This is an English adaptation of a FoodBud historical article originally published on September 15, 2021.
Tam Jai International Co. Limited, the Hong Kong-based rice noodle chain operator behind TamJai Yunnan Mixian and TamJai SamGor Mixian, passed its Hong Kong Stock Exchange listing hearing on September 13, 2021, according to its disclosed prospectus.
The company was expected to list in Hong Kong soon after the hearing, with a reported fundraising size of about US$100 million, or approximately HK$780 million. It first submitted its prospectus on April 15, 2021, with Guotai Junan as sole sponsor.
Tam Jai International operates self-managed casual restaurant chains centered on mixian, or rice noodles. Its first TamJai-branded restaurant opened in 1996, giving the brand a 25-year operating history at the time of the filing.
Its two core brands, TamJai Yunnan Mixian and TamJai SamGor Mixian, are based on an adapted version of Yunnan crossing-the-bridge rice noodles, incorporating flavors inspired by southwestern Chinese cuisine. The menu combines dozens of ingredients, including meats, meatballs, vegetables, mushrooms and soy products.
Customers can choose from six soup bases and 10 spice levels. Signature items cited in the prospectus included spicy mala soup, charred chili soup and bandit chicken wings.
According to Euromonitor data cited in the prospectus, by 2019 revenue Tam Jai International ranked:
A market research survey cited by the company showed that TamJai and SamGor recorded brand-equity-index growth of 23% and 36%, respectively, in 2019 and 2020. The company said the two brands have distinct soup-base profiles and separate customer followings.
In May 2017, Japan's Toridoll Holdings announced the acquisition of all equity in TamJai Yunnan Mixian for HK$1.0 billion. In December 2017, Toridoll also confirmed the acquisition of TamJai SamGor Mixian for HK$1.11 billion.
Before the IPO, Toridoll Hong Kong directly held 99.8% of Tam Jai International. Toridoll Hong Kong is a wholly owned subsidiary of Toridoll Japan, a Tokyo Stock Exchange-listed company under ticker 3397.
The prospectus stated that Mr. Awata, in his personal capacity and through T&T and SMBC Bank, together with Mrs. Awata through T&T and SMBC Bank, controlled about 48.69% of Toridoll Japan. Toridoll Hong Kong, Toridoll Japan, Mr. Awata, Mrs. Awata and T&T were deemed controlling shareholders.
For the fiscal years ended March 31, 2019, 2020 and 2021, Tam Jai International reported revenue of HK$1.556 billion, HK$1.691 billion and HK$1.795 billion, respectively. Net profit was HK$198 million, HK$191 million and HK$288 million.
For fiscal 2019 and fiscal 2020, the company reported the following per-restaurant and customer metrics:
Despite Hong Kong's social unrest in the second half of 2019 and the pandemic from 2020, total customer volumes did not fall sharply. For the fiscal year ended March 31, 2021, Tam Jai's customer volume exceeded the 2019 level and rose 6.2% from fiscal 2020.
The main driver was growth in delivery and takeaway. In fiscal 2019, delivery and takeaway orders totaled 6,227, equivalent to 30% of dine-in orders. By fiscal 2021, delivery and takeaway orders had reached 15,130, less than 500 orders below dine-in volume.
For the nine months ended December 31, 2020, the group recorded net profit of HK$231.6 million, including HK$125.6 million in government subsidies and HK$13 million in rent concessions.
At the time of the filing, Hong Kong was Tam Jai International's core market. Restaurants in Hong Kong accounted for 97% of its network, and as of April 2020, Hong Kong contributed more than 97% of both revenue and profit.
The prospectus pointed to slower growth in Hong Kong's fast-casual restaurant market. According to Euromonitor, Hong Kong fast-casual restaurant revenue was forecast to grow from HK$22.9 billion in 2019 to HK$25.4 billion in 2024, a compound annual growth rate of about 2.1%.
The IPO proceeds were expected to support expansion of the restaurant network and central kitchens in Hong Kong, mainland China, Singapore, Japan and Australia. The company also planned to invest in information and technology infrastructure, including customer relationship management, voice ordering and enterprise resource planning systems.
According to the prospectus, Tam Jai International planned to open, by March 31, 2024, approximately:
The filing devoted substantial attention to market prospects in Hong Kong, mainland China, Singapore, Japan and Australia. Based on the planned store count, the largest expansion focus outside the home market was mainland China, followed by Singapore and Japan.
Hong Kong's restaurant market faced clear constraints after social unrest and the pandemic, alongside geographic and population limits. Consumer foodservice revenue in Hong Kong fell from HK$121.1 billion in 2019 to HK$80.1 billion in 2020.
The original article compared Hong Kong-listed pub operator Pacific Bar with Helens, a bar chain with a mainland China growth story. Pacific Bar reported fiscal 2016 revenue of HK$126 million when it listed in Hong Kong in 2017, but its market capitalization did not exceed HK$300 million at its high point and later fell to just over HK$40 million. Helens, by contrast, reported 2020 revenue of RMB818 million and listed with a market capitalization of HK$30.3 billion.
For operators, the comparison underlined how similar consumer formats can be valued very differently depending on the scale and growth profile of the target market.
The article noted that Hong Kong-based foodservice companies often pursue internationalization through Singapore as a bridge to Southeast Asia, alongside Japan, Australia and mainland China. Tam Jai International's store-opening plan placed its largest expansion bet on mainland China.
The opportunity was meaningful, but the challenge was also significant: Hong Kong culture no longer carried the same trendsetting pull in mainland China, while the rice noodle and noodle sectors were already highly competitive, with emerging brands raising increasingly large financing rounds.
For mainland Chinese rice noodle and noodle chain operators, Tam Jai International's Hong Kong listing path may have been an encouraging signal for the category.
Note: IPO, fundraising, valuation and forward store-opening figures are historical references from the 2021 source article.