Hong Kong IPOs are underway, Red Star Cold Chain (01641) is taking off with the "East Wind" of central cold chain industry development.

At the end of the year, Hong Kong IPOs remain active, and investors' enthusiasm for new listings remains high. Data shows that this year, both the success rate and the apparent return rate of new listings on the Hong Kong stock market have significantly increased, with an average first-day gain of 38% and a break-even rate of only 28%, reaching the best level in nearly five years. In this context, another new stock, Red Star Cold Chain (01641), which has recently started its IPO process, has naturally caught the attention of investors. According to the IPO arrangement, Red Star Cold Chain will be open for subscription from December 31, 2025, to January 8, 2026, with a global offering of 23.263 million H shares, of which 10% will be offered in Hong Kong and 90% internationally. The offer price is set at HK$12.26 per share, with a minimum subscription of 500 shares per lot, at an entrance fee of approximately HK$6,191.83. The company is expected to be officially listed on the Hong Kong Stock Exchange on January 13, 2026. Red Star Cold Chain's IPO has already attracted cornerstone investors who have subscribed for shares at the offer price of HK$12.26 per share, totaling RMB 20 million worth of shares. This arrangement is not only seen as a recognition of the company's long-term value by industry investors but also sends a positive signal to the market. The prospectus shows that the shares offered this time account for about 23.7% of the total number of shares to be issued after the global offering, with a market value of approximately HK$1.203 billion and a price-earnings ratio of about 13.04 times based on the offer price of HK$12.26 and the company's 2024 net profit, providing a relatively low valuation and leaving room for the stock price to rise after listing. However, the attractiveness of the valuation is just one aspect of Red Star Cold Chain's growth story. The company's business philosophy, business layout, and future strategy are the key factors that sustain its long-term value. Having cultivated the cold chain market for twenty years, how did Red Star Cold Chain become a regional leader? To tell the growth story of Red Star Cold Chain, one cannot ignore the "Red Star Village Spirit" deeply rooted in the company's history. During the reform and opening up period of the 1980s, the villagers of Red Star Village saw an opportunity in the lack of a large furniture wholesale market in Changsha and founded Changsha Red Star Industrial Company. After years of development, Red Star Industrial Group has grown into a multi-industry conglomerate with total assets exceeding one billion, covering distribution, processing, trade, exhibitions, supply chain finance, and market development in various fields. The development of Red Star has always been guided by the philosophy of "merchants first": the prosperity of the market is based on the success of the merchants. As Red Star Industrial Group consultant Yang Jinhua puts it, "When you have a cup of tea, you should give it to the merchants first; when you have a stool, you should let the merchants sit first." The predecessor of Red Star Cold Chain was Hunan Red Star Frozen Food Co., Ltd., founded in 2006 by Red Star Industrial and other early shareholders, which started as a frozen food trading platform and warehousing service. At the end of 2019, the company completed its shareholding system transformation. With nearly twenty years of experience in the cold chain field, the company has accumulated a wealth of industry experience. Red Star Cold Chain has adopted an innovative dual-drive model of "warehousing service" and "trading platform," combining frozen food cold storage with frozen food store rentals, serving wholesalers and retailers in the frozen food supply chain. This operation logic is consistent with Red Star's "merchants first" philosophy, both fundamentally built around meeting the needs of merchants. At the same time, the company's business can also create synergies with other businesses under the group. Cold chain logistics mainly serve food and pharmaceutical products, with food demand accounting for over 90%, covering various categories such as vegetables, fruits, meat, poultry, seafood, dairy products, and frozen foods. Red Star Industrial Group's deep roots in the distribution field provide comprehensive industrial upstream and downstream synergy and rich customer resources for the cold chain business. In recent years, Red Star Cold Chain has been expanding its industry chain layout, forming a complete industrial chain system including frozen product warehousing, import and export trade, e-commerce platform transactions, customs supervision sites, frozen product processing, and cold chain logistics distribution. Specifically, Red Star Cold Chain has two main warehouse bases in Changsha with a total design capacity of over 1 million cubic meters and a usable capacity of over 230,000 tons. Past operating data shows that the utilization rate of the company's warehouses has been maintained at over 88%, serving more than 700 customers as of June 30, 2025. In terms of trading platforms, the company has over 36,000 square meters of space for store rentals, with a historical occupancy rate of over 94%, also at a high level. Having deeply cultivated Hunan province for many years, Red Star Cold Chain has rightfully become a regional leader, and its mature and stable profit model is evident from its financial data: the prospectus shows that the company's gross profit margin has consistently been maintained above 50%, with a net profit margin stabilized between 33% and 38%. Public information shows that due to factors such as low industry concentration, small scale, and high technical maintenance costs, the average profit margin of China's cold chain warehousing industry is only about 8%-12%. In comparison, Red Star Cold Chain's profitability stands out. According to Zhaoshi Consulting report, based on the 2024 revenue calculation, Red Star Cold Chain ranks first in the frozen food warehousing services market in the central region and Hunan province. Similarly, it ranks at the forefront in the frozen food store rental services market, with a second position in the central region and the first in Hunan province, holding approximately 54.7% market share in Hunan province and establishing a clear leading advantage. Now, Red Star Cold Chain's ambitions are no longer limited to Hunan province but have set their sights on the broader central cold chain market. It is reported that a significant portion of the funds raised from Red Star Cold Chain's IPO, approximately 57.5%, will be used for capacity expansion to meet the growing market demand in the central region; about 19.7% will be used for potential strategic acquisitions and partnerships to transform the company from a regional cold chain enterprise to a full-chain cold chain service provider covering a broader service segment in the central region; and approximately 12.8% will be invested in intelligent upgrades to continuously enhance operational efficiency and help the company maintain its high gross profit advantage. Why is Red Star Cold Chain betting on the central market, the next growth opportunity for cold chain logistics? Looking at the current situation, Red Star Cold Chain is focusing on the central market for practical reasons. In Hunan province, where Red Star Cold Chain has its roots, the company is facing a strong new competitor, Yuhu Cold Chain, under the Hong Kong Yuhu Group. Public information shows that Yuhu Cold Chain is planning to build a trading center in Changsha with a built area of over 360,000 square meters and a storage capacity of over 280,000 tons, expected to attract over 700 enterprises and is set to start operations in 2026. This will undoubtedly directly compete with Red Star Cold Chain and bring new variables to the local cold chain market. It is worth noting that Red Star Cold Chain's proactive expansion beyond Hunan province not only aims to find the next growth opportunity but also capitalizes on the rapid development of the central cold chain market during this "golden window of opportunity." Data shows that the central region accounted for 25.73% of the national population share in 2024, with the six central provinces being important populous provinces in China. With the effects of industrial transformation and economic acceleration showing in the central provinces, the overall consumption market in the central region has demonstrated strong growth resilience, with Hunan and Henan provinces' retail sales of social consumer goods increasing by 5.4% and 6.1% respectively, outperforming the national average. According to Zhaoshi Consulting data, the market for frozen food warehousing services in the central region is expected to maintain an annual compound growth rate of about 6.6% between 2025 and 2029, while the frozen food cold chain service market is projected to sustain an annual compound growth rate of approximately 8.5%, indicating a period of rapid market development. From the overall industry environment, under the dual drive of favorable policies and consumption upgrades, cold chain logistics has become a sunrise industry with high growth certainty. On the policy level, the "14th Five-Year Plan for Cold Chain Logistics Development" clearly defines the important position of cold chain logistics in the development of agricultural industrialization and improving the quality control process of pharmaceutical products, providing a top-level design and systematic guidance for the high-quality development of cold chain logistics. This year, many regions, including Tianjin, Hubei, and Jiangxi, have successively issued relevant policy responses, mentioning the construction of cold chain logistics infrastructure, improvement of cold chain logistics networks, promotion of industry standardization and improvement of smart levels. In this context, Red Star Cold Chain's IPO fundraising will provide more than enough "ammunition" for the company's next stage of capacity expansion, efficiency improvement, and regional integration. The company's greater confidence comes from the forward-looking layout of its parent company, Red Star Industrial. Public reports show that in recent years, Red Star Industrial has already made inroads in the central region, building the largest modern Shenzhen Agricultural Power Group trading platform in the central and southern regions - the Red Star Global Agricultural Wholesale Center, establishing a trading network that caters to 280 million consumers in the six provinces of the central region. The group has established stable production-sales partnerships with more than 10 provinces and over 30 counties nationwide, such as Gansu's highland summer vegetables, Liuding lychees in Guangdong, and honey pomelos in Zhangzhou, Fujian, with business networks across the country. Leveraging the group's existing production-sales network and customer resources, Red Star Cold Chain is poised to quickly enter new markets and fully benefit from the synergies of the group's industrial upstream and downstream, giving it a competitive edge that many third-party cold chain companies cannot match. In summary, the growth strategy of Red Star Cold Chain is clear: after years of deep cultivation in the regional market, its mature profit model has been validated by performance and the market. Coupled with the support of a physical industry conglomerate, the industrial synergy advantage is significant. Taking advantage of the strategic opportunity of the high-growth central cold chain market, the company is expected to rapidly replicate its regional success model, accelerate its transformation into a full-chain cold chain service provider, and capitalize on the high certainty growth dividend of the company. For market investors, the company's IPO now presents a rare opportunity to share in the high certainty growth dividend of the company.