According to the prospectus, Red Star Cold Chain is a leading comprehensive service platform for frozen food trading and cold storage services, headquartered in Changsha, Hunan Province. Since its establishment in 2006, the company has developed an integrated business model that combines a professional frozen food trading platform with advanced cold storage facilities, enabling the company to provide comprehensive solutions within the frozen food supply chain and connecting producers, wholesalers, and retailers through efficient trading and logistics services.
According to the Frost & Sullivan report, in 2024, Red Star Cold Chain's frozen food trading services achieved a total transaction value of approximately 40 billion yuan, ranking second among all frozen food trading service providers in Central China and first in Hunan Province. Additionally, according to the same source, based on 2024 revenue, the company is the largest cold storage service provider in Central China and Hunan Province.
Red Star Cold Chain's business centers on a comprehensive service platform that combines a professional frozen food trading platform with advanced cold storage facilities. The company's self-operated trading platform in Changsha covers an area of over 36,000 square meters. The company primarily rents this trading platform as storefronts to its customers, with an occupancy rate exceeding 94% during the track record period, making it the core wholesale hub for Hunan Province's frozen food industry.
The company's self-operated cold storage facilities at two bases in Changsha have a total designed storage capacity exceeding 1 million cubic meters, or over 230,000 tons of available storage capacity, with a utilization rate exceeding 88% during the track record period. As of December 31, 2024, the facilities have served over 700 customers.
China's cold chain industry has experienced rapid growth, benefiting from consumers' continuously rising demand for high-quality frozen foods and their growing awareness of the critical role cold chain services play in maintaining food quality throughout the supply chain. China's frozen food trading services industry has experienced steady growth, with a total transaction value of 1.7 trillion yuan in 2024, representing a compound annual growth rate of 3.8% from 2020 to 2024. It is expected to reach 2.5 trillion yuan by 2029, with a compound annual growth rate of 7.1% from 2024 to 2029.
China's cold storage services market also shows continuous expansion, reaching a market size of 25.6 billion yuan in 2024, with a compound annual growth rate of 4.2% from 2020 to 2024. It is expected to reach 35.1 billion yuan by 2029, with a compound annual growth rate of 6.5% from 2024 to 2029.
China's frozen food trading services market and cold storage services market remain regionalized. In the frozen food trading services industry, based on total transaction value in 2024, the top four participants in Central China collectively hold a 31% market share, while the company holds an 8.9% market share in Central China, ranking second, and a 52.7% market share in Hunan Province, ranking first.
The cold storage services market is fragmented. Based on 2024 revenue, the top five participants in Central China collectively hold a 9.7% market share. The company ranks first in both Central China and Hunan Province, with market shares of 2.6% and 13.6%, respectively.
Financially, Red Star Cold Chain generated revenues of approximately 237 million yuan, 202 million yuan, and 234 million yuan in 2022, 2023, and 2024, respectively, with corresponding gross profit margins of 50.1%, 57.7%, and 52.8%. In 2022, 2023, and 2024, the company's net profits were 79.112 million yuan, 75.312 million yuan, and 82.88 million yuan, respectively, with corresponding net profit margins of 33.4%, 37.3%, and 35.5%.
Red Star Cold Chain's Hong Kong IPO fundraising proceeds are planned for the following purposes: constructing a new processing plant and new cold storage warehouse over the next three years, equipped with processing equipment and intelligent systems to provide frozen food processing services to customers; upgrading equipment, information technology infrastructure, and software used in the company's existing business, including investments in artificial intelligence technology to empower the company's operations and customers; seeking strategic acquisitions and partnerships to improve the company's industrial chain integration, thereby consolidating the company's position in the entire cold chain ecosystem; and for working capital and other general corporate purposes.