Hong Kong IPO: Analysis and subscription plan for CAROTE
Carote Ltd is a globally renowned kitchenware brand company headquartered in Hangzhou, China. Since the launch of the "CAROTE" brand in 2016, the company has rapidly risen in the online kitchenware segment, becoming one of the fastest-growing kitchenware brands worldwide. Carote's products are known for their practicality, exquisite design, and reasonable pricing, emphasizing the concepts of "maximizing utility" and "value for money," aiming to promote modern cooking lifestyles.
The company's development began in 2007, initially providing original equipment manufacturing (OEM) services for overseas brands. With market evolution and changing demands, Carote shifted to original design manufacturing (ODM) in 2013, designing, developing, and manufacturing customized kitchenware products for international brand owners and retailers. This transition allowed the company to accumulate valuable industry expertise and deep insights into consumer preferences.
In 2016, Carote launched its own brand "CAROTE" and strategically entered the online retail sector. This marked the beginning of its direct-to-consumer (DTC) sales model, engaging directly with global retail customers through online channels. This approach enabled Carote to swiftly respond to market changes and introduce products tailored to diverse market needs.
As the brand business expanded, Carote fully transitioned to outsourced production and a light-asset model in February 2022 to meet growing capacity and efficiency demands. Currently, the company operates both ODM and brand businesses, with the latter being the focus of its future growth strategy.
Carote offers a diverse product portfolio, including cookware, kitchen utensils, and drinkware, covering over 2,500 SKUs. The company regularly introduces new products to meet evolving customer needs. Through its global online sales network, Carote's products have entered markets in 19 countries and regions, including the U.S., Western Europe, Southeast Asia, and Japan.
The company's business model comprises five key elements: DTC sales, agile product design and development, solid industry expertise and efficient supply chain management, a global online sales network, and dynamic inventory management. These elements collectively drive Carote's sustained growth and market competitiveness.
Carote's success is largely attributed to its global brand positioning, product development capabilities, DTC retail model, flexible light-asset supply chain, and an experienced management team with a global vision. The company's strategic goals include product iteration, functional and design innovation, expanding global influence, optimizing organizational structure and supply chain, empowering global talent recruitment, and building a multi-brand portfolio through investments and acquisitions.
IPO Information:
Pre-IPO and Cornerstone Investors:
Carote's pre-IPO investments are shown below. Denk Trade acquired the company's equity, with payments settled on July 24, 2023, and November 2, 2023. The total cost was RMB 680,000, with a per-share price of RMB 0.17, representing a 96.7% discount to the IPO price. Money is easier to make in the primary market—this deal yielded a 33.8x return, achieving financial freedom in one go!
The company has secured two cornerstone investors, totaling $40 million (approximately HK$311 million). At the upper price limit, cornerstones account for 41.72% of the offering; at the median price, 41.94%; and at the lower limit, 42.16%. The cornerstone lock-up period is six months.
Sponsors:
The IPO is jointly sponsored by BNP Paribas and CMB International, with the latter also acting as the stabilizing agent. BNP Paribas last sponsored a deal in 2022, which holds little reference value, but its 2020 listing of VESYNC, an air fryer-focused home appliance company, performed exceptionally well. CMB International's recent deal, EDA, also closed with significant gains, indicating both institutions are relatively stable.
Financial Overview:
Revenue:2021 revenue: RMB 675 million; 2022 revenue: RMB 768 million; 2023 revenue: RMB 1.583 billion; LTM revenue as of March 2024: RMB 1.794 billion.
Gross Profit:2021 gross profit: RMB 126 million; 2022 gross profit: RMB 275 million; 2023 gross profit: RMB 565 million; LTM gross profit as of March 2024: RMB 664 million.
Net Profit:2021 net profit: RMB 31.7 million; 2022 net profit: RMB 109 million; 2023 net profit: RMB 236 million; LTM net profit as of March 2024: RMB 269 million.
Allocation Rate:
The global offering comprises 129.8645 million shares, with 500 shares per lot. As of now, the oversubscription rate is 16.15x. Assuming a 30% clawback, there are 38,959.35 lots for each of Groups A and B, with an estimated 10,000–20,000 participants. The allocation rate is expected to be 100% for one lot.
Under the average allocation method, the allocation rate is around 15%, with 30 lots required to secure one.
Comprehensive Review:
Carote's revenue primarily comes from its brand and ODM businesses. As of March 2024, the brand business accounts for over 89% of revenue, while ODM contributes only 10%. By product category, the brand business is dominated by drinkware (88% of revenue). Key sales platforms include Amazon, Walmart, and Tmall, collectively accounting for 86% of revenue. Geographically, the U.S. contributes 60% of revenue, followed by mainland China (18.5%), Western Europe (7.6%), Japan (6.3%), Southeast Asia (3.4%), and other regions (4.2%).
Financial data highlights drinkware as the major revenue driver. For comparison, we can look at A-listed companies like Supor, Joyoung, ASD, Bear, and Hong Kong-listed VESYNC (see chart below for details).
Compared to A-listed peers, Carote's valuation is reasonable. Against VESYNC, it is not cheap (previously, I mistakenly compared currency units—now corrected, thanks for the reminder!). However, Carote's revenue growth outperforms VESYNC. Compared to Hong Kong-listed giants like Hisense and Haier, the valuation is fair. Recently listed Midea Group surged 7.85% on its debut, with a cumulative gain of 23.36%, outperforming its A-share counterpart. This indirectly validates Hong Kong's market strength—currently outpacing A-shares!
Fundamentally, Carote is a solid pick in terms of valuation and growth. Sentiment-wise, Midea Group's strong debut sets a positive tone. The company aims to raise HK$743–751 million, with cornerstones locking up 41%, leaving a free float of ~HK$440 million—manageable for a quality stock. The only oddity is the narrow IPO price range (a mere HK$0.06 spread), which feels unnecessarily cautious. Why not just set the upper limit? Baffling!
Bull Rating: Silver Bull
Rating Scale: True Bull > Gold Bull > Silver Bull > Bronze Bull > Pot Bull (True Bull: full leverage; Gold Bull: high certainty, leverage recommended; Silver Bull: decent certainty, multi-account spread; Bronze Bull: volatile, prone to sharp swings; Pot Bull: avoid).
Subscription Plan:
I will subscribe.
$CAROTE(02549.HK)
Disclaimer:Investing involves risks; participation requires caution. The mentioned securities are for personal tracking only and do not constitute investment advice. Losses incurred are not my responsibility. If this content helps you, please like, share, and recommend it to others—thank you!
The copyright of this article belongs to the original author/organization.
The views expressed herein are solely those of the author and do not reflect the stance of the platform. The content is intended for investment reference purposes only and shall not be considered as investment advice. Please contact us if you have any questions or suggestions regarding the content services provided by the platform.