(资料图片)

Image source: China Visual

BEIJING, November 22(TMTPOST)—DPC Dash, operator of the Domino’s pizza chain in China, passed the listing hearing of the Hong Kong Stock Exchange, according to an online filing to the exchange.

This marks a major step towards going public for the company, as it filed for an IPO in Hong Kong for the second time this year in October after the initial IPO prospectus submitted in March expired. BofA Securities was the exclusive sponsor.

As Domino"s Pizza exclusive master franchisee in mainland China, Hong Kong and Macau, DPC Dash owns 562 directly-operated stores in 13 cities, more than half of which are located in Beijing and Shanghai. In 2021, the revenue from the Chinese market reached 1.61 billion yuan, a year-on-year increase of 45.9 percent. Although the growth rate dropped to 18.6 percent in the first half of 2022, the Chinese sector managed to keep growing amid the Covid-19 pandemic, contributing 6 percent of the Comino’s global revenue. One of the reasons was an emphasis on takeout dining, which gained popularity during the pandemic. Over 70 percent of the income came from delivery orders and the current trend is expected to continue. The size of the food delivery segment within the China pizza market, as measured by revenue, grew from 7.6 billion yuan in 2016 to 14.1 billion yuan in 2019, representing compound annual growth rate of 22.9 percent, according to the Frost & Sullivan Report. “In 2020, although the overall China pizza market experienced a contraction due to the adverse effects of the COVID-19 pandemic, the pizza delivery market showed strong resilience and reached 15.7 billion yuan in size,” the report shows.

Despite such growth, Domino"s China has suffered a total net loss of 580 million yuan in the past three and a half years. The loss in net profits peaked in 2020 at 200 million yuan. But in the first half of 2022, that number dropped to 60 million yuan. The unprofitable performance was mainly attributed to rapid expansion. 100 new stores were added in China each year during the past three years. “Our cash investment payback period has been improving, but as most of our new stores have been open for less than three years, they have not been open for long enough to achieve cash investment payback,” the company said in its IPO filing. As of the end of June, about 9 percent of the newly opened stores had achieved cash investment payback.

Domino’s, the world"s largest pizza company in terms of retail sales, has 19,200 stores in more than 90 countries and regions around the world. The company is currently China’s third largest pizza chain, with a market share of 4.4 percent, according to the Frost & Sullivan Report. Pizza Hut leads in the China market, with a share of 37.4 percent.