New stock preview | Xiaocaiyuan: Selling Huicai at a reasonable price generates a gross profit margin of 68%, and pre-strike dividends of nearly 200 million before ringing the bell.

10.45.51.33.2 At a time when the company needed a large amount of funds for business expansion, it also distributed a large amount of dividends. In 2021, the company declared dividends of 1.5 billion yuan, and in 2023, it declared dividends of about 1.35 billion yuan. As of the four months ending on April 30, 2024, the company declared dividends of about 1.88 billion yuan, accounting for approximately 96% of the net profit for that period.The above-mentioned dividends mainly went into the "pockets" of the actual controllers of the company. The prospectus shows that as of the last feasible date, Wang Shugao controls approximately 92.99% of the voting rights of the issued share capital of Xiaocaiyuan through seven holding platforms including XCY Yongqing Limited. Interestingly, under the backdrop of rapid performance growth, Xiaocaiyuan's debt levels remain high. According to the prospectus, as of April 30, 2024, Xiaocaiyuan's total current liabilities were 613 million yuan, total non-current liabilities were 1.233 billion yuan, and net assets were 606 million yuan. In this context, the large dividend payout before Xiaocaiyuan's IPO may raise concerns in the market about its financial health. The company's listing fundraising will provide momentum for business expansion, but in the fiercely competitive catering market environment, whether its growth story can be realized with high quality remains to be seen.