, Banu's "product - oriented" strategy has been implemented.

Under the "product - oriented" positioning, Banu's prices are indeed relatively high. The prospectus shows that in the first quarter of 2025, Banu's average customer spend was 138 yuan, which falls within the price range of quality hot pot (average customer spend higher than 110 yuan). 36Kr learned from the official ordering mini - program that the prices of Banu's two signature tripe products, "New Zealand fresh - chilled tripe" and "Classic tripe", are 89 yuan per serving and 78 yuan per serving respectively. The prices of meat range from 39 yuan to 129 yuan, and the prices of vegetarian dishes are between 16 yuan and 48 yuan.

For Haidilao, another hot - pot player, the overall average customer spend per store in 2024 was 97.5 yuan. In the same period, the average customer spend of Xiabu Xiabu was 54.8 yuan. Among the three major brands under Jiujiumao, which is often used as a reference in the catering industry, namely Taier (self - operated), Song Hot Pot, and Jiujiumao (self - operated), their average customer spends in Q1 2025 were 72 yuan, 100 yuan, and 56 yuan respectively.

The high - end positioning has indeed brought "sweet fruits" in terms of performance to Banu.

According to the prospectus, currently fully self - operated Banu's revenue growth during the reporting period (from 2022 to the first quarter of 2025) has generally outperformed the overall hot - pot industry. Even though the growth rate significantly declined in 2024, there were signs of recovery in Q1 this year. During the same period, the growth of net profit also remained at a relatively high level overall.

In recent years, the price distribution structure of the hot - pot industry has become more differentiated. Data from the 2024 Consumption Trend Report of Douyin Life Services shows that while the proportion of affordable hot pot has increased and the proportion of mid - range hot pot has decreased, the proportion of quality hot pot has also slightly increased. The root cause behind this is that against the backdrop of a weak economic recovery, the social trends of consumption grading and frugality have also had a profound impact on the hot - pot industry. Cost - effectiveness has become one of the main demands of consumers. More notably, quality hot pot has brought a better consumption experience through upgrades in ingredients, scenarios, etc., and current consumers are also willing to pay for it.

Chart: Proportion distribution of hot - pot consumption intervals from 2020 - 2024; Source: Douyin Life Services, 36Kr

Therefore, the relative prosperity of the quality hot - pot segment has played an important supporting role in Banu's performance growth in recent years. At the same time, Banu has also expanded rapidly in line with the industry's development trend. From 2022 to 2024, the number of new stores opened by Banu was 11, 25, and 35 respectively. According to data from Zhaimen Canyin, as of the time of writing, Banu Tripe Hot Pot has 148 stores, covering 40 cities across the country. Coupled with the existing 5 central kitchens and 1 base - material factory, the scale effect is gradually emerging.

Reflected in the income statement, the revenue growth brought about by expansion is clearly visible. Moreover, Banu has also maintained strong profitability during the reporting period, with the gross profit margin remaining stable at around 66% for a long time, leading Haidilao, which has a prominent scale effect. In contrast, driven by the scale effect, Haidilao's gross profit margin gradually increased from 57% in 2020 to 62% in 2024. The change in Haidilao's gross profit margin in the past five years and its current level also indirectly confirm that Banu's current operating system has formed a considerable scale effect, thus providing strong support for its high gross profit margin.

Although Banu has good profitability, its operating expenses have eroded a considerable amount of profit. Financial report data shows that from 2022 to Q1 2025, the median of Banu's operating expense ratio was 60%. Among them, the operating expense ratio in 2022 was as high as 64%, and the net profit was slightly in the red in the same period. Later, driven by revenue growth, the operating expense ratio decreased passively to some extent, and the company also turned a profit in 2023.

Banu's operating expenses include items such as employee salaries, rent (depreciation of right - of - use assets + short - term lease expenses), depreciation and amortization of other assets, utilities, travel expenses, sales expenses, and other expenses. Among them, employee salaries are the major part, accounting for more than half of the overall operating expenses during the reporting period. Moreover, as the company expands, including the expansion of new stores and the construction of the supply chain, the proportion of employee salaries in operating expenses has also been increasing. By Q1 2025, employee salaries accounted for about 61% of the operating expenses in the same period.

Chart: Structure of Banu's operating expenses; Source: Company financial reports, 36Kr

Therefore, with a high gross profit margin and a high expense ratio, and no large non - operating income during the reporting period, Banu's net profit margin is relatively low. In 2023, 2024, and Q1 2025, Banu's net profit margins were 4.8%, 5.3%, and 7.8% respectively, all lower than Haidilao's levels in the same period. Previously, Du Zhongbing also told the media bluntly: "People scold Banu for being expensive, but Banu's net profit margin is less than 10%." 

However, given the relatively strong revenue growth and relatively restrained expense expenditure, Banu's performance growth rate in the past two years has actually been quite high. The net profits in 2024 and Q1 2025 were 123 million yuan and 55 million yuan respectively, with corresponding year - on - year growth rates of 21% and 57% respectively. Since Banu only started to make a profit during the reporting period in 2023, the high growth rate also includes a certain low - base effect.

Regarding the core factors driving Banu's performance growth, in addition to the expansion of new stores, the fact that some same - store operating indicators are at a relatively high level in the industry has also played a key role. In 2024, Banu's average table - turnover rate was 3.2 times per day. In the same period, Haidilao's overall table - turnover rate was 4.1 times per day, and Xiabu Xiabu's was 2.5 times per day. Previously, Du Zhongbing also said that opening a store requires a "triple - turnover" theory, that is, when the table - turnover rate reaches 3 times, the brand can earn a profit of 8% - 10%. If it fails to reach this level, it has to accept losses.

Supported by a relatively complete supply - chain system, the raw - material prices are relatively stable. Banu's raw - material cost ratio during the reporting period was approximately 33%, better than Haidilao's in the same period. However, it should also be noted that the ratios of items such as employee salaries and rent to revenue are significantly higher than Haidilao's. This shows that there are still obvious gaps between Banu and Haidilao, the industry leader, in terms of labor efficiency and brand bargaining power.

With Continued Consumption Grading, Where Should Banu Go?

Against the backdrop of increasing consumption grading and fierce competition among peers, the hot - pot industry has become one of the most severely reshuffled sectors in recent years. According to data from Hongcan Big Data, from November 2023 to November 2024, the total number of closed hot - pot stores across the country exceeded 300,000, and consumption grading is still continuing. The "2024 Hot - Pot Industry Innovation Report" shows that the overall per - capita consumption in the hot - pot sector decreased from about 90 yuan in 2023 to about 60 - 65 yuan in 2024.

At the company - level, in 2024, Haidilao's overall average customer spend decreased by 1.6% year - on - year. For Taier (self - operated), Song Hot Pot, and Jiujiumao (self - operated), the decreases were 1.37%, 13.79%, and 1.75% respectively. Banu's per - capita average customer spend was 150 yuan in 2023, and it decreased to 138 yuan in Q1 2025. The decrease in the average customer spend was not achieved through direct price cuts. Instead, Banu dynamically adjusted the average customer spend according to the different consumption capabilities of different cities and launched differentiated discount packages in order to stimulate more consumption. For example, it launched the "9.9 - yuan seasonal vegetable brand" in Xinxiang stores and the "98 - yuan lunch - time package" in Luoyang stores.

However, in the view of Wen Zhihong, an expert in chain - store operation and the general manager of Hehong Consulting, in the long run, a change of a few yuan is not enough to arouse wide - spread attention from consumers. "The core of Banu lies in creating a sense of value that customers can recognize, making customers feel that 'the money is well - spent'." This view coincides with the judgment on quality hot pot in the 2024 Consumption Trend Report of Douyin Life Services.

Therefore, while adhering to its positioning as a quality hot - pot brand, Banu's future development also lies in further expansion.

In the prospectus, Banu also clarified its store - opening plan and accelerated its expansion to lower - tier markets. The prospectus mentioned that Banu will increase the density of its restaurants in key cities where it has established brand influence and expand to surrounding county - level cities. It plans to open approximately 40, 50, and 60 new self - operated stores in 2025, 2026, and 2027 respectively. It is estimated that the pre - opening investment for each new restaurant generally does not exceed 5 million yuan.

For Banu, the risks of expanding to lower - tier markets mainly come from going against the current consumption trends. "The consumption ability in the sinking market is limited, which contradicts Banu's high - quality route," Shen Meng analyzed.

Therefore, the prospectus also issued a risk warning that newly opened stores may not be profitable for a certain period or may not achieve performance similar to that of existing stores.

Wen Zhihong is partially optimistic about Banu's expansion plan. He believes that Banu's denser layout in markets where it is already well - recognized (such as Henan) is conducive to forming a stronger brand and scale effect. However, Wen Zhihong also admitted that Banu's challenge lies in expanding beyond Henan. "Currently, Banu's brand awareness is not high in out - of - province markets."

In Wen Zhihong's view, Banu needs to optimize its store model during the expansion process. "Especially when opening stores in first - tier cities in the future, with the sharp increase in labor and rent costs, it is necessary to control investment and costs." From a financial perspective, comparing the operating expense structure with industry peers, it can be seen that Banu still has great potential for improvement in terms of labor efficiency, space utilization efficiency, and brand power, which can further reduce the squeezing of profit margins by cost factors and further amplify the scale effect brought about by investment.

However, before starting, the key question is, calculating at a price of 5 million yuan per store, Banu needs a large amount of funds to cover the store - opening costs. Does this mean that the outcome of this IPO will have a crucial impact on Banu's subsequent development?

The Urgency of IPO and Nine "Soul - Searching Questions"

According to market news, the expected financing scale of Banu's IPO this time is approximately 100 - 200 million US dollars, equivalent to about 700 - 1.4 billion yuan. According to the information disclosed in the prospectus, Banu plans to open 150 new stores in total this year and in the next two years, with an investment of no less than 5 million yuan per new store. It can be calculated that the total investment for this round of new - store expansion is expected to be no less than 750 million yuan.

As of Q1 2025, Banu had 273 million yuan in cash on its books, and the financial assets were approximately 367 million yuan in the same period. Among them, a portion of the cash needs to be retained for daily operating expenses, and there may also be trading gains or losses during the process of realizing the financial assets. Based on Banu's current capital reserves, there is still a large capital gap for this round of new - store expansion plan. Therefore, this IPO is a key event for Banu to promote business expansion and drive performance growth.