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Stock Code : 2408
(A joint stock company incorporated in the People’s Republic of China with limited liability)
Sole Sponsor
GLOBAL OFFERING
廣州遇見小麵餐飲股份有限公司
Guangzhou Xiao Noodles Catering Management Co., Ltd.


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If you are in any doubt about any of the contents in this prospectus, you should obtain independent professional advice.
Guangzhou Xiao Noodles Catering Management Co., Ltd.
ʮ̡
(A joint stock company incorporated in the People’ s Republic of China with limited liability)
GLOBAL OFFERING
Number of Offer Shares under the
Global Offering
: 97,364,500 H Shares (subject to the
Over-allotment Option)
Number of Hong Kong Offer Shares : 9,736,500 H Shares (subject to
reallocation)
Number of International Offering Shares : 87,628,000 H Shares (subject to
reallocation and the Over-allotment
Option)
Maximum Offer Price : HK$7.04 per H Share plus brokerage of
1%, SFC transaction levy of 0.0027%,
Stock Exchange trading fee of
0.00565% and AFRC transaction levy
of 0.00015% (payable in full on
application in Hong Kong dollars and
subject to refund)
Nominal value : RMB0.02 per H Share
Stock code : 2408
Sole Sponsor
Joint Overall Coordinators, Joint Global Coordinators,
Joint Bookrunners and Joint Lead Managers
Other Joint Global Coordinators, Joint Bookrunners and Joint Lead Managers
Other Joint Bookrunners and Joint Lead Managers
Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsib ility for the contents of this
prospectus, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arisin g from or in reliance upon the whole or any part
of the contents of this prospectus.
A copy of this prospectus, having attached thereto the documents specified in the paragraph headed “Documents Delivered to the Registrar of Companie s and Available on Display” in Appendix VII
to this prospectus, has been registered by the Registrar of Companies in Hong Kong as required by Section 342C of the Companies (Winding Up and Miscella neous Provisions) Ordinance (Chapter
32 of the Laws of Hong Kong). The Securities and Futures Commission and the Registrar of Companies in Hong Kong take no responsibility for the contents o f this prospectus or any other document
referred to above.
The Offer Price is expected to be fixed by agreement between, among others, the Sole Sponsor-Overall Coordinator (for itself and on behalf of the Under writers) and our Company on the Price
Determination Date. The Price Determination Date is expected to be on or around Wednesday, December 3, 2025 and, in any event, not later than 12:00 noon on Wednesday, December 3, 2025. The
Offer Price will be not more than HK$7.04 and is currently expected to be not less than HK$5.64. Applicants for Hong Kong Offer Shares may be required to p ay, on application (subject to application
channels), the Offer Price together with a brokerage of 1%, SFC transaction levy of 0.0027%, Stock Exchange trading fee of 0.00565% and AFRC transacti on levy of 0.00015%. If, for any reason,
the Offer Price is not agreed by 12:00 noon on Wednesday, December 3, 2025, the Global Offering will not proceed and will lapse.
The Sole Sponsor-Overall Coordinator (for itself and on behalf of the Underwriters) may, with our consent, reduce the number of Offer Shares being off ered under the Global Offering and/or the
indicative Offer Price Range below that stated in this prospectus at any time on or prior to the morning of the last day for lodging applications under th e Hong Kong Public Offering. In such a case,
a notice of the reduction of the number of Offer Shares and/or the indicative Offer Price range will be published on the website of the Stock Exchange at www.hkex.com.hk and our website at
www.xiaonoodles.com as soon as practicable following the decision to make such reduction, and in any event not later than the morning of the last day for lodging application s under the Hong Kong
Public Offering. Further details are set forth in “Structure of the Global Offering” and “How to Apply for the Hong Kong Offer Shares” in this prospectu s.
The obligations of the Hong Kong Underwriters under the Hong Kong Underwriting Agreement are subject to termination by the Sole Sponsor and the Sole Sp onsor-Overall Coordinator (for itself
and on behalf of the Hong Kong Underwriters) if certain grounds arise prior to 8:00 a.m. on the Listing Date. See “Underwriting — Underwriting Arrangem ents and Expenses — Hong Kong Public
Offering — Grounds for termination”.
Prior to making an investment decision, potential investors should consider carefully all of the information set out in this prospectus, including t he risk factors set out in “Risk Factors”.
The Offer Shares have not been and will not be registered under the U.S. Securities Act or any state securities law in the United States and may not be offe red, sold, pledged or transferred within
the United States or to, or for the account or benefit of U.S. persons (as defined in Regulation S) except in transactions exempt from, or not subject to, the registration requirements of the U.S.
Securities Act. The Offer Shares are being offered and sold only outside the United States in offshore transactions in reliance on Regulation S under t he U.S. Securities Act.
ATTENTION
We have adopted a fully electronic application process for the Hong Kong Public Offering. We will not provide printed copies of this prospectus to the p ublic in relation to the Hong Kong Public
Offering.
This prospectus is available at the websites of the Stock Exchange ( www.hkexnews.hk ) and our Company ( www.xiaonoodles.com ). If you require a printed copy of this prospectus, you may
download and print from the website addresses above.
IMPORTANT
November 27, 2025


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IMPORTANT NOTICE TO INVESTORS:
FULLY ELECTRONIC APPLICATION PROCESS
We have adopted a fully electronic application process for the Hong Kong
Public Offering.
We will not provide any printed copies of this prospectus for use by the public.
This prospectus is available at the website of the Stock Exchange at
www.hkexnews.hk under the “HKEXnews > New Listings > New Listing
Information” section, and our website at www.xiaonoodles.com. If you require a
printed copy of this prospectus, you may download and print from the website
addresses above.
To apply for Hong Kong Offer Shares, you may:
(1) apply online via the HK eIPO White Form service at www.hkeipo.hk ;o r
(2) apply through the HKSCC EIPO channel to electronically cause HKSCC
Nominees to apply on your behalf by instructing your broker or custodian
who is a HKSCC Participant to submit an EIPO application on your behalf
through HKSCC’s FINI system in accordance with your instructions.
We will not provide any physical channels to accept any application for the Hong
Kong Offer Shares by the public. The contents of the electronic version of this
prospectus are identical to the printed prospectus as registered with the Registrar of
Companies in Hong Kong pursuant to Section 342C of the Companies (Winding Up and
Miscellaneous Provisions) Ordinance, Chapter 32 of the Laws of Hong Kong.
If you are an intermediary, broker or agent, please remind your customers, clients
or principals, as applicable, that this prospectus is available online at the website
addresses above.
Please refer to “How to Apply for Hong Kong Offer Shares” in this prospectus for
further details on the procedures through which you can apply for Hong Kong Offer
Shares electronically.
IMPORTANT


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Y our application through the HK eIPO White Form service or the HKSCC EIPO channel
must be for a minimum of 500 Hong Kong Offer Shares and in one of the numbers set out in
the table below. If you are applying through the HK eIPO White Form service, you may refer
to the table below for the amount payable for the number of Shares you have selected. Y ou must
pay the respective maximum amount payable on application in full upon application for Hong
Kong Offer Shares. If you are applying through the HKSCC EIPO channel, you are required
to prefund your application based on the amount specified by your broker or custodian, as
determined based on the applicable laws and regulations in Hong Kong.
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
HK$ HK$ HK$ HK$
500 3,555.51 7,000 49,776.98 50,000 355,549.92 700,000 4,977,698.88
1,000 7,111.00 8,000 56,887.98 60,000 426,659.90 800,000 5,688,798.72
1,500 10,666.51 9,000 63,998.99 70,000 497,769.89 900,000 6,399,898.55
2,000 14,222.00 10,000 71,109.99 80,000 568,879.87 1,000,000 7,110,998.40
2,500 17,777.50 15,000 106,664.98 90,000 639,989.86 2,000,000 14,221,996.80
3,000 21,332.99 20,000 142,219.97 100,000 711,099.85 3,000,000 21,332,995.20
3,500 24,888.50 25,000 177,774.95 200,000 1,422,199.68 4,000,000 28,443,993.60
4,000 28,443.99 30,000 213,329.95 300,000 2,133,299.52 4,868,000
(1) 34,616,340.22
4,500 31,999.50 35,000 248,884.94 400,000 2,844,399.35
5,000 35,554.99 40,000 284,439.93 500,000 3,555,499.20
6,000 42,665.99 45,000 319,994.93 600,000 4,266,599.05
(1) Maximum number of Hong Kong Offer Shares you may apply for and this is approximately 50% of the Hong
Kong Offer Shares initially offered.
(2) The amount payable is inclusive of brokerage, SFC transaction levy, the Stock Exchange trading fee and AFRC
transaction levy. If your application is successful, brokerage will be paid to the Exchange Participants (as
defined in the Listing Rules) or to the HK eIPO White Form Service Provider (for applications made through
the application channel of the HK eIPO White Form service) while the SFC transaction levy, the Stock
Exchange trading fee and the AFRC transaction levy will be paid to the SFC, the Stock Exchange and the
AFRC, respectively.
No application for any other number of the Hong Kong Offer Shares will be considered
and any such application is liable to be rejected.
IMPORTANT


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If there is any change in the following expected timetable of the Hong Kong Public
Offering, we will issue an announcement in Hong Kong to be published on our Company’ s
website at www.xiaonoodles.com and the website of the Stock Exchange at
www.hkexnews.hk .
Hong Kong Public Offering commences ..................... 9:00 a.m. on Thursday,
November 27, 2025
Latest time for completing electronic applications under the
HK eIPO White Form service through designated website
www.hkeipo.hk (2) ....................................1 1:30 a.m. on Tuesday,
December 2, 2025
Application lists of the Hong Kong Public Offering open (3) .......1 1:45 a.m. on Tuesday,
December 2, 2025
Latest time for completing payment of HK eIPO White Form
applications by effecting internet banking transfer(s) or PPS
payment transfer(s) ................................... 12:00 noon on Tuesday,
December 2, 2025
If you are instructing your broker or custodian who is a HKSCC Participant to submit
an EIPO application on your behalf through HKSCC’s FINI system, you are advised to
contact your broker or custodian for the latest time for giving such instructions which may
be different from the latest time as stated above.
Application lists of the Hong Kong Public Offering close
(3) ...... 12:00 noon on Tuesday,
December 2, 2025
Expected Price Determination Date (5) ......................o no r before 12:00 noon
on Wednesday,
December 3, 2025
Announcement of the final Offer Price, the level of indications of
interest in the International Offering, the level of applications in
the Hong Kong Public Offering and the basis of allocation of the
Hong Kong Offer Shares to be published on the websites of the
Stock Exchange at www.hkexnews.hk and our Company at
www.xiaonoodles.com (6) on or before ....................... 1 1:00 p.m. Thursday,
December 4, 2025
EXPECTED TIMETABLE (1)
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Results of allocations in the Hong Kong Public Offering
to be available through a variety of channels, including:
 in the announcement to be posted on our Company’s
website at www.xiaonoodles.com (6) and the Stock Exchange’s
website at www.hkexnews.hk by no later than ..........1 1:00 p.m. on Thursday,
December 4, 2025
 from the “Allotment Results” page in the designated
results of allocations website at www.tricor.com.hk/ipo/result
or www.hkeipo.hk/IPOResult with a “search by ID”
function on a 24-hour basis .................... from 11:00 p.m. on Thursday,
December 4, 2025 to
12:00 midnight on Wednesday,
December 10, 2025
 from the allocation results telephone enquiry
line by calling +852 3691 8488 ...................... between 9:00 a.m. and
6:00 p.m. from Friday,
December 5, 2025 to
Wednesday,
December 10, 2025
(excluding Saturday, Sunday
and public holiday in Hong Kong)
Despatch of H Share certificates or deposit of the H Share certificates
into CCASS in respect of wholly or partially successful
applications pursuant to the Hong Kong Public Offering
on or before
(7) ................................................. Thursday,
December 4, 2025
Despatch of HK eIPO White Form
e-Auto Refund payment instructions/refund checks (if applicable)
in respect of wholly or partially unsuccessful applications pursuant
to the Hong Kong Public Offering on or before
(7)(8) ....................... Friday,
December 5, 2025
Dealings in H Shares on the Stock Exchange expected to
commence at .......................................... 9:00 a.m. on Friday,
December 5, 2025
Notes:
(1) All times and dates refer to Hong Kong local times and dates.
EXPECTED TIMETABLE (1)
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(2) Y ou will not be permitted to submit your application under the HK eIPO White Form service through the
designated website at www.hkeipo.hk after 11:30 a.m. on the last day for submitting applications. If you have
already submitted your application and obtained an application reference number from the designated website
prior to 11:30 a.m., you will be permitted to continue the application process (by completing payment of
application monies) until 12:00 noon on the last day for submitting applications, when the application lists
close.
(3) If there is/are a tropical cyclone warning signal number 8 or above, a “black” rainstorm warning and/or
Extreme Conditions in force in Hong Kong at any time between 9:00 a.m. and 12:00 noon on Tuesday,
December 2, 2025, the application lists will not open or close on that day. Further information is set out in
“How to Apply for Hong Kong Offer Shares — E. Severe Weather Arrangements”.
(4) Applicants who apply for Hong Kong Offer Shares by giving electronic application instructions to HKSCC via
HKSCC’s FINI system should refer to “How to Apply for Hong Kong Offer Shares — A. Application for Hong
Kong Offer Shares — 2. Application Channels”.
(5) The Price Determination Date is expected to be on or about Wednesday, December 3, 2025, and in any event,
not later than 12:00 noon on Wednesday, December 3, 2025. If, for any reason, the Offer Price is not agreed
between, among others, the Sole Sponsor-Overall Coordinator (for itself and on behalf of the Underwriters)
and us on or before 12:00 noon on Wednesday, December 3, 2025, the Global Offering will not proceed and
will lapse.
(6) None of the websites or any of the information contained on the websites forms part of this prospectus.
(7) H Share certificates for the Hong Kong Offer Shares are expected to be issued on Thursday, December 4, 2025,
but will only become valid evidence of title provided that the Global Offering has become unconditional in all
respects prior to 8:00 a.m. on Friday, December 5, 2025. Investors who trade H Shares on the basis of publicly
available allocation details prior to the receipt of H Share certificates or prior to the H Share certificates
becoming valid evidence of title do so entirely at their own risk.
e-Auto Refund payment instructions/refund checks will be issued in respect of wholly or partially unsuccessful
applications pursuant to the Hong Kong Public Offering and in respect of successful applications in the event
that the final Offer Price is less than the price payable per Offer Share on application.
(8) Applicants who have applied through the HK eIPO White Form service for 1,000,000 or more Hong Kong
Offer Shares under the Hong Kong Public Offering and have provided all information required may collect
H Share certificates in person from our H Share Registrar, Tricor Investor Services Limited, at 17/F, Far East
Finance Centre, 16 Harcourt Road, Hong Kong from 9:00 a.m. to 1:00 p.m. on Friday, December 5, 2025 or
such other date as notified by us as the date of dispatch/collection of H Share certificates/refund checks and
e-Auto Refund payment instructions. Applicants being individuals who are eligible for personal collection may
not authorize any other person to collect on their behalf. If you are a corporate applicant which is eligible for
personal collection, your authorized representative must bear a letter of authorization from your corporation
stamped with your corporation’s chop. Both individuals and authorized representatives must produce evidence
of identity acceptable to our H Share Registrar at the time of collection. Further information is set out in the
sections headed “How to Apply for Hong Kong Offer Shares — D. Despatch/Collection of H Share Certificates
and Refund of Application Monies”.
The above expected timetable is a summary only. For details of the structure and
conditions of the Global Offering, and the procedures for applications for Hong Kong Offer
Shares, see “Structure of the Global Offering” and “How to Apply for Hong Kong Offer
Shares” in this prospectus, respectively.
EXPECTED TIMETABLE (1)
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IMPORTANT NOTICE TO PROSPECTIVE INVESTORS
This prospectus is issued by us solely in connection with the Hong Kong Public
Offering and the Hong Kong Offer Shares and does not constitute an offer to sell or a
solicitation of an offer to buy any security other than the Hong Kong Offer Shares by this
prospectus pursuant to the Hong Kong Public Offering. This prospectus may not be used
for the purpose of making, and does not constitute, an offer or invitation in any other
jurisdiction or in any other circumstances. No action has been taken to permit a public
offering of the Hong Kong Offer Shares in any jurisdiction other than Hong Kong and no
action has been taken to permit the distribution of this prospectus in any jurisdiction
other than Hong Kong. The distribution of this prospectus for purposes of a public
offering and the offering and sale of the Hong Kong Offer Shares in other jurisdictions
are subject to restrictions and may not be made except as permitted under the applicable
securities laws of such jurisdictions pursuant to registration with or authorization by the
relevant securities regulatory authorities or an exemption therefrom.
You should rely only on the information contained in this prospectus to make your
investment decision. The Hong Kong Public Offering is made solely on the basis of the
information contained and the representations made in this prospectus. We have not
authorized anyone to provide you with information that is different from what is
contained in this prospectus. Any information or representation not contained nor made
in this prospectus must not be relied on by you as having been authorized by us, any of
the Sole Sponsor , the Joint Overall Coordinators, the Joint Global Coordinators, the
Joint Bookrunners, the Joint Lead Managers, the Capital Market Intermediaries, the
Underwriters, any of our or their respective directors, officers, employees, agents, or
representatives of any of them or any other parties involved in the Global Offering.
EXPECTED TIMETABLE ............................................ i
CONTENTS ....................................................... i v
SUMMARY ....................................................... 1
DEFINITIONS ..................................................... 2 1
GLOSSARY OF TECHNICAL TERMS ................................. 3 2
FORW ARD-LOOKING STATEMENTS ................................. 3 5
RISK FACTORS ................................................... 3 7
W AIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES .... 6 7
CONTENTS
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INFORMATION ABOUT THIS PROSPECTUS AND
THE GLOBAL OFFERING ......................................... 7 1
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL
OFFERING ...................................................... 7 6
CORPORATE INFORMATION ....................................... 8 4
INDUSTRY OVERVIEW ............................................. 8 7
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE ............ 1 0 4
REGULATORY OVERVIEW ......................................... 1 2 4
BUSINESS ........................................................ 1 5 1
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT .............. 2 6 3
RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS .......... 2 7 9
SUBSTANTIAL SHAREHOLDERS ..................................... 2 8 4
CORNERSTONE INVESTORS ........................................ 2 9 1
SHARE CAPITAL .................................................. 2 9 8
FINANCIAL INFORMATION ......................................... 3 0 2
FUTURE PLANS AND USE OF PROCEEDS ............................. 3 7 1
UNDERWRITING .................................................. 3 7 7
STRUCTURE OF THE GLOBAL OFFERING ............................ 3 9 1
HOW TO APPLY FOR HONG KONG OFFER SHARES ................... 4 0 2
APPENDIX I ACCOUNTANTS’ REPORT ........................ I - 1
APPENDIX II UNAUDITED PRO FORMA FINANCIAL
INFORMATION ............................... II-1
APPENDIX III TAXATION AND FOREIGN EXCHANGE ............. III-1
APPENDIX IV SUMMARY OF PRINCIPAL LEGAL AND
REGULATORY PROVISIONS .................... I V - 1
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION .... V - 1
APPENDIX VI STATUTORY AND GENERAL INFORMATION ........ VI-1
APPENDIX VII DOCUMENTS DELIVERED TO THE REGISTRAR OF
COMPANIES AND A V AILABLE ON DISPLAY ....... VII-1
CONTENTS
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This summary aims to give you an overview of the information contained in this
prospectus. As this is a summary, it does not contain all the information that may be
important to you. You should read the entire prospectus before you decide to invest in the
Offer Shares.
There are risks associated with any investment. Some of the particular risks in
investing in the Offer Shares are set out in “Risk Factors.” You should read that section
carefully before you decide to invest in the Offer Shares.
OVERVIEW
We are a Chinese noodle restaurants operator in China. We operate the Xiao Noodles (༾
Ԉʃᙢ) brand in the Chinese Mainland and Hong Kong SAR. Our restaurant network
encompassed 451 restaurants in 22 cities in the Chinese Mainland and 14 restaurants in Hong
Kong SAR as of the Latest Practicable Date. Leveraging our strong growth momentum, we had
115 new restaurants in pre-opening preparation as of the Latest Practicable Date. Our
restaurants are largely located in southern and eastern China with more than half of our
restaurants in Guangdong province. According to Frost & Sullivan, we were the fourth largest
Chinese noodle restaurants operator in China in terms of GMV in 2024, capturing a market
share of 0.5%. According to Frost & Sullivan, the Chinese noodle restaurants market is a major
subset of the overall Chinese quick service restaurants (QSR) market in China with a market
share of approximately 29.8% in 2024. QSR typically offer convenient and ready-to-eat meals
to consumers for quick dining. The QSR market comprises businesses and establishments that
excel through standardized operations, high efficiency, and scalable models — leveraging
digital integration and affordable pricing to deliver consistent, fast, and convenient dining
experiences with mass appeal, catering to consumers prioritizing quick service and ready-to-eat
meals. The Chinese QSR market accounted for approximately 17.6% of the overall food service
market in China in 2024. The Chinese QSR market in China is highly fragmented due to a large
number and varying types of market participants, with the top five players collectively
accounting for approximately 3.0% of the market in terms of GMV in 2024. According to Frost
& Sullivan, we ranked the thirteenth in the overall Chinese QSR market in terms of GMV in
2024 with a market share of 0.14%.
Our Origin
In 2014, our founding team, Mr. Song, Mr. Su and Ms. Luo, established their first
single-location noodle house on Tiyu East Street in Guangzhou, embarking on their
entrepreneurial journey. Our founding team, Mr. Song, Mr. Su and Ms. Luo, graduated from
South China University of Technology, a tertiary science and engineering institution in
Guangzhou. Mr. Song and Ms. Luo also obtained master’s degrees from the Hong Kong
University of Science and Technology. Under the leadership of our founding team, in
particular, Mr. Song, our founder, who had practical experience in international fast food chain,
we have developed a business model with high degree of standardization, comprehensive
management systems and digitalization, which forms the cornerstone of our success,
integrating the traditional appeal of the Chinese noodle houses with data-driven management
approach.
Signature Dishes
Our foundation was built on Chongqing noodles (ᅅʃᙢ), a series of spicy flavor staple
dishes originated in the mountain city Chongqing, which has garnered popularity across the
country. Being a Chinese restaurant chain (೐) that specializes in Chongqing
noodles, we have expanded our offerings to a diverse range of spicy and non-spicy dishes
encompassing noodles, rice, snacks and beverages.
SUMMARY
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Market Opportunities
Noodles have long been one of the daily main dishes in the Chinese community.
Operating in the Chinese noodle restaurants segment, our restaurants strive to fulfill the strong
consumer demand for quick and convenient dining experience with the enduring appeal of
noodle dishes. According to Frost & Sullivan, the prosperity of Chinese noodle restaurants in
China has been fueled by the accelerating urbanization process, rising disposable incomes and
the popularity of digital ordering and takeaway platforms. As consumer preferences continue
to evolve, Chinese noodle restaurants are expected to achieve sustained growth through menu
innovation and improved operational efficiency.
According to Frost & Sullivan, the growth of the Chinese noodle restaurant market in
China is expected to accelerate further to reach the total GMV of RMB510.0 billion by 2029,
at a CAGR of 10.9% from 2025 to 2029, based on further urbanization, increase in disposable
income and increase in the proportion of consumers dining out in China. Within the Chinese
noodle restaurant market, the total GMV of market of Chinese noodle restaurants specializing
in Sichuan and Chongqing-style in China is expected to reach the total GMV of RMB135.7
billion by 2029, at a CAGR of 13.2% from 2025 to 2029, which is the highest among the
markets of Chinese noodle restaurants for different types of regional cuisine in China.
These favorable trends present us with exceptional growth opportunities.
OUR RESTAURANT NETWORK AND PERFORMANCE
Our restaurants are operated under either a self-operated model or a franchise model.
During the Track Record Period, we had managed to sustain expansion of our restaurant
number and achieved rapid growth of our financial performance. From the beginning of the
Track Record Period to the Latest Practicable Date, the number of our restaurants had grown
by 249.6% from 133 to 465 restaurants.
The following table sets forth movement in the number of our restaurants for the periods
indicated.
For the year ended December 31,
For the
six months
ended
June 30,
From
June 30,
2025 to the
Latest
Practicable
Date2022 2023 2024 2025
At the beginning of the
period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118133 170 252 360 417
Newly opened during the
period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111843 92 120 63 55
Closed during the period /H1118/H1118 (6)(1) (10) (1) (12) (6) (7)
At the end of the period /H1118/H1118 170 252 360 417 465
Note:
(1) As of January 1, 2022 and 2023, we authorized an Independent Third Party to operate twelve and nine
restaurants, respectively. In 2022 and 2023, three and nine of such restaurants were closed, respectively.
For details of the background of our restaurants under authorized operation model, see “Business — Our
Franchisees.”
The following table sets forth certain key performance indicators of our self-operated and
franchised Xiao Noodles restaurants (1) in China by region for the periods indicated.
For the year ended December 31,
For the six months ended
June 30,
2022 2023 2024 2024 2025
GMV(2) (RMB’000)
Self-operated
restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118340,086 668,021 944,708 433,913 544,954
SUMMARY
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For the year ended December 31,
For the six months ended
June 30,
2022 2023 2024 2024 2025
Second-tier cities
and below /H1118/H1118/H1118/H1118/H1118/H111829,866 45,095 67,946 29,389 42,621
Hong Kong SAR /H1118/H1118 – – 15,723 (3) 3,674 42,272
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118369,952 713,116 1,028,378 466,976 629,847
Franchised
restaurants
First-tier and new
first-tier cities /H1118/H1118/H111868,110 129,871 152,693 74,394 72,981
Second-tier cities
and below /H1118/H1118/H1118/H1118/H1118/H111873,146 117,081 167,351 76,353 96,122
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118141,257 246,952 320,044 150,747 169,104
Average daily sales
per restaurant (4)
(RMB)
Self-operated
restaurants
First-tier and new
first-tier cities /H1118/H1118/H111812,059 14,143 12,405 12,714 11,355
Second-tier cities
and below /H1118/H1118/H1118/H1118/H1118/H111810,169 12,132 10,605 11,360 9,773
Hong Kong SAR /H1118/H1118 – – 51,215 51,021 42,357
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,881 13,997 12,410 12,693 11,805
Franchised
restaurants
First-tier and new
first-tier cities /H1118/H1118/H111811,802 14,234 12,688 12,904 11,880
Second-tier cities
and below /H1118/H1118/H1118/H1118/H1118/H111811,554 12,872 12,104 12,181 11,215
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,672 13,554 12,376 12,528 11,493
Total number of
orders
(5)
(thousands)
Self-operated
restaurants
First-tier and new
first-tier cities /H1118/H1118/H11189,416 19,498 29,581 13,385 17,666
Second-tier cities
and below /H1118/H1118/H1118/H1118/H1118/H1118817 1,349 2,176 924 1,428
Hong Kong SAR /H1118/H1118 – – 260 57 699
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810,233 20,847 32,018 14,365 19,794
Franchised
restaurants
First-tier and new
first-tier cities /H1118/H1118/H11181,922 3,913 4,864 2,359 2,404
Second-tier cities
and below /H1118/H1118/H1118/H1118/H1118/H11182,004 3,459 5,212 2,336 3,061
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,927 7,372 10,076 4,695 5,465
Average spending
per order (6) (RMB)
Self-operated
restaurants
First-tier and new
first-tier cities /H1118/H1118/H111836.1 34.3 31.9 32.4 30.8
Second-tier cities
and below /H1118/H1118/H1118/H1118/H1118/H111836.5 33.4 31.2 31.8 29.8
Hong Kong SAR /H1118/H1118 – – 60.4 64.7 60.4
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111836.2 34.2 32.1 32.5 31.8
SUMMARY
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For the year ended December 31,
For the six months ended
June 30,
2022 2023 2024 2024 2025
Franchised
restaurants
First-tier and new
first-tier cities /H1118/H1118/H111835.4 33.2 31.4 31.5 30.4
Second-tier cities
and below /H1118/H1118/H1118/H1118/H1118/H111836.5 33.8 32.1 32.7 31.4
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111836.0 33.5 31.8 32.1 30.9
Average daily orders
per restaurant (7)
Self-operated
restaurants
First-tier and new
first-tier cities /H1118/H1118 334 413 388 392 368
Second-tier cities
and below /H1118/H1118/H1118/H1118/H1118/H1118278 363 340 357 327
Hong Kong SAR /H1118/H1118 – – 848 788 701
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118329 409 386 390 371
Franchised
restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118333 429 404 409 391
Second-tier cities
and below /H1118/H1118/H1118/H1118/H1118/H1118317 380 377 373 357
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118324 405 390 390 371
Seat turnover rate (8)
Self-operated
restaurants
First-tier and new
first-tier cities /H1118/H1118/H11183.2 4.0 3.8 3.8 3.4
Second-tier cities
and below /H1118/H1118/H1118/H1118/H1118/H11182.5 3.1 3.1 3.2 2.6
Hong Kong SAR /H1118/H1118 – – 6.8 6.9 6.0
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183.1 3.9 3.8 3.8 3.4
Franchised
restaurants
First-tier and new
first-tier cities /H1118/H1118/H11183.2 4.1 3.9 3.9 3.5
Second-tier cities
and below /H1118/H1118/H1118/H1118/H1118/H11182.8 3.2 3.3 3.2 2.9
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183.0 3.6 3.6 3.6 3.1
Notes:
(1) The above key performance indicators of our self-operated and franchised Xiao Noodles restaurants do
not include the restaurants that were authorized to be operated by an Independent Third Party in 2022
and 2023. For details of the background of our restaurants under authorized operation model, see
“Business — Our Franchisees.” During the Track Record Period, there was no significant difference in
the performance of our self-operated and franchised restaurants.
(2) Representing the total sales value of food and beverage sold under the restaurant operations and delivery
business of restaurants under our self-operated and franchise models over the period, after deducting any
fees or costs such as discounts or returns.
(3) In 2024, we operated three self-operated restaurants in Hong Kong SAR, which were opened in April,
November and December, 2024.
(4) Average daily sales per restaurant is calculated by dividing (i) the total GMV generated from restaurant
operations and delivery business of restaurants under our self-operated and franchise models by (ii) the
total operation days of such restaurants for the period. The number of the total operation days is the sum
of the operation days of all Xiao Noodles restaurants in the relevant regions.
(5) Total number of orders include the number of orders placed by dine-in customers and customers of our
delivery services for the period in the relevant regions.
SUMMARY
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(6) Average spending per order is calculated by dividing (i) the GMV generated from restaurant operations
and delivery business of restaurants under our self-operated and franchise models by (ii) the total
number of orders, including orders placed by both dine-in customers and customers of our delivery
services, for the period in the relevant regions.
(7) Average daily orders per restaurant is calculated by dividing (i) the total number of orders, including
orders placed by both dine-in customers and customers of our delivery services, by (ii) the total
operation days of such restaurants for the period. The number of the total operation days is the sum of
the operation days of all Xiao Noodles restaurants in the relevant regions.
(8) Seat turnover rate is calculated by dividing the aggregate number of orders placed by dine-in customers
during a specific period by the total number of available seats in that period, which is determined by
multiplying the restaurants’ seat count by their operation days.
The average spending per order at our self-operated and franchised restaurants decreased
from RMB36.2 and RMB36.0 in 2022 to RMB34.2 and RMB33.5 in 2023, and further
decreased to RMB32.1 and RMB31.8 in 2024, and decreased from RMB32.5 and RMB32.1 for
the six months ended June 30, 2024 to RMB31.8 and RMB30.9 for the six months ended June
30, 2025, respectively, primarily because we took the initiative to reduce the prices of our
menu items and provide customers with a more affordable dining experience in order to attract
customers and increase our overall sales.
The following table sets forth the restaurant-level operating profit/(loss) margin
(1) of our
self-operated restaurants for the periods indicated.
For the year ended December 31,
For the
six months
ended
June 30,
2022 2023 2024 2025
(%) (%) (%) (%)
Self-operated restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(8.4) 12.2 12.6 14.1
Second-tier cities and
below /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810.8 17.3 19.3 19.8
Hong Kong SAR /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 26.1 21.8
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(6.9) 12.5 13.3 15.1
Note:
(1) The restaurant-level operating profit/(loss) is derived from the Company’s operating data and calculated
by deducting costs of food ingredients, staff, rent and utilities, transaction fees, advertising and
promotion expenses, miscellaneous expenses, and depreciation and amortization from restaurant-level
revenue, and restaurant-level operating profit/(loss) margin is calculated by dividing restaurant-level
operating profit/(loss) by restaurant-level revenue.
Despite the restaurant-level operating loss recorded in 2022 due to the impact of
COVID-19 pandemic, we had turned to restaurant-level operating profit since 2023 and our
restaurant-level operating profit margin increased in 2024 and the first half of 2025, primarily
due to (i) improved management efficiency over our procurement costs through bulk
purchasing of ingredients and economies of scale following the expansion of our self-operated
restaurant network. In particular, the percentage of the cost of raw materials and consumables
of our self-operated restaurants over the revenue attributable to our self-operated restaurants
decreased from 29.0% in 2023 to 28.4% in 2024, and further decreased to 26.9% for the six
months ended June 30, 2025 due to our continuous effort in managing our procurement costs;
(ii) streamlined labor management through digitalization and standardization, which increased
operational efficiency; and (iii) the gradual expansion of our restaurants from the existing
locations in city centers to peripheral areas, which generally had lower revenue contribution
but were benefited from lower rental costs and higher profit margins. Coupled with the effect
of our increased bargaining power with property owners resulting from enhanced brand
recognition and the gradual decline in market rental levels during the Track Record Period, the
percentage of rental expenses of our self-operated restaurants, comprising depreciation of
right-of-use assets, other rentals and related expenses and interest on lease liabilities of our
SUMMARY
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self-operated restaurants, over the revenue attributable to our self-operated restaurants
decreased from 23.8% in 2023 to 23.3% in 2024, and further decreased to 22.2% for the six
months ended June 30, 2025.
Same Store Sales
The following table sets forth details of our same store sales in China during the Track
Record Period. Same store sales for a given period refer to the revenue of all restaurants that
qualified as same stores during that period. We define our same store base to be those
restaurants that opened for at least 300 days and had the same number of seats in both 2022
and 2023 and in both 2023 and 2024, and opened for at least 150 days and had the same number
of seats in both the six months ended June 30, 2024 and 2025.
For the year ended December 31,
For the six months
ended June 30,
2022 2023 2023 2024 2024 2025
Number of same
stores
Self-operated
restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118 59 96 155
Second-tier cities
and below /H1118/H1118/H1118/H1118/H111881 0 1 1
Total/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111867 106 166
Franchised
restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118 13 20 23
Second-tier cities
and below /H1118/H1118/H1118/H1118/H111816 19 25
Total/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111829 39 48
Same store sales (1)
(RMB’000)
Self-operated
restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118234,969 310,458 496,652 471,765 344,758 333,521
Second-tier cities
and below /H1118/H1118/H1118/H1118/H111827,569 35,669 44,397 45,621 24,250 24,013
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118262,538 346,127 541,049 517,386 369,008 357,534
Franchised
restaurants
First-tier and new
first-tier cities /H1118/H1118/H111852,775 65,004 106,281 100,353 55,494 53,199
Second-tier cities
and below /H1118/H1118/H1118/H1118/H111866,488 80,146 93,048 91,297 55,312 54,355
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118119,263 145,150 199,330 191,651 110,806 107,554
Same store sales
growth (%)
Self-operated
restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118 32.1 (5.0) (3.3)
Second-tier cities
and below /H1118/H1118/H1118/H1118/H111829.4 2.8 (1.0)
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111831.8 (4.4) (3.1)
Franchised
restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118 23.2 (5.6) (4.1)
Second-tier cities
and below /H1118/H1118/H1118/H1118/H111820.5 (1.9) (1.7)
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111821.7 (3.9) (2.9)
SUMMARY
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For the year ended December 31,
For the six months
ended June 30,
2022 2023 2023 2024 2024 2025
Same store average
daily orders per
restaurant
(2)
Self-operated
restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118339 427 416 418 387 386
Second-tier cities
and below /H1118/H1118/H1118/H1118/H1118276 361 363 388 373 400
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118331 419 411 415 386 387
Franchised
restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118333 417 434 441 420 433
Second-tier cities
and below /H1118/H1118/H1118/H1118/H1118318 403 392 412 369 377
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118325 409 413 427 393 404
Same store average
spending per
order
(3)
First-tier and new
first-tier cities /H1118/H1118/H111835.5 34.0 34.3 32.7 32.3 31.2
Second-tier cities
and below /H1118/H1118/H1118/H1118/H111836.0 33.9 33.5 32.2 32.5 30.3
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111835.5 33.9 34.2 32.6 32.3 31.2
Franchised
restaurants
First-tier and new
first-tier cities /H1118/H1118/H111835.5 33.1 33.8 31.5 32.0 30.2
Second-tier cities
and below /H1118/H1118/H1118/H1118/H111836.5 34.1 34.3 32.2 33.1 31.9
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111836.1 33.7 34.0 31.8 32.5 31.0
Same store seat
turnover rate (4)
Self-operated
restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118 3.2 4.0 4.0 4.2 3.8 3.6
Second-tier cities
and below /H1118/H1118/H1118/H1118/H11182.5 3.1 3.1 3.4 3.3 3.1
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183.1 3.9 3.9 4.1 3.7 3.6
Franchised
restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118 3.3 4.0 4.2 4.5 4.1 4.0
Second-tier cities
and below /H1118/H1118/H1118/H1118/H11182.8 3.3 3.2 3.6 3.2 3.0
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183.0 3.6 3.7 4.0 3.6 3.5
Notes:
(1) Same store sales refer to the total GMV generated from our same stores, including those generated from
dine-in and delivery orders.
(2) Same store average daily orders per restaurant is calculated by dividing (i) the total number of orders,
including orders placed by both dine-in customers and customers of our delivery services of these same
store restaurants, by (ii) the sum of restaurant operation days of each same store restaurant for the
period.
SUMMARY
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--- page 17 ---
(3) Same store average spending per order is calculated by dividing (i) the total GMV generated from
restaurant operations and delivery business of same store restaurants by (ii) the total number of orders
from our same stores, including orders placed by both dine-in customers and customers of our delivery
services, for the period in the relevant regions.
(4) Same store seat turnover rate is calculated by dividing the aggregate number of orders placed by dine-in
customers during a specific period by the total number of available seats in that period, which is
determined by multiplying the restaurants’ seat count by their operation days.
Our same store average daily orders per restaurant increased in 2022 and 2023, 2023 and
2024, as well as the six months ended June 30, 2024 and 2025 primarily because we took the
initiative to reduce the prices of our menu items and provide customers with more affordable
dining experience in order to attract more customers and increase our overall sales. Benefited
from our price reduction initiative, we recorded an increase in same store seat turnover rate,
which mainly reflects the performance of our dine-in services, in 2022 and 2023 as well as
2023 and 2024. Our same store seat turnover rate decreased in the six months ended June 30,
2024 and 2025 primarily due to the intensified promotional activities on delivery platforms in
the first half of 2025, which prompted some of the customers from dining in to placing orders
on the delivery platforms.
Our same store sales increased in 2022 and 2023 primarily due to the rebound of
consumers’ spendings after the gradual phasing-out of the COVID-19 pandemic in 2023. We
recorded a decrease in same store sales in 2023 and 2024 primarily because of (i) the
normalization of consumer spending pattern in the catering market in the Chinese Mainland
following the rapid surge thereof during the first several months in 2023 following the gradual
phasing-out of the COVID-19 pandemic, which was in line with the spending patterns in other
consumer sectors according to Frost & Sullivan, and (ii) our initiative to reduce the prices of
our menu items in order to attract more customers and increase our overall sales as mentioned
above. We recorded a slight decrease in same store sales for the six months ended June 30,
2024 and 2025 primarily because we continued our price reduction initiative in order to provide
a more affordable dining experience for our customers and increase our overall sales, which
was reflected in the increase in our same store average daily orders per restaurant in the same
period.
The same store sales for our self-operated restaurants in first-tier and new first-tier cities
in the six months ended June 30, 2024 and 2025 represented a relatively high proportion of the
full-year figure in 2024 compared with the same store sales for our self-operated restaurants
in second-tier cities and below in the corresponding periods primarily due to the substantial
increase in the number of same store self-operated restaurants in first-tier and new first-tier
cities from 96 for 2023 and 2024 to 155 for the six months ended June 30, 2024 and 2025 (as
compared to 10 and 11 in second-tier cities and below), as a result of the expansion of our
restaurant network in the same periods.
OUR FRANCHISEES
Harnessing the success of our self-operated model and our well-established brand
recognition, we ventured into the franchise model under our centralized management in 2019.
Since adopting the franchise model, the number of our franchised restaurants has grown
steadily during the Track Record Period. As of June 30, 2025, we had 86 franchised restaurants.
Our franchised restaurants followed the same standards we set for the self-operated restaurants.
We maintain strong oversight of franchised restaurants, ensuring that every aspect of restaurant
operation is properly managed and optimized for success. As the franchisor, we provide
franchise management services under our franchise agreements with franchisees and sell food
ingredients and restaurant supplies to them. Our franchise management services revenue
mainly includes sales of food ingredients and restaurant supplies as well as royalty and
franchising income. For details on our franchise model, see “Business — Our Franchisees.” For
the years ended December 31, 2022, 2023, 2024 and the six months ended June 30, 2024 and
2025, the restaurant-level gross profit margin of our franchised restaurants, derived from the
Company’s operating data and calculated by dividing restaurant-level gross profit (i.e.
deducting restaurant-level revenue by raw materials and consumables used) by restaurant-level
revenue, was 67.0%, 66.0%, 66.2%, 65.8% and 66.8%, respectively.
CUSTOMERS AND SUPPLIERS
As a restaurant company, we have a large and fragmented customer base. Under the
franchising model, we also regard our franchisees as our customers. In 2022, 2023, 2024 and
the six months ended June 30, 2025, our five largest customers in each year/period comprised
our franchisees. In 2022, 2023, 2024 and the six months ended June 30, 2025, revenue from
our five largest customers in each year/period accounted for 8.5%, 6.8%, 4.9% and 4.2% of our
total revenue for the respective periods. Our largest customer in each year/period during the
SUMMARY
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--- page 18 ---
Track Record Period accounted for approximately 3.7%, 3.5%, 2.8% and 2.2% of our total
revenue for 2022, 2023, 2024 and the six months ended June 30, 2025, respectively. During the
Track Record Period, we were not subject to any material customer concentration risk. To the
best of our knowledge, during the Track Record Period and up to the Latest Practicable Date,
all of our five largest customers in each year/period during the Track Record Period were
Independent Third Parties. To the best of the knowledge of our Directors, none of our
Directors, their respective associates or any shareholder who owns more than 5% of our issued
share capital had any interest in any of our five largest customers in each year/period during
the Track Record Period.
As of the Latest Practicable Date, we collaborated with approximately 460 suppliers.
Purchases from our five largest suppliers in each year/period during the Track Record Period
accounted for 28.7%, 30.1%, 30.5% and 33.1% of our total purchases for the respective
year/period. Purchases from our largest supplier in each year/period during the Track Record
Period accounted for 7.2%, 10.1%, 11.6% and 13.3% of our total purchases for the respective
year/period. To the best of our knowledge, during the Track Record Period and up to the Latest
Practicable Date, all of our five largest suppliers in each year/period during the Track Record
Period were Independent Third Parties. To the best of the knowledge of our Directors, none of
our Directors, their respective associates or any shareholder who owns more than 5% of our
issued share capital had any interest in any of our five largest suppliers in each year/period
during the Track Record Period.
Currently, we procure food ingredients from third-party suppliers primarily through a
logistics and supply chain service company located in Beijing and a group of companies under
its common control (collectively, the “ Supply Chain Service Group ”), all of which are
Independent Third Parties located in the Chinese Mainland providing supply chain services to
us. For details, see “Business — Procurement — Procurement arrangement with the Supply
Chain Service Group.”
COMPETITION
The Chinese noodle restaurant market is highly fragmented, with the top five players
accounting for 3.0% market share in terms of GMV in 2024. This fragmentation presents
significant opportunities for market consolidation. With the current landscape offering ample
opportunities for strategic mergers, acquisitions, and organic chain expansion, established
players can leverage economies of scale, streamline operations, and enhance supply chain
efficiencies. According to Frost & Sullivan, the total GMV of the Chinese noodle restaurant
market in China had expanded from RMB183.3 billion in 2020 to RMB296.2 billion in 2024,
at a CAGR of 12.7%. We operate in this rapidly growing market, where key entry barriers
include brand influence and recognition, integrated supply chain management capabilities,
standardized and scalable operational management, product development expertise, and
digitalized operational systems. We believe we are well-positioned to compete effectively,
leveraging our strengths in these areas. For more information on the competitive landscape of
our industry, see “Industry Overview.”
OUR STRENGTHS
We attribute our success to and distinguish ourselves by the following key competitive
strengths:
 Modern Chinese noodle restaurants operator, favorably positioned to capture future
market opportunities;
 Diverse menu offerings and affordable dining experience catering to the needs of
customers through our diversified business operation model;
 Highly standardized operational model with high replicability;
 Systematic management of self-operated and franchised restaurants;
 Digitalization supporting restaurant and operations management; and
 Management team with entrepreneurial spirit and strong shareholder support.
OUR STRATEGIES
We will continue to pursue the following strategies to further expand our business:
 Strategically expand our self-operated and franchised restaurant network to deliver
sustainable growth;
 Continue to invest in technology and digitalization;
 Continuously invest in brand building and strengthen customer loyalty; and
 Enhance operating efficiency through pursuing strategic investments.
SUMMARY
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RISK FACTORS
Our business and the Global Offering involve certain risks, including risks relating to (i)
our business and industry, (ii) doing business in the jurisdictions where we operate and (iii) the
Global Offering. Some of the major risks we face include, but are not limited to, the following:
 Our business depends significantly on the market recognition of our Xiao Noodles
brand, and if we are not able to maintain or enhance the image of our Xiao Noodles
brand recognition, our business, financial condition and results of operations may be
materially and adversely affected.
 We have in recent years experienced accelerated expansion, which may lead to
increasing risks and uncertainties, and our evolving operation system may not be
effective to address such risks and uncertainties.
 We may not be able to maintain and increase the sales and profitability of our
existing restaurants, and our future growth also depends on our ability to open and
profitably operate in existing and new geographical markets.
 Increases in the cost of ingredients used in our restaurants may lead to declines in
our margins and operating results.
 If we cannot obtain desirable restaurant locations or secure renewal of existing
leases on commercially reasonable terms, or our current restaurant sites are affected
by other unfavorable factors beyond our control, our business, results of operations
and ability to implement our growth strategy may be materially and adversely
affected.
 Intense competition in China’s catering industry could prevent us from increasing or
sustaining our revenue and profitability.
PROPERTIES
As of the Latest Practicable Date, we leased 418 properties with a total GFA of
approximately 68,579.3 sq.m. in China and Singapore, which are primarily used as our
restaurants, warehouses and offices.
The following table sets forth a breakdown of the number of leases by remaining term as
of the Latest Practicable Date:
Remaining term Number of leases
Less than one year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111864
One to two years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111858
Two to five years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118222
More than five years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111874
The following table sets forth a breakdown of the number of leases by regions and range
of average monthly rental expenses as of the Latest Practicable Date:
First-tier and new first-tier cities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118362
Less than RMB50,000 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118226
From RMB50,000 to RMB100,000 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118101
More than RMB100,000 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111835
Second-tier cities and below /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111839
Less than RMB50,000 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111837
From RMB50,000 to RMB100,000 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182
Hong Kong SAR /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111816
From RMB50,000 to RMB100,000 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183
More than RMB100,000 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111813
Singapore /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181
More than RMB100,000 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118418
As of the Latest Practicable Date, the estimated reinstatement costs per sq.m. upon
termination for our leases in first-tier and new first-tier cities, second-tier cities and below and
Hong Kong SAR were approximately RMB210 to RMB270, RMB180 to RMB210 and
HK$1,000 to HK$2,200, respectively.
SUMMARY
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SUMMARY OF HISTORICAL FINANCIAL INFORMATION
The summary of consolidated financial information should be read together with the
historical financial information included in the Accountants’ Report in Appendix I to this
prospectus, including the accompanying notes and the information set out in “Financial
Information.”
Summary of Consolidated Statements of Profit or Loss
For the year ended December 31,
For the Six Months ended
June 30,
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Revenue /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118418,096 800,514 1,154,434 525,657 703,185
Raw materials and
consumables used /H1118/H1118/H1118/H1118/H1118/H1118/H1118(160,138) (290,270) (395,701) (187,250) (220,932)
Staff costs /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(109,264) (175,194) (265,062) (121,771) (158,797)
Depreciation of right-of-use
assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(94,620) (125,429) (188,845) (86,309) (109,726)
Depreciation and amortization
of property, plant and
equipment and intangible
assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(21,828) (24,213) (37,649) (17,332) (26,028)
Utility expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(14,119) (27,487) (44,543) (19,715) (28,102)
Other rentals and related
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(4,523) (18,365) (21,632) (10,645) (16,505)
Listing expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (1,112) – (11,164)
Advertising and promotion
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(6,150) (5,044) (13,339) (4,660) (9,525)
Travelling and related
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,929) (3,742) (5,672) (2,508) (2,577)
Other expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(34,595) (59,790) (88,721) (40,402) (53,698)
Other income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,504 14,143 8,967 4,879 4,500
Other net (losses)/gains /H1118/H1118/H1118/H1118/H1118(177) 286 3,116 53 (1,867)
Finance costs /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(16,962) (19,333) (27,771) (12,697) (14,512)
Impairment losses of property,
plant and equipment /H1118/H1118/H1118/H1118/H1118(9,440) (8,938) (1,589) (846) (1,956)
Profit/(Loss) before taxation (48,145) 57,138 74,881 26,454 52,296
Income tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,172 (11,224) (14,181) (5,085) (10,462)
Profit/(Loss) for the
year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(35,973) 45,914 60,700 21,369 41,834
Non-IFRS Measure
To supplement our consolidated financial statements which are presented in accordance
with IFRS, we also use the adjusted net profit/(loss) (a non-IFRS measure) and adjusted net
profit/(loss) margin (a non-IFRS measure) as additional financial measures, which are not
required by, or presented in accordance with, IFRS. We believe that such non-IFRS measure
facilitates comparisons of operating performance from period to period by eliminating
potential impacts of certain items. We believe that such measure provides useful information
to investors and others in understanding and evaluating our consolidated results of operations
in the same manner as it helps our management. However, our presentation of the adjusted net
profit/(loss) (a non-IFRS measure) and adjusted net profit/(loss) margin (a non-IFRS measure)
may not be comparable to similarly titled measures presented by other companies. The use of
such non-IFRS measure has limitations as an analytical tool, and you should not consider it in
isolation form, or as substitute for analysis of, our results of operations or financial condition
as reported under IFRS.
We define the adjusted net profit/(loss) (a non-IFRS measure) as profit/(loss) for the
year/period by eliminating (i) our equity-settled share-based payment expenses, (ii) listing
expenses, and (iii) tax effect of the above non-IFRS adjustments. Our management considers
that (1) equity-settled share-based payment expenses are non-cash in nature and do not result
SUMMARY
–1 1–


--- page 21 ---
in cash outflow and (2) listing expenses are expenses relating to the Global Offering. We define
the adjusted net profit/(loss) margin (a non-IFRS measure) as the adjusted net profit/(loss) (a
non-IFRS measure) for the year/period as percentages of the revenue for that year/period.
Y ear Ended December 31, Six Months ended June 30,
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Profit/(loss) for the
year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118(35,973) 45,914 60,700 21,369 41,834
Equity-settled
share-based payment
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,337 1,419 3,139 1,551 2,624
Listing expense /H1118/H1118/H1118/H1118/H1118– – 1,112 – 11,164
Tax effect of non-IFRS
adjustments /H1118/H1118/H1118/H1118/H1118/H1118(334) (355) (1,063) (388) (3,447)
Adjusted net
profit/(loss)
(a non-IFRS
measure) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(34,970) 46,978 63,888 22,532 52,175
Adjusted net
profit/(loss) margin
(%) (a non-IFRS
measure) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(8.4) 5.9 5.5 4.3 7.4
Revenue
During the Track Record Period, we primarily generated our revenue from self-operated
restaurant operations and franchise management. Revenue from self-operated restaurant
operations mainly comprises revenue from dine-in service and delivery business at our
self-operated restaurants. Revenue from franchise management comprises revenue from
royalty and franchising income as well as sales of goods such as food ingredients and
restaurant supplies to franchisees and sales of equipment to franchisees. Our revenue increased
from RMB418.1 million in 2022 to RMB800.5 million in 2023 and further increased to
RMB1,154.4 million in 2024, representing a CAGR of 66.2%. Our revenue further increased
by 33.8% from RMB525.7 million for the six months ended June 30, 2024 to RMB703.2
million for the six months ended June 30, 2025. Over 90% of our revenue are generated in the
Chinese Mainland.
The following table sets forth a breakdown of our revenue and percentage to total revenue
by business line for the periods indicated:
For the year ended December 31, For the Six Months ended June 30,
2022 2023 2024 2024 2025
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(Unaudited)
Self-operated restaurant
operations
– Dine-in service /H1118/H1118/H1118/H1118/H1118270,998 64.8 547,353 68.4 820,301 71.1 370,612 70.5 497,176 70.7
– Delivery business /H1118/H1118/H1118/H111865,738 15.7 124,587 15.5 180,709 15.6 82,128 15.6 128,898 18.3
Sub-total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118336,736 80.5 671,940 83.9 1,001,010 86.7 452,740 86.1 626,074 89.0
Franchise management
– Sales of food ingredients
and restaurant supplies /H1118/H1118 67,964 16.3 104,965 13.2 125,488 10.9 59,736 11.4 62,787 8.9
– Royalty and franchising
income and provision of
service /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,547 3.0 22,729 2.8 27,042 2.3 12,736 2.4 13,875 2.0
Sub-total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111880,511 19.3 127,694 16.0 152,530 13.2 72,472 13.8 76,662 10.9
Others
(1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118849 0.2 880 0.1 894 0.1 445 0.1 449 0.1
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118418,096 100.0 800,514 100.0 1,154,434 100.0 525,657 100.0 703,185 100.0
SUMMARY
–1 2–


--- page 22 ---
Note:
(1) This represents revenue generated from sales of retail products under our Xiao Noodles brand on e-commerce
platforms.
Major Cost Components
Our cost components mainly include raw materials and consumables, staff costs,
depreciation of right-of-use assets and other rentals and related expenses.
In 2022, 2023 and 2024 and the six months ended June 30, 2024 and 2025, our cost of
raw materials and consumables accounted for 38.3%, 36.3%, 34.3%, 35.6% and 31.4% of our
total revenue, respectively. The decrease in costs of raw materials and consumables as a
percentage of total revenue during the Track Record Period was primarily due to (a) the
structural shift in our cost structure following the proportional increase in the number of our
self-operated restaurants, cost of raw materials and consumables of which accounted for a
lower proportion of the corresponding revenue as compared with our franchised restaurants,
and (b) our continuous effort in managing procurement prices.
In 2022, 2023 and 2024 and the six months ended June 30, 2024 and 2025, our staff costs
accounted for 26.1%, 21.9%, 23.0%, 23.2% and 22.6% of our total revenue, respectively. The
decrease in 2023 was primarily due to the strong rebound of our revenue following the ease of
the COVID-19 pandemic early in the year. The increase in 2024 was mainly attributable to our
headquarters’ initiative to build a talent pipeline for functional roles and recruit restaurant-
level staff in support of our restaurant expansion plan. The decrease in the first half of 2025
was primarily driven by our established headquarters’ departmental structure, which enabled
restaurant expansion without a proportional rise in functional staff, resulting in a slower growth
rate of labor costs than that of our restaurant expansion. Our outsourced staff costs increased
during the Track Record Period as we adopted a more flexible workforce strategy by
outsourcing to better support our business expansion.
In 2022, 2023 and 2024 and the six months ended June 30, 2024 and 2025, our
depreciation of right-of-use assets accounted for 22.6%, 15.7%, 16.4%, 16.4% and 15.6% of
our total revenue, respectively. The decrease in 2023 was primarily due to the strong rebound
of our revenue following the ease of the COVID-19 pandemic. The increase in 2024 was
mainly attributable to the accelerated expansion of our self-operated restaurant network. The
decrease in the first half of 2025 was primarily because (i) the decrease in rents of our newly
opened self-operated restaurants owing to our brand recognition and declining market rental
rates, and (ii) the optimization of existing self-operated restaurants by negotiating preferential
rents when renewing leases and closing those with relatively high rents.
In 2022, 2023 and 2024 and the six months ended June 30, 2024 and 2025, our other
rentals and related expenses as a percentage of total revenue remain relatively stable at 1.1%,
2.3%, 1.9%, 2.0% and 2.3%, respectively.
For details, see “Financial Information — Period to Period Comparison of Results of
Operations”.
Net Profit
Despite a net loss of RMB36.0 million recorded in 2022 due to the impact of COVID-19
pandemic, we turned to net profit position in 2023 with net profit of RMB45.9 million,
primarily due to (i) the expansion of our self-operated restaurant network, resulting in
significant increase in revenue from self-operated restaurant operations, (ii) the strong rebound
of our performance in all business lines following the ease of the COVID-19 pandemic, and
(iii) cost of raw materials and consumables accounts for a lower proportion of our revenue due
to structural shift in our cost structure following the proportional increase in the number of our
self-operated restaurants, cost of raw materials and consumables of which accounted for a
lower proportion of the corresponding revenue as compared with our franchised restaurants. As
a result, we achieved a turnaround from a net loss margin of 8.6% in 2022 to a net profit margin
of 5.7% in 2023.
Our net profit increased by 32.2% from RMB45.9 million in 2023 to RMB60.7 million
in 2024, primarily due to (i) the expansion of our self-operated restaurant network, resulting
in significant increase in revenue from self-operated restaurant operations, (ii) the revenue
growth in royalty and franchising income and provision of service and sales of food ingredients
and restaurant supplies, attributable to the increase in the number of our franchised restaurants,
SUMMARY
–1 3–


--- page 23 ---
and (iii) cost of raw materials and consumables accounts for a lower proportion of our revenue
due to factors including (a) structural shift in our cost structure following the proportional
increase in the number of our self-operated restaurants, cost of raw materials and consumables
of which accounted for a lower proportion of the corresponding revenue as compared with our
franchised restaurants, and (b) our continuous effort in managing procurement prices. Our net
profit margin remained relatively stable at 5.7% and 5.3% in 2023 and 2024, respectively. Our
net profit increased by 95.8% from RMB21.4 million for the six months ended June 30, 2024
to RMB41.8 million for the same period in 2025, primarily due to (i) the improvement of our
operating efficiency at restaurant level attributable to our cost control efforts in procurement
and rent as we had benefited from enhanced brand recognition and economies of scale with the
expansion of our self-operated restaurant network; (ii) the growing contribution from
restaurants in Hong Kong which had higher operating profit margins; and (iii) the further
dilution of our headquarters costs.
Summary of Selected Items of Consolidated Statements of Financial Position
As of December 31,
As of
June 30,
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Total current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118102,525 156,519 247,636 244,877
Total non-current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118510,879 685,978 913,497 964,029
Total current liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118251,090 343,275 489,861 499,837
Total non-current liabilities /H1118/H1118/H1118/H1118/H1118336,342 445,429 553,495 561,979
Net current liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(148,565) (186,756) (242,225) (254,960)
Net Assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111825,972 53,793 117,777 147,090
Net Assets
Our net assets increased from RMB26.0 million as of December 31, 2022 to RMB53.8
million as of December 31, 2023, primarily attributable to profit for the year of RMB45.9
million and equity-settled share-based transactions of RMB1.4 million, partially offset by
dividend declared of RMB19.5 million in 2023.
Our net assets increased from RMB53.8 million as of December 31, 2023 to RMB117.8
million as of December 31, 2024, primarily attributable to profit for the year of RMB60.7
million in 2024 and equity-settled share-based transactions of RMB3.1 million.
Our net assets further increased from RMB117.8 million as of December 31, 2024 to
RMB147.1 million as of June 30, 2025, primarily attributable to profit for the period of
RMB41.8 million and equity-settled share-based transactions of RMB2.6 million, partially
offset by dividend declared of RMB14.7 million.
Net Current Liabilities
We had net current liabilities during the Track Record Period. As of December 31, 2022,
2023 and 2024, June 30, 2025 and September 30, 2025, our net current liabilities amounted to
RMB148.6 million, RMB186.8 million, RMB242.2 million, RMB255.0 million and RMB258.8
million, respectively. Our increased net current liabilities position was primarily because (i) we
financed the expansion of our self-operated restaurant network with our current assets,
especially cash and cash equivalents, for non-current items such as property, plant and
equipment for restaurant decorations and purchases of equipment, (ii) a portion of our lease
liabilities has been recorded as current liabilities while the corresponding balance of
right-of-use assets has been recorded as non-current assets according to IFRS 16, and (iii) there
was a redemption liability which will be reclassified from current liabilities to equity upon
Listing.
Our net current liabilities increased by 29.7% from RMB186.8 million as of
December 31, 2023 to RMB242.2 million as of December 31, 2024, primarily due to (i) an
increase in current lease liabilities of RMB53.1 million mainly attributable to our increased
lease properties for the expansion of our self-operated restaurant network, (ii) an increase in
short-term borrowings of RMB50.0 million, and (iii) an increase in contract liabilities,
primarily consist of receipt of the advance payment of franchising income from our
franchisees, balances in stored value membership accounts and issued vouchers and contract
liabilities of customer loyalty scheme of RMB22.5 million in line with our business expansion,
SUMMARY
–1 4–


--- page 24 ---
partially offset by (iv) an increase in financial assets measured at FVPL of RMB45.2 million
representing our investments in structured deposits and (v) an increase in trade and other
receivables of RMB25.6 million in line with our business expansion.
Our net current liabilities increased by 25.7% from RMB148.6 million as of
December 31, 2022 to RMB186.8 million as of December 31, 2023, primarily due to (i) an
increase in trade and other payables of RMB42.3 million mainly attributable to the growing
procurement from suppliers, (ii) an increase in current lease liabilities of RMB32.8 million
mainly attributable to the increased lease properties for the expansion of our self-operated
restaurant network, and (iii) an increase in contract liabilities of RMB23.5 million in line with
our business expansion, partially offset (iv) an increase in trade and other receivables of
RMB24.7 million in line with our business expansion and (v) an increase in financial assets
measured at FVPL of RMB18.1 million.
Our net current liabilities remained relatively stable at RMB242.2 million as of December
31, 2024, RMB255.0 million as of June 30, 2025 and RMB258.8 million as of September 30,
2025, respectively.
We will continue to expand our restaurant network in the future which may further
increase our current lease liabilities. On the other hand, we expect our operating cash inflows
to scale up following our business expansion once the newly opened restaurants begin to
generate profit. The net proceeds from the Global Offering will also bolster our working
capital. Furthermore, as the franchised restaurants account for a higher proportion of our total
restaurants, our need for expenditures for restaurant openings will decrease, which is expected
to improve our net current liabilities position. We will also closely monitor our liquidity
positions by way of regular review of our cash flows, to ensure that our liquidity positions are
in line with our business operations and expansion needs. To further tighten our cash
management regime, we have instituted a weekly review mechanism. This periodic assessment
aids in making informed decisions about cash allocation, capital structure optimization, and
addressing immediate and future working capital needs. We will maintain sound relationships
with banks and other financial institutions to obtain financial facilities to support our business
operations as required.
ACCUMULATED LOSSES
At the beginning of the Track Record Period, our Group recorded accumulated losses,
primarily due to investments in headquarters expansion and rapid store network growth in the
early stages of our business. Nevertheless, based on our Group’s unaudited management
accounts without considering the impact of adoption of IFRS 16, we had remained profitable
during the three years prior to the Track Record Period until the COVID-19 pandemic
adversely affected our financial results in 2022.
We recorded accumulated losses as at December 31, 2022 of RMB75.2 million, primarily
due to a net loss of RMB36.0 million caused by the adverse impact of the COVID-19 pandemic
on our business operations.
Our accumulated losses as at December 31, 2023 were reduced to RMB26.1 million,
primarily attributable to a net profit of RMB45.9 million, partially offset by a declared
dividend of RMB19.5 million as a result of the strong rebound of our performance following
the ease of the COVID-19 pandemic.
We turned to retained profit as of December 31, 2024 and June 30, 2025, attributable to
our strong performances across all business lines in 2024 and the first half of 2025.
WORKING CAPITAL SUFFICIENCY
Taking into account the financial resources available to us, including our cash and cash
equivalents and financial assets measured at fair value through profit or loss on hand, available
bank loans and facilities and the estimated net proceeds from the Global Offering, our
Directors are of the view that we have sufficient working capital to meet our present needs and
for the next twelve months from the date of this prospectus.
Our current assets comprise, among others, cash and cash equivalent, restricted bank
deposits, and financial assets at fair value through profit or loss. Our total cash and cash
equivalents, restricted bank deposits, and financial assets at FVPL amounted to RMB55.6
million, RMB73.0 million, RMB143.8 million, and RMB119.5 million as of December 31,
2022, 2023, and 2024, and June 30, 2025, respectively. Our cash and cash equivalent amounted
to RMB36.5 million, RMB26.8 million, RMB42.2 million and RMB50.0 million as of
December 31, 2022, 2023 and 2024 and June 30, 2025, respectively, and our financial assets
at fair value through profit or loss amounted to RMB7.0 million, RMB25.1 million, RMB70.3
SUMMARY
–1 5–


--- page 25 ---
million and RMB25.0 million as of December 31, 2022, 2023 and 2024 and June 30, 2025,
respectively. Our financial assets at fair value through profit or loss represent our investments
in wealth management products with maturity less than three months, all of which were liquid
structured deposits issued by reputable commercial banks in China with guaranteed principal
and variable returns tied to the performance of certain underlying financial assets. There are
no fixed or determinable returns of these structured deposits.
We will further enhance our working capital management efficiency and continue to
closely monitor our cash flows and financial position on a regular basis to ensure that our cash
flows and cash and cash equivalents balances remain at a healthy level and manage our
indebtedness as appropriate. Specifically, we will enhance working capital efficiency through
regular annual and monthly budgeting, including cash flow projections approved by our chief
financial officer, while closely monitoring liquidity and adjusting indebtedness as needed. Our
chief financial officer will oversee regular liquidity reviews and report major updates to the
Board. We will maintain optimal cash reserves to meet operational and expansion needs, while
leveraging available financing resources, such as unutilized credit facilities, when necessary,
ensuring readiness for both planned and unexpected circumstances. We also expect to replenish
working capital with 10% of our total net proceeds from the Global Offering to reduce demand
for short-term loans.
Summary of Selected Items of Consolidated Cash Flow Statements
For the year ended December 31,
For the Six Months ended
June 30,
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Net cash generated from
operating activities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118104,773 245,126 313,546 145,699 202,051
Net cash used in investing
activities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(36,001) (78,007) (143,093) (18,848) (7,601)
Net cash used in financing
activities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(75,761) (176,874) (155,059) (98,094) (186,549)
Net increase/(decrease) in
cash and cash equivalents /H1118 (6,989) (9,755) 15,394 28,757 7,901
Cash and cash equivalents at
beginning of the
year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111843,508 36,519 26,764 26,764 42,190
Effect of foreign exchange rate
changes /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 32 – (59)
Cash and cash equivalents at
end of year/period /H1118/H1118/H1118/H1118/H1118/H1118/H111836,519 26,764 42,190 55,521 50,032
KEY FINANCIAL RATIOS
For the year ended/As of December 31,
For the year
ended/As of
June 30,
2022 2023 2024 2025
Revenue growth rate (%) /H1118/H1118/H1118/H1118/H1118/H1118/H1118N/A 91.5 44.2 33.8
Current ratio (1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11180.4 0.5 0.5 0.5
Debt ratio (2) (%) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181.6 – 4.3 –
Notes:
(1) Calculated using current assets dividend by current liabilities as of the respective date.
(2) Calculated using total interest bearing borrowings divided by total assets and multiplied by 100%.
SUMMARY
–1 6–


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IMPACT OF COVID-19 PANDEMIC
In 2022, our business and results of operations were affected by the COVID-19 pandemic
to a certain extent. Notably, our restaurants experienced reduced customer traffic, temporary
closures and reduced operating hours in 2022. In 2022, there were 32 and 11 newly opened
self-operated restaurants and franchised restaurants, respectively. Due to the regional outbreaks
of COVID-19 in various parts of the Chinese Mainland in 2022, we temporarily suspended the
operation of a total of 134 restaurants across the Chinese Mainland, including 100 self-
operated restaurants and 34 franchised restaurants, for two to 192 days in 2022. All of these
restaurants had been subsequently reopened. We also experienced a slowdown in the expansion
of our restaurant network and opened 43 new restaurants in 2022 in light of the resurgence of
COVID-19 outbreaks. As a result, we recorded a net loss of RMB36.0 million in 2022.
We have taken comprehensive measures to mitigate the negative impact of the COVID-19
pandemic, including (i) implementing more stringent cost controls on utilities, consumables,
and other operational expenses, (ii) negotiating with our landlords to obtain more favorable
terms such as extending rent-free periods and lower variable rent payments, (iii) proactively
developing our delivery business by designing, updating and diversifying our menu items for
delivery scenarios and improving our service capabilities to meet increasing consumer demand
for food delivery services, and (iv) remaining agile with pandemic control measures to resume
restaurant operations by adopting flexible working hours and flexible shift systems based on
restaurant foot traffic, allowing us to retain staff while reducing expenses.
Following the ease of the COVID-19 pandemic in early 2023, our customer traffic and
operating days resumed and our financial performance exhibited a strong rebound with an
91.5% year-on-year increase in revenue and a net profit of RMB45.9 million in 2023. Notably,
our revenue from self-operated restaurant operations thrived with a 99.5% year-on-year
increase in the same year. In 2023, we recorded a 74.8% year-on-year increase in the GMV
generated from our franchised restaurant operations. We resumed our restaurant expansion plan
and opened 92 and 120 new restaurants in 2023 and 2024, respectively. Despite the challenges
brought by the COVID-19 in 2022, we believe that the COVID-19 pandemic will not continue
to have any material adverse effect on our business operations or financial performance. For
details on related risks, see “Risk Factors — We face risks related to instances of food-borne
illnesses, health epidemics and other outbreaks.”
OUR CONTROLLING SHAREHOLDERS
Huai’an Chuangtao was established by Mr. Song and Mr. Su in April 2016 as their
shareholding platform. As of the Latest Practicable Date, Huai’an Chuangtao held
approximately 49.04% of the total issued Shares of our Company. Mr. Song, as the general
partner, and Mr. Su, as the limited partner, held 66.67% and 33.33% of the partnership interests
in Huai’an Chuangtao, respectively.
As of the Latest Practicable Date, Mr. Song was entitled to exercise the voting rights
attached to approximately 4.24% of the total issued Shares of our Company by virtue of being
the general partner of Huai’an Y ujian Haoren, our Company’s employee incentive platform.
Immediately following the completion of the Global Offering, Huai’an Chuangtao will be
entitled to exercise the voting rights attaching to 42.33% of the total issued Shares of our
Company (without taking into account any Shares which may be issued pursuant to the exercise
of the Over-allotment Option). Further, by virtue of their interests in Huai’an Chuangtao, a
shareholding platform between them, both Mr. Song and Mr. Su will be regarded as a group of
controlling shareholders pursuant to Chapter 1.1C of the Guide for New Listing Applicants
published by the Stock Exchange. In addition, Mr. Song through Huai’an Y ujian Haoren will
be entitled to exercise the voting rights attaching to 3.66% of the total issued Shares of our
Company (without taking into account any Shares which may be issued pursuant to the exercise
of the Over-allotment Option).
Based on the above, Mr. Song, Mr. Su, Huai’an Chuangtao, and Huai’an Y ujian Haoren
will together form our group of Controlling Shareholders upon Listing. For details, see
“Relationship with Our Controlling Shareholders.”
PRE-IPO INVESTORS
We have engaged in Pre-IPO Investments with our Pre-IPO Investors. For further details
of the identity and background of the Pre-IPO Investors and the principal terms of the Pre-IPO
Investments, see “History, Development and Corporate Structure — The Pre-IPO
Investments.”
SUMMARY
–1 7–


--- page 27 ---
LEGAL PROCEEDINGS AND COMPLIANCE
We may, from time to time, become a party to various legal, arbitral or administrative
proceedings arising in the ordinary course of our business. During the Track Record Period and
up to the Latest Practicable Date, we had not been and were not a party to any legal, arbitral
or administrative proceedings, and we were not aware of any pending or threatened legal,
arbitral or administrative proceedings against us or our Directors that could, individually or in
the aggregate, have a material adverse effect on our business, financial condition and results
of operations. As advised by our PRC Legal Advisor, as of the Latest Practicable Date, we had
complied with all relevant PRC Law in all material respects and had obtained all requisite
licenses, approvals and permits from relevant authorities that are material for our operations in
the Chinese Mainland and such licenses, approvals and permits are valid and effective.
See “Business — Legal Proceedings” and “Business — Compliance, Licenses and
Permits” for more information. For more information about the laws and regulations that we
are subject to, see “Regulatory Overview”.
OFFERING STATISTICS
The statistics in the following table are based on the assumptions that (i) the Global
Offering has been completed and 97,364,500 H Shares are newly issued in the Global Offering,
(ii) the Over-allotment Option for the Global Offering is not exercised, and (iii) 710,689,300
Shares are issued and outstanding following the completion of the Global Offering:
Based on an
Offer Price of
HK$5.64 per
Share
Based on an
Offer Price of
HK$7.04 per
Share
Market capitalization of our Shares (1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118HK$4,008.3
million
HK$5,003.3
million
Unaudited pro forma adjusted consolidated net
tangible assets per Share (2)(3) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
HK$1.01
(RMB0.93)
HK$1.19
(RMB1.10)
Notes:
(1) The calculation of market capitalization is based on 710,689,300 Shares expected to be in issue
immediately upon completion of the Global Offering.
(2) The unaudited pro forma adjusted consolidated net tangible assets attributable to equity shareholders of
our Company per Share has been arrived at after adjustments referred to in Appendix II and on the basis
that 699,500,800 Shares (which is calculated based on 613,324,800 Shares issued at June 30, 2025 and
adjusted for 97,364,500 Shares newly issued upon the Global Offering, but excluding 11,188,500
unvested Shares held by Huai’an Y ujian Haoren, our employee incentive platform for the Pre-IPO
Employee Incentive Scheme) were in issue immediately following completion of the Global Offering,
assuming that the Global Offering had been completed on June 30, 2025 without taking into account of
the Shares which may be issued upon exercise of the Over-allotment Option or pursuant to the Pre-IPO
Employee Incentive Scheme.
No adjustment has been made to the unaudited pro forma adjusted consolidated net tangible assets to
reflect any trading results or other transactions of the Group entered into subsequent to June 30, 2025,
including but not limited to the dividends of RMB34,365,000 declared in October 2025. Had such
dividends been declared on 30 June 2025, the pro forma adjusted consolidated net tangible assets would
have decreased by approximately RMB34,365,000 and the pro forma adjusted consolidated net tangible
assets attributable to equity shareholders of the Company per Share would have decreased by
approximately RMB0.05 (equivalent to HK$0.05).
For the calculation of the unaudited pro forma adjusted net tangible asset value per Share
attributed to our Shareholders, see the section headed “Unaudited Pro Forma Financial
Information” in Appendix II.
FUTURE PLANS AND USE OF PROCEEDS
We estimate that we will receive net proceeds from the Global Offering of approximately
HK$551.6 million, after deducting underwriting fees and commissions and other estimated
expenses paid and payable by us in relation to the Global Offering, assuming an Offer Price
of HK$6.34 per H Share, being the mid-point of the Offer Price range from HK$5.64 to
SUMMARY
–1 8–


--- page 28 ---
HK$7.04 per H Share, and that the Over-allotment Option is not exercised. In line with our
strategies, we intend to use the proceeds from the Global Offering for the purposes and in the
amounts set forth below:
 approximately 60.0% of the net proceeds, or approximately HK$331.0 million, for
expanding our restaurant network, broadening our geographical coverage and
deepening our market penetration;
 approximately 10.0% of the net proceeds, or approximately HK$55.2 million, for
advancing our information technology capabilities through upgrading the
technology and digital systems across our restaurant network;
 approximately 10.0% of the net proceeds, or approximately HK$55.2 million, for
brand building and strengthening customer loyalty;
 approximately 10.0% of the net proceeds, or approximately HK$55.2 million, for
strategic investment in potential companies in the upstream food processing
industry; and
 approximately 10.0% of the net proceeds, or approximately HK$55.2 million, for
general corporate purposes and working capital.
DIVIDENDS
In 2023 and the six months ended June 30, 2025, we declared dividends attributable to
equity shareholders of our Company of RMB19.5 million and RMB14.7 million which had
been fully paid subsequently, respectively. No other dividend was declared or paid by our
Company or other entities comprising our Group during the Track Record Period. On October
27, 2025, the Company passed a Board resolution and Shareholders resolution, declaring a
dividend of RMB34,365,000 based on the Company’s retained profits as of June 30, 2025 to
our existing Shareholders whose names appeared in the register of members of the Company
on October 27, 2025 (the “ Dividend ”). As of September 30, 2025, the total amount of our
Company’s cash and cash equivalents was RMB41.1 million. The Dividend was fully settled
in November 2025 with our internal resources. For details, see “Financial Information —
Dividends.”
We do not currently have a formal dividend policy or any predetermined dividend payout
ratio. PRC Law require that dividends be paid only out of our distributable profits.
Distributable profits are our after-tax profits, less appropriations to statutory and other reserves
that we are required to make. Any future declarations and payments of dividends will be at the
absolute discretion of our Directors and will depend on our actual and expected results of
operations, cash flow and financial position, general business conditions and business
strategies, expected working capital requirements and future expansion plans, legal, regulatory
and other contractual restrictions, and other factors which our Directors consider relevant at
such time. We may declare and pay dividends mainly by cash or by stock that we consider
appropriate. Our ability to distribute dividends in the future also depends on whether we can
receive dividends from our subsidiaries. Any declaration and payment as well as the amount
of dividends will be subject to our constitutional documents, applicable PRC Law and approval
by our Shareholders.
According to the PRC Company Law, a PRC incorporated company is required to set
aside at least 10% of its after-tax profits each year, after making up for previous years’
accumulated losses, if any, to contribute to certain statutory reserve funds until the aggregate
amount contributed to such funds reaches 50% of its registered capital. Our Company may pay
dividends out of after-tax profits after making up for accumulated losses and contributing to
statutory reserve funds as mentioned above.
LISTING EXPENSES
Based on an Offer Price HK$6.34 per H Share, being the mid-point of the indicative Offer
Price range, and assuming the Over-allotment Option is not exercised, listing expenses to be
borne by us are estimated to be approximately HK$65.7 million or 10.6% of the gross proceeds
of the Global Offering, which consist of (i) underwriting commission of approximately
HK$27.0 million, and (ii) non-underwriting related expenses of approximately HK$38.7
million including (a) fees and expenses of legal advisors and the Reporting Accountants of
approximately HK$19.3 million and (b) other fees and expenses of approximately HK$19.4
million. During the Track Record Period, we incurred accumulated listing expenses of
HK$13.3 million recognized in the consolidated statements of profit or loss and other
comprehensive income. Subsequent to the Track Record Period, we expect to further incur
listing expenses of HK$52.4 million prior to and upon completion of the Global Offering, of
which (i) HK$21.2 million is expected to be recognized as expenses in our consolidated
statements of profit or loss and other comprehensive income, and (ii) HK$31.2 million is
expected to be accounted for as a deduction from equity upon Listing.
SUMMARY
–1 9–


--- page 29 ---
APPLICATION FOR LISTING ON THE STOCK EXCHANGE
We have applied to the Stock Exchange for the granting of the listing of, and permission
to deal in, the H Shares in issue and to be issued pursuant to the Global Offering (including
any Shares which may be issued pursuant to the exercise of the Over-allotment Option) and the
Conversion of Unlisted Shares into H Shares. We satisfy the market
capitalization/revenue/cash flow test under Rule 8.05(2) of the Listing Rules with reference to,
among other things, (i) our revenue for the year ended December 31, 2024 being over HK$500
million; (ii) our expected market capitalization at the time of the Listing based on the Offer
Price of HK$5.64 per Offer Share (being the low-end of the indicative Offer Price range)
exceeds HK$2 billion; and (iii) our positive cash flow from operating activities of over
HK$100 million in aggregate for the three years ended December 31, 2024, as required by Rule
8.05(2) of the Listing Rules.
RECENT DEVELOPMENTS AND NO MATERIAL ADVERSE CHANGE
During the period from June 30, 2025 to the Latest Practicable Date, we opened 55 new
restaurants among which 45 were self-operated restaurants and ten were franchised restaurants;
38 were located in first-tier and new first-tier cities, ten were located in second-tier cities and
below, and seven were located in Hong Kong SAR. As of the Latest Practicable Date, we had
115 new restaurants in pre-opening preparation.
Based on our management account, we recorded (i) 36.8% and 14.8% period-on-period
increase in the GMV generated from our self-operated restaurants and franchised restaurants
for the eight months ended August 31, 2024 and the same period in 2025, respectively, and (ii)
42.0% and 20.9% period-on-period increase in the total number of orders served in our
self-operated restaurants and franchised restaurants for the eight months ended August 31,
2024 and the same period in 2025, respectively, primarily due to the increase in number of our
self-operated restaurants and franchised restaurants in the eight months ended August 31, 2025.
In October 2025, the Company passed a Board resolution and Shareholders resolution,
declaring a dividend of RMB34,365,000 based on the Company’s retained profits as of June
30, 2025 to our existing Shareholders whose names appeared in the register of members of the
Company on October 27, 2025 (the “ Dividend ”). The Dividend was fully settled in November
2025 with our internal resources. For details, see “— Dividends.”
Our Directors have confirmed that up to the date of this prospectus, there has been no
material adverse change in our financial or trading position or prospects since June 30, 2025,
being the end of the Track Record Period as reported in the Accountants’ Report as set out in
Appendix I, and there has been no event since June 30, 2025 which would materially affect the
information shown in the Accountants’ Report as set out in Appendix I.
SUMMARY
–2 0–


--- page 30 ---
In this prospectus, unless the context otherwise requires, the following terms shall
have the meanings set forth below. Certain technical terms are explained in “Glossary of
Technical Terms” in this prospectus.
“Accountants’ Report” the accountants’ report of our Company for the Track
Record Period, as included in Appendix I
“affiliate(s)” with respect to any person, any other person, directly or
indirectly, controlling, controlled by or under common
control with such person
“AFRC” the Accounting and Financial Reporting Council of Hong
Kong
“Articles” or “Articles of
Association”
the amended and restated articles of association of the
Company, which was conditionally adopted on April 2,
2025 with effect from the Listing Date, as amended,
supplemented or restated from time to time; see
“Summary of the Articles of Association” in Appendix V
for a summary of the Articles
“associate(s)” has the meaning ascribed to it under the Listing Rules
“Board” or “Board of Directors” the board of Directors of the Company
“business day” a day on which banks in Hong Kong are generally open
for business to the public and which is not a Saturday,
Sunday or public holiday in Hong Kong
“Capital Market
Intermediary(ies)”
the capital market intermediaries participating in the
Global Offering
“CCASS” the Central Clearing and Settlement System established
and operated by HKSCC
“China” or “PRC” the People’s Republic of China
“Chinese Mainland” the People’s Republic of China excluding Hong Kong,
Macau Special Administrative Region and Taiwan
province
“close associate(s)” has the meaning ascribed to it under the Listing Rules
DEFINITIONS
–2 1–


--- page 31 ---
“Companies Ordinance” the Companies Ordinance (Chapter 622 of the Laws of
Hong Kong), as amended, supplemented or otherwise
modified from time to time
“Companies (Winding Up and
Miscellaneous Provisions)
Ordinance”
the Companies (Winding Up and Miscellaneous
Provisions) Ordinance (Chapter 32 of the Laws of Hong
Kong), as amended, supplemented or otherwise modified
from time to time
“Company”, “our Company”, or
“the Company”
Guangzhou Xiao Noodles Catering Management Co.,
Ltd. (ʮ̡), a limited
liability company established under PRC Law on
February 14, 2014 (previously named Guangzhou Xiao
Noodles Catering Management Co., Ltd. ( ᄿψ༾Ԉʃᙢ
ʮ̡)), which was converted into a joint
stock limited liability company on September 7, 2023
“connected person(s)” has the meaning ascribed to it under the Listing Rules
“connected transaction(s)” has the meaning ascribed to it under the Listing Rules
“Controlling Shareholders” has the meaning ascribed to it under the Listing Rules and
unless the context otherwise requires, refers to Mr. Song,
Mr. Su, Huai’an Chuangtao and Huai’an Y ujian Haoren
“Conversion of Unlisted Shares
into H Shares”
the conversion of 613,324,800 Unlisted Shares into H
Shares on a one-for-one basis upon the completion of the
Global Offering. Such conversion of Unlisted Shares into
H Shares has been approved by the CSRC on October 13,
2025 and an application for H Shares to be listed on the
Stock Exchange has been made to the Listing Committee
“CSRC” the China Securities Regulatory Commission ( ʕ਷ᗇՎ
ึ)
“Director(s)” the director(s) of our Company
“EIT” the enterprise income tax
“EIT Law” the China Enterprise Income Tax Law ( ʕശɛ͏΍ձ
), promulgated on 16 March 2007 and
came into effect on 1 January 2008 and was most recently
amended on 29 December 2018 which became effective
on the same date
DEFINITIONS
–2 2–


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“Extreme Conditions” the occurrence of “extreme conditions” as announced by
any government authority of Hong Kong due to serious
disruption of public transport services, extensive
flooding, major landslides, large-scale power outage or
any other adverse conditions before Typhoon Signal No.
8 or above is replaced with Typhoon Signal No. 3 or
below
“FINI” Fast Interface for New Issuance, an online platform
operated by HKSCC that is mandatory for admission to
trading and, where applicable, the collection and
processing of specified information on subscription in
and settlement for all new listings on the Stock Exchange
“Frost & Sullivan” Frost & Sullivan (Beijing) Inc., Shanghai Branch Co., an
independent market research and consulting company
“Frost & Sullivan Report” the report prepared by Frost & Sullivan and
commissioned by us
“Global Offering” the Hong Kong Public Offering and the International
Offering
“Group”, “we”, “our”, or “us” our Company and, where appropriate, our subsidiaries or,
in respect of the period before our Company became the
holding company of our present subsidiaries, the
businesses operated by such subsidiaries or their
predecessors, as the case may be
“H Share(s)” Shares which an application has been made for the listing
and permission to deal on the Stock Exchange with
nominal value of RMB0.02 each
“H Share Registrar” Tricor Investor Services Limited, the H Share Registrar
of the Company
“HK eIPO White Form ” the application for Hong Kong Offer Shares to be issued
in the applicant’s own name by submitting applications
online through the designated website at www.hkeipo.hk
“HK eIPO White Form Service
Provider”
the HK eIPO White Form service provider designated
by the Company as specified on the designated website at
www.hkeipo.hk
DEFINITIONS
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“HKD” or “HK$” Hong Kong dollars, the lawful currency of Hong Kong
“HKSCC” Hong Kong Securities Clearing Company Limited, a
wholly-owned subsidiary of Hong Kong Exchanges and
Clearing Limited
“HKSCC EIPO” the application for the Hong Kong Offer Shares to be
issued in the name of HKSCC Nominees and deposited
directly into CCASS to be credited to your designated
HKSCC Participant’s stock account through causing
HKSCC Nominees to apply on your behalf, including by
instructing your broker or custodian who is an HKSCC
Participant to give electronic application instructions via
HKSCC’s FINI system to apply for the Hong Kong Offer
Shares on your behalf
“HKSCC Nominees” HKSCC Nominees Limited, a wholly-owned subsidiary
of HKSCC
“HKSCC Operational
Procedures”
the Operational Procedures of HKSCC, containing the
practices, procedures and administrative or other
requirements relating to HKSCC’s services and the
operations and functions of CCASS, FINI or any other
platform, facility or system established, operated and/or
otherwise provided by or through HKSCC, as from time
to time in force
“HKSCC Participant” a participant admitted to participate in CCASS as a direct
clearing participant, a general clearing participant or a
custodian participant
“Hong Kong” or “Hong Kong
SAR”
the Hong Kong Special Administrative Region of China
“Hong Kong Legal Counsel” Mr. Clay Huen, barrister-at-law in Hong Kong
“Hong Kong Offer Shares” the 9,736,500 H Shares being initially offered by our
Company for subscription at the Offer Price pursuant to
the Hong Kong Public Offering, subject to adjustment as
described in “Structure of the Global Offering”
DEFINITIONS
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“Hong Kong Public Offering” the offer of the Hong Kong Offer Shares for subscription
by the public in Hong Kong (subject to adjustment as
described in the section headed “Structure of the Global
Offering”) at the Offer Price (plus brokerage of 1.0%,
SFC transaction levy of 0.0027%, the Stock Exchange
trading fee of 0.00565% and AFRC transaction levy of
0.00015%) and on and subject to the terms and conditions
described in this prospectus, as further described in
“Structure of the Global Offering”
“Takeovers Code” Codes on Takeovers and Mergers and Share Buy-backs
issued by the SFC
“Hong Kong Underwriters” the underwriters of the Hong Kong Public Offering
whose names are set forth in “Underwriting — Hong
Kong Underwriters”
“Hong Kong Underwriting
Agreement”
the underwriting agreement, dated November 26, 2025,
relating to the Hong Kong Public Offering, entered into
by our Company, our Controlling Shareholders, CMBI
and the Hong Kong Underwriters, as further described in
“Underwriting — Hong Kong Public Offering”
“Huai’an Chuangtao” Huai’an Chuangtao Enterprise Management Partnership
(Limited Partnership) ( ଊτ̹௴ᗱΆุ၍ଣΥྫΆุ(Ϟ
Υྫ)), a limited partnership established under PRC
Law by Mr. Song and Mr. Su on April 7, 2016 as their
shareholding platform and one of our Controlling
Shareholders. Mr. Song, as the general partner, and Mr.
Su, as the limited partner, held 66.67% and 33.33% of the
partnership interest therein, respectively
“Huai’an Y ujian Haoren” Huai’an Y ujian Haoren Enterprise Management
Partnership (Limited Partnership) ( ଊτ̹༾ԈλɛΆุ
၍ଣΥྫΆุ(Υྫ)), previously known as
Guangzhou Y ujian Haoren Investment Partnership
(Limited Partnership) ( ᄿψ༾Ԉλɛҳ༟ΥྫΆุ(ࠢ
Υྫ)), a limited partnership established under PRC Law
on May 30, 2019 as our Company’s employee incentive
platform and one of our Controlling Shareholders. Mr.
Song is the general partner of Huai’an Y ujian Haoren
“IFRS” IFRS Accounting Standards issued by the International
Accounting Standards Board
DEFINITIONS
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“Independent Third Party(ies)” person(s) or company(ies), who/which, to the best of our
Directors’ knowledge, information and belief, is/are not
our connected persons
“International Offering” the offer of the International Offering Shares by the
International Underwriters at the Offer Price outside the
United States in offshore transactions in reliance on
Regulation S, as further described in “Structure of the
Global Offering”
“International Offering Shares” the 87,628,000 H Shares being initially offered by our
Company pursuant to the International Offering, together
with any additional H Shares which may be issued by our
Company pursuant to the exercise of the Over-allotment
Option, subject to adjustment as described in the section
headed “Structure of the Global Offering”
“International Underwriters” the underwriters of the International Offering
“International Underwriting
Agreement”
the international underwriting agreement, expected to be
entered into on or about December 3, 2025, relating to the
International Offering, by our Company, our Controlling
Shareholders, CMBI and the International Underwriters
in respect of the International Offering, as further
described in “Underwriting — The International
Offering”
“Joint Overall Coordinators” or
“Joint Global Coordinators” or
“Joint Bookrunners” or
“Joint Lead Managers”
the joint overall coordinators, the joint global
coordinators, the joint bookrunners, and joint lead
managers as named in “Directors, Supervisors and Parties
Involved in the Global Offering”
“Latest Practicable Date” November 18, 2025, being the latest practicable date for
the purpose of ascertaining certain information contained
in this prospectus prior to its publication
“Listing” the listing of the H Shares on the Main Board of the Stock
Exchange
“Listing Committee” the listing sub-committee of the board of directors of the
Stock Exchange
DEFINITIONS
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“Listing Date” the date, expected to be on or about Friday, December 5,
2025, on which the H Shares are listed and from which
dealings in the H Shares are permitted to take place on
the Hong Kong Stock Exchange
“Listing Rules” the Rules Governing the Listing of Securities on the
Stock Exchange, as amended, supplemented or otherwise
modified from time to time
“Main Board” the stock exchange (excluding the option market)
operated by the Stock Exchange which is independent
from and operated in parallel with GEM of the Stock
Exchange
“Ministry of Finance” or “MOF” Ministry of Finance of China (௅)
“MOFCOM” Ministry of Commerce of China ( ʕശɛ͏΍ձ਷ਠਕ௅)
“Mr. Song” Mr. Song Qi ( ҂փ), our founder, Controlling
Shareholder, the chairman of our Board, an executive
Director and the chief executive officer of our Company
“Mr. Su” Mr. Su Xuxiang ( ᘽϛജ), our co-founder, Controlling
Shareholder, executive Director and vice president of our
Company
“Ms. Luo” Ms. Luo Y anling ( ᖯዲᜳ), our co-founder, executive
Director and vice president of our Company
“NDRC” National Development and Reform Commission of China
(ึ)
“NPC” the National People’s Congress of China ( ʕശɛ͏΍ձ
ɽึ)
“Offer Price” the final offer price per Offer Share in Hong Kong dollars
(exclusive of brokerage of 1.0%, SFC transaction levy of
0.0027%, the Stock Exchange trading fee of 0.00565%
and AFRC transaction levy of 0.00015%) of no more than
HK$7.04 and expected to be not less than HK$5.64, at
which the Offer Shares are to be subscribed for and
issued pursuant to the Global Offering, to be determined
in the manner as further described in “Structure of the
Global Offering”
DEFINITIONS
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“Offer Share(s)” the Hong Kong Offer Shares and the International
Offering Shares, together with any additional H Shares
which may be issued by our Company pursuant to the
exercise of the Over-allotment Option
“Over-allotment Option” the option expected to be granted our Company to the
International Underwriters, exercisable by the Sole
Sponsor-Overall Coordinator (for itself and on behalf of
the International Underwriters), pursuant to the
International Underwriting Agreement, pursuant to which
our Company may be required to allot and issue up to an
aggregate of 4,868,000 additional H Shares at the Offer
Price, representing approximately 5.00% of the total
number of Shares initially available under the Global
Offering, to cover, among other things, over-allocation in
the International Offering, if any
“PRC Company Law” the Company Law of China, as amended, modified and/or
otherwise supplemented from time to time
“PRC Data Compliance Advisor” Jia Y uan Law Offices, the legal advisor to our Company
as to PRC Law on cybersecurity and data privacy
protection
“PRC government” or “State” the central government of China and all governmental
subdivisions (including provincial, municipal and other
regional or local government entities) and
instrumentalities thereof or, where the context requires,
any of them
“PRC Law” the laws and regulations of China, without reference to
the laws and regulations of Hong Kong and Macao
Special Administrative Region and the relevant
regulations of Taiwan
“PRC Legal Advisor” Jingtian & Gongcheng, our legal advisor as to PRC Law
“Pre-IPO Employee Incentive
Scheme”
the pre-IPO employee incentive scheme approved and
adopted by our Company in August 2019, the details of
which are set out in “Statutory and General Information
— D. Pre-IPO Employee Incentive Scheme” in
Appendix VI
DEFINITIONS
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“Pre-IPO Investment(s)” the pre-IPO investment(s) in our Company, the details of
which are set out in “History, Development and
Corporate Structure — Pre-IPO Investments”
“Pre-IPO Investor(s)” the investor(s) of the Pre-IPO Investments
“Price Determination Agreement” the agreement to be entered into between, among others,
our Company and the Sole Sponsor-Overall Coordinator
(for itself and on behalf of the Underwriters) at or about
the Price Determination Date to record and fix the Offer
Price
“Price Determination Date” the date, expected to be on or about Wednesday,
December 3, 2025 and no later than 12:00 noon on
Wednesday, December 3, 2025 unless otherwise
announced, on which the Offer Price is to be determined
for the purposes of the Global Offering
“province” a province or, where the context requires, a provincial
level autonomous region or municipality, under the direct
supervision of the central government of China
“Regulation S” Regulation S under the U.S. Securities Act
“RMB” or “Renminbi” Renminbi yuan, the lawful currency of the Chinese
Mainland
“SAFE” the State Administration for Foreign Exchange of China
(̮ි၍ଣ҅)
“SAIC” the State Administration of Industry and Commerce of
China (၍ଣᐼ҅), which
has now been merged into the SAMR
“SAMR” the State Administration for Market Regulation of China
(̹ఙ္ຖ၍ଣᐼ҅)
“SA T” the State Administration of Taxation of China ( ʕശɛ͏
೼ਕᐼ҅)
“Securities Law” the Securities Law of the People’s Republic of China ( ʕ
جas amended, supplemented or
otherwise modified from time to time
DEFINITIONS
–2 9–


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“SFC” the Securities and Futures Commission of Hong Kong
“SFO” or “Securities and Futures
Ordinance”
the Securities and Futures Ordinance (Chapter 571 of the
Laws of Hong Kong), as amended, supplemented or
otherwise modified from time to time
“Share(s)” ordinary share(s) in the share capital of our Company,
with a nominal value of RMB0.02 each, comprising the
Unlisted Shares and H Shares
“Shareholder(s)” holder(s) of the Share(s)
“Sole Sponsor” or “Sole Sponsor-
Overall Coordinator” or
“CMBI”
CMB International Capital Limited, a licensed
corporation registered under the SFO to carry on Type 1
(dealing in securities) and Type 6 (advising on corporate
finance) regulated activities as defined in the SFO
“Stabilizing Manager” CMB International Global Markets Limited
“State Council” the State Council of China ( ʕശɛ͏΍ձ਷਷ਕ৫)
“Stock Exchange” or “Hong
Kong Stock Exchange”
The Stock Exchange of Hong Kong Limited
“subsidiary” or “subsidiaries” has the meaning ascribed to it under the Listing Rules
“substantial shareholder(s)” has the meaning ascribed to it in the Listing Rules
“Supervisor(s)” member(s) of the supervisory committee of our Company
“Track Record Period” the three years ended December 31, 2022, 2023, 2024 and
the six months ended June 30, 2025
“treasury shares” Shares repurchased and held by the Company in treasury
(which include Shares repurchased by the Company and
held or deposited in CCASS for sale on the Stock
Exchange) from time to time
“Trial Measures” the Trial Administrative Measures of Overseas Securities
Offering and Listing by Domestic Companies (“ ྤʫΆุ
جpromulgated by
the CSRC on 17 February 2023
DEFINITIONS
–3 0–


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“U.S.”, “US” or “United States” the United States of America, its territories, its
possessions, any State of the United States and the
District of Columbia
“U.S. Securities Act” United States Securities Act of 1933 and the rules and
regulations promulgated thereunder
“USD”, “U.S. dollars” or “US$” United States dollars, the lawful currency of the United
States
“Underwriters” collectively, the Hong Kong Underwriters and the
International Underwriters
“Underwriting Agreements” collectively, the Hong Kong Underwriting Agreement
and the International Underwriting Agreement
“Unlisted Share(s)” ordinary share(s) in the share capital of the Company
with a nominal value of RMB0.02 each, which is/are not
listed on any stock exchange
“V A T” value-added tax
“%” per cent
Unless otherwise specified, in this prospectus:
(a) certain amounts and percentage figures have been subject to rounding adjustments;
accordingly, figures shown as totals in certain tables may not be an arithmetic
aggregation of the figures preceding them; and
(b) for ease of reference, the names of governmental authorities, institutions, nature
persons or other entities (including certain of our subsidiaries) in the Chinese
Mainland have been included in this prospectus in both the Chinese and English
languages and in the event of any inconsistency, the Chinese versions shall prevail.
English translations of company names and other terms from the Chinese language
are provided for identification purposes only.
DEFINITIONS
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This glossary contains definitions of certain technical terms used in this prospectus
in connection with us and our business. These may not correspond to standard industry
definitions, and may not be comparable to similarly terms adopted by other companies.
“AI” artificial intelligence
“CAGR” compound annual growth rate
“CBD(s)” central business district of a city
“Chinese noodle” a type of Chinese cuisine primarily made from noodles,
rice noodles, vermicelli, or similar ingredients, prepared
using simple and quick cooking methods
“Chinese noodle restaurants” food service outlets that engage in the preparation, sale,
and distribution of Chinese noodle-based dishes ranging
from traditional varieties like noodles, rice noodles, and
stir-fried noodles to modern interpretations and fusion
cuisine
“COVID-19” coronavirus disease 2019, a disease caused by a novel
virus designated as severe acute respiratory syndrome
coronavirus 2
“dine-in” for the purpose of this prospectus, the service model in
which customers place orders at a restaurant and have the
option to either consume their meals at the restaurant or
take their food away as takeout
“ESG” environmental, social and governance
“first-tier cities” for the purpose of this prospectus, Beijing, Guangzhou,
Shanghai and Shenzhen
“GFA” gross floor area
“GMV” gross merchandise value
“IoT” Internet of things, the collective network of connected
devices and the technology that facilitates
communication between devices and the cloud, as well as
between devices themselves
GLOSSARY OF TECHNICAL TERMS
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“initial breakeven period” the first calendar month for which the revenue of a newly
opened self-operated restaurant at least equals its
operating expenses
“investment payback period” the amount of time it takes for a newly opened self-
operated restaurant by accumulating its restaurant level
earnings before interest, taxes, depreciation and
amortization (after deducting cash rental expense) to
cover the costs to open that restaurant
“new first-tier cities” for the purpose of this prospectus, Changsha, Chengdu,
Chongqing, Dongguan, Hangzhou, Hefei, Wuxi, Nanjing,
Ningbo, Qingdao, Suzhou, Tianjin, Wuhan, Xi’an, and
Zhengzhou
“POS” Point of Sale
“QR code” a machine-readable optical label that contains
information about the item to which it is attached
“QSR” quick service restaurants, which typically offer
convenient and ready-to-eat meals to consumers for quick
dining
“repurchase rate” calculated by dividing, among those that had become our
stored value members before the first day of a given
period, (i) the number of our members that placed at least
two orders in the given period, by (ii) the number of our
stored value members in the same period
“R&D” research and development
“second-tier cities and below” for the purpose of this prospectus, cities, county-level
cities and counties in the Chinese Mainland other than
first-tier cities and new first-tier cities
“self-operated restaurants” for the purpose of this prospectus, restaurants opened and
directly operated by our Group
“SKU” stock keeping unit, representing the number of products
in inventory. It is used to identify each unique product
and keep track of stock level
GLOSSARY OF TECHNICAL TERMS
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--- page 43 ---
“staff” for the purpose of this prospectus, our employees and
outsourced staff
“stored value member
payment rate”
calculated by dividing (i) the GMV generated from
transactions settled with balances in stored value
membership accounts, by (ii) the GMV generated from
transactions made on our mini-applications for the period
“sq.m.” square meter(s)
GLOSSARY OF TECHNICAL TERMS
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Certain statements in this prospectus are forward-looking statements that are, by their
nature, subject to significant risks and uncertainties. Any statements that express, or involve
discussions as to, expectations, beliefs, plans, objectives, assumptions, future events, or
performance (often, but not always, through the use of words or phrases such as “aim”,
“anticipate”, “aspire”, “believe”, “could”, “estimate”, “expect”, “goals”, “going forward”,
“intend”, “may”, “objective”, “ought to”, “outlook”, “plan”, “project”, “projection”, “seek”,
“schedules”, “should”, “target”, “vision”, “will”, “would”) are not historical facts, are
forward-looking and may involve estimates and assumptions and are subject to risks (including
but not limited to the risk factors detailed in this prospectus), uncertainties and other factors
some of which are beyond our Company’s control and which are difficult to predict.
Accordingly, these factors could cause actual results or outcomes to differ materially from
those expressed in the forward-looking statements.
Our forward-looking statements have been based on assumptions and factors concerning
future events that may prove to be inaccurate. Those assumptions and factors are based on
information currently available to us about the businesses that we operate. The risks,
uncertainties and other factors, many of which are beyond our control, that could influence
actual results include, but are not limited to:
 our mission, goals and strategies;
 our future business development, financial conditions and results of operations;
 the expected growth of the catering industry;
 our expectations regarding demand for and market acceptance of our offerings;
 our expectations regarding our relationships with customers, business partners,
suppliers and other third parties;
 changes in macro-economic factors such as international, national, regional and
local economic conditions, employment levels and consumer spending patterns;
 our ability to adequately protect our reputation and brand image, as well as our
intellectual property rights;
 our ability to obtain adequate capital resources to fund future development plans;
 our ability to control costs, as well as to achieve and maintain operational efficiency;
 our ability to attract and retain key personnel;
 competition in the industries and markets in which we operate or into which we
intend to expand;
FORW ARD-LOOKING STATEMENTS
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 our proposed use of proceeds;
 our ability to generate the expected level of returns from our investment in
technology;
 changes in currency exchange rates;
 relevant government policies and regulations relating to industries which we operate
in; and
 all other risks and uncertainties described in “Risk Factors.”
Since actual results or outcomes could differ materially from those expressed in any
forward-looking statements, we strongly caution investors against placing undue reliance on
any such forward-looking statements. Any forward-looking statement speaks only as of the
date on which such statement is made, and, except as required by the Listing Rules, we
undertake no obligation to update any forward-looking statement to reflect events or
circumstances after the date on which such statement is made or to reflect the occurrence of
unanticipated events. Statements of, or references to, our intentions or those of any of our
Directors are made as of the date of this prospectus. Any such intentions may change in light
of future developments.
All forward-looking statements in this prospectus are expressly qualified by reference to
this cautionary statement.
FORW ARD-LOOKING STATEMENTS
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An investment in our H Shares involves a high degree of risk. You should carefully
consider the following information about risks, together with the other information
contained in this Prospectus, including our consolidated financial statements and related
notes, before you decide to buy our H Shares. If any of the circumstances or events
described below actually arises or occurs, our business, results of operations, financial
condition and prospects would likely suffer . In any such case, the market price of our H
Shares could decline and you may lose all or part of your investment. This Prospectus
also contains forward-looking information that involves risks and uncertainties. Our
actual results could differ materially from those anticipated in these forward-looking
statements as a result of many factors, including the risks described below.
RISKS RELATING TO OUR BUSINESS AND INDUSTRY
Our business depends significantly on the market recognition of our Xiao Noodles brand,
and if we are not able to maintain or enhance the image of our Xiao Noodles brand
recognition, our business, financial condition and results of operations may be materially
and adversely affected.
We believe that maintaining and enhancing our Xiao Noodles brand is important to
maintaining our competitive advantage and is vital to our success. However, our ability to
maintain our brand recognition depends on a number of factors, some of which are beyond our
control. Our continued success in preserving and enhancing our brand and image depends to
a large extent on our ability to further develop and maintain our distinctive combination of
fusion cuisine, affordable prices, hospitable services, pleasant dining environments throughout
our restaurant network and our ability to respond to any change in the competitive environment
in the catering industry. If we are unable to do so, the value of our brand or image will be
diminished and our business and results of operations may be materially and adversely
affected. Any events that will harm our reputation, such as liability claims, litigation,
customers’ complaints, illegal activities conducted by customers in our restaurants, other
negative publicity of our food and delivery services, or any violation acts by third-parties such
as using our Xiao Noodles brand illegally, may have a negative effect on our brand.
Furthermore, the image of Xiao Noodles brand may be affected by reviews made by customers
on social media platforms. We have no control over the content of such reviews in relation to
our food and our delivery services. Any negative reviews or related content, regardless of their
validity, may materially and adversely affect our brand and the results of our operations. We
cannot assure you that we will not receive any material customer complaints, which may cause
a material adverse effect on our future operation. As we continue to grow in size, expand our
food offerings and services and extend our geographic reach, maintaining quality and
consistency may be more difficult and we cannot assure you that customers’ confidence in our
brand name will not be diminished.
RISK FACTORS
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We have in recent years experienced accelerated expansion, which may lead to increasing
risks and uncertainties, and our evolving operation system may not be effective to address
such risks and uncertainties.
We have increased the number of our restaurants from 170 as of December 31, 2022 to
252 as of December 31, 2023, to 360 as of December 31, 2024, and further increased to 417
as of June 30, 2025. We expect our business growth to continue in the foreseeable future. Along
with our accelerated growth, we face an emerging challenge of continuing expansion while
ensuring consistent outstanding quality and service. Regarding food safety and quality control,
as our business expands, due to the labor-intensive nature of the restaurant business, it may
become more difficult to ensure that the dining experiences across all of our restaurants is
consistently of high quality, and that all of the employees comply with relevant laws and
regulations, especially the detailed and stringent regulations in relation to food safety.
Regarding talent pool for restaurant managers, our continuing expansion may place a strain on
our pool of qualified candidates for restaurant managers as our restaurant managers typically
start from restaurant frontline positions.
Our current expansion plans contemplate more rapid expansion than before. There is no
assurance that we will be able to expand at the expected pace or effectively manage our growth.
Our expansion may place substantial demands on our management and our operational,
technological, financial and other resources, as well as significant demands on us to maintain
consistent service and food quality to ensure that our brand does not suffer as a result of any
deterioration, whether actual or perceived, in the quality of our service or food. In addition,
there can be no assurance that our management system, as it evolves, will always be able to
address our needs at different stages of our growth. Any significant failure or deterioration of
our management system could have a material and adverse effect on our business and results
of operations.
We may not be able to maintain and increase the sales and profitability of our existing
restaurants, and our future growth also depends on our ability to open and profitably
operate in existing and new geographical markets.
The sales of existing restaurants will affect our growth and continue to be a critical factor
affecting our revenue and profit. Our ability to increase the sales of existing restaurants
depends in part on our ability to successfully implement our initiatives to increase customer
traffic and table turnover. Examples of these initiatives include offering new menu items and
combinations, improving the dining experiences to attract repeat customer, enhancing customer
loyalty, attracting more customers during non-peak hours and adjusting the prices of our menu
items. There can be no assurance that we will be able to achieve our targeted sales growth and
profitability for our existing restaurants. Also, we cannot ensure that existing restaurant sales
will not decrease. If we are unable to achieve our targeted sales and profitability in our existing
markets, our business, financial condition and results of operations may be materially and
adversely affected.
Our future growth also depends on our ability to open and profitably operate new
restaurants. In 2022, 2023, 2024 and the six months ended June 30, 2025, we opened 43, 92,
120 and 63 self-operated and franchised new restaurants, respectively. We plan to open
approximately 150 to 180, 170 to 200 and 200 to 230 self-operated and franchised new
restaurants in 2026, 2027 and 2028, respectively. We may not be able to open new restaurants
at the same pace as in the past or as quickly as planned. Delays or failures in opening new
restaurants could materially and adversely affect our growth strategy and our expected
financial and operating results. In obtaining new restaurant sites, we may face intense
competition from our competitors in China’s catering industry. We may also encounter delays
RISK FACTORS
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--- page 48 ---
when applying for relevant material licenses and permits during the approval process from the
government authorities, for which the timeline is beyond our control. Moreover, since most of
our restaurant managers are promoted from the frontline of our restaurants, there might be
insufficient existing restaurant staff with experience to assist with opening new restaurants.
Even if we are able to open additional restaurants as planned, these new restaurants may not
be as profitable or have results comparable to our existing restaurants.
Our current expansion plan includes increasing our penetration in markets where we have
existing restaurants. As we open new restaurants in our existing geographic markets, the sales
performance and customer traffic of our existing restaurants near such new restaurants may
decline as a result of potential cannibalization. We cannot assure you that these new restaurants
will not cannibalize the business of our existing restaurants, in which case our business,
financial conditions and results of operations may be materially and adversely affected. We
may also open new restaurants in markets where we have little or no operating experience.
Through our research of these markets, we believe they present significant opportunities for the
expansion and growth of our business. However, the new markets may have different
competitive dynamics, customer preferences and discretionary spending patterns from our
existing markets. As a result, we may not be able to open new restaurants in these markets on
a timely basis or at all. If the new restaurants do open, they may be less profitable compared
with restaurants in our existing markets. Consumers in a new market may not be familiar with
our brands and we may need to build brand awareness in that market through advertising and
promotional activities, which could result in higher expenses than originally planned. Opening
restaurants in new markets may record lower average sales, lower average spending per
customer, higher renovation costs or higher operating costs than restaurants in existing
markets. In addition, we may take longer to set up similar supply chain networks with suitable
quality control in such new markets. Restaurants opened in new markets may take longer than
expected to ramp up and reach, or may never reach, expected sales and profit levels, thereby
affecting our overall profitability. There can be no assurance that we will be able to maintain
our profitability as we continue to expand into new markets.
Increases in the cost of ingredients used in our restaurants may lead to declines in our
margins and operating results.
Any rise in our costs, particularly a rise in the cost of the ingredients, may lead to declines
in our margins and operating results. Our cost of raw materials and consumables used depends
on a variety of factors, many of which are beyond our control. Our raw materials and
consumables used represented approximately 38.3%, 36.3%, 34.3%, 35.6% and 31.4% of our
revenue in 2022, 2023, 2024 and the six months ended June 30, 2024 and 2025, respectively.
Fluctuations in weather, supply and demand, and economic conditions could adversely affect
the cost, availability, and quality of our critical food ingredients. If we are not able to obtain
requisite quantities of quality ingredients at commercially reasonable prices, we may not be
able to serve our dishes. Furthermore, if we cannot pass these cost increases onto our
customers, our operating margins may decrease.
Failures to meet food safety and hygiene standards, any significant liability claims, food
contamination complaints from our customers or reports of food tampering incidents
could have a material and adverse effect on our reputation, financial conditions and
results of operations.
Due to the scale of our operations, maintaining consistent food quality depends
significantly on the effectiveness of our quality control system, which in turn depends on a
number of factors, including but not limited to the design of our quality control system and our
food safety and hygiene standards, employee trainings to ensure that our employees adhere to
and implement those quality control policies and the effectiveness of monitoring any potential
violation of our quality control system and our food safety and hygiene standards. There can
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be no assurance that our quality control system will always prove to be effective. As we
expand, due to the labor-intensive nature of the restaurant business, it becomes more difficult
to ensure that the dining experiences across all of our restaurants are consistently of high
quality. The quality of the ingredients provided by our suppliers is subject to factors beyond
our control, including the effectiveness and the efficiency of their quality control system,
among others. There can be no assurance that our current suppliers may always be able to adopt
appropriate quality control system and meet our stringent quality control requirements in
respect of the supplies they provide. Any significant failure or deterioration of our quality
control systems and our food safety and hygiene standards could have a material and adverse
effect on our reputation, financial condition and results of operations.
Being in the catering industry, we face an inherent risk of food contamination and liability
claims. Our food quality substantially depends on the quality of the food ingredients provided
by our suppliers and we may not be able to detect all defects in those supplies. As we expand
our business scale, we cannot assure you that these counterparties or our restaurant employees
will adhere to our internal procedures and requirements at all times. Any failure to detect
defective food supplies, poor hygiene or cleanliness standards in our operations or other failure
to observe our requirements, could adversely affect the quality of the food served in our
restaurants, which could lead to liability claims, complaints, or related adverse publicity and
could result in the imposition of penalties by competent authorities or compensation awarded
by courts against us.
Most of the customer complaints we received were related to the flavor of the dish, long
waiting time, and the service quality of our restaurant frontline staff. We cannot assure you that
we can successfully prevent all customer complaints of similar nature. Any complaints or
claims against us or any restaurant we operate, even if meritless and unsuccessful, may divert
management attention and other resources from our business and adversely affect our business
and operations. Customers may lose confidence in us and our brand, which may adversely
affect the business of our restaurants, resulting in declines in our revenue and even losses.
Furthermore, negative publicity including but not limited to negative online reviews on social
media and crowd-sourced review platforms or media reports related to food quality, safety,
public health concerns, illness, or injury, or industry findings, whether or not accurate, and
whether or not concerning our restaurants, can adversely affect our business, results of
operations and reputation.
If we cannot obtain desirable restaurant locations or secure renewal of existing leases on
commercially reasonable terms, or our current restaurant sites are affected by other
unfavorable factors beyond our control such as rental increases or fluctuations, our
business, results of operations and ability to implement our growth strategy may be
materially and adversely affected.
We compete with other restaurants for suitable locations. Also, some landlords and
developers may offer priority or grant exclusivity for desirable locations to some of our
competitors. We cannot assure you that we will be able to enter into new lease agreements for
prime locations or renew existing lease agreements on commercially reasonable terms.
The lease arrangements for our restaurants generally last for four to six years. Where we
do not have a provision providing an option to renew a lease agreement, we may need to
negotiate the terms of renewal with the lessor, who may insist on a significant modification to
the terms and conditions of the lease agreement. If a lease agreement is renewed at a rent
substantially higher than the existing rent or other existing favorable terms granted by the
lessor, if any, are not extended, we must evaluate whether renewal on such modified terms is
in our business interest. If we are unable to renew leases for our restaurant sites or any of the
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lessors of our leases, in particular, long-term leases, elect to early terminate such leases, we
will have to close or relocate the relevant restaurants, which would eliminate the sales that the
restaurants would have contributed to our revenue during the period of closure, and could
subject us to costs and risks relating to new restaurant openings. In addition, the revenue and
profit generated at a relocated restaurant may be less than the revenue and profit previously
generated before such relocation.
The success of a restaurant also substantially depends on its sites. There can be no
assurance that our current restaurant sites will continue to be attractive as economic or
demographic conditions change. The economic and demographic conditions of our restaurant
sites could become unfavorable to us in the future, thus resulting in potentially reduced sales
of restaurants in these sites. As substantially all of our lease agreements have fixed lease terms,
these lease agreements expose us to the risk of having to make rental payments for fixed
periods of time in spite of unprofitable business operations or other unforeseen events that may
occur before each lease term expires. In the event of any closure or demolition of any of the
properties in which our restaurants are situated for redevelopment, or winding down of
landlords’ operations, the amount of compensation to be awarded to us may not be adequate.
In such event, we will be forced to relocate to other sites. Therefore, any inability to obtain
leases for desirable restaurant sites or renew existing leases on commercially sound terms or
other unfavourable factors occur that prevent us from maintaining our restaurant sites or
obtaining new desirable positions could have a material and adverse effect on our business,
financial condition and results of operations.
As we lease properties for all of our self-operated restaurants, warehouses and offices, we
have significant exposure to the retail rental market in China. In 2022, 2023, 2024 and the six
months ended June 30, 2024 and 2025, our depreciation of right-of-use assets amounted to
RMB94.6 million, RMB125.4 million, RMB188.8 million, RMB86.3 million and RMB109.7
million, respectively, representing 22.6%, 15.7%, 16.4%, 16.4% and 15.6% of our revenue in
the same periods, respectively. Since our rental expenses represent a significant portion of our
total operating costs, our profitability may be adversely affected by any substantial increase or
fluctuations in such expenses of our restaurant premises.
Intense competition in China’s catering industry could prevent us from increasing or
sustaining our revenue and profitability.
China’s catering industry is intensely competitive with respect to, among other things,
food quality and consistency, taste, price, ambience, service, site, supply of quality food
ingredients and employees. According to Frost & Sullivan, the Chinese noodle restaurants in
China is highly fragmented, with the top five players accounting for 3.0% market share in
terms of GMV in 2024, and the players in this market face fierce competition. We face
significant competition at each of our sites from a variety of restaurants in various market
segments, including locally owned restaurants and regional and international chains. Our
competitors also offer dine-in and delivery services. There are a number of well-established
competitors with substantially greater financial, marketing, personnel and other resources than
ours, and many of our competitors are well established in the markets where we have
restaurants or in which we intend to open new restaurants. Additionally, other companies may
develop new restaurants that operate with similar concepts and target similar customer groups,
thus resulting in increased competition. We recorded a decrease in same store sales in 2023 and
2024 primarily because of (i) the normalization of consumer spending pattern in the catering
market in the Chinese Mainland following the rapid surge thereof during the first several
months in 2023 following the gradual phasing-out of the COVID-19 pandemic, which was in
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line with the spending patterns in other consumer sectors according to Frost & Sullivan, and
(ii) our initiative to reduce the prices of our menu items in order to attract more customers and
increase our overall sales. We recorded a slight decrease in same store sales for the six months
ended June 30, 2024 and 2025 primarily because we continued our price reduction initiative in
order to provide a more affordable dining experience for our customers and increase our overall
sales, which was reflected in the increase in our same store average daily orders per restaurant
in the same period.
According to Frost & Sullivan, the total GMV of the Chinese noodle restaurant market in
China had expanded from RMB183.3 billion in 2020 to RMB296.2 billion in 2024, at a CAGR
of 12.7%. Looking forward, the growth of the Chinese noodle restaurant market is expected to
accelerate further to reach the total GMV of RMB510.0 billion by 2029, at a CAGR of 10.9%
from 2025 to 2029. Any inability to successfully compete with the other restaurants in our
markets may prevent us from increasing or sustaining our revenue and profitability and thus
lose market share, which could have a material and adverse effect on our business, financial
condition, results of operations or cash flow. We may also need to modify or refine elements
of our restaurant network to evolve our concepts in order to compete with popular new
restaurant styles or concepts that develop from time to time. We cannot ensure that we will be
successful in implementing these modifications or that these modifications will benefit us as
expected, or at all.
Our success depends on the continuing efforts of our senior management team and other
key personnel, and therefore our business may be harmed if we lose their services.
Our future success depends heavily upon the continuing services and performance of our
key management personnel. We must continue to attract, retain and motivate a sufficient
number of qualified management and operating personnel to maintain consistency in the
quality and atmosphere of our restaurants and meet our planned expansion requirements. If our
senior management team fails to work together successfully, or if one or more of our senior
managers are unable to effectively implement our business strategy, we may be unable to grow
our business at the speed or in the manner in which we expect. Competition for experienced
management and operating personnel in the catering market is strong, and the pool of qualified
candidates is limited. We may not be able to retain the services of our key management and
operating personnel or attract and retain high-quality senior executives or key personnel in the
future. In addition, if one or more of our key personnel are unable or unwilling to continue in
their present positions, we may not be able to replace them easily or at all. Therefore, our
business may be disrupted and our results of operations may be materially and adversely
affected. In addition, if any member of our senior management team or any of our other key
personnel joins a competitor or forms a competing business, business secrets and know-how
may leak as a result. Any failure to attract, retain and motivate these key personnel may harm
our reputation and result in a loss of business. Any of the above would materially and adversely
affect our business and results of operations.
We may not be able to quickly develop new menu items and adapt to evolving consumer
preferences.
The success of our restaurants is also defined by consumer preference. Our continued
success depends on our ability to launch new menu items and improve existing menu to cater
to evolving consumer preferences. There is no guarantee that we will always be able to
effectively gauge or capture the direction of our key markets and successfully identify, develop
and promote new or improved menu items in the changing market, or that our new menu items
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will always be favored by consumers or commercially successful. Our results of operation
could be adversely affected by the lack of consumer acceptance of new menu items; consumers
may reduce their demand for our current offerings as new menu items are introduced; or we
may be unable to effectively manage our cost of raw materials and consumables, especially for
newly launched menu items.
We face certain risks associated with the use of the franchise model.
We tapped into the franchise model in 2019 as our first attempt to combine the benefits
of the franchise model with our competitive strengths developed through the self-operated
model. As of June 30, 2025, we had 86 franchised restaurants. For details of our franchise
arrangements, see “Business — Our Franchisees.” We face a number of risks associated with
the use of our franchise model, each of which may impact our revenue generation, harm our
brand image, and may adversely affect our business and results of operations.
Our franchisees are responsible for the day-to-day operation of their restaurants under the
standardized protocols developed by our headquarters. As a result, we cannot guarantee full
control over their actions and our contractual rights and remedies are limited. If our franchisees
do not perform their obligations pursuant to their franchise agreements with us, including but
not limited to obtaining the relevant operating permits or complying with the applicable laws
and regulations, or if our franchisees do not successfully operate restaurants in a manner
consistent with our required standards, or project an image inconsistent with our brands and
values, our brands’ image and reputation could be harmed, which in turn could hurt our
business and operating results. The success of our franchised restaurants will also depend on
the willingness and ability of our franchisees to implement major initiatives, which may
include financial investment, and to remain aligned with us on operating, promotional and
reinvestment plans, which may be capital-intensive and may only be beneficial in the long
term. There is no guarantee that our franchisees will share our vision, and they may refuse to
take actions that are only beneficial in the long term.
The revenue we realize from franchised restaurants are partly dependent on the ability of
our franchisees to grow their sales. If our franchisees do not experience sales growth, our
revenue and margins could be negatively affected. Also, if sales trends worsen for our
franchisees, their financial results may deteriorate, which could result in, among other things,
restaurant closures or delayed or reduced payments to us.
A franchisee’s insolvency and/or financial distress could have a substantial negative
impact on our ability to collect payments due under the franchise arrangements and may have
a negative impact on our brand image. Our franchisees are subject to a variety of litigation
risks, including, but not limited to, customer claims, personal-injury claims, environmental
claims, and employee allegations of improper termination. As stipulated in our franchise
agreement, we typically will not be held liable for the claims against our franchisees. Although
we are not directly liable for the costs involved in these types of litigation, each of these claims
may increase the costs of our franchisees and adversely affect their profitability, and may
therefore limit the funds available for them to pay franchise fees or make procurement, to
renovate and develop the restaurants they operate, or limit their ability to renew their
arrangements with us. On the other hand, our franchisees or former franchisees may have
disputes with us for various issues, such as breach of franchise agreement. Such direct or
indirect litigation risks could in turn adversely affect our business and operating results and
may negatively impact our brand image.
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Shortages or interruptions in the availability and delivery of our food ingredients and
other supplies may have a material and adverse effect on our business, financial condition
and results of operations.
If our suppliers do not deliver food ingredients and other supplies in a timely manner, we
may experience supply shortages and increased costs. The ability to source high-quality food
ingredients at competitive prices in a timely manner is crucial to our business. Our ability to
maintain consistent quality and maintain our menu offerings throughout our restaurant network
depends in part upon our ability to acquire food ingredients and related supplies in sufficient
quantities from reliable sources that meet our food safety and quality specifications. We
generally enter into framework agreements with our suppliers for food ingredients and other
consumables with fixed prices within certain periods. During the Track Record Period, none of
our key suppliers ceased or indicated that it would cease to provide supplies to us. Also, we
did not experience any material delays or interruptions in securing supplies from our key
suppliers. However, there can be no assurance that we will be able to maintain business
relationships with our key suppliers. A disruption of our food supplies can occur for a variety
of reasons, many of which are beyond our control, including adverse weather conditions,
international trade disputes, import/export restrictions, natural disasters, diseases, important
suppliers ceasing operations or unexpected production shortages. Moreover, there can be no
assurance that our current suppliers may always be able to meet our stringent quality control
requirements in the future. If any of our suppliers does not perform quality control adequately
or otherwise fails to distribute supplies to us in a timely manner, we cannot assure you that we
will be able to find suitable alternative suppliers in a short period of time on acceptable terms.
As a result, our failure to do so could increase our procurement costs and cause shortages of
food ingredients and other supplies at our restaurants. Any significant food shortages or supply
disruptions will lead to the unavailability of some menu items and a significant reduction in
revenue as customers seek out alternative dining options.
Our historical financial and operating results are not indicative of future performance,
and we may not be able to achieve and sustain the historical level of revenue, profitability
and margins.
Our historical results and growth may not be indicative of our future performance. Our
financial and operating results may not meet the expectations of public market analysts or
investors. Our revenue, expenses, margins and operating results may vary from period to period
in response to a variety of factors beyond our control. These factors can include general
economic conditions, special events, government regulations and policies affecting our
restaurant operations. In addition, our overall results of operations may fluctuate significantly
from period to period because of various factors that are beyond our control, including: the
timing of new restaurant openings; loss of revenue and renovation expenses associated with the
temporary closure of existing restaurants for refurbishment; impairment of non-current assets,
and any losses incurred on restaurant closures; and fluctuations in raw materials and
commodity prices. Y ou should not rely on our historical results to predict our future financial
performance.
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Labor shortages, rising labor costs and the long-term trend of higher wages may lead to
declines in our margins and operating results.
Historically, staff costs, comprising salaries, wages and other benefits payable to all our
staff, including our directors, senior management, headquarters personnel and restaurant
employees, have been a major component of our operating costs. In 2022, 2023, 2024 and the
six months ended June 30, 2024 and 2025, our staff costs amounted to RMB109.3 million,
RMB175.2 million, RMB265.1 million, RMB121.8 million and RMB158.8 million, accounting
for 26.1%, 21.9%, 23.0%, 23.2% and 22.6% of our revenue, respectively. As of the Latest
Practicable Date, all of our staff are employed in the Chinese Mainland, Hong Kong SAR and
Singapore, where the economies have grown significantly over the past decade and have
resulted in an increased average cost of labor. We compete with other competitors for labor
resources, and may not be able to offer competitive remuneration and benefits compared with
them. Any shortages in the availability of labor or any material increase in the cost of labor as
a result of competition, increased minimum wage requirements and employee benefits will
diminish our competitive advantage and have a material and adverse effect on our business,
financial condition and results of operations.
Information technology system failures, breaches of our network security or compromised
data privacy or information security could interrupt our operations and adversely affect
our business.
We rely on our information technology systems across our operations and management to
monitor the daily operations of our restaurants and to collect accurate, up-to-date financial and
operating data for business analysis and decision-making. Any damage or failure of our
information technology systems or computer virus attacks that cause interruptions or
inaccuracies in our operations could have a material and adverse effect on our business and
results of operations. We also receive certain personal information about our consumers
through our membership system. Our network security may be breached due to the actions of
outside parties, employee error, malfeasance, or a combination of these or otherwise. If any
actual or perceived breach of our network security occurs, and personal information is stolen
or obtained by unauthorized persons or used inappropriately, we may become subject to
litigation or other proceedings relating to such incidents. Any such proceedings could divert
our management from running our business and cause us to incur significant unplanned losses
and expenses. In addition, our consumers’ confidence in the effectiveness of our security
measures could be harmed and we may lose consumers and suffer financial losses due to such
events or in connection with remediation efforts, investigation costs and system protection
measures. Any of the above could harm our reputation and materially and adversely affect our
business and results of operations.
Our investment in technology may not generate the level of returns expected.
We have invested and intend to continue to invest significantly in technological
infrastructure and intelligence equipment, such as our information technology systems and
equipment to enhance the consumer experience and improve the efficiency of our operations.
See “Business — Our Technologies.” We invested RMB5.9 million, RMB11.1 million,
RMB14.1 million, RMB6.1 million and RMB7.1 million in technology systems and
intelligence equipment in 2022, 2023, 2024 and the six months ended June 30, 2024 and 2025,
respectively. We cannot assure you that our investments in technology will generate sufficient
returns or have the expected effects on our business operations, if at all. If our technology
investments do not meet expectations for the above and other reasons, our prospects and share
price may be materially and adversely affected.
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Our business depends on the performance of, and our long-term relationships with,
third-party online food delivery platforms, third-party payment service providers and
third-party supply chain service providers.
Our delivery services partly depend on the performance of, and our long-term
relationships with, third-party online food delivery platforms. As of the Latest Practicable
Date, we cooperated with four major third-party online food delivery platforms and, to a lesser
extent, we also engaged third-party courier platforms for delivery of orders made on our
WeChat and Alipay mini programs. We allow our menu items to be presented on and ordered
through their platforms. Accordingly, if we fail to extend or renew the agreements with these
food delivery platforms on acceptable terms, or at all, our business and results of operations
may be materially and adversely affected, and any increase in the fees charged by these food
delivery platforms could negatively impact our operating results. Therefore, the ability to
accept mobile payments is critical to our business. We accept cash, credit cards, WeChat Pay,
Alipay and other online payments at our restaurants. In 2024, approximately 98.5% of the total
amount paid by our dine-in customers was settled through mobile payment. If we fail to extend
or renew the agreements with these third-party payment processors on acceptable terms or if
these payment service providers are unwilling or unable to provide us with payment services
or impose onerous requirements on us in order to access their services, or if they increase the
fees they charge us for these services, our business and results of operations could be harmed.
Furthermore, to the extent we rely on the systems of third-party payment service providers, any
defects, failures and interruptions in their systems could result in similar adverse effects on our
business. Sustained or repeated system defects, failures or interruptions would impact our
ability to consistently make timely deliveries and provide a simple and convenient ordering
experience to our customers. Hence, our customer satisfaction may be significantly
undermined, and our reputation and relationship with our customers may be damaged as a
result, which could materially impact our business and results of operations. In addition, we
procure food ingredients from third-party suppliers primarily through a group of third-party
logistics and supply chain service companies (collectively, the “ Supply Chain Service
Group ”) in the Chinese Mainland. In 2022, 2023, 2024 and the six months ended June 30,
2025, the total purchase of our Group supplied through the Supply Chain Service Group were
RMB150.1 million, RMB299.2 million, RMB400.1 million and RMB219.4 million,
respectively, among which the supply chain service fees charged by the Supply Chain Service
Group were RMB8.5 million, RMB16.2 million, RMB22.8 million and RMB12.7 million,
respectively. For details, see “Business — Procurement — Procurement Arrangement with the
Supply Chain Service Group.” If we fail to extend or renew the agreements with these logistics
and supply chain service companies on acceptable terms or if these companies are unwilling
or unable to provide us with supply chain services or impose onerous requirements on us in
order to access their services, or if they increase the fees they charge us for these services, our
business and results of operations could be affected.
If the quality of our offerings or dining experience declines, our restaurants may not
continue to be successful.
The success of our restaurants revolves primarily around customer satisfaction, which is
dependent on the continued popularity of our Xiao Noodles brand and lies in our ability to
maintain and enhance our dining experience. The quality of our food or dining experience may
be adversely affected by a number of factors, including, among others, (i) decline in the quality
of service provided by our restaurant staff; (ii) inability to introduce new menu items that gain
popularity amongst customers; (iii) inability to meet the needs of our customers and changes
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in customer tastes or preferences; (iv) decline in food quality, or the perception of such decline
amongst customers; (v) any significant liability claims or food contamination complaints from
our customers; (vi) inability to offer quality food at affordable prices; (vii) long waiting time;
(viii) decrease in the attractiveness or quality of design of our restaurants; and (ix) low quality
of delivery service. For details on our quality control systems, see “Business — Food Safety
and Quality Control.” There can be no assurance that our food safety and quality control
systems will prove to be effective. We cannot guarantee that our food and dining experiences
will continue to be of high quality and favored by customers, or that our existing and new
restaurants will continue to be successful.
We may be unable to detect, deter and prevent all instances of fraud or other misconduct
committed by our employees, customers or other third parties.
We are exposed to the risks of fraud, theft or other misconduct involving employees,
customers or other third parties, which may have a material adverse impact on our business.
We are also exposed to the risk of our staff members responsible for procurement and quality
control receiving bribes or kick-backs from our suppliers in violation of our policies, which in
turn may result in supplies that are overpriced or fail our quality standard. We may be unable
to prevent, detect or deter all instances of misconduct. Any misconduct committed against our
interests, which may include past acts that have gone undetected or future acts, could subject
us to financial losses and/or harm our reputation.
Our results of operations may fluctuate seasonally due to several factors that are beyond
our control.
Our business and operating results may be subject to seasonal fluctuations because of
several factors including holidays, school vacations, and fluctuations in food prices. As a
result, our results of operations may fluctuate significantly from period to period and
comparisons of different periods may not be meaningful. Our results for a given period in a
fiscal year are not necessarily indicative of results to be expected for any other period in the
same fiscal year.
Events that disrupt the operations of any of our restaurants, such as fires, floods,
earthquakes or other natural or man-made disasters, may materially and adversely affect
our business operations.
Our operations are vulnerable to interruption by fires, floods, typhoons, power failures
and shortages, terrorist attacks and other events beyond our control. Our business is also
dependent on prompt delivery and transportation of our food ingredients and other
consumables. Certain events, such as adverse weather conditions, natural disasters, severe
traffic accidents and delays, and labor strikes, could also lead to delayed or lost deliveries of
food supplies to logistics facilities and our restaurants. Any of these may result in the loss of
potential business, and thus sales revenue. Perishable food ingredients, such as fresh, chilled
or frozen food ingredients, may deteriorate due to delivery delays, malfunctioning of
refrigeration facilities or poor handling during transportation by our suppliers or our logistics
partners. In addition, fires, floods, earthquakes and terrorist attacks may lead to evacuations
and other disruptions in our operations, which may also prevent us from providing quality
offerings and services to consumers, thereby affecting our business and damaging our
reputation. Any such event could adversely affect our business operations and results of
operations.
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We are subject to risks related to our overseas expansion, which may result in fluctuations
of our business and results of operations.
We have expanded our presence beyond the Chinese Mainland. We have a limited
operating history beyond the Chinese Mainland and therefore lower brand awareness and
operating experience overseas. Our overseas operation is also subject to different competitive
landscapes, regulatory environments, customs, consumer tastes, and discretionary spending
patterns compared to the Chinese Mainland. As a result, overseas restaurants may take longer
to ramp up sales and achieve satisfactory performance, if at all, which could affect overall
growth and profitability. Building brand awareness in overseas markets may require greater
investments in advertising and promotional activities than initially planned or than required in
the Chinese Mainland. This increased investment could negatively impact our profitability in
overseas markets.
Our overseas operations are also subject to additional inherent risks of conducting
business abroad, such as (i) difficulty in finding qualified franchisees, suppliers and other
business partners and maintaining relationships with these business partners for overseas
operations; (ii) inability to anticipate foreign consumers’ evolving preferences and tastes; (iii)
challenges, changes or uncertainties in navigating economic, legal, regulatory, social, political,
religious and geopolitical complexities in these international markets, or international
relations; (iv) interpretation and application of laws and regulations, including licensing,
approvals, permits, tax, tariffs, labor, merchandise and privacy laws and regulations, as well
costs and other burdens of complying with a wide variety of local laws and regulations; (v)
restrictive actions of governmental authorities affecting trade and foreign investment,
including relevant measures such as export and customs duties and tariffs, government policies
that affect dynamics of market competition and restrictions on the level of foreign ownership;
(vi) the enforceability of intellectual property and contract rights under different legal systems;
(vii) limitations on the repatriation of funds and foreign currency exchange restrictions due to
current or new local regulations; (viii) challenges in recruiting and retaining high-quality
employees in overseas markets; (ix) challenges in securing desirable locations for opening
restaurants; (x) difficulties in setting up and developing warehouse system and delivery
network overseas; (xi) difficulties to effectively manage the supply chain, including but not
limited to procurement, production, logistics, R&D and quality control, to meet the needs of
new and existing restaurants on a timely basis; (xii) difficulties in developing and managing
foreign operations, including ensuring the consistency of product quality and services, due to
governmental regulations and actions, distance, language and cultural differences. Any of the
above factors could materially and adversely affect our ability to expand our restaurant
network and, in turn, negatively impact our results of operations and financial performance.
If we fail to obtain sufficient funding, our growth may be adversely affected.
During the Track Record Period, we primarily funded our operations, expansion and
capital expenditures through cash generated from our operations and bank borrowings. As our
business scale grows and at a faster pace, we may require additional cash resources to finance
our continued growth or other future developments, including any investments we may decide
to pursue. The amount and timing of such additional financing needs will vary depending on
the timing of our new restaurant openings, investments in new restaurants and the amount of
cash flow from our operations. If our resources are insufficient to satisfy our cash
requirements, we may seek additional financing by selling additional equity or debt securities
or obtaining a credit facility. The sale of additional equity securities could result in additional
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dilution to shares held by our shareholders. The incurrence of indebtedness would result in
increased debt service obligations and finance costs, and could result in operating and
financing covenants that may, among other things, restrict our operations or our ability to pay
dividends. Servicing such debt obligations could also be burdensome to our operations. If we
fail to service the debt obligations or are unable to comply with such debt covenants, we could
be in default under the relevant debt obligations and our liquidity and financial conditions may
be materially and adversely affected. Our ability to obtain additional capital on acceptable
terms is subject to a variety of uncertainties, some of which are beyond our control, including
general economic and capital market conditions, credit availability from banks or other lenders,
receipt of necessary approvals from competent government authorities, investors’ confidence
in us, the performance of the catering industry in general, and our operating and financial
performance in particular. We cannot assure you that future financing will be available in
amounts or on terms acceptable to us, if at all. In the event that financing is not available or
is not available on terms acceptable to us, our business, results of operations and growth
prospects may be adversely affected.
Our insurance policies may not provide adequate coverage for all claims associated with
our business operations.
During the Track Record Period, we were covered by insurance policies that we believe
are customary for businesses of our size and type and in line with the standard commercial
practice. For details on our insurance policies, see “Business — Insurance” in this prospectus.
However, there are losses we may incur that cannot be insured against or that we believe are
not commercially reasonable to insure, such as loss of reputation. If we were held liable for
uninsured losses or amounts and claims for insured losses exceeding the limits of our insurance
coverage, our business and results of operations may be materially and adversely affected.
We may not be able to adequately protect our intellectual property, which could harm the
value of our brand and adversely affect our business and operation.
We believe that our brand is essential to our success and our competitive position.
Although we have registered trademarks in the jurisdictions where we operate, these steps may
not be adequate to protect our intellectual property. There is no assurance that any of our
pending trademark applications will be granted. We cannot assure you that the registrations
will be successfully completed. If we fail to secure the registration of any trademarks under
application, or if we are held by any court or tribunal to be infringing on any trademark of
others, our business and results of operations may be adversely affected. See “Appendix VI —
Statutory and General Information.” In addition, third parties may infringe upon our
intellectual property rights or misappropriate our proprietary knowledge, which could have a
material and adverse effect on our business, financial condition or operating results. If the
operations of third parties who used or imitated our trademarks or trade names without our
authorization result in adverse side effects on consumers, we may be associated with negative
publicity as a result. Preventing trademark and trade name infringement and trade secret
misappropriation may be difficult, costly and time-consuming. Such litigation could result in
substantial costs and diversion of resources, which could negatively affect our sales,
profitability and prospects. Even if any such litigation is resolved in our favor, relevant
remedies may not be adequate to compensate us for our actual or anticipated losses, whether
tangible or intangible. On the other hand, we may face claims of infringement that could
interfere with the use of our proprietary know-how, concepts, recipes or trade secrets.
Defending against such claims may be costly and, if we are unsuccessful, we may be prohibited
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from continuing to use such proprietary information in the future or be forced to pay damages,
royalties or other fees for using such proprietary information, any of which could negatively
affect our sales, profitability and prospects.
Any changes to PRC Law requirements for social insurance and housing provident fund
contributions for our employees may require us to adapt our practices, resulting in
additional costs and subjecting us to late payments and fines imposed by relevant
governmental authorities.
Companies operating in the Chinese Mainland are required to make social insurance and
housing provident funds for their employees. We have in the past failed to make timely and
adequate social security insurance and housing provident fund contributions for some of our
employees in accordance with the relevant PRC Law. Our PRC Legal Advisor has advised us
that, pursuant to relevant PRC Law, if we fail to pay the full amount social insurance as
required, we may be ordered by the relevant authorities in the Chinese Mainland to pay the
outstanding social insurance contributions within a prescribed time limit and may be subject
to an overdue charge of 0.05% of the delayed payment per day. If such payment is not made
within the stipulated period, the competent authority may further impose a fine from one to
three times the amount of any overdue payment. Our PRC Legal Advisor has further advised
us that, pursuant to relevant PRC Law, if we fail to pay the full amount of housing provident
fund contributions as required, the housing provident fund management center may order us to
make the outstanding payment within a prescribed time limit. If the payment is not made within
such time limit, an application may be made to the courts in the Chinese Mainland for
compulsory enforcement. On July 31, 2025, the Supreme People’s Court promulgated the
Supreme People’s Court’s Interpretation (II) on Several Issues Concerning the Application of
Law in Labor Dispute Cases (༆ᙑ
(ɚ)) (the “ New Judicial Interpretation ”), which took effect on September 1, 2025. Article
19(1) of the New Judicial Interpretation stipulates that if an employer and an employee agree
or the employee undertakes that social insurance contributions need not be paid, the People’s
Court shall deem such agreement or undertaking invalid. Further, the relevant employee has the
right to terminate the labor contract and claim economic compensation from the employer
pursuant to Article 38(3) of the Labor Contract Law. For further details, see “Regulatory
Overview — Regulations on Labour Rights — Regulations and Law on Social Insurance and
Housing Fund” and “Business — Employees — Social Insurance and Housing Provident
Funds.”
Our leased property interests may be defective and our lease agreements may not be
registered, our right to lease the properties affected by such defects may be challenged,
which could cause significant disruption to our business.
As of the Latest Practicable Date, the lease agreements with respect to 369 of our leased
properties with an aggregate GFA of approximately 60,515.6 sq.m., representing approximately
88.2% of the total leased GFA of our leased properties, were not registered with the appropriate
government authorities in the Chinese Mainland. As advised by our PRC Legal Advisor, failure
to complete the registration of lease agreements may lead to a fine ranging from RMB1,000 to
RMB10,000 imposed by the relevant authorities in the Chinese Mainland for each of these
lease agreements if we fail to complete the registration of lease agreements within the
stipulated period, and as such, the potential maximum penalties in relation to the
aforementioned non-compliant incidents is approximately RMB3.7 million.
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As of the Latest Practicable Date, with respect to 74 of our leased properties in the
Chinese Mainland, the lessors of such properties failed to provide us with sufficient or valid
ownership certificates or any form of permission to sublet from the owners, despite the
proactive requests we previously made, with an aggregate GFA of approximately 12,169.0
sq.m., representing approximately 17.7% of the total leased GFA of our leased properties.
Based on the advice of our PRC Legal Advisor, if the lessors of the leased properties do not
have the requisite rights to lease the relevant properties, we would not be subject to any
administrative penalties with respect to these properties, but our leases may be affected, and,
as a result, we may be required to vacate the relevant properties and relocate our restaurants.
In this event, our operation of restaurants on such properties may be impaired and we may not
be adequately indemnified by the landlords for our related losses. Also, we will incur
additional costs in relocating our restaurants to other suitable sites, thus affecting our business
operations, financial condition and results of operations.
As of the Latest Practicable Date, the actual use of 13 leased properties (with an aggregate
GFA of approximately 2,135.0 sq.m., representing approximately 3.1% of our total leased
GFA) did not fit into the prescribed scope of usage shown on the relevant ownership
certificates. For such leased properties, as advised by our PRC Legal Advisor, administrative
penalties may be imposed on the owners if the properties are leased for the usage incompatible
with the prescribed scope, and our usage of such leased properties with usage defects may be
interrupted. However, as a tenant, we are not subject to any penalties in this regard.
As of the Latest Practicable Date, with respect to 19 of our leased properties built on
allocated land ( ྌᅡ͜ή) with an aggregate GFA of approximately 3,237.4 sq.m, representing
approximately 4.7% of our total leased GFA, the lessors could not provide documents proving
that the corresponding approval procedures for such properties leased to us had been
completed. As advised by our PRC Legal Advisor, properties on allocated land shall not be
leased without authorization from relevant authorities. There is no guarantee that the lessors
had obtained authorizations from the relevant land administration departments to lease the
properties. If the lessors did not obtain the requisite approval for leasing such properties in
accordance with the relevant laws and regulations, the validity of the relevant leasing contracts
may be uncertain.
As a result, we cannot assure you that we will not be subject to any challenges, lawsuits
or other actions taken against us with respect to the properties we use or lease. If any challenge
against us in these respects are successful, our use or lease of such properties may be affected
and we may be required to relocate from these relevant properties. If we fail to find suitable
alternative premises on terms acceptable to us, or if we are subject to any material liability
resulting from such challenges, our business, financial condition, results of operations and
prospects may be materially and adversely affected. For details, see “Business — Properties —
Leased Properties.”
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We face risks relating to our investments.
We, in the future, may invest, in companies in the upstream or downstream of China’s
catering industry. Such endeavors may involve significant risks and uncertainties, including
diverting management from current operations, greater than expected liabilities and expenses,
and issues not discovered in our due diligence. For investments over which we do not obtain
control, we may lack influence over the operations of these investees, which may prevent us
from achieving our strategic goals in these investments. In addition, we may experience
constraints on our liquidity because gains or losses from those investments do not give rise to
any change in our cash position unless we dispose of the relevant assets or receive dividend
payments.
We have incurred net loss in 2022, and may not be able to subsequently maintain
profitability in the future.
In 2022, our business and results of operations were affected by the COVID-19 pandemic
to a certain extent and recorded a net loss of RMB36.0 million. There is no assurance that we
will not incur net losses in the future. We believe that our future revenue growth will depend
on factors such as our ability to increase brand awareness and recognition, attract and retain
customers, and compete effectively and successfully. We also anticipate that costs and
expenses will increase in the future as we continue to expand our business and operations. If
we are unable to generate sufficient revenue and manage our expenses, we may incur losses in
the future and not be able to subsequently maintain profitability.
We may not be able to effectively manage our inventory, which may adversely affect our
results of operations, financial condition and liquidity.
Our inventories primarily consisted of food ingredients and other materials. As of
December 31, 2022, 2023, 2024 and June 30, 2025, the balance of our inventories was
RMB16.6 million, RMB27.1 million, RMB22.7 million and RMB22.2 million, respectively.
For the years ended December 31, 2022, 2023, 2024 and the six months ended June 30, 2025,
our inventory turnover days was 41 days, 27 days, 23 days and 18 days, respectively. Managing
our inventory effectively is essential to our operations. We base our purchasing decisions on
demand forecasts for varied goods to manage our inventory accordingly. However, this demand
can shift between the time of order and the intended sale date. Multiple factors can influence
this demand, including product launches, pricing strategies, potential product defects, and
evolving consumer behaviors and preferences. In addition, when we procure a new kind of raw
material for a new product, our demand forecasts may not align with the consumer acceptance
of our new products, and it may be challenging for us to accurately predict demand for the raw
material. As we expand our menu, the growing variety of ingredients for our dishes is expected
to complicate our inventory management process. There is no certainty that our inventory
levels will always match our demands, which may adversely affect our sales. Ineffectual
inventory management could expose us to risks like inventory obsolescence, a decline in
inventory value, and significant inventory write-offs. These challenges may materially and
adversely affect our business, results of operations and financial condition. If we miscalculate
product demand, or if there are lapses in our suppliers’ timely provision of quality ingredients,
inventory shortages might ensue. These shortages could erode brand loyalty, lead to revenue
loss, and jeopardize our business reputation, negatively affecting our operations, financial
position, and overall liquidity.
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We have granted, and may continue to grant, share-based incentive awards, which may
result in increased share-based compensation expenses.
We have adopted the Pre-IPO Employee Incentive Scheme in 2019 in order to motivate
and retain our senior management, middle-level management and other key employees by
granting share-based compensation awards to them. Expenses associated with share-based
compensation have affected our profitability and may continue to affect our profitability in the
future. For the years ended December 31, 2022, 2023, 2024 and the six months ended June 30,
2024 and 2025, we incurred equity-settled share-based payment expenses in the amount of
RMB1.3 million, RMB1.4 million, RMB3.1 million, RMB1.6 million and RMB2.6 million,
respectively. We do not plan to issue any additional securities pursuant to the Pre-IPO
Employee Incentive Scheme which constitutes a share scheme funded by existing shares only.
However, if we issue any additional securities under any share-based incentive plans we may
adopt in the future, such additional securities will dilute the ownership interests of our
shareholders. We believe the granting of share-based incentive awards is of significant
importance to our ability to attract and retain key employees, and we may grant additional
share-based incentive awards in the future. As a result, our share-based compensation expenses
may increase, which may have an adverse effect on our results of operations.
We may be exposed to credit risks resulting from delays and/or defaults in payments by
our customers or related parties, which would adversely affect our business, financial
condition and results of operations.
Our credit risk is primarily attributable to trade and other receivables. As of December 31,
2022, 2023, 2024 and June 30, 2025, our trade and other receivables amounted to RMB30.1
million, RMB54.9 million, RMB80.5 million and RMB102.5 million, respectively. For further
details, see “Financial Information — Selected Key Items of Consolidated Statement of
Financial Position — Current Assets and Liabilities.” Our trade and other receivables primarily
consisted of (i) trade debtors, net of loss allowance, mainly including amounts due from
third-party payment service providers and delivery platforms, which are generally settled
within one month, and amounts due from franchisees representing franchise and royalty fees
receivable from franchisees as well as receivables derived from sales of food ingredients and
restaurant supplies to them, (ii) input value-added tax recoverable, (iii) deposits, mainly
comprising rental deposits and other deposits in relation to our ordinary business operations,
(iv) other receivables, mainly comprising petty cash of our restaurants, (v) prepayments to
vendors, mainly representing prepaid rent and service fees, (vi) lease payment receivables
relating to subleasing and (vii) the current portion of long-term receivables which represents
the amount due from certain franchisees at longer payment terms for their upfront expenses for
opening franchised restaurants to us as part of our strategy to nurture franchisees with
potential. If the abovementioned parties delay or default in their payments to us, we may have
to make impairment provisions and write off the relevant receivables and hence our liquidity
may be adversely affected. This may in turn materially and adversely affect our business,
financial condition and results of operations.
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We are subject to risk of recoverability of deferred tax assets.
As of December 31, 2022, 2023, 2024 and June 30, 2025, our deferred tax assets
amounted to RMB24.6 million, RMB23.3 million, RMB27.2 million and RMB27.9 million,
respectively. Deferred tax assets are recognised for unused tax losses, unused tax credits and
deductible temporary differences to the extent that it is probable that future taxable profits will
be available against which they can be used. Future taxable profits are determined based on the
reversal of relevant taxable temporary differences. If the amount of taxable temporary
differences is insufficient to recognise a deferred tax asset in full, then future taxable profits,
adjusted for reversals of existing temporary differences, are considered, based on the business
plans for individual subsidiaries in the Group. Pursuant to the Notice No. 8 issued by the
Ministry of Finance and the State Administration of Taxation of the PRC on February 6, 2020,
the maximum carried forward period of the tax losses affected by COVID-19 in certain affected
industries, such as catering industry, is extended from five years to eight years. Any changes
in management’s judgment as well as the future operating results of the relevant entities would
affect the carrying amounts of deferred tax assets to be recognized and the recoverability of
deferred tax assets recognized in our consolidated financial statements, and therefore could
materially and adversely affect our financial condition and results of operation in future years.
We may continue to recognize impairment losses for property, plant and equipment.
For the years ended December 31, 2022, 2023, 2024 and the six months ended June 30,
2024 and 2025, we recognized impairment losses of property, plant and equipment of RMB9.4
million, RMB8.9 million, RMB1.6 million, RMB0.8 million and RMB2.0 million, respectively.
For details of accounting treatment, see note 11 to the Accountants’ Report set forth in
Appendix I. We may continue to recognize impairment losses for property, plant and equipment
in the future as we are actively expanding our restaurant network and the performance of
certain restaurants may not meet our expectation. If we continue to recognize impairment
losses for property, plant and equipment, our financial condition and results of operations may
be materially and adversely affected. The impairment evaluation of property, plant and
equipment requires significant management judgment. If our estimates and judgments are
inaccurate, the recoverable amount determined could be inaccurate and the impairment may not
be adequate, and we may need to record additional impairments in the future. Any significant
impairment losses charged against our property, plant and equipment could have a material and
adverse effect on our results of operations and financial performance.
Our financial condition, results of operations and prospects may be adversely affected by
the valuation uncertainty of financial assets at fair value through profit or loss due to the
use of unobservable inputs.
During the Track Record Period, we purchased certain wealth management products. As
of December 31, 2022, 2023, 2024 and June 30, 2025, our financial assets measured at fair
value through profit or loss (“ FVPL ”) was RMB7.0 million, RMB25.1 million, RMB70.3
million and RMB25.0 million, respectively. For the years ended December 31, 2022, 2023,
2024 and the six months ended June 30, 2024 and 2025, our net fair value changes of financial
assets measured at FVPL was RMB9,000, RMB63,000, RMB261,000, RMB130,000 and
RMB18,000, respectively. See “Financial Information — Selected Key Items of Consolidated
Statement of Financial Position — Current Assets and Liabilities — Financial assets measured
at FVPL.” As we need to make significant estimates on assumptions in determining the fair
value of the wealth management products we purchased using unobservable inputs, the
valuation of these financial assets is subject to uncertainties. Any net changes in the fair value
of such assets are recorded as our other net (losses)/gains, and therefore may adversely affect
our results of operations. Although we did not incur any fair value losses for financial assets
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at fair value through profit or loss during the Track Record Period, we cannot assure you that
we will not incur any such fair value losses in the future. If we incur such fair value losses,
our financial condition, results of operations and prospects may be adversely affected.
Our net current liabilities may expose us to certain liquidity risks and could restrain our
operational flexibility as well as affect our ability to expand our business.
As of December 31, 2022, 2023, 2024 and June 30, 2025, we recorded net current
liabilities of RMB148.6 million, RMB186.8 million, RMB242.2 million and RMB255.0
million, respectively. See “Financial Information — Selected Key Items of Consolidated
Statement of Financial Position — Current Assets and Liabilities” for a detailed analysis of our
net current liability position. Net current liabilities may expose us to certain liquidity risks and
could constrain our operational flexibility as well as adversely affect our ability to expand our
business. Our future liquidity, and the payment of trade and other payables as and when they
become due, will primarily depend on our ability to maintain adequate cash inflows from our
operating activities and adequate external financing, which will be affected by our future
results of operations, prevailing economic conditions, and financial, business and other factors,
many of which are beyond our control. If we do not have sufficient working capital to meet
future financial needs, we may need to resort to external funding. Our inability to obtain
additional external borrowings on a timely basis or on acceptable terms, or at all, may also
force us to abandon our development and expansion plans, and our business, financial
condition and results of operations may be materially and adversely affected.
If our preferential tax treatment becomes unavailable, our results of operations may be
adversely affected.
For the years ended December 31, 2022, 2023, 2024 and the six months ended June 30,
2025, certain of our subsidiaries fulfilled the criteria required for a preferential income tax rate
granted to small and low profit-making enterprises in the Chinese Mainland, and were entitled
to a preferential income tax rate of 5% on taxable income. For the years ended December 31,
2022, 2023, 2024 and the six months ended June 30, 2025, certain of our subsidiaries fell
within the state encouraged industries in the specified western regions and were entitled to a
preferential income tax rate of 15%. However, we cannot assure you that we will continue to
enjoy similar preferential tax treatment in the future. The EIT Law and its implementation rules
have adopted a flat statutory enterprise income tax rate of 25% to all enterprises in the Chinese
Mainland. If any of our subsidiaries ceases to be entitled to preferential tax treatment, the flat
statutory enterprise income tax rate of 25% shall be applied, leading an increase in our income
tax expenses, which would adversely affect our results of operations. The effect of preferential
income tax rates of certain subsidiaries increased tax expense by RMB675,000 for the year
ended December 31, 2022 and recorded tax credit of RMB1.3 million, RMB2.9 million,
RMB577,000 and RMB1.4 million for the years ended December 31, 2023, 2024 and the six
months ended June 30, 2024 and 2025. See Note 7 to the Accountants’ Report in Appendix I
to this prospectus for details.
The discontinuation of any government grants could adversely affect our financial
position, results of operations, cash flows and prospects.
During the Track Record Period, we received government grants from local government
authorities in connection with enterprise development support, fiscal subsidies and various tax
incentives. In 2022, 2023, 2024 and the six months ended June 30, 2024 and 2025, we
recognized government grants of RMB2.2 million, RMB1.9 million, RMB5.8 million, RMB3.6
million and RMB2.4 million as other revenue, respectively. We cannot assure you that we will
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continue to receive such government grants from local government authorities or that the
amount of such grants will not be reduced in the future. Any significant reduction of
government grants received by us may adversely affect our financial condition and results of
operations.
We may not be able to fulfill our obligations in respect of contract liabilities, which may
have a material and adverse impact on our business, reputation and liquidity position.
Our contract liabilities primarily consist of the receipt of advance payment of franchising
income from our franchisees, balances in stored value membership accounts and issued
vouchers and contract liabilities of customer loyalty scheme. We recorded contract liabilities
of RMB36.7 million, RMB60.1 million, RMB82.6 million and RMB110.9 million as of
December 31, 2022, 2023, 2024 and June 30, 2025, respectively. See “Financial Information
— Selected Key Items of Consolidated Statement of Financial Position — Current Assets and
Liabilities — Contract Liabilities.” If we fail to fulfill our obligations under our receipt of
advance payment of franchising income, balances in stored value membership accounts and
issued vouchers and contract liabilities of customer loyalty scheme, we may not be able to
recognize such contract liabilities as revenue, which may have a material and adverse impact
on our business, results of operation, reputation and liquidity position.
Our operations may be negatively affected by any industry-wide food safety related
concerns even if such concerns are through no fault of our own or related to our business.
The catering industry in China as a whole is subject to concern over food safety and
quality related issues. In particular, there have been reports and negative publicity related to
the safety and quality incidents in China’s catering industry. While the reports and allegations
are not targeted at us, the catering industry as a whole can be negatively impacted by these
incidents and associated reports. Our prospects, business, results of operations and financial
condition can be negatively impacted if the catering industry experiences slower growth from
concerns over food safety.
We face risks related to instances of food-borne illnesses, health epidemics and other
outbreaks.
Our business is susceptible to food-borne illnesses, health epidemics and other outbreaks.
We cannot guarantee that our internal controls and training will be fully effective in preventing
all food-borne illnesses. Furthermore, our reliance on third-party food processing companies,
suppliers and distributors increases the risk of food-borne illness incidents which could be
caused by third-party food processing companies, suppliers and distributors outside our control
and the risk of affecting multiple locations instead of a single restaurant being affected. Drug
resistant disease may develop in the future, or diseases with long incubation periods could
arise, such as mad-cow disease, which could give rise to claims or allegations. Reports in the
media of instances of food-borne illnesses could, if highly publicized, negatively affect our
industry overall and us, regardless of whether we were responsible for the spread of the illness.
Furthermore, other illnesses, such as hand, foot and mouth disease or avian influenza, could
adversely affect the supply of some of our ingredients and significantly increase our costs,
thereby impacting our restaurant sales, forcing the closure of some of our restaurants and
conceivably having significant adverse effects on our results of operations. China’s catering
industry may be significantly affected by any epidemics or pandemics, which may cause
material disruptions to our operations, including but not limited to, travel restrictions,
temporary closures of our restaurants, and sickness or death of our key personnel, which in turn
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may materially and adversely affect our financial condition and results of operations. In 2022,
our business and results of operations were affected by the COVID-19 pandemic to a certain
extent and recorded a net loss of RMB36.0 million. For details, see “Financial Information —
Impact of COVID-19 Pandemic.”
We may be subject to litigation and regulatory investigations and proceedings, and may
not always be successful in defending ourselves against such claims or proceedings.
Our business operations may be subject to substantial litigation and regulatory risks,
including the risk of lawsuits and other legal actions relating to fraud and misconduct, sales and
customer services, leases, labor disputes and control procedures deficiencies, as well as the
protection of personal and confidential information of our end-users and business partners,
among others. We may be subject to claims and lawsuits in the ordinary course of our business.
We may also be subject to inquiries, inspections, investigations and proceedings by relevant
regulatory and other governmental agencies relating to advertisements and taxation, among
other things, which may result in the diversion of our resources and management attention.
Actions brought against us may result in settlements, injunctions, fines, penalties or other
results adverse to us that could harm our business, financial condition, results of operations and
reputation. Even if we are successful in defending ourselves against these actions, the costs of
such defense may be significant for us. A significant judgment or regulatory action against us
or a material disruption in our business arising from adverse adjudications in proceedings
against our Directors, officers or employees would have a material adverse effect on our
liquidity, business, financial condition, results of operations, reputation and prospects.
The increasing awareness of environmental, social and governance issues may lead to the
adoption of more stringent laws and regulations and increase our compliance costs.
With the rising awareness of ESG issues, including with respect to food and packaging
waste, greenhouse gas emissions and environmental protection, any revisions to laws and
regulations may affect our business operations. Accordingly, we may need to devote more
effort and resources to ensure our compliance with such laws or regulations. See “Business —
Environmental, Social and Corporate Governance.” We cannot assure you that these risk
management measures can effectively mitigate the relevant risks. Revisions to existing
ESG-related laws and regulations or the promulgation of new ESG-related laws and regulations
may increase our compliance costs, which may adversely affect our business, results of
operations and financial performance.
Macroeconomic factors have had and may continue to have a material and adverse effect
upon our business, financial condition and results of operations.
The catering industry in China is affected by macro-economic factors, including changes
in international, national, regional and local economic conditions, employment levels and
consumer spending patterns. In particular, our restaurants are located in the Chinese Mainland
and Hong Kong SAR and accordingly, our results of operations are closely affected by the
macro-economic conditions in the Chinese Mainland and Hong Kong SAR, such as changes in
disposable consumer income, fear of recession and decreases in consumer confidence. These
macro-economic factors may lead to a reduction of customer traffic and average spending per
customer at our restaurants, which could materially and adversely affect our financial condition
and results of operations. Moreover, the occurrence of a sovereign debt crisis, banking crisis
or other disruptions in the global financial markets that could impact the availability of credit
generally may have a material and adverse impact on financings available to us. Renewed
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turmoil affecting the financial markets, banking systems or currency exchange rates may
significantly restrict our ability to obtain financing from the capital markets or from financial
institutions on commercially reasonable terms, or at all, which could materially and adversely
affect our business, financial condition and results of operations.
RISKS RELATING TO DOING BUSINESS IN THE JURISDICTIONS WHERE WE
OPERATE
Our business is governed by laws and regulations. Changes to the regulatory regime and
government policies relating to the areas where we operate businesses may limit our
ability to provide offerings, thereby materially and adversely affecting our business,
financial condition and results of operations.
The operations of our businesses are subject to various laws, rules and regulations in
relation to the catering industry in China. Such laws, rules and regulations mainly relate to: (i)
specifications in the catering industry that may affect our ability to carry out daily operations
and to implement our business strategies; (ii) the operation and supervision of catering
institutions; and (iii) food safety and fire safety, among other things. Compliance with these
laws and regulations can cause difficulties and incur higher costs. New laws or regulations or
revisions to laws and regulations can impose additional compliance costs, reduce our revenue,
and require us to change our operations to ensure compliance, or otherwise change our
business.
New laws, rules and regulations as well as government policies relevant to our businesses
may be introduced in the future, or the current applicable regulations may otherwise be
amended or replaced, requiring us to conduct business with additional oversight and regulatory
compliance. In particular, any change in the applicable laws, rules and regulations could
require us to obtain additional licenses, permits, approvals or certificates, increase our
operational expenses or result in the invalidation of licenses, permits, approvals or certificates
we currently have. Newly promulgated laws and regulations may be subject to further
variations in application, interpretation and implementation. As a result, we may not be aware
in a timely manner that we have violated certain policies and rules. There can be no assurance
that we can adapt to the evolving regulatory environment swiftly enough or in a cost-efficient
manner, failure of which may adversely affect our operations and lead to substantial
compliance costs. Meanwhile, we may need to implement changes in our facilities, equipment,
personnel or services to comply with the latest laws and regulations, and such may increase our
capital expenditures and operating expenses, thereby adversely affecting our business,
financial condition and results of operations.
Since we require various approvals, licenses and permits to operate our business, any
failure to obtain, maintain or renew any of these approvals, licenses and permits could
materially and adversely affect our business and results of operations.
In accordance with the PRC Law, we are required to maintain various approvals, licenses
and permits in order to operate our businesses in the Chinese Mainland and Hong Kong SAR.
These approvals, licenses and permits are achieved upon satisfactory compliance with,
amongst other things, the applicable food hygiene and safety and fire safety laws and
regulations. Most of these licenses are subject to examinations or verifications by relevant
authorities and some are valid only for a fixed period of time subject to renewal and
accreditation.
RISK FACTORS
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We may experience difficulties or failures in obtaining the necessary approvals, licenses
and permits for new restaurants. In addition, there can be no assurance that we will be able to
obtain, renew and/or convert all of the approvals, licenses and permits required for our existing
business operations upon expiration in a timely manner or at all. If we cannot obtain and/or
maintain all licenses required by us to operate our business, planned new business operations
and/or expansion may be delayed, and our ongoing business could be interrupted. We may also
be subject to fines and penalties. For details, see “Regulatory overview” and “Business —
Compliance, Licenses and Permits.”
Adapting to revisions to data protection, cybersecurity, privacy and similar laws in the
Chinese Mainland, Hong Kong SAR and other jurisdictions that regulate the collection,
use and disclosure of information and data may subject us to increased compliance costs,
which may have a material and adverse effect on our business, financial condition and
results of operations.
Our business collects and processes certain data, including our consumers’ personal
information and other information and data, and any improper processing activity of such data
or any other information security incident could harm our reputation as well as have a material
adverse effect on our business and prospects. Collecting, using, storing, sharing, transferring
and disclosing personal information are regulated in the Chinese Mainland and Hong Kong
SAR. Our measures to ensure compliance on the confidentiality of our consumers’ personal
information may not always be effective and there can be no guarantee that we can completely
protect the information from leakage and constantly maintain compliance under relevant laws
and regulations. While we strive to comply with our privacy policies and procedures as well
as relevant laws and regulations, we may fail to protect our consumers’ personal information
for reasons beyond our control. Such information could be divulged due to, for example, theft
or misuse arising from employee misconduct or negligence, or compromised in the event of a
security breach at any third-party online platform we use. We may entrust third parties to
collect some data, or may indirectly collect some data from third parties, during the operation
of our business. The activities of such third parties are beyond our control and there is no
guarantee as to the effectiveness of the measures we have taken to urge and supervise third
parties to abide by applicable cybersecurity and data privacy and protection laws and
regulations. If any third party fails, or is deemed to have failed, to obtain authorization from
the subject of personal information in a reasonable and lawful manner, or to comply with
applicable cybersecurity and data privacy and protection laws and regulations, it may also have
a material adverse effect on our businesses as well as our reputation.
Additionally, a technological failure or security breach may result in violation of
regulations, and may lead to civil, administrative or criminal penalties, which could have a
material adverse effect on our business, financial condition and results of operations.
Regulators in the Chinese Mainland and Hong Kong SAR have increased their focus on data
protection, cybersecurity and privacy. While we believe our current usage of our consumers’
personal information in material aspects is in compliance with applicable laws and regulations,
revisions to those laws and regulations could subject us to increased compliance costs, which
may have a material and adverse effect on our business, financial condition and results of
operations.
RISK FACTORS
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The laws and regulations regarding data security and privacy protection are generally
complex and evolving, and the interpretation and application thereof will be determined
according to the laws and regulations then in effect. As such, we cannot assure you that our
privacy and data protection measures are, and will be, always considered sufficient under
applicable laws and regulations. Additionally, the integrity of our privacy and data protection
measures is also subject to system failure, interruption, inadequacy, security breaches or
cyber-attacks. If we are unable to address any data security and privacy protection concerns,
such actual or alleged failure could damage our reputation, adversely affect our business
operations and results of operations, and could subject us to significant legal, financial and
operational consequences.
Regulatory and legislative developments for the catering industry, including fire safety,
food hygiene, environmental protection and anti-corruption regimes are expansive. These
evolving laws and regulations could create unexpected costs, restrict our business
development or cause us to change our business model.
Our business is subject to various compliance and operational requirements under laws
and regulations in the Chinese Mainland and Hong Kong SAR. Each of our restaurants must
hold a basic business license issued by the local government authorities and must have
restaurant operations within the business scope of its business license. Our business is also
subject to various regulations that affect various aspects of our business in the cities in which
we operate, including fire safety, food hygiene, environmental protection and anti-corrpution.
Each of our restaurants must obtain various licenses and permits or conduct record filing
procedures under these regulations. Adapting to the evolving laws and regulations may create
unexpected costs, restrict our business development or cause us to change our business model.
See also “Regulatory Overview — Regulations on Food Safety and Licensing Requirements for
Catering Services” and “Regulatory Overview — Regulations on Fire Prevention”.
We may be subject to the approval, filing or other requirements of the CSRC or other
PRC governmental authorities in connection with future capital raising activities.
We cannot assure you that any new rules or regulations promulgated in the future will not
impose new requirements on us or otherwise tighten the regulations on us. If it is determined
in the future that new approval from or filing with the CSRC or other regulatory authorities or
other procedures is required, we may fail to obtain such approval, perform such filing
procedures, or meet such new requirements in a timely manner or at all. Such failure may
adversely affect our ability to finance the development of our business and may have a material
adverse effect on our business and financial condition. Furthermore, any unforeseeable
circumstances and/or negative publicity regarding such an approval, filing, or other
requirements may also have a material adverse effect on the price of our shares.
We are subject to the currency exchange regulatory system in the Chinese Mainland.
The conversion of Renminbi is subject to applicable laws and regulations in the Chinese
Mainland. It cannot be guaranteed that under a certain exchange rate, we will have sufficient
foreign exchange to meet our foreign exchange requirements. Under the current foreign
exchange regulatory system in the Chinese Mainland, foreign exchange transactions under the
current account conducted by us, including the payment of dividends, do not require advance
approval from the SAFE, but we are required to present documentary evidence of such
transactions and conduct such transactions at designated foreign exchange banks in the Chinese
Mainland that have the licenses to carry out foreign exchange business.
RISK FACTORS
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Under existing foreign exchange regulations, following the completion of the Global
Offering, we will be able to pay dividends in foreign currencies without prior approval from
the SAFE by complying with certain procedural requirements. However, there is no assurance
that these foreign exchange policies regarding payment of dividends in foreign currencies will
continue in the future. In addition, any insufficiency of foreign exchange may restrict our
ability to obtain sufficient foreign exchange for dividend payments to Shareholders or to satisfy
any other foreign exchange requirements, capitalize our capital expenditure plans, and even our
business, operating results and financial condition, may be affected.
Fluctuations in exchange rates could have a material and adverse effect on our results of
operations and the value of your investment.
During the Track Record Period, as our principal business activities were carried out in
the Chinese Mainland, our revenue and expenditures were mainly denominated in Renminbi,
while the net proceeds from the Global Offering will be in Hong Kong dollars. Fluctuations in
the exchange rate between the Renminbi and the Hong Kong dollar will affect the relative
purchasing power in Renminbi in terms of the proceeds from the Global Offering. Fluctuations
in the exchange rate may also cause us to incur foreign exchange losses and affect the relative
value of any dividend issued by our Chinese Mainland subsidiaries. In addition, appreciation
or depreciation in the value of the Renminbi relative to the Hong Kong dollar or U.S. dollar
would affect our financial results in Hong Kong dollar or U.S. dollar terms without giving
effect to any underlying change in our business or results of operations. All foreign exchange
transactions involving Renminbi must take place through the People’s Bank of China or other
institutions authorised to buy and sell foreign exchange. The exchange rates adopted for the
foreign exchange transactions are the rates of exchange quoted by the People’s Bank of China
that are determined largely by supply and demand. As at 31 December 2022, 2023, 2024 and
June 30, 2025, our cash and cash equivalents situated in the Chinese Mainland amounted to
RMB36,519,000, RMB26,739,000, RMB39,031,000 and RMB44,006,000. Remittance of
funds out of the Chinese Mainland is subject to relevant rules and regulations of foreign
exchange control.
Payment of dividends or gains from the sale or other disposition of our H Shares is subject
to taxation under PRC Law.
Non-Chinese Mainland resident individual holders of H Shares whose names appear on
the register of members of H Shares (“ Non-Chinese Mainland Resident Individual
Holders ”) are subject to the Chinese Mainland individual income tax on dividends received
from us and gains realized through the sale or transfer by other means of H shares by such
holders.
Pursuant to the Circular on Questions Concerning the Collection of Individual Income
Tax Following the Repeal of Guo Shui Fa [1993] No. 045 (Guo Shui Han [2011] No. 348) ( ᗫ
਷೼೯[1993]045)( ਷೼Ռ[2011]348 ໮)
dated June 28, 2011 and issued by the SA T of the Chinese Mainland, the tax rate applicable to
dividends paid to Non-Chinese Mainland Resident Individual Holders of H Shares varies from
5% to 20%, depending on whether there is any applicable tax treaty between the Chinese
Mainland and the jurisdiction in which the Non-Chinese Mainland Resident Individual Holder
of H Shares resides, as well as the tax arrangement between the Chinese Mainland and Hong
Kong SAR.
RISK FACTORS
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In addition, under the Individual Income Tax Law of the PRC (ה
) and its implementation regulations, Non-Chinese Mainland Resident Individual
Holders of H Shares are subject to individual income tax at a rate of 20% on gains realized
upon the sale or other disposition of H Shares. However, according to the Circular of the
Ministry of Finance and the SA T on Issues Concerning Individual Income Tax Policies ( ৌ
), income received by individual
foreigners from dividends and bonuses of a foreign-invested enterprise are exempt from
individual income tax for the time being. Pursuant to the Circular Declaring that Individual
Income Tax Continues to be Exempted over Income of Individuals from Transfer of Shares
() issued by the Ministry of
Finance and the SA T on March 30, 1998, gains of individuals derived from the transfer of listed
shares of enterprises may be exempt from individual income tax. Based on our knowledge, as
of the Latest Practicable Date, the PRC tax authorities have not in practice sought to collect
individual income tax on such gains. If such tax is collected in the future, the value of such
individual holders’ investments in H Shares may be materially and adversely affected.
Under the Enterprise Income Tax Law of the PRC ()
(“EIT Law ”) and its implementation regulations, a non-Chinese Mainland resident enterprise
is generally subject to enterprise income tax at a rate of 10% with respect to its Chinese
Mainland-sourced income, including dividends received from a Chinese Mainland company
and gains derived from the disposition of equity interests in a Chinese Mainland company. This
rate may be reduced under any special arrangement or applicable treaty between the Chinese
Mainland and the jurisdiction in which the non-Chinese Mainland resident enterprise resides.
Pursuant to the Circular on Questions Concerning Withholding of Enterprise Income Tax for
Dividends Distributed by Resident Enterprises in China to Non-resident Enterprises Holding H-shares
of the Enterprises (Guo Shui Han [2008] No. 897) (͏ΆุΣྤ̮H͏Ά
(਷೼Ռ[2008]897 ໮)) promulgated by
the SA T on November 6, 2008, we intend to withhold tax at 10% from dividends payable to
non-Chinese Mainland resident enterprise holders of H Shares (including HKSCC Nominees).
Non-Chinese Mainland resident enterprises that are entitled to be taxed at a reduced rate under
an applicable income tax treaty or arrangement will be required to apply to the PRC tax
authorities for a refund of any amount withheld in excess of the applicable treaty rate, and
payment of such refund will be subject to the PRC tax authorities’ approval. Pursuant to the
Arrangements between the Chinese Mainland and the Hong Kong Special Administrative
Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with
Respect to Taxes on Incomes (ᅄ೼ձԣ˟ਊဍ
τર) dated August 21, 2006, any non-resident enterprise registered in Hong Kong that
holds directly at least 25% of the shares of our Company shall pay EIT for the dividends
declared and paid by us at a tax rate of 5%. If the PRC tax authorities collect enterprise income
tax on gains derived upon the sale or other disposition of H Shares from non-Chinese Mainland
resident enterprise holders of H Shares in the future, the value of such non-Chinese Mainland
resident enterprise holders’ investments in H Shares may be materially and adversely affected.
Y ou may experience difficulties in effecting service of legal process, enforcing foreign
judgments or bringing actions against us or our management named in the prospectus
based on foreign laws.
Most of our Directors and executive officers reside within the Chinese Mainland, and
most of our assets and substantially all of the assets of those persons are located within the
Chinese Mainland. It may not be possible for investors to effect service of process upon us or
those persons inside the Chinese Mainland or to enforce against us or them in the Chinese
RISK FACTORS
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Mainland any judgments obtained from non-Chinese courts. The Chinese Mainland does not
have treaties providing for the reciprocal recognition and enforcement of judgments of courts
in the United States, the United Kingdom, Japan or most other western countries. However,
judgments rendered by courts in Hong Kong SAR may be recognized and enforced in the
Chinese Mainland if the requirements set forth by the Arrangements for Reciprocal
Recognition and Enforcement of Judgments in Civil and Commercial Cases between Courts of
the Mainland and Hong Kong Special Administrative Region (ج
τર) are met. Therefore, recognition and enforcement
in the Chinese Mainland of judgments of a court in any of these jurisdictions other than Hong
Kong SAR in relation to any matter not subject to binding arbitration provisions may be
difficult or impossible.
Furthermore, although we will be subject to the Listing Rules and the Takeovers Code
upon the listing of our H Shares on the Stock Exchange, the holders of H Shares will not be
able to bring actions on the basis of violations of the Listing Rules and must rely on the Stock
Exchange to enforce its rules. Moreover, the Takeovers Code does not have the force of law
and provides only standards of commercial conduct considered acceptable for takeover and
merger transactions and share repurchases in Hong Kong.
RISKS RELATING TO THE GLOBAL OFFERING
There has been no prior public market for our H Shares, and you may not be able to resell
our Shares at or above the price you pay, or at all.
Prior to the Global Offering, there was no public market for our H Shares. We cannot
assure you that a public market for our H Shares with adequate liquidity and trading volume
will develop and be sustained following the completion of the Global Offering. In addition, the
Offer Price of our H Shares is expected to be fixed by agreement between the Sole
Sponsor-Overall Coordinator (for itself and on behalf of the Underwriters) and us, and may not
be an indication of the market price of our H Shares following the completion of the Global
Offering. If an active public market for our H Shares does not develop following the
completion of the Global Offering, the market price and liquidity of our H Shares may be
materially and adversely affected.
The price and trading volume of our H Shares may be volatile, which could lead to
substantial losses to investors.
The trading price of our H Shares may be volatile and could fluctuate widely in response
to factors beyond our control, including general market conditions of the securities markets in
Hong Kong SAR and elsewhere in the world. In particular, the performance and fluctuation of
the market prices of other companies with business operations located mainly in China that
have listed their securities in Hong Kong SAR may affect the volatility of the price of, and
trading volumes for our H Shares. A number of Chinese Mainland-based companies have listed
their securities, and some are in the process of preparing for listing their securities, in Hong
Kong SAR. Some of these companies have experienced significant volatility, including
significant price declines after their offerings. The trading performances of the securities of
these companies at the time of, or after, their offerings may affect the overall investor
sentiment towards Chinese Mainland-based companies listed in Hong Kong SAR, and
consequently may impact the trading performance of our H Shares. These broad market and
industry factors may significantly affect the market price and volatility of our H Shares,
regardless of our actual operating performance.
RISK FACTORS
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Future sales or perceived sales of substantial amounts of our H Shares in the public
market could have a material adverse effect on the prevailing market price of our H
Shares and our ability to raise additional capital in the future, or may result in dilution
of your shareholding.
Future sales of a substantial number of our H Shares, especially by our Directors,
executive officers, Pre-IPO Investors and substantial shareholders, or the perception or
anticipation of such sales, could negatively impact the market price of our H Shares in Hong
Kong and our ability to raise equity capital in the future at a time and price that we deem
appropriate. The Shares held by our Controlling Shareholders are subject to certain lock-up
periods. While we are currently not aware of any intention of such persons to dispose of
significant amounts of their Shares after the expiry of the lock-up periods, we cannot assure
you that they will not dispose of any Shares they may own now or in the future. Upon the
completion of the Global Offering and the Conversion of Unlisted Shares into H Shares, our
Shares will only consist of H Shares. Unlisted Shares and H Shares are all ordinary Shares in
the share capital of our Company and are considered as one class of Shares. For details, see
“Share Capital.” In the case that there is any further issue of Unlisted Shares and subsequent
conversion into H Shares in the future, your shareholding under the class of holders of our H
Shares will be diluted.
Y ou will incur immediate and substantial dilution and may experience further dilution in
the future.
As the Offer Price of our H Shares is higher than the consolidated net tangible assets per
Share immediately prior to the Global Offering, purchasers of our H Shares in the Global
Offering may experience an immediate dilution. Our existing Shareholders will receive an
increase in the pro forma adjusted consolidated net tangible asset value per Share of their
Shares. In addition, holders of our H Shares may experience further dilution of their interest
if we issue additional Shares in the future to raise additional capital.
Our Controlling Shareholders have significant influence over our Company and their
interests may not be aligned with the interests of our other Shareholders.
Our Controlling Shareholders have substantial influence over our business, including
matters relating to our management, policies and decisions regarding mergers, expansion plans,
consolidations and sales of all or substantially all of our assets, election of Directors and other
significant corporate actions. The concentration of ownership may discourage, delay or prevent
a change in control of the Company, which could deprive other Shareholders of an opportunity
to receive a premium for their Shares as part of a sale of the Company and might reduce the
price of our H Shares. These events may occur even if they are opposed by our other
Shareholders. In addition, the interests of our Controlling Shareholders may differ from the
interests of our other Shareholders. It is possible that our Controlling Shareholder may exercise
its substantial influence over us and cause us to enter into transactions or take, or fail to take,
actions or make decisions that conflict with the best interests of our other Shareholders.
RISK FACTORS
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We cannot assure you that we will declare and distribute any amount of dividends in the
future and you may have to rely on price appreciation of our H Shares for return on your
investment.
While dividends may be paid out of distributable profits under our Articles of
Association. For our declaration and distribution of dividends during the Track Record Period,
see “Financial Information — Dividends.” Distributable profits mean our net profits for a
period, plus the distributable profits or net of the accumulated losses, if any, at the beginning
of such period, less the portions allocated to the discretionary reserve approved by the
Shareholders’ meeting and the statutory reserve. As a result, we may not have sufficient profit
to enable us to make future dividend distributions to our Shareholders, even if our financial
statements prepared in accordance with IFRSs indicate that our operations had been profitable.
Furthermore, future determination of dividends will also depend on various factors, including
but not limited to our results of operations, cash flows and financial conditions, capital
adequacy ratio, operation and capital expenditure requirement and other factors that our Board
consider relevant. We cannot assure you that the factors we take into consideration will not
change in the future.
Y ou should read the entire prospectus carefully and should not rely on any information
contained in press articles or other media regarding us and the Global Offering.
We strongly caution our investors not to rely on any information contained in press
articles or other media regarding us, our Shares and the Global Offering. Prior to the
publication of this prospectus, there may be press and media coverage regarding the Global
Offering and us. Such press and media coverage may include references to certain information
that does not appear in this prospectus, including certain operating and financial information
and projections, valuations and other information. We have not authorized the disclosure of any
such information in the press or media and do not accept any responsibility for any such press
or media coverage or the accuracy or completeness of any such information or publication. We
make no representation as to the appropriateness, accuracy, completeness or reliability of any
such information or publication. To the extent that any such information is inconsistent or
conflicts with the information contained in this prospectus, we disclaim responsibility for it
and our investors should not rely on such information.
Certain facts, forecast and other statistics in this prospectus obtained from official
government sources have not been independently verified and may not be reliable.
Certain facts, forecast and other statistics in this prospectus are derived from various
official government resources. However, our Directors cannot guarantee the quality or
reliability of such source materials. We believe that the sources of the said information are
appropriate sources for such information and have taken reasonable care in extracting and
reproducing such information. We have no reason to believe that such information is false or
misleading or that any fact has been omitted that would render such information false or
misleading. Nevertheless, such information has not been independently verified by us, the Sole
Sponsor, the Joint Overall Coordinators, the Joint Global Coordinators, the Joint Bookrunners,
the Joint Lead Managers, the Underwriters or any of their respective affiliates or advisers or
any other party involved in the Global Offering (other than Frost & Sullivan) and, therefore,
we make no representation as to the accuracy of such facts and statistics. Further, we cannot
assure our investors that they are stated or compiled on the same basis or with the same degree
of accuracy as similar statistics presented elsewhere. In all cases, our investors should consider
carefully how much weight or importance should be attached to or placed on such facts or
statistics.
RISK FACTORS
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Forward-looking statements contained in this prospectus are subject to risks and
uncertainties.
This prospectus contains forward-looking statements with respect to our business
strategies, operating efficiencies, competitive positions, growth opportunities for existing
operations, plans and objectives of management, certain pro forma information and other
matters. The words “aim”, “anticipate”, “believe”, “could”, “predict”, “potential”, “continue”,
“expect”, “intend”, “may”, “might”, “plan”, “seek”, “will”, “would”, “should” and the negative
of these terms and other similar expressions identify a number of these forward-looking
statements. These forward-looking statements, including, amongst others, those relating to our
future business prospects, capital expenditure, cash flows, working capital, liquidity and
capital resources are necessarily estimates reflecting the best judgment of our Directors and
management and involve a number of risks and uncertainties that could cause actual results to
differ materially from those suggested by the forward-looking statements. As a consequence,
these forward-looking statements should be considered in light of various important factors,
including those set out in this section. Accordingly, such statements are not a guarantee of
future performance and investors should not place undue reliance.
RISK FACTORS
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In preparation for the Global Offering, our Company has sought the following waivers
from strict compliance with the relevant provisions of the Listing Rules:
W AIVER IN RELATION TO MANAGEMENT PRESENCE IN HONG KONG
Pursuant to Rule 8.12 of the Listing Rules, a new applicant for listing on the Stock
Exchange must have sufficient management presence in Hong Kong, which normally means
that at least two of its executive directors must be ordinarily resident in Hong Kong. Rule
19A.15 of the Listing Rules further provides that the requirement in Rule 8.12 of the Listing
Rules may be waived by having regard to, among other considerations, the new applicant’s
arrangements for maintaining regular communication with the Stock Exchange.
Since our headquarters and principal business operations are located in the Chinese
Mainland and the management functions of our Group are carried out in the Chinese Mainland,
our executive Directors are based in the Chinese Mainland, and are expected to continue to be
based in the Chinese Mainland, to better manage and attend to our Group’s business operations.
We consider that it is in the best interests of our Company for our executive Directors to be
based in the places where our Group has significant operations and it would be practically
difficult, unduly burdensome and costly to relocate our executive Directors to Hong Kong SAR
or appoint additional executive Directors who are ordinarily resident in Hong Kong SAR.
Therefore, we do not and, in the foreseeable future, will not have sufficient management
presence in Hong Kong SAR for the purpose of satisfying the requirements under Rule 8.12
and Rule 19A.15 of the Listing Rules.
Accordingly, we have applied to the Stock Exchange for, and the Stock Exchange has
granted us, a waiver from strict compliance with the requirements under Rules 8.12 and 19A.15
of the Listing Rules, provided that our Company implements the following arrangements to
maintain regular communication between the Stock Exchange and us:
(a) we have appointed Mr. Song, our executive Director and Ms. Tang King Yin
(቎౻ሬ)( “ Ms. Tang ”), one of our joint company secretaries, as our authorized
representatives for the purpose of Rule 3.05 of the Listing Rules. Our authorized
representatives will act as the principal channel of communication between the
Stock Exchange and our Company. Ms. Tang is ordinarily resident in Hong Kong,
and Mr. Song will be available to visit Hong Kong and meet with the Stock
Exchange within a reasonable period of time upon request. Each of our Company’s
authorized representatives will be readily contactable by the Stock Exchange by
telephone and/or email to deal promptly with any enquiries which may be made by
the Stock Exchange. Each of our authorized representatives is authorized to
communicate on behalf of our Company with the Stock Exchange;
W AIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES
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(b) our authorized representatives have means to contact all of our Directors (including
our independent non-executive Directors) promptly at all times as and when the
Stock Exchange wishes to contact our Directors for any matters. We have provided
the Stock Exchange with the contact details of each Director (including their
respective mobile phone number, office phone number and e-mail address), and in
the event that a Director expects to be traveling or otherwise be out of office, he/she
will provide his/her phone numbers or means of communication to our authorized
representatives;
(c) each Director who is not ordinarily resident in Hong Kong has confirmed that he/she
possesses or can apply for valid travel documents to visit Hong Kong and can meet
with the Stock Exchange upon reasonable notice;
(d) we have appointed Altus Capital Limited as our compliance advisor (the
“Compliance Advisor ”), pursuant to Rule 3A.19 of the Listing Rules, who will have
access at all times to our authorized representatives, Directors and senior
management, and will act as an additional channel of communication between the
Stock Exchange and us for the period commencing from the Listing Date to the date
on which our Company complies with Rule 13.46 of the Listing Rules in respect of
its financial results for the first full financial year commencing after the Listing
Date. Our authorized representatives, Directors and other officers of our Company
will provide our Compliance Advisor with such information and assistance as our
Compliance Advisor may reasonably require in connection with the performance of
its duties;
(e) any meeting between the Stock Exchange and our Directors will be arranged through
our authorized representatives, our Compliance Advisor or directly with our
Directors within a reasonable time frame. We will inform the Stock Exchange
promptly in respect of any changes to our authorized representatives and our
Compliance Advisor; and
(f) we will also retain legal advisers to advise on on-going compliance requirements as
well as other issues arising under the Listing Rules and other applicable laws and
regulations of Hong Kong after Listing.
We believe that the above measures and arrangements will ensure that all members of our
Board can be promptly informed of any matters raised by the Stock Exchange and that there
is an effective communication channel in place between the Stock Exchange and our Company.
W AIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES
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W AIVER IN RESPECT OF JOINT COMPANY SECRETARIES
Pursuant to Rules 3.28 and 8.17 of the Listing Rules, we must appoint a company
secretary who possesses the necessary academic or professional qualifications or relevant
experience, and is, in the opinion of the Stock Exchange, capable of discharging the functions
of the company secretary. Note 1 to Rule 3.28 of the Listing Rules provides that the Stock
Exchange considers the following academic or professional qualifications to be acceptable:
(a) a member of The Hong Kong Chartered Governance Institute;
(b) a solicitor or barrister as defined in the Legal Practitioners Ordinance (Chapter 159
of the Laws of Hong Kong); and
(c) a certified public accountant as defined in the Professional Accountants Ordinance
(Chapter 50 of the Laws of Hong Kong).
Note 2 to Rule 3.28 of the Listing Rules provides that in assessing “relevant experience”,
the Stock Exchange will consider the individual’s:
(a) length of employment with the issuer and other issuers and the roles he/she played;
(b) familiarity with the Listing Rules and other relevant law and regulations including
the Securities and Futures Ordinance, the Companies Ordinance, the Companies
(Winding Up and Miscellaneous Provisions) Ordinance and the Takeovers Code;
(c) relevant training taken and/or to be taken in addition to the minimum requirement
of taking not less than fifteen hours of relevant professional training in each
financial year under Rule 3.29 of the Listing Rules; and
(d) professional qualifications in other jurisdictions.
Our Company considers that while it is important for our company secretary to be familiar
with the relevant securities regulations in Hong Kong, he/she also needs to have experience
relevant to our Group’s internal administration and business operations and have a close
working relationship with the management of our Company in order to perform the functions
of a company secretary and take the necessary actions in the most effective and efficient
manner. We consider it beneficial for our Company to appoint a company secretary who reports
directly to our senior management and is familiar with our Company’s industry, business and
affairs.
W AIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES
–6 9–


--- page 79 ---
We have appointed Mr. Zhang Hua ( ௝㏞)( “ Mr. Zhang ”) and Ms. Tang as the joint
company secretaries of our Company. Ms. Tang is an associate member of both The Hong Kong
Chartered Governance Institute and The Chartered Governance Institute in the United
Kingdom, and therefore meets the qualification requirements under note 1 to Rule 3.28 of the
Listing Rules and is in compliance with Rule 8.17 of the Listing Rules. Although Mr. Zhang
does not possess the qualification and sufficient relevant experience as stipulated in the notes
to Rule 3.28 of the Listing Rules, considering Mr. Zhang’s position as our finance director, his
extensive experience in accounting and finance matters, close working relationship with the
management of the Company, and understanding of the internal administration and business
operations of our Group as well as his industry knowledge, he is a suitable person to act as a
company secretary of our Company. In addition, as our headquarters and principal business
operations are located in the Chinese Mainland, our Directors believe that it is necessary to
appoint Mr. Zhang as a company secretary whose presence in the Chinese Mainland will enable
him to attend to the day-to-day corporate secretarial matters concerning our Group. We believe
that it would be in the best interests of our Company and the corporate governance of our
Group to have Mr. Zhang as our joint company secretary. For more details of Mr. Zhang and
Ms. Tang’s biographical information, see “Directors, Supervisors and Senior Management”.
Apart from discharging her functions in her role as one of our joint company secretaries,
Ms. Tang will assist Mr. Zhang in enabling him to acquire the relevant company secretary
experience as required under Rule 3.28 of the Listing Rules and to become familiar with the
requirements of the Listing Rules and other applicable Hong Kong laws and regulations. In
addition, Mr. Zhang will also attend relevant professional training during each financial year
as required under Rule 3.29 of the Listing Rules.
We have therefore applied to the Stock Exchange for, and the Stock Exchange has granted
us, a waiver from strict compliance with the requirements under Rules 3.28 and 8.17 of the
Listing Rules in respect of the appointment of Mr. Zhang as one of our joint company
secretaries on the conditions that: (i) Mr. Zhang must be assisted by Ms. Tang, who possesses
the qualifications or experience as required under Rule 3.28 of the Listing Rules and is
appointed as a joint company secretary throughout the waiver period; and (ii) the waiver will
be revoked if there are material breaches of the Listing Rules by our Company.
We expect that Mr. Zhang will acquire the qualifications or relevant experience required
under Rule 3.28 of the Listing Rules prior to the end of the three-year period after the Listing.
We will liaise with the Stock Exchange before the end of the three-year period to enable it to
assess whether Mr. Zhang, having had the benefit of Ms. Tang’s assistance for three years, has
acquired the relevant experience within the meaning of Rule 3.28 of the Listing Rules so that
a further waiver from Rules 3.28 and 8.17 of the Listing Rules will not be necessary.
W AIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES
–7 0–


--- page 80 ---
DIRECTORS’ RESPONSIBILITY STATEMENT
This prospectus, for which our Directors (including any proposed Director who is named
as such in this prospectus) collectively and individually accept full responsibility, includes
particulars given in compliance with the Companies (Winding Up and Miscellaneous
Provisions) Ordinance, the Securities and Futures (Stock Market Listing) Rules (Chapter 571V
of the Laws of Hong Kong) and the Listing Rules for the purpose of giving information with
regard to us. Our Directors, having made all reasonable enquiries, confirm that to the best of
their knowledge and belief, the information contained in this prospectus is accurate and
complete in all material respects and not misleading or deceptive, and there are no other
matters the omission of which would make any statement herein or this prospectus misleading.
CSRC FILING
According to the Overseas Listing Trial Measures, we are required to complete the filing
procedures with the CSRC in connection with the proposed Listing. We have submitted a filing
to the CSRC for application for the Listing on April 15, 2025. The CSRC confirmed that such
filing has been completed on October 13, 2025. No other approvals from the CSRC are
required to be obtained for the Listing.
THE HONG KONG PUBLIC OFFERING AND THIS PROSPECTUS
This prospectus is published solely in connection with the Hong Kong Public Offering,
which forms part of the Global Offering. For applicants under the Hong Kong Public Offering,
this prospectus sets out the terms and conditions of the Hong Kong Public Offering. The Hong
Kong Offer Shares are offered solely on the basis of the information contained and
representations made in this prospectus and on the terms and subject to the conditions set out
herein and therein. No person is authorized to give any information in connection with the
Global Offering or to make any representation not contained in this prospectus, and any
information or representation not contained in this prospectus must not be relied upon as
having been authorized by our Company, the Sole Sponsor, Joint Overall Coordinators, Joint
Global Coordinators, Joint Bookrunners and Joint Lead Managers and any of the Underwriters,
any of our or their respective directors, agents, employees or advisors or any other party
involved in the Global Offering. The Listing is sponsored by the Sole Sponsor and the Global
Offering is managed by the Joint Overall Coordinators. The Hong Kong Public Offering is fully
underwritten by the Hong Kong Underwriters under the terms and conditions of the Hong Kong
Underwriting Agreement and is subject to us and the Sole Sponsor-Overall Coordinator (for
itself and on behalf of the Underwriters), among others, agreeing on the Offer Price. The
International Offering is expected to be fully underwritten by the International Underwriters
subject to the terms and conditions of the International Underwriting Agreement, which is
expected to be entered into on or around the Price Determination Date.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
–7 1–


--- page 81 ---
If, for any reason, the Offer Price is not agreed between, among others, us and the Sole
Sponsor-Overall Coordinator (for itself and on behalf of the Underwriters), the Global Offering
will not proceed and will lapse. For full information about the Underwriters and the
underwriting arrangements, see “Underwriting”.
Neither the delivery of this prospectus nor any offering, sale or delivery made in
connection with our H Shares should, under any circumstances, constitute a representation that
there has been no change or development reasonably likely to involve a change in our affairs
since the date of this prospectus or imply that the information contained in this prospectus is
correct as of any date subsequent to the date of this prospectus.
PROCEDURES FOR APPLICATION FOR THE HONG KONG OFFER SHARES
The procedures for applying for the Hong Kong Offer Shares are set forth in “How to
Apply for Hong Kong Offer Shares.”
STRUCTURE OF THE GLOBAL OFFERING
Details of the structure of the Global Offering, including its conditions, are set forth in
“Structure of the Global Offering.”
OVER-ALLOTMENT OPTION AND STABILIZATION
Details of the arrangements relating to the Over-allotment Option and stabilization are set
forth in “Structure of the Global Offering.”
RESTRICTIONS ON OFFERS AND SALES OF OUR SHARES
Each person acquiring the Hong Kong Offer Shares under the Hong Kong Public Offering
will be required to, or be deemed by his acquisition of Offer Shares to, confirm that he is aware
of the restrictions on offers of the Offer Shares described in this prospectus.
No action has been taken to permit a public offering of the Offer Shares or the general
distribution of this prospectus in any jurisdiction other than in Hong Kong. Accordingly, this
prospectus may not be used for the purposes of, and does not constitute, an offer or invitation
in any jurisdiction or in any circumstances in which such an offer or invitation is not authorized
or to any person to whom it is unlawful to make such an offer or invitation. The distribution
of this prospectus and the offering of the Offer Shares in other jurisdictions are subject to
restrictions and may not be made except as permitted under the applicable securities laws of
such jurisdictions and pursuant to registration with or authorization by the relevant securities
regulatory authorities or an exemption therefrom. In particular, the Hong Kong Offer Shares
have not been publicly offered or sold, directly or indirectly, in the Chinese Mainland or the
United States.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
–7 2–


--- page 82 ---
APPLICATION FOR LISTING OF OUR H SHARES ON THE STOCK EXCHANGE
We have applied to the Stock Exchange for the listing of, and permission to deal in, our
H Shares to be issued pursuant to (i) the Global Offering; and (ii) the exercise of the
Over-allotment Option, as well as the H Shares to be converted from Unlisted Shares. No part
of our equity or debt securities is listed on or dealt in on any other stock exchange and no such
listing or permission to list is being or proposed to be sought on the Stock Exchange or any
other stock exchange as of the Latest Practicable Date. All the Offer Shares will be registered
on our H Share register of members in order to enable them to be traded on the Stock Exchange.
COMMENCEMENT OF DEALINGS IN OUR H SHARES
Dealings in our H Shares on the Stock Exchange are expected to commence on Friday,
December 5, 2025. Our H Shares will be traded in board lots of 500 H Shares. The stock code
of our H Shares will be 2408.
Under section 44B(1) of the Companies (Winding Up and Miscellaneous Provisions)
Ordinance, any allotment made in respect of any application will be invalid if the listing of,
and permission to deal in, our H Shares on the Stock Exchange is refused before the expiration
of three weeks from the date of the closing of the application lists, or such longer period (not
exceeding six weeks) as may, within the said three weeks, be notified to our Company by or
on behalf of the Stock Exchange.
H SHARES WILL BE ELIGIBLE FOR ADMISSION INTO CCASS
If the Stock Exchange grants the listing of, and permission to deal in, our H Shares and
we comply with the stock admission requirements of HKSCC, our H Shares will be accepted
as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect
from the Listing Date or any other date as determined by HKSCC. Settlement of transactions
between participants of the Stock Exchange is required to take place in CCASS on the second
settlement day after any trading day.
All activities under CCASS are subject to the General Rules of HKSCC and HKSCC
Operational Procedures in effect from time to time.
Investors should seek the advice of their stockbroker or other professional advisors for
details of the settlement arrangement as such arrangements may affect their rights and interests.
All necessary arrangements have been made to enable our Shares to be admitted into CCASS.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
–7 3–


--- page 83 ---
PROFESSIONAL TAX ADVICE RECOMMENDED
Y ou should consult your professional advisors if you are in any doubt as to the taxation
implications of subscribing for, purchasing, holding or disposing of, or dealing in, our H Shares
or exercising any rights attaching to them. We emphasize that none of our Company, the Sole
Sponsor, Joint Overall Coordinators, Joint Global Coordinators, Joint Bookrunners and Joint
Lead Managers, the Underwriters, any of our or their respective directors, officers or
representatives or any other person involved in the Global Offering accepts responsibility for
any tax effects or liabilities resulting from your subscription, purchase, holding or disposing
of, or dealing in, our H Shares or your exercise of any rights attaching to our H Shares.
H SHARE REGISTER OF MEMBERS AND STAMP DUTY
All of our H Shares issued pursuant to applications made in the Global Offering and our
H Shares converted from Unlisted Shares will be registered on our H Share register of members
to be maintained in Hong Kong by our H Share Registrar, Tricor Investor Services Limited, at
17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong. Our principal register of
members will be maintained by us at our headquarters in China.
Dealings in the H Shares registered on our H Share register of members will be subject
to Hong Kong stamp duty. The stamp duty is charged to each of the seller and purchaser at the
ad valorem rate of 0.1% of the consideration for, or (if greater) the value of, our H Shares
transferred. In other words, a total of 0.2% is currently payable on a typical sale and purchase
transaction of our H Shares. In addition, a fixed duty of HK$5 is charged on each instrument
of transfer (if required). Investors should seek professional tax advice for further details of
Hong Kong stamp duty.
Unless determined otherwise by our Company, dividends payable in respect of the H
Shares will be paid to the Shareholders listed on the H Share register of members of our
Company in Hong Kong, by ordinary post, at the Shareholders’ risk, to the registered address
of each Shareholder of our Company.
EXCHANGE RATE CONVERSION
Unless otherwise specified, amounts denominated in RMB, US$ and HK$ have been
translated, for the purpose of illustration only, into Hong Kong dollars in this prospectus at
the following exchange rates: HK$1.00:RMB0.92342, US$1.00:RMB7.1788 and
US$1.00:HK$7.7741.
No representation is made that any amounts in RMB or US$ were or could have been or
could be converted into Hong Kong dollars at such rates or any other exchange rates on such
date or any other date.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
–7 4–


--- page 84 ---
ROUNDING
Certain amounts and percentage figures included in this prospectus have been subject to
rounding adjustments. Accordingly, figures shown as totals in certain tables may not be an
arithmetic aggregation of the figures preceding them.
LANGUAGE
If there is any inconsistency between this prospectus and its Chinese translation, this
prospectus shall prevail, provided that if there is any inconsistency between the Chinese names
of the entities or enterprises established under PRC Law in the Chinese Mainland mentioned
in this prospectus and their English translations, the Chinese names shall prevail. The English
translations of the Chinese names of such entities or enterprises are provided for identification
purposes only.
OTHER
Unless otherwise specified, all references to any shareholdings in our Company following
the completion of the Global Offering assume that the Over-allotment Option is not exercised.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
–7 5–


--- page 85 ---
DIRECTORS
Executive Directors
Name Address Nationality
Mr. Song Qi ( ҂փ) Room 1503
No. 21 Huacheng Avenue
Tianhe District, Guangzhou
Guangdong province
China
Chinese
Mr. Su Xuxiang ( ᘽϛജ) Room 3106, Building 13
No. 160, Nancun East Line
Panyu District, Guangzhou
Guangdong province
China
Chinese
Ms. Luo Y anling ( ᖯዲᜳ) Room 1503
No. 21 Huacheng Avenue
Tianhe District, Guangzhou
Guangdong province
China
Chinese
Non-Executive Director
Name Address Nationality
Mr. Wang Xiaolong ( ˮʃᎲ) Room D302
No. 8 Shangdi West Road
Haidian District, Beijing
China
Chinese
Independent non-executive Directors
Name Address Nationality
Mr. Xu Lei (ཤ) No. 1307, 13/F, Building 1
Courtyard No. 18
Dongzhimenwai Street
Dongcheng District, Beijing
China
Chinese
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
–7 6–


--- page 86 ---
Name Address Nationality
Mr. Chan Kwok Bun ( ௓਷੸) Flat D, 12/F, BLK 1, Bellagio
33 Castle Peak Road Sham Tseng
New Territories
Hong Kong
Chinese
(Hong Kong)
Mr. Zhong Jiesheng (͛) Room 902
No. 16 Xiancun Road
Tianhe District, Guangzhou
Guangdong province
China
Chinese
Supervisors
Name Address Nationality
Ms. Qin Y an ( ॢዲ) Room 204, Block 6, Liquan Building
Lijiang Garden, Luopu Street
Panyu District, Guangzhou
Guangdong province
China
Chinese
Mr. Peng Y ue ( ుᚔ)
(formerly named Peng
Nianyue ( ుϋᚔ))
Room 4-2, Unit 3, Building 23
Nancheng Community
No. 4 Lvcheng South Road
Xipeng Town
Jiulongpo District, Chongqing
China
Chinese
Ms. Zhang Qi ( ੵೡ) Room 505, Building 1
186 Gaoji Street
Chancheng District, Foshan
Guangdong province
China
Chinese
See “Directors, Supervisors and Senior Management” for further details.
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
–7 7–


--- page 87 ---
PARTIES INVOLVED IN THE GLOBAL OFFERING
Sole Sponsor and Sole Sponsor-Overall
Coordinator
CMB International Capital Limited
45/F Champion Tower
3 Garden Road, Central
Hong Kong
Joint Overall Coordinators CMB International Capital Limited
45/F Champion Tower
3 Garden Road, Central
Hong Kong
CLSA Limited
18/F, One Pacific Place
88 Queensway
Hong Kong
SDIC Securities (Hong Kong) Limited
39/F, One Exchange Square
Central
Hong Kong
Futu Securities International
(Hong Kong) Limited
34/F, United Centre
No. 95 Queensway, Admiralty
Hong Kong
Joint Global Coordinators CMB International Capital Limited
45/F Champion Tower
3 Garden Road, Central
Hong Kong
CLSA Limited
18/F, One Pacific Place
88 Queensway
Hong Kong
SDIC Securities (Hong Kong) Limited
39/F, One Exchange Square
Central
Hong Kong
Futu Securities International
(Hong Kong) Limited
34/F, United Centre
No. 95 Queensway, Admiralty
Hong Kong
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
–7 8–


--- page 88 ---
China Galaxy International Securities
(Hong Kong) Co., Limited
20/F Wing On Centre
111 Connaught Road Central
Hong Kong
BOCI Asia Limited
26/F Bank of China Tower
1 Garden Road
Central, Hong Kong
Joint Bookrunners CMB International Capital Limited
45/F Champion Tower
3 Garden Road, Central
Hong Kong
CLSA Limited
18/F, One Pacific Place
88 Queensway
Hong Kong
SDIC Securities (Hong Kong) Limited
39/F, One Exchange Square
Central
Hong Kong
Futu Securities International
(Hong Kong) Limited
34/F, United Centre
No. 95 Queensway, Admiralty
Hong Kong
China Galaxy International Securities
(Hong Kong) Co., Limited
20/F Wing On Centre
111 Connaught Road Central
Hong Kong
BOCI Asia Limited
26/F Bank of China Tower
1 Garden Road
Central, Hong Kong
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
–7 9–


--- page 89 ---
Shenwan Hongyuan Securities (H.K.)
Limited
Level 6, Three Pacific Place
1 Queen’s Road East
Hong Kong
Zhongtai International Securities Limited
19/F, Li Po Chun Chambers
189 Des V oeux Road Central
Hong Kong
Livermore Holdings Limited
Unit 1214A
12/F, Tower II Cheung Sha Wan Plaza
833 Cheung Sha Wan Road
Kowloon, Hong Kong
ABCI Capital Limited
11/F, Agricultural Bank of China Tower
50 Connaught Road Central
Hong Kong
Tiger Brokers (HK) Global Limited
23/F, Li Po Chun Chambers
189 Des V oeux Road
Central Hong Kong
Joint Lead Managers CMB International Capital Limited
45/F Champion Tower
3 Garden Road, Central
Hong Kong
CLSA Limited
18/F, One Pacific Place
88 Queensway
Hong Kong
SDIC Securities (Hong Kong) Limited
39/F, One Exchange Square
Central
Hong Kong
Futu Securities International
(Hong Kong) Limited
34/F, United Centre
No. 95 Queensway, Admiralty
Hong Kong
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
–8 0–


--- page 90 ---
China Galaxy International Securities
(Hong Kong) Co., Limited
20/F Wing On Centre
111 Connaught Road Central
Hong Kong
BOCI Asia Limited
26/F Bank of China Tower
1 Garden Road
Central, Hong Kong
Shenwan Hongyuan Securities (H.K.)
Limited
Level 6, Three Pacific Place
1 Queen’s Road East
Hong Kong
Zhongtai International Securities Limited
19/F, Li Po Chun Chambers
189 Des V oeux Road Central
Hong Kong
Livermore Holdings Limited
Unit 1214A
12/F, Tower II Cheung Sha Wan Plaza
833 Cheung Sha Wan Road
Kowloon, Hong Kong
ABCI Securities Company Limited
10/F, Agricultural Bank of China Tower
50 Connaught Road Central
Hong Kong
Tiger Brokers (HK) Global Limited
23/F, Li Po Chun Chambers
189 Des V oeux Road
Central Hong Kong
Legal advisers to our Company As to Hong Kong laws
Han Kun Law Offices LLP
Rooms 4301-10
43/F., Gloucester Tower
The Landmark
15 Queen’s Road Central
Hong Kong
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
–8 1–


--- page 91 ---
As to Hong Kong laws with respect to
the operations of certain subsidiaries in
Hong Kong and personal data privacy and
information security
Mr. Clay Huen
Barrister-at-law
Unit 1503, 15/F, The Henderson
2 Murray Road, Central
Hong Kong
As to PRC Law
Jingtian & Gongcheng
34/F, Tower 3
China Central Place
77 Jianguo Road
Beijing 100025
China
As to PRC Law on cybersecurity
and data privacy protection
Jia Yuan Law Offices
45F, Media Finance Center
Pengcheng 1st Road
Futian District, Shenzhen
Guangdong Province
China
Legal advisers to the Sole Sponsor and
the Underwriters
As to Hong Kong laws
Eric Chow & Co. in Association with
Commerce & Finance Law Offices
3401, Alexandra House
18 Chater Road
Central
Hong Kong
As to PRC Law
Commerce & Finance Law Offices
12-15/F, China World Office 2
No. 1 Jianguomenwai Avenue
Chaoyang District
Beijing
China
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
–8 2–


--- page 92 ---
Independent Auditor and Reporting
Accountants
KPMG
Certified Public Accountants
Public Interest Entity Auditor registered in
accordance with the Accounting and
Financial Reporting Council Ordinance
8th Floor
Prince’s Building
10 Chater Road
Central
Hong Kong
Industry Consultant Frost & Sullivan (Beijing) Inc.,
Shanghai Branch Co.
Room 2504, Wheelock Square
1717 West Nanjing Road
Shanghai
China
Compliance Advisor Altus Capital Limited
21 Wing Wo Street
Central
Hong Kong
Receiving bank CMB Wing Lung Bank Limited
45 Des V oeux Road Central
Hong Kong
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
–8 3–


--- page 93 ---
Registered Office Room 4068, 4th Floor
No. 102, Keyun Road
Zhongshan Avenue
Tianhe District, Guangzhou
Guangdong province
China
Headquarters and Principal Place of
Business in China
1510-1511, 15F
No. 148 Xingang East Road
Haizhu District, Guangzhou
Guangdong province
China
Principal Place of Business in Hong Kong Room 1912, 19/F
Lee Garden One
33 Hysan Avenue
Causeway Bay
Hong Kong
Company Website https://www.xiaonoodles.com
(the information contained on this website
does not form part of this prospectus)
Joint Company Secretaries Mr. Zhang Hua ( ௝㏞)
1510-1511, 15F
No. 148 Xingang East Road
Haizhu District, Guangzhou
Guangdong province
China
Ms. Tang King Yin ( ቎౻ሬ)
(ACG, HKACG)
Room 1912, 19/F
Lee Garden One
33 Hysan Avenue
Causeway Bay
Hong Kong
CORPORATE INFORMATION
–8 4–


--- page 94 ---
Authorized Representatives Mr. Song Qi ( ҂փ)
Room 1503
No. 21 Huacheng Avenue
Tianhe District, Guangzhou
Guangdong province
China
Ms. Tang King Yin ( ቎౻ሬ)
Room 1912, 19/F
Lee Garden One
33 Hysan Avenue
Causeway Bay
Hong Kong
Audit Committee Mr. Chan Kwok Bun ( ௓਷੸) (Chairperson)
Mr. Xu Lei (ཤ)
Mr. Zhong Jiesheng (͛)
Remuneration and Appraisal Committee Mr. Zhong Jiesheng (͛) (Chairperson)
Mr. Chan Kwok Bun ( ௓਷੸)
Mr. Song Qi ( ҂փ)
Nomination Committee Mr. Xu Lei (ཤ) (Chairperson)
Mr. Zhong Jiesheng (͛)
Ms. Luo Y anling ( ᖯዲᜳ)
H Share Registrar Tricor Investor Services Limited
17/F, Far East Finance Centre
16 Harcourt Road
Hong Kong
CORPORATE INFORMATION
–8 5–


--- page 95 ---
Principal Banks China Merchants Bank Co., Ltd.
Guangzhou Huanshi East Road Branch
201-1, 108, No. 3 Tianhe Road
Y uexiu District, Guangzhou
Guangdong province
China
Bank of China Limited
Guangzhou Xianlie Middle Road Branch
Room 102
No. 81 Xianlie Middle Road
Y uexiu District, Guangzhou
Guangdong province
China
China CITIC Bank Corporation Limited
Guangzhou Huacheng Branch
Shop B2, 1st floor, Building B and
1st floor, Building A
Junyi Building
No. 933-935 Jinsui Road
Zhujiang New Town
Tianhe District, Guangzhou
Guangdong province
China
CORPORATE INFORMATION
–8 6–


--- page 96 ---
The information and statistics set out in this section and other sections of this
Prospectus were extracted from an independent industry report prepared by Frost &
Sullivan (the ‘ ‘F&S Report’ ’), which was commissioned by us, and from various official
government publications. We engaged Frost & Sullivan to prepare the F&S Report in
connection with the Global Offering. The information from official government sources
has not been independently verified by us, the Sole Sponsor , the Joint Overall
Coordinators, the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead
Managers, the Capital Market Intermediaries, the Underwriters, any of our or their
respective directors, officers, employees, agents, or representatives of any of them or any
other parties involved in the Global Offering, and no representation is given as to its
accuracy. For discussion of risks related to our industry, please see ‘ ‘Risk Factors —
Risks Relating to Our Business and Industry’ ’ in this Prospectus.
The food service market comprises businesses and establishments that prepare, serve, and
distribute food and beverages for on-site or off-site consumption, catering to a wide range of
consumer dining preferences. This market is broadly divided into two primary categories:
Quick Service Restaurants (QSR) and Full Service Restaurants (FSR). QSR establishments
emphasize speed, efficiency, and standardized processes, offering fast food or ready-to-eat
meals that cater to consumers prioritizing convenience and quick dining. In contrast, FSR
venues focus on delivering a comprehensive dining experience characterized by a diverse
menu, personalized service, and a comfortable ambiance, appealing to those seeking a more
relaxed and engaging meal experience.
Compared to FSRs, which focus on in-person service, longer dining times, and broader
menu customization, QSRs stand out with the following characteristics:
 Standardization. Unified preparation methods and service models ensure consistent
taste and quality across locations.
 High Efficiency. Optimized kitchen and front-end workflows enable fast order
fulfillment and high seat turnover.
 Scalability. Easily replicable business models support rapid chain expansion and
regional penetration.
 Digitalization. Widespread adoption of self-ordering systems, digital payments, and
delivery platforms enhances operational efficiency and customer convenience.
 Lower Ticket Size. Affordable pricing and smaller average transaction values make
Chinese QSRs accessible to a wider range of customers and drive high-frequency
visits.
INDUSTRY OVERVIEW
–8 7–


--- page 97 ---
The QSR segment can be further divided by cuisine type into three categories: Chinese
QSR, Western QSR, and other QSR, such as Japanese QSR and Southeast Asian QSR. Chinese
QSR centers on offerings rooted in traditional local flavors, while Western QSR focuses on
dishes and service concepts derived from Western culinary traditions. Other QSR formats blend
diverse Asian or other regional culinary influences.
OVERVIEW OF THE CHINESE MAINLAND’S FOOD SERVICE MARKET
The food service sector in the Chinese Mainland represents a multi-trillion RMB market
opportunity and has experienced significant growth over the past several years. From 2020 to
2024, the market expanded from RMB4.0 trillion to RMB5.5 trillion in GMV , achieving a
CAGR of 8.3%. This growth was driven by increasing urbanization, rising disposable incomes,
accelerated digital transformation, and the market’s notable resilience during the COVID-19
pandemic, which spurred rapid adoption of online ordering and delivery services despite
unprecedented challenges.
Looking ahead, the period from 2025 to 2029 presents substantial growth potential, with
projections indicating a market size of RMB7.1 trillion by 2029 and an anticipated CAGR of
5.6%. This future expansion is expected to be fueled by ongoing technological innovation, an
expanding middle-class consumer base, and evolving dining preferences that increasingly
blend convenience with quality.
Enormous Scale, with Chinese QSR the Leading Driver of Growth
The food service market in the Chinese Mainland has reached an enormous scale,
underpinned by rapid growth and transformation across all segments. Among these, the
Chinese QSR segment stands out as the leading driver of growth, propelled by strong local
consumer demand for traditional flavors and convenience. This sector has not only attracted a
wide range of consumers with its familiar tastes but has also innovated continuously —
introducing new menu items that blend tradition with modern culinary trends — to keep pace
with evolving consumer palates, as a modern restaurant is typically characterized by the
adoption of data-driven management approach with the support of digital infrastructure.
Streamlined service operations, bolstered by digital ordering and efficient delivery networks,
have enabled QSR outlets to serve large urban populations quickly and effectively, while their
strategic geographic expansion into both mature metropolitan areas and emerging markets has
significantly widened their reach. Furthermore, the adoption of advanced technology has
improved operational efficiency, allowing these businesses to maintain consistent quality
across multiple locations and adapt swiftly to market changes. As consumer preferences
continue to evolve — driven by rising disposable incomes, a growing appetite for convenience,
and increasing urbanization — Chinese QSR is expected to further solidify its pivotal role,
catalyzing sustained expansion and reinforcing the overall dynamism of the Chinese food
service market.
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In 2024, the QSR market in the Chinese Mainland reached RMB2,129.0 billion in GMV ,
marking a significant milestone in its evolution. From 2020 to 2024, the market expanded from
RMB1,355.8 billion to RMB2,129.0 billion, achieving a CAGR of 11.9%. During this period,
the proportion of QSR GMV within the broader Chinese food service market rapidly increased,
underscoring its growing influence. Looking ahead, the market is projected to reach
RMB2,932.9 billion by 2029 with an anticipated CAGR of 8.3% from 2025 to 2029, as
continued menu innovation, enhanced service delivery, and further adoption of digital ordering
and delivery solutions propel sustained growth.
The following table sets forth the breakdown of the market size, measured by GMV , of
the Chinese Mainland’s food service market by major sub-sectors from 2020 to 2029.
Market size of the Chinese Mainland’s Food Service Industry,
in terms of GMV , 2020-2029E
CAGR 2020-2024 2025E-2029E
6.5% 3.9%
11.9% 8.3%
5.9% 4.6%
FSR
QSR
Others
Billion RMB
2020 2021 2022 2023 2024 2025E 2026E 2027E 2028E 2029E
87.0 117.2 101.1 105.8 109.5
1,355.8 1,650.7 1,643.4 2,004.5 2,129.0 2,133.3 2,340.5 2,485.9 2,748.2 2,932.9
2,510.0
2,921.6 2,649.6
3,178.7 3,234.5 3,471.6
3,555.9 3,728.8
3,822.1
4,049.1
114.4114.4 120.3120.3 126.8126.8 132.7132.7 136.7136.7
3,952.7
4,689.5
4,394.1
5,289.0 5,473.0
5,719.3
6,016.7
6,341.6
6,703.0
7,118.6
Source: National Bureau of Statistics of China (“NBS”), China Food Industry Association (“CFIA”) and Frost &
Sullivan Analysis
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Chain operations are emerging as a major trend in the Chinese QSR market, offering
distinct strategic advantages. The QSR market comprises businesses and establishments that
excel through standardized operations, high efficiency, and scalable models — leveraging
digital integration and affordable pricing to deliver consistent, fast, and convenient dining
experiences with mass appeal, catering to consumers prioritizing quick service and ready-to-eat
meals. These operators benefit from standardized processes, centralized procurement, and
consistent brand experiences that facilitate rapid scaling and enhance operational efficiency.
Drivers behind this trend include the growing demand for uniform quality and fast service, the
increasing consumer reliance on digital ordering and delivery platforms, and the competitive
pressures that push brands to differentiate themselves through operational excellence.
Additionally, the development and standardization of the food service supply chain —
especially through advancements in pre-prepared and clean-cut ingredients — has further
streamlined operations and bolstered the case for chain expansion, positioning these operators
to capture a larger share of the evolving market.
Chain Chinese QSR Non-Chain Chinese QSR
Business Model /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Standardized operations
with centralized
management
Independently operated
with flexible management
styles
Brand Recognition /H1118/H1118/H1118/H1118/H1118/H1118Strong brand presence,
benefiting from marketing
and nationwide expansion
Limited to local reputation,
often relying on word-of-
mouth
Scale of Operations /H1118/H1118/H1118/H1118/H1118Large-scale with multiple
outlets domestically or
internationally
Single or a few locations,
typically local or regional
Supply Chain Efficiency /H1118Centralized procurement
and distribution, cost-
effective due to economies
of scale
Decentralized sourcing,
potentially higher costs and
less consistency
Quality Control /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Consistent product quality
across all outlets
Quality may vary
depending on the chef or
local supplier
Innovation Capability /H1118/H1118/H1118Structured product
development with R&D
investment
Flexible innovation based
on local tastes and trends
Source: Frost & Sullivan Analysis
Currently, the Chinese QSR market is primarily composed of non-chain operations, with
a chain penetration rate of only 32.5% in 2024. Within the chain QSR segment, self-operated
Chinese QSR chains and franchised Chinese QSR chains account for 9.3% and 23.2% of the
total Chinese QSR market GMV in 2024, respectively.
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However, with advancements in supply chain management, operational standardization,
and digitalization, the growth of chain QSRs is expected to accelerate. By 2029, the market size
of chain Chinese QSRs in the Chinese Mainland is projected to reach RMB477.8 billion, while
non-chain Chinese QSRs will expand to RMB935.8 billion, though at a slowing pace. The
CAGR for self-operated and franchised Chinese QSR chains is estimated at 9.8% and 10.2%,
respectively, with overall chain penetration anticipated to increase to 33.8% by 2029. Enhanced
standardization and digitalization will strengthen quality control, improve store replicability,
and drive the expansion of Chinese QSRs, catering to consumers’ growing expectations for
food quality and dining experience. The chart below sets forth the breakdown of the market
size, measured by GMV , of the Chinese QSR market in the Chinese Mainland by chain and
non-chain from 2020 to 2029.
Market size of the Chinese QSR Market in the Chinese Mainland,
in terms of GMV , 2020-2029E
CAGR 2020-2024 2025E-2029E
12.6% 9.8%
12.2% 10.2%
11.8% 8.5%
Self-operated Chinese QSR Chain
Franchise Chinese QSR Chain
Non-chain Chinese QSR
11.9% 9.0%Total
0
300
600
900
1200
1500
RMB in billions
2020 2021 2022 2023 2024 2025E 2026E 2027E 2028E 2029E
416.1 495.4 492.9
601.2 649.6 675.3 735.9 785.8 865.0 935.8140.9
167.8 168.2
205.1
223.3 232.1
254.7
281.6
313.9
342.4
66.4 67.0
81.7
93.0
102.4
110.9
123.8
135.4
55.8
89.5
612.8
729.6 728.0
888.0
962.3 1,000.5
1,093.0
1,178.3
1,302.7
1,413.6
Source: NBS, CFIA and Frost & Sullivan Analysis
OVERVIEW OF CHINA’S CHINESE NOODLE RESTAURANT MARKET
Chinese Noodle Restaurant: A Dynamic Segment in the Broader Chinese QSR Landscape
Accounting for 29.8% of the Chinese QSR market in 2024, the Chinese noodle segment
represents a core and high-performing category within the industry. The sustained growth and
substantial contributions of Chinese noodle restaurant market further affirms its prominent
position in the Chinese QSR market. In comparison to the other meal segments, the Chinese
noodle segment stands out with distinct operational and product characteristics, setting it apart
from other fast food categories. Its emphasis on freshly prepared broths, diverse regional
flavors, and a wide variety of noodle types requires a more complex supply chain, kitchen
process, and SKU management compared to rice-based or hot pot-style formats, highlighting
its unique positioning within the broader QSR landscape. The Chinese noodle restaurant
market in China is rapidly developing into a dynamic and growing segment within the broader
QSR landscape, driven by the enduring appeal of traditional noodle dishes and the demand for
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fast, convenient dining experiences. This market is characterized by a fusion of classic culinary
traditions and innovative service models, spurred by trends such as urbanization, rising
disposable incomes, and a strong shift toward digital ordering and delivery platforms. As
consumer preferences continue to evolve, noodle restaurant establishments are leveraging
menu innovation and operational efficiency to capture market share and drive growth.
The Chinese noodle restaurant segment is the dominant sector within the overall noodle
food service market in China, accounting for more than 95% of the market share. The total
GMV of the Chinese noodle restaurant market in China (including the Chinese Mainland, Hong
Kong SAR, Macau Special Administrative Region and Taiwan province) had expanded from
RMB183.3 billion in 2020 to RMB296.2 billion in 2024, at a CAGR of 12.7%. Looking
forward, the growth of the Chinese noodle restaurant market is expected to accelerate further
to reach the total GMV of RMB510.0 billion by 2029, at a CAGR of 10.9% from 2025 to 2029,
based on further urbanization, increase in disposable income and increase in the proportion of
consumers dining out in China. Within the Chinese noodle restaurant market, the total GMV
of market of Chinese noodle restaurants specializing in Sichuan and Chongqing-style in China
had expanded from RMB45.0 billion in 2020 to RMB72.7 billion in 2024, at a CAGR of 12.8%,
and is expected to reach the total GMV of RMB135.7 billion by 2029, at a CAGR of 13.2%
from 2025 to 2029.
In 2024, the Chinese noodle restaurant market in the Chinese Mainland reached
RMB286.6 billion in GMV . From 2020 to 2024, this segment experienced substantial growth,
expanding from RMB177.5 billion to RMB286.6 billion and achieving a CAGR of 12.7%.
Looking ahead, driven by an expanding customer base resulting from increasing urbanization
and rising household income levels, as well as the growing popularity of traditional Chinese
noodle dishes, the market is projected to maintain a double-digit growth, with an anticipated
GMV of RMB495.6 billion by 2029, reflecting a projected CAGR of 11.0% from 2025 to 2029.
The chart below presents the market size, measured by GMV , of the Chinese noodle
restaurant market in the Chinese Mainland and its penetration rate within the entire Chinese
QSR market from 2020 to 2029.
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Market size of the Chinese Noodle Restaurant Market in the Chinese Mainland,
in terms of GMV , 2020-2029E
CAGR 2020-2024 2025E-2029E
––Market share*
12.7% 11.0%Chinese Noodle Restaurant Market Size
RMB in billions
2020 2021 2022 2023 2024 2025E 2026E 2027E 2028E 2029E
177.5
196.3 195.1
250.7
286.6
326.0
367.4
409.3
452.0
495.6
29.0%
26.9% 26.8% 28.2% 29.8%
32.6% 33.6% 34.7% 34.7% 35.1%
*Note: market share refers to the proportion of Chinese noodle restaurant in the overall Chinese QSR market size.
Source: NBS, CFIA and Frost & Sullivan Analysis
The Chinese noodle restaurant market in the Chinese Mainland is segmented by regional
cuisine types, each offering distinct flavor profiles and dining experiences that cater to diverse
consumer preferences. Key segments include Northwest-style noodles, Sichuan-Chongqing
style noodles, Jiangsu-Zhejiang style noodles, and Cantonese-style noodles. Notably, the
popularity of Sichuan-Chongqing style noodles is increasing, driven by their bold, spicy
flavors and the growing trend among urban consumers for both traditional and innovative
dining options. This rising consumer interest is spurring significant innovation and expansion
within the Sichuan-Chongqing segment, positioning it as a major growth driver within the
overall Chinese noodle restaurant landscape.
The chart below sets forth the breakdown of the market size, measured by GMV , of the
Chinese noodle restaurant market in the Chinese Mainland by different cuisine types from 2020
to 2029.
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Market size of the Chinese Noodle Restaurant Market in the Chinese Mainland,
in terms of GMV , 2020-2029E
CAGR 2020-2024 2025E-2029E
13.9% 11.6%
12.7% 13.2%
12.7% 8.9%
12.7% 8.4%
4.9% 5.2%
Northwest-style
Sichuan and Chongqing-style
Jiangsu and Zhejiang-style
Cantonese-style
Others
12.7% 11.0%Total
RMB in billions
2020 2021 2022 2023 2024 2025E 2026E 2027E 2028E 2029E
28.7 31.9 35.3 38.5 41.1 44.130.1 34.4 39.1 43.4 47.5 51.5 55.0
44.4 49.1 48.8
62.7 71.6
81.5 95.5
106.4
122.0 133.8
88.3
79.9 89.7
115.3
134.7
153.2
176.4
192.4
212.4
237.9
17.8
14.2
23.6
19.6
15.7
23.4
19.5
13.7
25.1
17.2 20.2
21.3
24.6 24.9 24.8
177.5
196.3 195.1
250.7
286.6
326.0
367.4
409.3
452.0
495.6
16.917.6
Source: Source: NBS, CFIA and Frost & Sullivan Analysis
Growth Drivers
The rapid growth of the Chinese QSR, and Chinese noodle restaurant segments is
primarily driven by the following factors.
 Rising Consumer Demand for Convenience and Quality. As urbanization
accelerates and consumer lifestyles become busier, the demand for quick,
convenient dining options continues to rise. Additionally, with increasing disposable
income, consumers are willing to spend more on convenient yet quality dining
experiences. This trend benefits the entire QSR market, including Chinese noodle
restaurant segment, as consumers seek high-quality meals that can be served
quickly, both in-store and via delivery. Additionally, the dining-out penetration rate,
representing the percentage of people (or households) who engage in out-of-home
dining within a given time frame, has increased from approximately 23.2% in 2020
to 25.6% in 2024, which is expected to reach around 28% by 2029. This rising trend
indicates a structural shift in consumer behavior and is expected to serve as a key
growth driver for the food service industry.
 Technological Advancements and Digital Integration. The rapid adoption of digital
ordering platforms, delivery apps, and automated processes has significantly
enhanced the operational efficiency of QSRs. Leading QSR brands are increasingly
leveraging technology to streamline service and improve customer engagement,
while Chinese noodle restaurant operators are adopting these tools to offer a
seamless, efficient dining experience and cater to the growing demand for
contactless ordering and delivery.
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 Expansion of Brand Chains and Standardization. The increasing shift towards
chain operations within the QSR market, including Chinese noodle restaurant and
other Chinese QSRs, is driving growth. Standardized operations, consistent product
offerings, and the ability to scale quickly across cities and regions have enabled
these brands to capture more market share.
 Policy Support and Standardization of Food Safety Regulations. The government’s
increasing focus on the standardization of the food service industry and stricter food
safety regulations is contributing to the overall improvement of the market. This is
encouraging the development of chain operations and the further standardization of
processes within the QSR sector, driving growth across Chinese QSR and Chinese
noodle restaurant segments.
Future Trends
The development of the Chinese QSR, and Chinese noodle restaurant segments is shaped
by the following key trends.
 Branding and Chain Development Trend. With changing consumer perceptions and
intensified market competition, consumers are increasingly inclined to choose
dining brands with strong brand recognition, stable service, and consistent quality.
Branding and chain development have become core growth strategies for food
service companies. Through standardized operations, stable product quality, and
clear brand images, chain restaurant brands gain higher market recognition.
Additionally, the economies of scale afforded by chain operations help companies
control costs in areas like ingredient sourcing and supply chain management, further
enhancing market competitiveness.
 Ongoing Supply Chain Optimization and Greater Economies of Scale. Chinese
QSR brands are enhancing their supply chain management to control costs and
ensure faster service. The shift toward chain operations and scaling up has enabled
companies to reduce costs through centralized procurement, standardized processes,
and optimized logistics, resulting in improved profitability. This ongoing supply
chain optimization further strengthens the competitiveness of QSR brands, driving
sustainable growth.
 Rise of Y oung Consumer Groups and Greater Influence of Social Media.
Consumers from the post-90s and post-00s generations are becoming the dominant
consumer groups, favoring convenient, high-quality dining experiences and
embracing innovative elements in Chinese fast food service. Social media platforms,
especially short-video apps, have amplified the impact of digital marketing.
Consumers can quickly discover dining brands and share experiences, enabling
QSRs to attract a larger audience of young consumers through targeted digital
marketing and brand image promotion.
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 Integration of Technology and Digital Transformation. The integration of
advanced technology in Chinese QSR is driving a digital transformation across the
sector. From online ordering platforms and self-service kiosks to automated kitchens
and data-driven insights, technology is being leveraged to improve customer
experience, streamline operations, and enhance service speed. This digital shift not
only boosts operational efficiency but also enhances customer engagement, offering
more personalized dining experiences and further fostering brand loyalty in an
increasingly competitive market.
OVERVIEW OF OVERSEAS CHINESE QSR MARKET
The growing Chinese communities worldwide have significantly expanded the customer
base for Chinese food service industry, with these communities maintaining a deep emotional
and cultural connection to its flavors. In addition, the diversity and distinctiveness of Chinese
food have attracted a global audience, making it one of the most popular cuisines worldwide.
The successful international expansion of several Chinese restaurant chains highlights the
industry’s vast potential, encouraging further global growth. In 2024, the global Chinese food
market reached a value of RMB8,099.0 billion, with overseas markets contributing
RMB2,626.0 billion, or 32.4%. As a core element of Chinese cuisine, Chinese noodles have
become a popular choice on international menus, with strong growth prospects in global
markets.
Among overseas markets, both Hong Kong SAR and Singapore have demonstrated strong
momentum in the development of the Chinese QSR sector. In Hong Kong SAR, the market has
recorded steady growth in recent years, with the Chinese QSR sector expanding from RMB7.4
billion in 2020 to RMB10.0 billion in 2024, representing a CAGR of 7.6%. This upward
trajectory is expected to continue, with the market projected to reach RMB14.7 billion by 2029,
supported by a CAGR of 7.8% from 2025 to 2029. Meanwhile, Singapore has also witnessed
robust growth in its Chinese QSR market, with market size increasing from RMB0.7 billion in
2020 to RMB1.3 billion in 2024, reflecting a high CAGR of 15.7%. Looking ahead, the market
is expected to reach RMB2.3 billion by 2029, growing at a CAGR of 12.9% from 2025 to 2029.
These trends underscore the growing international demand for Chinese QSR formats and the
increasing acceptance of Chinese cuisine as a mainstream offering in global food service
landscapes.
COMPETITIVE LANDSCAPE ANALYSIS
Ranking and Market Share Analysis
The Chinese QSR segment in China is highly fragmented, with the top five players
collectively accounting for approximately 3% of the market in terms of GMV in 2024. In
addition to its fragmented nature, the Chinese QSR market is also highly segmented by product
type, featuring clearly differentiated formats such as rice-based meals, noodle dishes, hot
pot-style quick meals — each with distinct consumer appeal, operational models, and flavor
profiles. The Chinese noodle restaurant market reflects a similar pattern of fragmentation, with
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top 5 players only accounting for 3.0% market share in terms of GMV in 2024. This significant
fragmentation signals substantial market consolidation potential. With the current landscape
offering ample opportunities for strategic mergers, acquisitions, and organic chain expansion,
established players can leverage economies of scale, streamline operations, and enhance supply
chain efficiencies.
In 2024, Our Company was the fourth largest Chinese noodle restaurant operator in terms
of GMV , capturing a market share of 0.5%. Notably, the Company was also the largest
Sichuan-Chongqing style noodle restaurant operator in terms of GMV , and ranked the first
among all restaurant chains in China in terms of offline sales volume of Chongqing noodles,
noodles with peas and meat sauce and hot and sour sweet potato noodles from 2022 to 2024
for three consecutive years. Furthermore, the Company was the fastest growing player among
the top ten Chinese noodle restaurants in China, recording the highest CAGR of GMV from
2022 to 2024.
Ranking of Chinese Noodle Restaurant Operators in China, by GMV in 2024
Ranking Brand GMV in 2024
(RMB in millions)
Market Share in 2024
(%)
1 A 2,530.0 0.9%
2 B 2,060.0 0.7%
3 C 1,420.0 0.5%
4 The Company 1,348.4 0.5%
5 D 1,250.0 0.4%
Top 5 as a total 8,608.4 3.0%
Total 296,170.7 100%
2022-2024 CAGR
of GMV
23.8%
14.5%
47.8%
58.6%
28.2%
29.1%
Average Spending
Per Order
in 2024 (RMB)
~33.0
~30.0
~36.0
~32.0
~34.0
Note: Company A: Founded in 2012 and headquartered in Jiangsu, focuses on providing Chinese noodle dishes,
Company A is a private company and operated around 590 stores by the end of 2024.
Company B: Founded in 1987 and headquartered in Beijing, specializes in Chinese-style beef noodle dishes,
Company B is a private company and operated around 1,000 stores by the end of 2024.
Company C: Founded in 2014 and headquartered in Shenzhen, specializes in Northwestern Chinese noodle
dishes, Company C is a private company and operated around 390 stores by the end of 2024.
Company D: Founded in 2019 and headquartered in Shanghai, focuses on Lanzhou-style beef noodles,
Company D is a private company and operated around 320 stores by the end of 2024.
Source: Company website, Expert interview, and Frost & Sullivan Analysis
Key Success Factors
 Strong Site Selection Capabilities. Effective location strategy is critical in the
Chinese QSR and Chinese noodle restaurant segments. Operators that excel in
selecting high-traffic areas achieve rapid expansion with a high rate of successful
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store openings. This strong site selection capability not only contributes to
widespread brand presence but also ensures long store lifespans and low closure
rates, further solidifying market leadership and long-term sustainability.
 Brand and Market Recognition. The QSR industry is highly dependent on brand
recognition, with well-known brands enjoying higher market visibility and customer
loyalty. New entrants, lacking brand awareness and an established customer base,
find it challenging to attract large volumes of customers, especially given the
increasing trend of branding and chain development in the Chinese fast-food sector.
Building a strong, recognizable brand is critical for sustaining long-term success and
gaining consumer trust in a competitive market.
 Supply Chain and Cost Control. A stable and high-quality supply chain is essential,
especially in Chinese fast-food sector, where ingredient variety and quality are
critical. Established chains leverage economies of scale to control costs, benefiting
from centralized procurement and optimized logistics. Without a robust supply chain
system, it is difficult to maintain cost efficiency and mitigate operational risks,
particularly during rapid expansion.
 Talent and Management Capabilities. The fast-paced nature of Chinese QSR and
Chinese noodle restaurant, particularly in areas such as fast service, standardized
processes, and store management, requires high-level operational expertise. New
entrants that lack relevant management experience may struggle to maintain
consistent product quality and service standards, which can significantly impact
customer satisfaction and brand reputation. Effective talent management and strong
operational leadership are essential for executing consistent quality and maintaining
operational efficiency across multiple locations.
 Adoption of New Technologies and Digital Transformation. The successful
development of Chinese QSR brands relies heavily on digital technology. Effective
use of online ordering, delivery management, membership systems, and supply
chain solutions enhances operational efficiency and customer experience. Brands
that leverage technology to streamline processes and improve service are better
positioned to meet the demands of the modern restaurant industry and remain
competitive.
Entry Barriers
As one of the core categories within the Chinese QSR segment, the development of
Chinese noodle restaurants has contributed to the overall growth of the sector. Mirroring the
broader Chinese QSR industry, both categories are characterized by several notable entry
barriers:
 Capabilities and Experience in Achieving Standardization. Given the inherent
complexity of Chinese catering, it is characterized by a broad spectrum of
ingredients, intricate preparation techniques, and strong regional taste preferences.
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Achieving operational standardization presents significant challenges to new
entrants. Standardization within Chinese QSR segment is primarily demonstrated
through flavor consistency, replicable operational procedures, and supply chain
uniformity. The need for comprehensive operational expertise and resource
allocation creates a high barrier to entry for new or smaller market participants.
 Capital and Operational Cost. The Chinese QSR sector presents significant capital
and operational barriers for new entrants. Substantial upfront investment is required
across multiple dimensions, including site selection, interior design, kitchen
equipment procurement, and workforce training. Furthermore, the sector demands
robust capabilities in standardized operations to ensure consistent product quality
and service standard, efficient delivery systems, and multi-store management.
 Supply Chain and Cost Control. The Chinese QSR industry imposes substantial
barriers in supply chain management and cost control. The sector demands a wide
variety of high-quality ingredients, and as brands expand across regions. A stable
and well-integrated supply chain is essential to maintaining operational efficiency,
including covering raw material procurement, inventory management, and logistics
distribution. However, new entrants often struggle to establish such infrastructure,
whereas established chain operators benefit from economies of scale, enabling bulk
purchasing and optimized logistics.
 Brand Recognition and Market Penetration . Brand equity plays a critical role in
the Chinese QSR sector. Leading brands enjoy strong consumer awareness, which
translates into advantages in site selection, lease negotiations, and customer
retention through loyalty programs and private traffic channels. As branding and
chain development intensify, new entrants without established brand recognition
will face significant challenges in attracting and retaining customers.
Market Challenges and Treats
Provided with the noticeable market growth, both Chinese QSR and Chinese noodle
restaurant segments are imposed to following market challenges.
 Rising Labor Costs and the Transition toward Business Automation. Rising labor
costs have become a core challenge in China’s noodle-focused QSR segment,
particularly for chain operators reliant on large service and kitchen teams. Chain
restaurants, which rely heavily on staff for service, food preparation, and
management, face mounting pressure to sustain profitability amid wage growth and
a tightening labor market. While initial investment and employee retraining are
required, automation enhances efficiency, consistency, and cost control. Brands that
scale these technologies are better positioned to manage labor pressures and sustain
long-term competitiveness.
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 Limited Standardization and Chain Scalability. The Chinese noodle restaurant
sector faces inherent difficulties in achieving standardization due to the diversity
and complexity of product offerings. Chinese consumers exhibit strong regional
preferences regarding noodle type, broth density, spiciness level, and seasoning.
Traditional preparation methods, including handcrafted noodles and freshly
prepared broths, vary significantly across regions, making it challenging to build
scalable, replicable store formats. The lack of uniformity in ingredients, cooking
processes, and flavor profiles further complicates efforts to implement centralized
SOPs. Brands must localize menus to meet varying expectations, increasing the
complexity of R&D, menu planning, and staff training. Constant innovation is
required to stay relevant across diverse consumer bases.
 Complex and Demanding Supply Chain Infrastructure. To cater to diverse regional
preferences, brands must support a wide variety of SKUs, including different noodle
types (hand-pulled, rice noodles, knife-cut, etc.), proteins, condiments, and sauces.
Managing this SKU proliferation across warehouses, commissary kitchens, and
frontline stores increases operational complexity. Fresh ingredients, such as soup
bases, marinated proteins, and garnishes, are central to noodle-based menus. These
items often have short shelf lives and require strong cold chain logistics and
real-time inventory management to ensure quality. However, many small- and
medium-sized brands lack the logistics infrastructure or sourcing power to support
reliable supply chain execution across regions.
COST ANALYSIS
The primary cost components of a Chinese noodle restaurant are food ingredients, rental
expenses, and labor costs. Food ingredients form a significant share of costs, as maintaining
the quality and authenticity of diverse noodle offerings is essential for customer satisfaction.
Rental expenses, especially in high-traffic urban areas, contribute substantially to overheads
and influence strategic location decisions. Additionally, labor costs, driven by the need for
skilled culinary talent and efficient service staff, are a critical factor in overall operational
expenses. Together, these components determine the financial health and profitability of
Chinese noodle restaurants, making their efficient management essential for sustainable growth
in this competitive segment.
Food service companies in the Chinese Mainland typically procure pork, beef, chicken,
and vegetables as their main food ingredients. In recent years, some of these ingredients have
seen a price fluctuation. For instance, the average price of beef rose from RMB57.5 per
kilogram in 2018 to RMB65.4 per kilogram in 2024, primarily driven by growing consumer
demand. While since 2022, the price of beef has shown a downward trend, peaking at RMB77.5
per kilogram before gradually declining to RMB65.4 per kilogram in 2024, reflecting
adjustments in the supply and demand structure in the post-pandemic era.
INDUSTRY OVERVIEW
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The table below outlines the average prices of key food ingredients in the Chinese
Mainland from 2018 to 2024.
0
15
30
45
60
75
90
Pork Chicken Beef Vegetable
18.6
28.8
44.9
28.3 25.7
20.8 22.4
17.6 16.8 17.2 14.5
57.5
63.9
73.2
77.2 77.5
74.0
65.4
3.9 4.2 4.6 4.9 4.9 4.2 4.4
2018 2019 2020 2021 2022 2023 2024
14.9
18.4
14.5
RMB/KG
Source: National Bureau of Statistics, Frost & Sullivan
Note: (1) Price hereof refers to the wholesale price; (2) The average wholesale price of vegetables is the average
wholesale price of 28 types of vegetable in the Chinese Mainland.
In the Chinese Mainland food service industry, rental expenses for retail properties
represent a significant cost burden. Between 2018 and 2024, the average retail property rental
rate in the Chinese Mainland fluctuated between RMB3.2 to RMB3.6 per square meter per day,
and reached RMB3.3 per square meter per day in 2024, reflecting a CAGR of -0.5% since
2018. This fluctuation was primarily affected by a combination of factors, including the
economic recovery after the pandemic and oversupply in the commercial real estate sector.
The following table outlines the average rental fee rate for retail properties in the Chinese
Mainland between 2018 to 2024.
RMB/day/m2
0.0
1.0
2.0
3.0
4.0
3.4
3.6
3.4 3.3 3.2 3.3 3.3
2018 2019 2020 2021 2022 2023 2024
Source: National Bureau of Statistics, Frost & Sullivan
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Specifically, the average rental rates for shopping malls and standalone street-front stores
in first-tier cities in the Chinese Mainland have exhibited a clear divergence in recent years.
The average rent for shopping malls has shown a modest downward trajectory, with a CAGR
of -0.3%. This decrease is primarily attributable to the adverse effects of the COVID-19
pandemic, the ongoing migration of consumer traffic to e-commerce platforms, and continued
adjustments in retail formats. In contrast, the average rent for standalone street-front stores
exhibited a two-phase pattern: a steady increase from 2018 to 2022, driven by increasing local
consumption demand, followed by a decline after 2023 as a result of intensified competition
and the growing prevalence of online channels.
Average Rental Rate for Shopping Malls in First-Tier Cities
Average Rental Rate for Standalone Street-Front Retail Stores in First-Tier Cities
CAGR 2018-2024
-0.3%
2.5%
RMB/day/m2
6.7
3.1
3.9
6.9
4.3
6.6 6.7
4.7
6.5
5.1
6.6
4.6
6.6
3.6
2018 2019 2020 2021 2022 2023 2024
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
Source: Frost & Sullivan
Note: In the absence of comprehensive statistical data, a sampling-based approach has been utilized to estimate the
average rental rates of shopping malls and standalone street-front stores in first-tier cities in the Chinese
Mainland. It should be noted that, due to the inherent limitations of this methodology and data sources, certain
variances may exist between these estimates and actual market figures.
Aligned with the sustained economic growth of the Chinese Mainland, the average annual
salary of employees in the Chinese Mainland food service industry steadily increased from
2018 to 2024. Over the next five years, labor costs are expected to rise as the economy
continues to develop and disposable income improves. Looking ahead, the average annual
compensation for food service industry employees is projected to rise in tandem with Chinese
Mainland nominal GDP growth.
INDUSTRY OVERVIEW
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The following table outlines the average annual salary of food service industry employees
in the Chinese Mainland from 2018 to 2024.
Average Annual Salary
(Thousand RMB
39.6
42.4 42.3
46.8 47.5 49.3
51.5
2018 2019 2020 2021 2022 2023 2024
0
10
20
30
40
50
60
Source: National Bureau of Statistics, Frost & Sullivan
Note: Annual salary refers to average annual salary of private sector employees in the accommodation and catering
markets.
SOURCE OF INFORMATION
This section contains information extracted from the F&S Report prepared by Frost &
Sullivan independently, which is commissioned by us in connection with the Global Offering.
We expect to pay Frost & Sullivan a total of RMB400,000 for the F&S Report and our use of
the report. Frost & Sullivan is a consulting company which provides industry consulting
services, commercial due diligence and strategic consulting services for a variety of industries.
We are of the view that the payment of such fee does not impair the fairness of the conclusions
drawn in the F&S Report. We have extracted certain information from the F&S Report in this
section, as well as in the sections headed “Summary”, “Risk Factors”, “Business”, “Financial
Information” and elsewhere in this document to provide our potential investors with a more
comprehensive presentation of the industry in which we operate.
During the preparation of the F&S Report, Frost & Sullivan performed both primary and
secondary research, and obtained knowledge, statistics, information on and industry insights
into the food service markets in China and Globally. Primary research involved interviewing
key industry experts and leading industry participants. Secondary research involved analyzing
data from various publicly available data sources. The F&S Report was compiled based on the
following assumptions: (1) the overall social, economic, and political environment in China
and globally is expected to remain stable during the forecast period; (2) relevant key drivers
are likely to drive the continued growth of the food service markets in China and globally
throughout the forecast period; and (3) there is no extreme force majeure or unforeseen
industry regulations in which the industry may be affected in either a dramatic or fundamental
way. Our Directors have confirmed, after making reasonable inquiries and exercising
reasonable care, that there is no adverse change in the market information since the date of the
F&S Report which may qualify, contradict or impact the information disclosed in this section.
INDUSTRY OVERVIEW
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OVERVIEW
We are a modern Chinese noodle restaurants operator in China. We operate the Xiao
Noodles (༾Ԉʃᙢ) brand in the Chinese Mainland and Hong Kong SAR.
Our actual operation commenced in June 2014 when our Company, which was founded
by Mr. Song, Mr. Su and Ms. Luo under the name of Guangzhou Jiao Gongjiang Catering Co.,
Ltd. (ʮ̡), opened our first restaurant. For the biographical details of
Mr. Song, Mr. Su and Ms. Luo, see “Directors, Supervisors and Senior Management.” In
September 2023, our Company was converted into a joint stock company with limited liability.
As of the Latest Practicable Date, our Company had an issued share capital of 613,324,800
Shares in a nominal value of RMB0.02 each. Since 2014, we have expanded from a
single-location noodle house in Guangzhou to 451 restaurants in 22 cities in the Chinese
Mainland and 14 restaurants in Hong Kong SAR under our self-operated and franchising
models as of the Latest Practicable Date.
OUR KEY MILESTONES
The table below sets out the key business milestones in the history of our Group:
Y ear Event
2014 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118The brand “Xiao Noodles” ( ༾Ԉʃᙢ) was established and our first
restaurant was opened in Guangzhou
2015 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118“Xiao Noodles University” ( ʃᙢɽኪ) was established for systematic
internal restaurant management and training system
We received angel and angel+ investments from Mr. Gu Dongsheng
(͛) and Shanghai Qingcong Capital Investment Partnership
(Limited Partnership) (ᛆҳ༟ΥྫΆุ(Υྫ))
(“Qingcong Capital ”), respectively
2016 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118We completed series Pre-A and series A investments, of which the
lead investors were Jiumaojiu ( ɘˣɘ) and Hony Capital ( ̾ᆇҳ༟)
2017 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118“Xiao Noodles Research Institute” (Ӻ৫) was established for
systematic research and develop Sichuan and Chongqing cuisine
We opened our first restaurant in Shenzhen
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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Y ear Event
2018 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118We opened our first 24-hour restaurant
We opened retail stores on e-commerce platforms
2019 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118We opened our first franchised restaurant
2020 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118We opened our first restaurant in Beijing
We completed series A+ investments, of which the lead investors
were Jiumaojiu and Mr. Gao Defu ( ৷ᅃ၅)
2021 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118We opened our 100th restaurant
We completed series B and series B+ investments, of which the lead
investor was Country Garden Holdings Company Limited
2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118We opened our 200th restaurant
2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118We opened our 300th restaurant and our first restaurant in Hong Kong
2025 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118We opened our 400th restaurant
ESTABLISHMENT AND MAJOR SHAREHOLDING CHANGES OF OUR COMPANY
1. Establishment of Our Company
On February 14, 2014, our Company was established as a limited liability company under
PRC Law, with an initial registered capital of RMB60,000.00 and held by Mr. Song and Mr.
Su, as to approximately 66.67% and 33.33%, respectively.
2. Angel and Angel+ Investments
On September 30, 2014, Mr. Gu Dongsheng entered into an equity investment agreement
with Mr. Song and Mr. Su, pursuant to which, Mr. Gu Dongsheng agreed to invest
RMB2,000,000.00 in our Company.
On March 2, 2015, Mr. Gu Dongsheng and Qingcong Capital entered into a capital
increase agreement with our Company, pursuant to which, Qingcong Capital agreed to
subscribe for an increased registered capital of RMB3,750.00 in our Company for a
consideration of RMB666,700.00. The agreement also reiterated the investment of
RMB2,000,000.00 from Mr. Gu Dongsheng, as committed in the equity investment agreement
dated September 30, 2014, for an increased registered capital of RMB11,250.00.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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Further, on April 1, 2015, Qingcong Capital and our Company entered into a
supplementary agreement, adjusting the consideration of Qingcong Capital’s investment from
RMB666,700.00 to RMB800,000.00. The adjustment was made after the commercial
negotiation between relevant parties.
The considerations for the above investments were determined through arm’s length
negotiations, taking into account the business prospects of our Group during its early
development stage.
For the background information of Mr. Gu Dongsheng and Qingcong Capital, see “— The
Pre-IPO Investments — 4. Information relating to our Pre-IPO Investors.”
Upon the completion of the above investments, the shareholding structure of our
Company was as follows:
Name of Shareholder Registered capital held
Percentage of
shareholding
(RMB)
Mr. Song /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111840,000.00 53.33%
Mr. Su /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820,000.00 26.67%
Mr. Gu Dongsheng /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,250.00 15.00%
Qingcong Capital /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,750.00 5.00%
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111875,000.00 100.00%
3. Series Pre-A Investments in February 2016
On February 22, 2016, Guangzhou Jiumaojiu Catering Chain Co., Ltd. ( ᄿψɘˣɘ᎛භ
ʮ̡), currently known as Guangzhou Jiumaojiu Catering Chain Co., Ltd. ( ᄿψ
ʮ̡), (“ Guangzhou Jiumaojiu ”) and Qingcong Capital entered into a
capital increase agreement with our Company, pursuant to which, Guangzhou Jiumaojiu and
Qingcong Capital agreed to subscribe for increased registered capital of RMB4,547.65 and
RMB239.35 for consideration of RMB2,850,000.00 and RMB150,000.00, respectively. The
considerations were determined through arm’s length negotiations, with reference to various
factors, including our business model, the number of restaurants we operated, our then
financial performance and our growth prospects.
Due to its intra-group arrangement, Guangzhou Pinxin Y uegu Enterprise Management
Co., Ltd. (ʮ̡)( “ Pinxin Yuegu ”) was later designated as the
investment vehicle to make the actual investment.
Both Guangzhou Jiumaojiu and Pinxin Y uegu are wholly-owned by Jiumaojiu
International Holdings Limited, a company listed on the Stock Exchange (stock code: 9922)
and for further information, see “— The Pre-IPO Investments — 4. Information relating to our
Pre-IPO Investors.”
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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Upon the completion of the above investments, the shareholding structure of our
Company was as follows:
Name of Shareholder Registered capital held
Percentage of
shareholding
(RMB)
Mr. Song /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111840,000.00 50.13%
Mr. Su /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820,000.00 25.07%
Mr. Gu Dongsheng /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,250.00 14.10%
Pinxin Y uegu /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,547.65 5.70%
Qingcong Capital /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,989.35 5.00%
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111879,787.00 100.00%
4. Establishment of shareholding platform and transfer of Shares in September 2016
Guangzhou Chuangtao Investment Partnership (Limited Partnership) ( ᄿψ̹௴ᗱҳ༟Υ
ྫΆุ(Υྫ)), currently known as Huai’an Chuangtao Enterprise Management
Partnership (Limited Partnership) ( ଊτ̹௴ᗱΆุ၍ଣΥྫΆุ(Υྫ)) (“ Huai’an
Chuangtao ”), was established by Mr. Song and Mr. Su in April 2016 as their shareholding
platform. Mr. Song, as the general partner, and Mr. Su, as the limited partner, hold 66.67% and
33.33% of the partnership interest therein, respectively, reflecting the original relative
shareholding interests in our Company between them.
On September 13, 2016, each of Mr. Song and Mr. Su entered into a share transfer
agreement with Huai’an Chuangtao, pursuant to which, Mr. Song and Mr. Su agreed to transfer
their direct equity interest in our Company to Huai’an Chuangtao for consideration of
RMB40,000.00 and RMB20,000.00, respectively.
5. Series A Investments in November 2016
On November 20, 2016, Wonderful Dawn Holdings Limited (“ Wonderful Dawn ”)
entered into a capital increase agreement with our Company, Mr. Song, Mr. Su and other then
Shareholders, pursuant to which, Wonderful Dawn agreed to subscribe for an increased
registered capital of RMB19,947.00 for a consideration of RMB25,000,000.00. The
consideration was determined through arm’s length negotiations, with reference to various
factors, including our business model, the number of restaurants we operated, our then
financial performance and our growth prospects.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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Upon the completion of the above investments, the shareholding structure of our
Company was as follows:
Name of Shareholder Registered capital held
Percentage of
shareholding
(RMB)
Huai’an Chuangtao /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111860,000.00 60.16%
Wonderful Dawn /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111819,947.00 20.00%
Mr. Gu Dongsheng /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,250.00 11.28%
Pinxin Y uegu /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,547.65 4.56%
Qingcong Capital /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,989.35 4.00%
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111899,734.00 100.00%
Wonderful Dawn is wholly-owned by Best Food Holding Company Limited, a company
listed on the Stock Exchange (stock code: 1488), which is invested by Hony Capital, and for
further information, see “— The Pre-IPO Investments — 4. Information relating to our Pre-IPO
Investors.”
6. Conversion of Capital Reserve in March 2017
Pursuant to the Board’s resolution dated March 15, 2017, the then Directors approved the
conversion of RMB9,900,266.00 of our capital reserve into our registered capital, and the
registered capital held by each Shareholder increased proportionately in accordance with their
interest in our Company. Upon completion of the conversion, the registered capital of our
Company was increased from RMB99,734.00 to RMB10,000,000.00 and the shareholding
percentage of each Shareholder remained unchanged.
7. Capital increase in August 2019
In August 2019, the registered capital of our Company was further increased from
RMB10,000,000.00 to RMB10,256,410.00 pursuant to the subscription from Huai’an Y ujian
Haoren for a consideration of RMB256,410.00. Huai’an Y ujian Haoren is an employee
incentive platform established in May 2019 for our senior management and core employees, of
which Mr. Song is the general partner. For the details of Huai’an Y ujian Haoren, see “—
Employee Incentive Platform.”
8. Series A+ Investments in February 2020
On February 10, 2020, Pinxin Y uegu, Wonderful Dawn and Mr. Gao Defu entered into a
capital increase agreement with our Company, Mr. Song, Mr. Su and other then Shareholders,
pursuant to which, Pinxin Y uegu, Wonderful Dawn and Mr. Gao Defu agreed to subscribe for
increased registered capital of RMB341,880.00, RMB165,631.00 and RMB341,880.00 for
consideration of RMB10,000,000.00, RMB4,844,720.00 and RMB10,000,000.00, respectively.
The considerations were determined through arm’s length negotiations, with reference to
various factors, including our business model, the number of restaurants we operated, our then
financial performance and our growth prospects.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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--- page 118 ---
For the background information of Mr. Gao Defu, see “— The Pre-IPO Investments — 4.
Information relating to our Pre-IPO Investors.”
Upon the completion of the above investments, the shareholding structure of our
Company was as follows:
Name of Shareholder Registered capital held
Percentage of
shareholding
(RMB)
Huai’an Chuangtao /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,016,000.00 54.17%
Wonderful Dawn /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,165,631.00 19.50%
Mr. Gu Dongsheng /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,128,000.00 10.16%
Pinxin Y uegu /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118797,880.00 7.18%
Qingcong Capital /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118400,000.00 3.60%
Mr. Gao Defu /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118341,880.00 3.08%
Huai’an Y ujian Haoren /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118256,410.00 2.31%
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,105,801.00 100.00%
9. Series B Investments in March 2021
On March 2, 2021, Foshan Nanhai Huibi No. 1 Equity Investment Partnership (Limited
Partnership) (ᛆҳ༟ΥྫΆุ(Υྫ)) (“ Huibi No. 1 ”),
Wonderful Dawn and Mr. Gao Defu entered into a capital increase agreement with our
Company, Mr. Song, Mr. Su and other then Shareholders, pursuant to which, Huibi No. 1,
Wonderful Dawn and Mr. Gao Defu agreed to subscribe for increased registered capital of
RMB487,256.00, RMB119,075.00 and RMB18,798.00 for consideration of
RMB30,000,000.00, RMB7,331,349.00 and RMB1,157,372.00, respectively. The
considerations were determined through arm’s length negotiations, with reference to the
various factors such as our business model, the number of restaurants we operated, our then
financial performance and our growth prospects, with a discount in view of the lead investor
in series B investment being a well-known real estate development group. This discount
reflected the potential business collaboration opportunities and synergies that its investment
could facilitate, including the ability to rapidly expand our restaurant network by leveraging
the investor’s nationwide real estate projects.
Parties also agreed Huai’an Y ujian Haoren to further subscribe for additional registered
capital of RMB263,507.00 for a consideration of RMB263,507.00.
Huibi No. 1 is a fund ultimately controlled by Country Garden Holdings Company
Limited, a company listed on the Stock Exchange (stock code: 2007), and for more
information, see “— The Pre-IPO Investments — 4. Information relating to our Pre-IPO
Investors.”
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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Upon the completion of the above investments, the shareholding structure of our
Company was as follows:
Name of Shareholder Registered capital held
Percentage of
shareholding
(RMB)
Huai’an Chuangtao /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,016,000.00 50.16%
Wonderful Dawn /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,284,706.00 19.05%
Mr. Gu Dongsheng /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,128,000.00 9.40%
Pinxin Y uegu /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118797,880.00 6.65%
Huai’an Y ujian Haoren /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118519,917.00 4.33%
Huibi No. 1 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118487,256.00 4.06%
Qingcong Capital /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118400,000.00 3.33%
Mr. Gao Defu /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118360,678.00 3.01%
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,994,437.00 100.00%
10. Series B+ investments in June 2021
On June 28, 2021, Foshan Nanhai Huibi No. 2 Equity Investment Partnership (Limited
Partnership) (ᛆҳ༟ΥྫΆุ(Υྫ)) (“ Huibi No. 2 ”) and Mr.
Gao Defu entered into a capital increase agreement with our Company, Mr. Song, Mr. Su and
other then Shareholders, pursuant to which, Huibi No. 2 and Mr. Gao Defu agreed to subscribe
for increased registered capital of RMB263,878.00 and RMB8,181.00 for consideration of
RMB44,000,000.00 and RMB1,364,119.00, respectively.
Concurrent with the above capital increase, Mr. Gu Dongsheng and Wonderful Dawn also
agreed to transfer RMB179,917.00 and RMB179,917.00 of registered capital of our Company
to Huibi No. 2 for consideration of RMB30,000,000.00 and RMB30,000,000.00, respectively.
The considerations of the above investments were determined after arm’s length
negotiations between the parties with reference to our Company’s valuation of approximately
RMB2.0 billion prior to the series B+ investments, which was arrived at after considering
various factors, including our self-operated and franchising model, accelerated expansion in
our restaurant network in 2021, growth prospects and, in particular, the prevailing market
conditions and valuation in the catering and restaurant industry in the first half of 2021.
Huibi No. 2 is a fund ultimately controlled by Country Garden Holdings Company
Limited, a company listed on the Stock Exchange (stock code: 2007), and for more
information, see “— The Pre-IPO Investments — 4. Information relating to our Pre-IPO
Investors.”
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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Upon the completion of the above investments, the shareholding structure of our
Company was as follows:
Name of Shareholder Registered capital held
Percentage of
shareholding
(RMB)
Huai’an Chuangtao /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,016,000.00 49.04%
Wonderful Dawn /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,104,789.00 17.16%
Mr. Gu Dongsheng /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118948,083.00 7.73%
Pinxin Y uegu /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118797,880.00 6.50%
Huibi No. 2 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118623,712.00 5.08%
Huai’an Y ujian Haoren /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118519,917.00 4.24%
Huibi No. 1 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118487,256.00 3.97%
Qingcong Capital /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118400,000.00 3.26%
Mr. Gao Defu /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118368,859.00 3.01%
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,266,496.00 100.00%
11. Conversion into a Joint Stock Limited Company in September 2023
On September 7, 2023, our Company was converted from a limited liability company into
a joint stock limited company and renamed as Guangzhou Xiao Noodles Catering Management
Co., Ltd. (ʮ̡) with 613,324,800 issued Shares of RMB0.02 each.
Upon the completion of the conversion, the shareholding structure of our Company was
as follows:
Name of Shareholder Number of Shares
Percentage of
shareholding
Huai’an Chuangtao /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118300,800,000 49.04%
Wonderful Dawn /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118105,239,450 17.16%
Mr. Gu Dongsheng /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111847,404,150 7.73%
Pinxin Y uegu /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111839,894,000 6.50%
Huibi No. 2 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111831,185,600 5.08%
Huai’an Y ujian Haoren /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111825,995,850 4.24%
Huibi No. 1 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111824,362,800 3.97%
Qingcong Capital /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820,000,000 3.26%
Mr. Gao Defu /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818,442,950 3.01%
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118613,324,800 100.00%
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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12. Share transfers in July 2025
Having consider that the catering industry in the Chinese Mainland is currently in a
growth period and it may appropriately recover its initial investment costs to replenish its
working capital and seek new investment opportunities, on July 31, 2025, Wonderful Dawn
entered into a share transfer agreement with Mr. Wei Chuanfa ( ᕧෂ೯), Mr. Du Ming ( Ӂჼ)
and Mr. Gu Dongsheng, pursuant to which Wonderful Dawn transferred 6,133,248, 3,285,669,
and 1,095,223 Shares to Mr. Wei Chuanfa, Mr. Du Ming and Mr. Gu Dongsheng for a
consideration of RMB28,000,000.00, RMB15,000,000.00 and RMB5,000,000.00, respectively,
which has been fully settled on August 6, 2025. The considerations were determined after arm’s
length negotiations between the parties with reference to the then appraised value of 100%
equity interest of our Company as appraised by an independent valuer based on market
approach, after having considered various additional factors, including discounts for lack of
marketability at the time of the said share transfers.
For the background information of Mr. Wei Chuanfa and Mr. Du Ming, see “— The
Pre-IPO Investments — 4. Information relating to our Pre-IPO Investors.”
Upon the completion of the above share transfers, the shareholding structure of our
Company was as follows:
Name of Shareholder Number of Shares
Percentage of
shareholding
Huai’an Chuangtao /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118300,800,000 49.04%
Wonderful Dawn /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111894,725,310 15.44%
Mr. Gu Dongsheng /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111848,499,373 7.91%
Pinxin Y uegu /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111839,894,000 6.50%
Huibi No. 2 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111831,185,600 5.08%
Huai’an Y ujian Haoren /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111825,995,850 4.24%
Huibi No. 1 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111824,362,800 3.97%
Qingcong Capital /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820,000,000 3.26%
Mr. Gao Defu /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818,442,950 3.01%
Mr. Wei Chuanfa /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,133,248 1.00%
Mr. Du Ming /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,285,669 0.54%
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118613,324,800 100.00%
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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OUR MAJOR SUBSIDIARIES
As of the Latest Practicable Date, the following subsidiaries made a material contribution
to our results of operation during the Track Record Period:
Name of major subsidiary
Place of
incorporation
Date of
incorporation
Ownership
as of the Latest
Practicable Date
Principal
business
activities
Shenzhen Y ujian Xiaomian
Catering Management
Co., Ltd. ( ଉέ༾Ԉʃᙢ
ʮ̡)/H1118/H1118/H1118/H1118/H1118
Chinese
Mainland
June 2, 2017 100.00% Catering
management
Guangzhou Y ujian
Xiaomian Catering
Service Co., Ltd. ( ᄿψ༾
ʮ
̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Chinese
Mainland
September 8,
2021
100.00% Catering
management
Wuhan Y ujian Xiaomian
Catering Management
Co., Ltd. (ဏ༾Ԉʃᙢ
ʮ̡) /H1118/H1118/H1118/H1118
Chinese
Mainland
August 24,
2021
100.00% Catering
management
Sichuan Y ujian Haowan
Information Technology
Co., Ltd. (ِ
ʮ̡) /H1118/H1118/H1118/H1118
Chinese
Mainland
July 11, 2023 100.00% Provision of
information
technology
services
Guangzhou Y ujian Haowan
Information Technology
Service Co., Ltd. ( ᄿψ༾
ࠢ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Chinese
Mainland
March 16, 2020 100.00% Provision of
information
technology
services
Beijing Y ujian Xiaomian
Catering Management
Co., Ltd. ( ̏ԯ༾Ԉʃᙢ
ʮ̡) /H1118/H1118/H1118/H1118
Chinese
Mainland
September 4,
2019
100.00% Catering
management
Guangzhou Y ujian Haowu
Supply Chain
Management Co., Ltd.
(ԶᏐᗡ၍
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Chinese
Mainland
March 1, 2019 100.00% Supply chain
management
Huai’an Y ujian Haowu
Supply Chain
Management Co., Ltd.
(ԶᏐᗡ၍
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Chinese
Mainland
April 25, 2023 100.00% Supply chain
management
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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Name of major subsidiary
Place of
incorporation
Date of
incorporation
Ownership
as of the Latest
Practicable Date
Principal
business
activities
Suqian Y ujian Haopin
Supply Chain
Management Co., Ltd.
(ԶᏐᗡ၍ଣ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Chinese
Mainland
November 27,
2024
100.00% Supply chain
management
All major subsidiaries have been wholly-owned by our Company since their respective
inceptions.
MAJOR ACQUISITIONS, DISPOSALS AND MERGERS
We had no major acquisitions, disposals or mergers during the Track Record Period and
up to the Latest Practicable Date.
COMPLIANCE WITH PRC LA W
Our PRC Legal Advisor has confirmed that we have legally obtained the requisite legal
approvals and completed requisite governmental registrations or filings with relevant
governmental authorities in the PRC with respect to all the aforesaid capital increases and
equity transfers in all material respects.
THE PRE-IPO INVESTMENTS
1. Principal Terms of the Pre-IPO Investments
As of the Latest Practicable Date, we have received several rounds of Pre-IPO
Investments since the incorporation of our Company. The following table summarizes the key
terms of the Pre-IPO Investments to our Company made by the Pre-IPO Investors:
Investment(s)
Date of
agreement(s)
Date of full
settlement of
consideration
Registered capital/
number of Shares
subscribed for/
transferred
Total amount of
consideration
Cost per Share
(approximation) (1)
Discount to the
Offer Price
(approximation) (2)
(RMB) (RMB)
Angel Investment /H1118/H1118/H1118/H1118September 30,
2014 and
March 2,
2015
October 31,
2016
RMB11,250.00 2,000,000.00 0.0355 99.39%
Angel+ Investment /H1118/H1118/H1118March 2, 2015
and April 1,
2015
April 24,
2015
RMB3,750.00 800,000.00 0.0426 99.27%
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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Investment(s)
Date of
agreement(s)
Date of full
settlement of
consideration
Registered capital/
number of Shares
subscribed for/
transferred
Total amount of
consideration
Cost per Share
(approximation) (1)
Discount to the
Offer Price
(approximation) (2)
(RMB) (RMB)
Series Pre-A /H1118/H1118/H1118/H1118/H1118/H1118/H1118February 22,
2016
October 25,
2016
RMB4,787.00 3,000,000.00 0.1250 97.86%
Series A /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118November 20,
2016
December
29, 2016
RMB19,947.00 25,000,000.00 0.2500 95.73%
Series A+ /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118February 10,
2020
May 6, 2020 RMB849,391.00 24,844,720.00 0.5850 90.01%
Series B /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118March 2, 2021 May 18,
2021
RMB625,129.00 38,488,721.00 1.2314 78.97%
Series B+
(capital increase) /H1118/H1118/H1118
June 28, 2021 July 16, 2021 RMB272,059.00 45,364,119.00 3.3349 43.04%
Series B+
(equity transfers) /H1118/H1118/H1118
June 28, 2021 September
26, 2021
RMB359,834.00 60,000,000.00 3.3349 43.04%
Share transfers in July
2025 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
July 31, 2025 August 6,
2025
10,514,140
Shares
48,000,000.00 4.5653 22.02%
Basis of determining
the consideration
paid /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Please refer to the disclosure in “— Establishment and Major Shareholding Changes of Our Company”
above.
Lock-up period /H1118/H1118/H1118/H1118/H1118Under the applicable PRC Law, all existing Shareholders (including the Pre-IPO Investors) are subject to
a lock-up period of twelve months following the Listing Date.
Use of proceeds from
the Pre-IPO
Investments /H1118/H1118/H1118/H1118/H1118
Certain Pre-IPO Investments were effected by way of transfers by our then Shareholders, and no proceeds
were received by our Company. Whereas, other Pre-IPO Investments were effected by way of capital
increase and proceeds were received by our Company. We utilized the proceeds from Pre-IPO
Investments involving capital increase for research and development, business expansion, capital
expenditures and general working capital of our Group. As of the Latest Practicable Date, the net
proceeds received by our Company from the Pre-IPO Investments involving capital increase had been
fully utilized.
Strategic benefits the
Pre-IPO Investments
brought to our
Company /H1118/H1118/H1118/H1118/H1118/H1118/H1118
We believed that our Company could benefit from the additional capital provided by the Pre-IPO
Investors’ investments in our Company and the Pre-IPO Investors’ knowledge and experience. We could
take advantage of the Pre-IPO Investors’ industry resources and networks, while broadening our
shareholder base. The series of investments made by the Pre-IPO Investors in our Company reflected
their consistent confidence in the business of our Group and served as an endorsement of our
performance and future prospects.
Notes:
(1) Calculated based on the number of Shares as adjusted after the conversion of the capital reserve of our
Company in March 2017 and the conversion to a joint stock company in September 2023.
(2) The discount to the Offer Price is calculated based on the currency translation of HK$1.00 to RMB0.92342 and
the assumption that the Offer Price is HK$6.34 per H Share (being the mid-point of the indicative Offer Price
range).
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
–1 1 5–


--- page 125 ---
2. Special rights of the Pre-IPO Investors
The Pre-IPO Investors have been granted certain customary special rights in relation to
our Company, including, among others, pre-emptive rights, anti-dilution rights, right of first
refusal, co-sale rights, information rights, redemption right granted by our Company in favor
of Huibi No. 1 only (the “ Redemption Right granted by the Company ”), redemption right
granted by Huai’an Chuangtao, Mr. Song and Mr. Su (the “ Redemption Right granted by the
Controlling Shareholders ”), most-favored treatment rights, veto rights in respect of certain
matters at shareholders’ meetings and board meetings, rights to nominate directors and board
observers (as the case may be), special quorum requirements in board meetings and liquidation
rights. Pursuant to the agreement in relation to the Pre-IPO Investments, (i) both the
Redemption Right granted by the Company and the Redemption Right granted by the
Controlling Shareholders were automatically and unconditionally terminated on the day of the
submission of the first listing application, provided that such redemption rights shall be
automatically reinstated upon the occurrence of either of following events: (a) failing to
re-submit the listing application within six months after the withdrawal or rejection of the
previous listing application; or (b) failing to consummate a qualified IPO by March 11, 2028;
and (ii) all other special rights will be automatically terminated immediately prior to the
Listing (the “ Reinstatement Events ”).
With respect to the Redemption Right granted by the Company, our Company has
recognized a redemption liability of RMB45.0 million as at December 31, 2022, 2023 and 2024
and June 30, 2025. For details, see note 20(b) to the Accountants’ Report in Appendix I.
With respect to the Redemption Right granted by the Controlling Shareholders, as
confirmed by Huai’an Chuangtao, Mr. Song and Mr. Su, there are no side agreements between
them and the Pre-IPO Investors, or between our Company and Huai’an Chuangtao, Mr. Song
and Mr. Su, regarding the Redemption Right granted by the Controlling Shareholders. In
addition, our Company did not provide any guarantee on the Redemption Right granted by the
Controlling Shareholders in case of default by Huai’an Chuangtao, Mr. Song or Mr. Su.
Considering that our Company has no obligation to repurchase the Shares under the
Redemption Right granted by the Controlling Shareholders, no redemption liability regarding
the Redemption Right granted by the Controlling Shareholders was recorded by our Company
during the Track Record Period. For details, see note 20(b) to the Accountants’ Report in
Appendix I.
3. Compliance with the Guide
On the basis that (i) the Listing, being the first day of listing of the Shares on the Stock
Exchange, will take place no earlier than 120 clear days after completion of the Pre-IPO
Investments, and (ii) all special rights granted to the Pre-IPO Investors shall cease to be
effective and be discontinued prior to the Listing, the Sole Sponsor confirms that the Pre-IPO
Investments are in compliance with Chapter 4.2 of the Guide.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
–1 1 6–


--- page 126 ---
In particular, in confirming that the Redemption Right granted by the Company was
automatically and unconditionally terminated on the day of the submission of the first listing
application (provided that such redemption rights shall be automatically reinstated upon the
occurrence of either of the Reinstatement Events as described above), the Sole Sponsor has
conducted due diligence work including, among others: (i) reviewing the agreements in
relation to the Pre-IPO Investments, (ii) reviewing the PRC Law legal opinion issued by the
PRC Legal Advisor, and (iii) discussing with the PRC Legal Advisor and the legal advisor as
to PRC Law of the Sole Sponsor to understand the treatment of the Redemption Right granted
by the Company under the PRC Law. Based on the due diligence work conducted, nothing has
come to the Sole Sponsor’s attention that would cast doubt on the Company’s views above.
4. Information relating to our Pre-IPO Investors
Wonderful Dawn
Wonderful Dawn is a wholly-owned subsidiary of Best Food Holding Company Limited
(“Best Food ”), a company listed on the Stock Exchange (stock code: 1488), which principally
engaged in food and beverage investment holding. Best Food is a multi-brand food and
beverage platform invested by Hony Capital, a leading investment management firm founded
in 2003. To the knowledge of our Directors, as of the Latest Practicable Date, Best Food is
engaged in the operation of, and investment in, more than 10 food and beverage brands and
ultimately controlled by Zhao John Huan ( Ⴛ˿ᛇ), the chairman of Best Food’s board of
directors and an executive director. We became acquainted with Best Food through the
introduction of a third party peer in catering industry.
Huibi Funds
Huibi No. 1 and Huibi No. 2 are limited partnerships established under PRC Law,
principally engaged in equity investment and investment management. The general partner of
each of Huibi No. 1 and Huibi No. 2 is Guangzhou Chenghui Equity Investment Management
Co., Ltd. (ப΂ʮ̡)( “ Guangzhou Chenghui ”), which primarily
engaged in equity investment management. To the knowledge of our Directors, as of the Latest
Practicable Date, Guangzhou Chenghui was ultimately controlled by Country Garden Holdings
Company Limited (a company listed on the Stock Exchange (stock code: 2007), which
primarily engaged in real property development) as to 80.00% and, to the knowledge of our
Directors, is an Independent Third Party and the remaining 20.00% interest was held by an
Independent Third Party.
As of the Latest Practicable Date, Huibi No. 1 had two limited partners, namely Shenzhen
Country Garden Innovation Investment Management Co., Ltd. (ʮ
̡)( “ Country Garden Innovation Investment ”) and Foshan Shunde District Rongyue
Enterprise Management Co., Ltd. (ʮ̡)( “ Rongyue
Enterprise Management ”), and each held approximately 49.92% partnership interest therein.
The remaining partnership interest was held by the general partner. As of the Latest Practicable
Date, Country Garden Innovation Investment was an indirect wholly-owned subsidiary of
Country Garden Holdings Company Limited. To the knowledge of our Directors, Rongyue
Enterprise Management is ultimately controlled by Wu Y eneng ( юุঐ), an Independent Third
Party. The limited partners of Huibi No. 2 were also Country Garden Innovation Investment
and Rongyue Enterprise Management, and each held approximately 49.95% partnership
interest therein as of the Latest Practicable Date. The remaining partnership interest was held
by the general partner.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
–1 1 7–


--- page 127 ---
We became acquainted with Huibi Funds through the introduction of a third party
financial adviser.
Mr. Gu Dongsheng
Mr. Gu Dongsheng is an individual investor who specializes in the catering industry and
an Independent Third Party. We became acquainted with Mr. Gu Dongsheng after he patronized
our restaurant and decided to invest in our Group.
Pinxin Yuegu
Pinxin Y uegu is a limited company incorporated under the PRC Law, primarily engaged
in investment holding. As of the Latest Practicable Date, Pinxin Y uegu was an indirect
wholly-owned subsidiary of Jiumaojiu International Holdings Limited, a company listed on the
Stock Exchange (stock code: 9922), which principally engaged in the catering industry and, to
the knowledge of our Directors, is an Independent Third Party. Started in Haikou, Jiumaojiu
International Holdings Limited is a catering group operating for more than 29 years, with
Chinese restaurant chain operation as its core business. We became acquainted with Jiumaojiu
after a business visit and it decided to invest in our Group as it was optimistic in our growth
potential and future prospects.
Qingcong Capital
Qingcong Capital is a limited partnership established under PRC Law, principally
engaged in equity investment. As of the Latest Practicable Date, Qingcong Capital had seven
limited partners and each of them was an Independent Third Party. Among which, Hou Huajun
(ࠏheld approximately 34.65% partnership interest in Qingcong Capital and each of the
remaining limited partners held less than 30.00% interest therein. As of the Latest Practicable
Date, the general partner of Qingcong Capital was Qingcong Capital Asset Management Co.,
Ltd. (ʮ̡), which was owned by Hou Huajun, Zheng Bingmin (ފ
ઽ), Luo Jiaqiang ( ᖯ͠੶) and Y u Jianglin ( ЯϪ೙) as to 25.00% each, and each of whom was
an Independent Third Party. We became acquainted with Qingcong Capital through the
introduction of a third party private equity investor specializing in consumer sector in China.
Mr. Gao Defu
Mr. Gao Defu is an individual investor who is the founder of Dumpling Xi (ᅃ˥ჲ)
and an Independent Third Party. Dumpling Xi was established in 2002 and to the knowledge
of our Directors, as of the Latest Practicable Date, there are more than 800 Dumpling Xi chain
stores in the Chinese Mainland. We became acquainted with Mr. Gao Defu through the
introduction of Jiumaojiu.
Mr. Wei Chuanfa
Mr. Wei Chuanfa is an individual investor who is the founder of a Chiuchow-style beef
hotpot restaurant chain and an Independent Third Party.
Mr. Du Ming
Mr. Du Ming is an individual investor based in the PRC and an Independent Third Party.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
–1 1 8–


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SHAREHOLDING OF OUR COMPANY
The following table sets forth our shareholding structure as of the Latest Practicable Date
and immediately upon the Listing (assuming the Over-allotment Option is not exercised):
As of the Latest Practicable Date
Immediately after the completion of
the Global Offering
Name of Shareholder
Number of
Shares
Description of
Shares
Approximate
Ownership
Percentage
Number of
Shares
Description of
Shares
Approximate
Ownership
Percentage
Huai’an Chuangtao /H1118300,800,000 Unlisted Shares 49.04% 300,800,000 H Shares 42.33%
Wonderful Dawn /H1118/H111894,725,310 Unlisted Shares 15.44% 94,725,310 H Shares 13.33%
Mr. Gu Dongsheng /H1118 48,499,373 Unlisted Shares 7.91% 48,499,373 H Shares 6.82%
Pinxin Y uegu /H1118/H1118/H1118/H111839,894,000 Unlisted Shares 6.50% 39,894,000 H Shares 5.61%
Huibi No. 2 /H1118/H1118/H1118/H1118/H111831,185,600 Unlisted Shares 5.08% 31,185,600 H Shares 4.39%
Huai’an Y ujian
Haoren /H1118/H1118/H1118/H1118/H1118/H1118
25,995,850 Unlisted Shares 4.24% 25,995,850 H Shares 3.66%
Huibi No. 1 /H1118/H1118/H1118/H1118/H111824,362,800 Unlisted Shares 3.97% 24,362,800 H Shares 3.43%
Qingcong Capital /H1118/H111820,000,000 Unlisted Shares 3.26% 20,000,000 H Shares 2.81%
Mr. Gao Defu /H1118/H1118/H1118/H111818,442,950 Unlisted Shares 3.01% 18,442,950 H Shares 2.60%
Mr. Wei Chuanfa /H1118 6,133,248 Unlisted Shares 1.00% 6,133,248 H Shares 0.86%
Mr. Du Ming /H1118/H1118/H1118/H11183,285,669 Unlisted Shares 0.54% 3,285,669 H Shares 0.46%
Sub-total /H1118/H1118/H1118/H1118/H1118/H1118613,324,800 Unlisted Shares 100.00% 613,324,800 H Shares 86.30%
Other investors
taking part in the
Global Offering /H1118
– – – 97,364,500 H Shares 13.70%
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118613,324,800 100.00% 710,689,300 100.00%
FULL CIRCULATION
Our Company has applied for H Share full circulation to convert an aggregate of
613,324,800 Unlisted Shares held by all of the existing Shareholders, representing 100.00% of
the total issued Shares of our Company as of the Latest Practicable Date and approximately
86.30% of the total issued Shares of our Company upon completion of the Global Offering
(assuming the Over-allotment Option is not exercised).
PUBLIC FLOAT
Immediately upon completion of the Conversion of Unlisted Shares into H Shares and the
Global Offering (assuming the Over-allotment Option is not exercised), our Company will have
710,689,300 H Shares, among which, the 421,521,160 H Shares, representing approximately
68.73% of our total issued Shares as of the Latest Practicable Date and approximately 59.31%
of our total issued Shares upon Listing (assuming the Over-allotment Option is not exercised),
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
–1 1 9–


--- page 129 ---
will not be counted towards the public float of our Company according to Rule 19A.13A(1) of
the Listing Rules, as such H Shares are held by Huai’an Chuangtao, Wonderful Dawn and
Huai’an Y ujian Haoren, the core connected persons of our Company.
To the best of our Directors’ knowledge, information and belief and having made all
reasonable inquiries, save as disclosed above, upon the completion of the Global Offering and
the conversion of Unlisted Shares into H Shares, 191,803,640 H Shares to be held by our
Shareholders who are not our core connected persons, representing approximately 26.99% of
our total issued Shares upon the completion of the Global Offering (assuming the Over-
allotment Option is not exercised), will be counted towards the public float. Together with
97,364,500 H Shares to be issued pursuant to the Global Offering, approximately 40.69% of
our total issued Shares (assuming the Over-allotment Option is not exercised) will be counted
towards the public float for the purpose of Rule 19A.13A(1) of the Listing Rules upon Listing.
Assuming that the Over-allotment Option is not exercised, based on an Offer Price of (i)
HK$5.64 per Offer Share (being the minimum Offer Price of the indicative Offer Price range),
the market capitalization of our Shares immediately upon Listing is expected to be
approximately HK$4,008.3 million; (ii) HK$6.34 per Offer Share (being the mid-point of the
indicative Offer Price range), the market capitalization of our Shares immediately upon Listing
is expected to be approximately HK$4,505.8 million; and (iii) HK$7.04 per Offer Share (being
the maximum Offer Price of the indicative Offer Price range), the market capitalization of our
Shares immediately upon Listing is expected to be approximately HK$5,003.3 million.
Pursuant to Rule 19A.13A(1) of the Listing Rules, where the expected market value of our
Shares at the time of Listing does not exceed HK$6,000,000,000, H Shares representing at least
25% of our total share capital must be held by the public at the time of Listing. With respect
to the indicative Offer Price range of HK$5.64, HK$6.34 and HK$7.04 per Offer Share (being
the low-end, mid-point and the high-end of the indicative Offer Price range, respectively), the
expected market capitalization of our Shares at the time of Listing would not exceed
HK$6,000,000,000. Hence, our Company will be able to comply with Rule 19A.13A(1) of the
Listing Rules.
FREE FLOAT
Rule 19A.13C(1) of the Listing Rules provides that, where a new applicant is a PRC
issuer with no other listed shares at the time of listing, this will normally mean that the portion
of H shares for which listing is sought that are held by the public and not subject to any
disposal restrictions (whether under contract, the Listing Rules, applicable laws or otherwise),
at the time of listing, must: (i) represent at least 10% of the total number of issued shares in
the class to which H shares belong at the time of listing (excluding treasury shares), with an
expected market value at the time of listing of not less than HK$50,000,000; or (ii) have an
expected market value at the time of listing of not less than HK$600,000,000.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
– 120 –


--- page 130 ---
Under the applicable PRC Law, all existing Shareholders (including the Pre-IPO
Investors) are subject to a lock-up period of twelve months following the Listing Date. Each
of the Cornerstone Investors has agreed to a lock-up period of six months following the Listing
Date. As such, H Shares held by all existing Shareholders and the Cornerstone investors upon
the Listing shall not be counted towards the free float of the H Shares of the Company at the
time of Listing. Based on that (i) the 9,736,500 Offer Shares initially available under the Hong
Kong Public Offering, representing approximately 1.37% of our total issued Shares upon
completion of the Global Offering (assuming the Over-allotment Option is not exercised); (ii)
at least 61,332,500 Offer Shares to be allotted to investors who are not core connected person
of our Company and are not subject to any disposal restrictions under International Offering,
representing approximately 8.63% of our total issued Shares upon completion of the Global
Offering (assuming the Over-allotment Option is not exercised); and (iii) the Offer Price
HK$5.64 per H Share, being the low-end of the indicative Offer Price range, the Company will
satisfy the free float requirement under Rule 19A.13C(1) of the Listing Rules.
EMPLOYEE INCENTIVE PLATFORM
In recognition of the contributions of our employees, Huai’an Y ujian Haoren was
established in the Chinese Mainland as our Company’s employee incentive platform. The
general partner of Huai’an Y ujian Haoren is Mr. Song. As of the Latest Practicable Date, Mr.
Song, our executive Director, held 43.02%
(1) partnership interest in Huai’an Y ujian Haoren and
the rest of 56.98% partnership interests held by the limited partners represent the vested and
exercised awards of grantees. Out of the 56.98% vested partnership interest, Mr. Xu Zhi, our
chief financial officer and vice president, who resigned as a Director on April 1, 2025
(2), held
3.94% partnership interest therein. Mr. Peng Y ue, our supervisor, held 9.62% partnership
interest in Huai’an Y ujian Haoren. Mr. Li Bin ( ҽ੸), executive director and manager of
multiple subsidiaries of our Company, held 0.30% partnership interest in Huai’an Y ujian
Haoren. Mr. Pan Rujun (ڲour human resource manager, who resigned as a Director on
April 1, 2025
(2), held 0.24% partnership interest therein. Mr. Zhang Mingchen (ԕ) and
Mr. Bai Y ang (ݱboth of whom were management personnel since early stage of our
Company and resigned in 2021, held 16.21% and 9.62% partnership interest, respectively. Save
as disclosed above, the remaining approximately 17.06% vested partnership interests in
Huai’an Y ujian Haoren were held by six current and former employees and all of which were
Independent Third Parties and none of them is holding 5.00% partnership interest in Huai’an
Y ujian Haoren. For the details of the Pre-IPO Employee Incentive Scheme, see “Appendix VI
Statutory and General Information — D. Pre-IPO Employee Incentive Scheme”.
Notes:
(1) As of the Latest Practicable Date, 42.81% of the partnership interest held by Mr. Song represented 11,128,475
underlying Shares granted to 59 grantees (including Mr. Xu Zhi, Mr. Li Bin and a grantee who also held vested
interest in Huan’an Y ujian Haoren and certain other connected persons of our Company) under the Pre-IPO
Employee Incentive Scheme, which had not yet vested and beneficially owned by relevant grantees. The
remaining 0.21% of the partnership interest, representing 54,250 underlying Shares, was beneficially owned
by Mr. Song. For further details of the Pre-IPO Employee Incentive Scheme and information of the grantees,
see “Appendix VI Statutory and General Information — D. Pre-IPO Employee Incentive Scheme”.
(2) Mr. Xu Zhi and Mr. Pan Rujun resigned as our Directors due to the change of composition of our Board during
the preparation of the Listing and each of them has confirmed that he has no disagreement with the Board or
our Company. Mr. Xu Zhi continued to serve as chief financial officer and vice president and Mr. Pan Rujun
continued to serve as human resource manager after such adjustment.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
– 121 –


--- page 131 ---
CORPORATE STRUCTURE
Corporate structure immediately prior to the completion of the Global Offering
The following chart sets forth our shareholding structure immediately prior to the
completion of the Global Offering:
Our Company
100%100%100%
100%100%100%100%100%
100%100%100%
3.01%3.26%4.24%6.50%7.91%9.06%15.44%49.04%
66.67% 33.33%
Mr. Gao
Defu
Mr. Song
Huai’an
Chuangtao
Wonderful
Dawn
Huibi No. 1
and Huibi
No. 2
Mr. Gu
Dongsheng
Huai’an
Yujian
Haoren(1)
Qingcong
Capital
1.00%
Mr. Wei
Chuanfa
0.54%
Mr. Du
Ming
Pinxin
Yuegu
Mr. Su
Beijing Yujian
Xiaomian
Catering
Management Co.,
Ltd.̏ԯ༾Ԉ
ʃᙢ᎛භ၍ଣϞ
ʮ̡
Beijing Yujian
One Xiaomian
Catering
Management Co.,
Ltd. (̏ԯ༾Ԉ
ఠʃᙢ᎛භ
ʮ̡)
Guangzhou
Yujian
Xiaomian
Catering Service
Co., Ltd. (ᄿψ
༾Ԉʃᙢ᎛භ
ʮ̡)
Guangzhou Yujian
Haowan
Information
Technology Service
Co., Ltd. (ᄿψ༾Ԉ
ਕ
ʮ̡)
Sichuan Yujian
Haowan
Information
Technology Co.,
Ltd. (̬ʇ༾Ԉ
Ҧ
ʮ̡)
Shenzhen Yujian
Xiaomian
Catering
Management
Co., Ltd.ଉέ
༾Ԉʃᙢ᎛භ၍
ʮ̡
Suqian Yujian
Haopin Supply
Chain Management
Co., Ltd. (੖ቋ༾
ԶᏐᗡ
ʮ̡)
Guangzhou
Yujian Haowu
Supply Chain
Management Co.,
Ltd. (ᄿψ༾Ԉ
ԶᏐᗡ
ʮ̡)
Huai’an Yujian
Haowu Supply
Chain Management
Co., Ltd.
(ي
ԶᏐᗡ၍ଣϞ
ʮ̡)
XIAO NOODLES
INTERNATIONAL
HOLDINGS
LIMITED (༾Ԉʃᙢ
ʮ̡)
(Hong Kong)
Other
subsidiaries(2)
Wuhan Yujian
Xiaomian
Catering
Management Co.,
Ltd. (ဏ༾Ԉ
ʃᙢ᎛භ၍ଣ
ʮ̡)
Other
subsidiaries(2)
Other
subsidiaries(2)
Notes:
(1) Huai’an Y ujian Haoren is the employee incentive platform. See “— Employee Incentive Platform” for details.
(2) As of the Latest Practicable Date, each other subsidiaries was indirectly wholly owned by our Company.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
– 122 –


--- page 132 ---
Corporate structure immediately following the completion of the Global Offering
The following chart sets forth our shareholding structure immediately following the
completion of the Global Offering (assuming the Over-allotment Option is not exercised):
Our Company
42.33% 13.33% 7.82% 6.82% 5.61% 3.66% 2.81% 2.60% 13.70%
66.67% 33.33%
Mr. Gao
Defu
0.46%
Mr. Wei
Chuanfa
0.86%
Mr. Du
Ming
Other
investors
taking part
in the Global
Offering
Mr. Song
Huai’an
Chuangtao
Wonderful
Dawn
Huibi No. 1
and Huibi
No. 2
Mr. Gu
Dongsheng
Huai’an
Yujian
Haoren(1)
Qingcong
Capital
Pinxin
Yuegu
Mr. Su
100%100%100%
100%100%100%100%100%
100%100%100%
Beijing Yujian
Xiaomian
Catering
Management
Co., Ltd.̏ԯ
༾Ԉʃᙢ᎛භ၍
ʮ̡
Beijing Yujian
One Xiaomian
Catering
Management Co.,
Ltd. (̏ԯ༾Ԉ
ఠʃᙢ᎛භ
ʮ̡)
Guangzhou
Yujian
Xiaomian
Catering Service
Co., Ltd. (ᄿψ
༾Ԉʃᙢ᎛භ
ʮ̡)
Guangzhou Yujian
Haowan
Information
Technology Service
Co., Ltd. (ᄿψ༾
؂
ʮ̡)
Sichuan Yujian
Haowan
Information
Technology Co.,
Ltd. (̬ʇ༾Ԉ
Ҧ
ʮ̡)
Wuhan Yujian
Xiaomian
Catering
Management Co.,
Ltd. (ဏ༾Ԉ
ʃᙢ᎛භ၍ଣ
ʮ̡)
Shenzhen Yujian
Xiaomian
Catering
Management
Co., Ltd. (ଉέ
༾Ԉʃᙢ᎛භ၍
ʮ̡)
Suqian Yujian
Haopin Supply
Chain Management
Co., Ltd. (੖ቋ༾
ԶᏐᗡ
ʮ̡)
Guangzhou
Yujian Haowu
Supply Chain
Management Co.,
Ltd. (ᄿψ༾Ԉ
ԶᏐᗡ
ʮ̡)
Other
subsidiaries(2)
Other
subsidiaries(2)
Huai’an Yujian
Haowu Supply
Chain Management
Co., Ltd. (ଊτ༾
ԶᏐᗡ၍
ʮ̡)
XIAO NOODLES
INTERNATIONAL
HOLDINGS
LIMITED (༾Ԉʃᙢ
ʮ̡)
(Hong Kong)
Other
subsidiaries(2)
Note: See the notes t o “ — Corporate Structure — Corporate structure immediately prior to the completion of the
Global Offering.”
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PRC REGULATIONS
REGULATIONS ON CORPORATION
The establishment, operation and management of corporate entities in the PRC are
governed by the PRC Company Law () (the “ PRC Company
Law”), which was promulgated by the Standing Committee of the National People’s Congress
(the “ SCNPC ”) in December 1993 and further amended in December 1999, August 2004,
October 2005, December 2013, October 2018 and December 2023, respectively. The latest
amendment is effective since July 2024. According to the PRC Company Law, companies are
generally classified into two categories: limited liability companies and companies limited by
shares. The PRC Company Law also applies to foreign-invested limited liability companies and
companies limited by shares.
General
A “joint stock limited company” is an incorporated enterprise in China under the PRC
Company Law with independent legal person properties and entitlements to such legal person
properties and with its registered capital divided into shares of equal par value. The liability
of the company for its debts is limited to all the properties it owns and the liability of its
shareholders for the company is limited to the extent of the shares they subscribe for.
Shareholders’ Meetings
According to the PRC Company Law, a shareholders’ meeting for a company limited by
shares is constituted by all shareholders, functioning as the company’s authoritative body.
A shareholders’ meeting is required to be held once every year. An extraordinary meeting
is required to be held within two months in case of certain events specified in the PRC
Company Law.
Shareholders present at a shareholders’ meeting have one vote for each share they hold,
save that the company’s shares held by the company are not entitled to any voting rights.
Resolutions of the shareholders’ meeting must be passed by more than half of the voting
rights held by shareholders present at the meeting, except matters relating to merger, division
or dissolution of the company, increase or reduction of registered share capital, change of
corporate form or amendments to the articles of association, which in each case must be passed
by at least two-thirds of the voting rights held by the shareholders present at the meeting.
The shareholders may appoint the entrusted representative to attend a shareholders’
meeting; the entrusted representative shall submit a power of attorney to the company and
exercise the voting rights within the scope of authorization.
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Transfer of Shares
Share transfers are permissible under the PRC Company Law, either on a stock exchange
or through other methods as required by the State Council. Registered shares may be
transferred following shareholder endorsement or by methods specified in laws and
regulations. After transfer, the company updates its share register. No changes of registration
in the share register described above shall be effected during a period of 20 days prior to
convening a shareholders’ meeting or 5 days prior to the record date for the purpose of
determining entitlements to dividend distributions, unless otherwise stipulated by laws on the
registration of changes in the share register of listed companies.
Certain restrictions apply to share transfers: promoters’ shares and shares issued before
public issuance may not be transferred within one year of the company’s establishment or
listing on a stock exchange, respectively. Directors, supervisors and senior management must
declare their shareholdings and may transfer up to 25% annually during their terms, with
additional restrictions outlined in the PRC Company law. They shall not transfer the shares
they hold within one year of the date of the company’s listing on a stock exchange, nor within
six months after they leave their positions in the company. The articles of association may set
out other restrictive provisions in respect of the transfer of shares in the company held by its
directors, supervisors and senior management.
REGULATIONS ON FOREIGN INVESTMENT
On March 15, 2019, the National People’s Congress (the “ NPC”) promulgated the
Foreign Investment Law of the PRC () (the “ FIL”), which
came into effect on January 1, 2020, pursuant to which, it is applicable to the investment
activities in the PRC carried out directly or indirectly by foreign natural persons, enterprises
or other organizations. The Implementation Rules to the Foreign Investment Law of the PRC
(ૢԷ), which were promulgated by the State Council on
December 26, 2019, and became effective on January 1, 2020, the state actively encourages and
supports foreign investment, ensuring the protection of the lawful rights and interests of
foreign investors. The administration of foreign investment is regulated to create an
environment conducive to foreign investors. Continuous efforts are made to optimize the
foreign investment environment, promoting a more open and inviting landscape for foreign
participation at an elevated level. As confirmed by the PRC legal advisor, the Group’s business
is not under foreign investment restrictions.
On December 30, 2019, the MOFCOM and the State Administration for Market
Regulation (the “ SAMR ”) jointly promulgated the Measures for Information Reporting on
Foreign Investment (), which became effective on January 1, 2020,
pursuant to which, in the event that a foreign investor engages in investment activities in the
PRC, either directly or indirectly, the market regulatory authorities are required to transmit the
investment information provided by the foreign investor or the foreign-invested enterprise to
the relevant competent commerce administrative authorities.
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REGULATIONS ON FOOD SAFETY AND LICENSING REQUIREMENTS FOR
CATERING SERVICES
The Food Safety Law and Implementation Rules
In accordance with the Food Safety Law of the PRC (the “ Food Safety Law ”, ʕശɛ
), which was promulgated on February 28, 2009 and amended on April
24, 2015 and December 29, 2018 and April 29, 2021, respectively, food producers and traders
must be liable for the safety of the food produced or traded by them and shall produce and trade
food in accordance with relevant laws, regulations and food safety standards. Food producers
and traders must ensure food safety, act in good faith and be self-disciplined, be accountable
to society and the public, accept public supervision, and comply with their social
responsibilities.
The Implementation Rules of the Food Safety Law (the “ Implementation Rules ”, ʕ
ૢԷ), which further specify the detailed measures to be taken
and conformed to by food producers and business operators in order to ensure food safety, were
promulgated on July 20, 2009 and came into effect on the same date, and were amended on
February 6, 2016 and March 26, 2019, respectively. The Implementation Rules, which came
into effect on December 1, 2019, introduced extra regulatory measures such as conducting
random supervisory checks, improving the food safety violation reporting reward system, and
establishing a blacklist system for food producers and business operators with serious food
safety violations and a joint punishment mechanism against discreditable acts. The
Implementation Rules state that food producers and operators have primary responsibility for
food safety, detail the responsibilities of principals of enterprises, standardize food storage and
transportation requirements, forbid false publicity of food, and optimize the administrative
system for special food. The Implementation Rules also provide for strict legal liabilities for
violating food safety-related laws and regulations.
In accordance with the Food Safety Law and the Implementation Rules, with the purpose
of guaranteeing food safety and safeguarding the health and safety of the public, the PRC has
set up a system for supervision, monitoring and appraisal of food safety risk, compulsory
adoption of food safety standards, operating standards for food production, food inspection,
food export and import and food safety accident response. Providers of food circulation
services and consumer food services must comply with the aforementioned law and rules.
According to the Food Safety Law, the State Council shall establish a food safety
committee whose duties shall be defined by the State Council. The food safety administration
under the State Council shall exercise supervision and administration over food production and
trading activities according to the duties defined by the Food Safety Law and the State Council
itself. The health administrative department under the State Council shall organize the
implementation of risk monitoring and risk assessment of food safety according to the duties
defined by the Food Safety Law and the State Council, and shall formulate and issue national
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food safety standards together with the food and drug administration under the State Council.
Other relevant departments under the State Council shall carry out relevant food safety work
according to the duties defined by the Food Safety Law and the State Council.
As penalties for violation, the Food Safety Law sets out various legal liabilities in the
form of warnings, orders to rectify, confiscations of illegal gains, confiscations of utensils,
equipment, raw materials and other articles used for illegal production and operation, fines,
recalls and destructions of food in violation of laws and regulations, orders to suspend
production and/or operation, revocations of production and/or operation license, and even
criminal punishment.
Food Operation Licensing System
Pursuant to the Food Safety Law, the State implements a licensing system for food
production and trading. A person who engages in food production, food selling or catering
services must obtain a license in accordance with the law.
On June 15, 2023 the State Administration for Market Regulation promulgated the
Administrative Measures for Food Operation Licensing and Record-filing (຾ᐄ஢̙ձ
), and came into effect on December 1, 2023. According to the Administrative
Measures for Food Operation Licensing and Record-filing, a food operation license must be
obtained in accordance with the law to engage in food selling and catering services within the
territory of the PRC. A food operator shall obtain a food operation license or make
record-filing to engage in food operation activities at one operation site. Applications for food
operation licensing shall be filed according to food operators’ types of operation and operation
items classification. Types of operation of food operators are divided into food sales operators,
catering service operators and canteens of concentrated meal service providers. Food operation
items are divided into three categories, namely food sales, catering services and food operation
management.
The issuance date of a food operation license is the date when the decision on granting
the license is made, and the license is valid for five years. Food operators shall hang or place
their food operation license originals in prominent places of their operation sites. Where the
licensing items which are indicated on a food operation license change, the food operator shall,
within ten working days after the changes take place, apply to the market regulatory authority
which originally issued the license for alteration of the operation license. Where food operators
need to extend the validity period of their lawfully obtained food operation license, they shall
file applications with the market regulatory authority which originally issued the license within
the period from 90 working days to 15 working days before its expiry. Those who fail to obtain
a food operation license and engage in food operation activities shall be punished by the local
market regulatory authorities at or above the county level according to Article 122 of the Food
Safety Law. Where there is any change to the type of operation, operation item or other
licensing matters indicated in a food operation license, and the food operator fails to apply for
the alteration as required, the local market regulatory authority at or above the county level
shall punish it according to Article 122 of the Food Safety Law.
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Online Catering Services
Pursuant to Measures for the Supervision and Administration of the Safety of Food
Offered through Online Catering Services ()
effective on January 1, 2018, which was amended on October 23, 2020, online catering service
providers must have their own physical stores and must have obtained food business licenses
according to the law, and shall carry out business activities pursuant to the business forms and
business items specified on their own food business licenses, and must not do business beyond
their business scope. A catering service provider that runs its own website must file the record
with the administration for market regulation at its locality at county level, within 30 working
days of filing for record with the competent authority of communications.
Regulations On the Sanitation of the Public Assembly Venue
The Regulation for the Administration of Sanitation of the Public Assembly V enue ( ʮ
ሊ͛၍ଣૢԷ) effective on April 1, 1987 and as amended on February 6, 2016 and
April 23, 2019 and December 6, 2024, and the Implementation Rules for the Regulation for the
Administration of Sanitation of the Public Assembly V enue (୚
) effective on May 1, 2011, and as amended on January 19, 2016 and December 26, 2017,
were promulgated by the State Council and the Ministry of Health (later known as National
Health Commission of the PRC) respectively. The said regulations were adopted to create
favorable and sanitary conditions for the public assembly venues, prevent disease transmission
and safeguard people’s health. Depending on the requirements of the local health and family
planning administrations, a restaurant is required to obtain a public assembly venue hygiene
license from the local health authority after it applies for a business license to operate its
business.
The Decision of the State Council on the Integration of Health permits and Food Business
licenses in Public places for Restaurant Services (ʮ΍
), which was promulgated by the State Council on
February 3, 2016, cancels the hygiene permits issued by the local health authorities to four
kinds of public places, such as restaurants, cafes, bars and teahouses, and integrates the
contents of the food safety permits into the food business licenses issued by the food and drug
regulatory authorities.
Food Recall System
China Food and Drug Administration (now merged into the State Administration for
Market Regulation) promulgated the Administrative Measures for Food Recall (the
“Administrative Measures for Recall ”,) on March 11, 2015, which
became effective on September 1, 2015 and amended on October 23, 2020. According to the
Administrative Measures for Recall, where food operators find that the food involved thereby
is unsafe, they must immediately suspend the operations, inform relevant food producers and
operators of the suspension of production and operation, recommend consumers stop eating,
and take necessary measures to prevent and control food safety risks. Food producers knowing
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that any food produced and traded thereby is unsafe must voluntarily recall such food. Food
producers and operators must faithfully record the name, trademark, specification, production
date, batch number, quantity and other contents of unsafe food subject to the suspension of
production and operation, recall and disposal. Records must be kept for at least two years.
Where food operators violate the Food Safety Law and the Administrative Measures for Food
Recall and do not immediately suspend operation or voluntarily recall unsafe food, follow the
prescribed time limit to activate recall procedures, recall unsafe food products in accordance
with the recall plan or dispose of unsafe food products, the food and drug administrative
authorities shall issue warnings to them and impose fines between RMB10,000 and
RMB30,000 on them.
Regulations Relating to Single-Purpose Commercial Pre-Paid Cards
The Administrative Measures for Single-purpose Commercial Prepaid Cards (for Trial
Implementation) (ج(༊Б)) was promulgated by the Ministry of
Commerce on September 21, 2012 and amended on August 18, 2016. Single-purpose
commercial pre-paid cards refer to pre-paid certificates that are issued by an enterprise
engaged in retail, accommodation, catering, and residential services, and which are exclusively
used to pay for goods or services within the group to which the enterprise belongs to or within
the franchise system of one brand. This includes but not limited to physical cards in the form
of magnetic stripe cards, chip cards paper coupons, and virtual cards in the form of passwords
string codes, graphics and biometric information. In accordance with relevant provisions of the
said Measures, Card issuers shall file with the competent commerce department at the location
of industrial and commercial registration for record, within 30 days of starting to offer
single-purpose card services. If any card-issuing enterprise fails to comply with the provisions
of the said Measures, the competent commerce department of the people’s government above
the county-level in the locality where such violation occurs shall order it to make rectifications.
Where the enterprise fails to do so within the said time limit, the enterprise shall be subject to
a fine of more than RMB10,000 and less than RMB30,000.
REGULATIONS ON FOOD ADVERTISEMENT
According to the Advertising Law of the PRC (the “ Advertising Law ”, ʕശɛ͏΍ձ
) promulgated by the SCNPC on October 27, 1994 and most recently revised on
April 29, 2021, no advertisement shall contain any false or misleading information, and shall
not deceive or mislead consumers. Any advertiser, advertising agent or advertisement publisher
shall, when engaging in advertising activities, comply with laws and administrative
regulations, act in good faith, and conduct fair competition. In any advertisement, where there
are statements regarding the performance, function, place of origin, purpose, quality,
ingredients, price, producer, valid period and guarantees of the product, or the content,
provider, form, quality, price and guarantees of the service, such statements shall be accurate,
clear and explicit.
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REGULATIONS ON CONSUMER RIGHTS AND BENEFITS
The principal legal provisions for the protection of consumer interests are set out in the
PRC Consumer Rights and Interests Protection Law (the “ Consumer Protection Law ”,ʕശ
), which was promulgated on October 31, 1993, and came into
effect on January 1, 1994, and was subsequently amended in 2009 and 2013. Pursuant to the
Consumer Protection Law, business operators must guarantee that the commodities they sell
satisfy the requirements for personal or property safety, provide consumers with authentic
information about the commodities, and guarantee the quality, function, usage, and term of
validity of the commodities. Failure to comply with the Consumer Protection Law may subject
business operators to civil liabilities such as refunding purchase prices, replacing or repairing
the commodities, mitigating the damages, compensation, and restoring the reputation, and
subject the business operators or the responsible individuals to criminal penalties if business
operators commit crimes by infringing the legitimate rights and interests of consumers.
According to the Consumer Protection Law, where operators knowingly provide consumers
with defective commodities or services causing death or serious damage to the health of
consumers or other victims, the victims may require operators to compensate them for losses
in accordance with the Consumer Protection Law and other relevant provisions, and claim
punitive compensation of not more than two times the amount of losses incurred. The Food
Safety Law also provides the amount of punitive compensation that the operators knowingly
provide food failing to meet the food safety standards shall paid the victims, which is ten times
the price paid or three times the loss unless the amount of the additional compensation is less
than RMB1,000 where the punitive compensation shall be RMB1,000.
REGULATIONS ON COMMERCIAL FRANCHISING
Pursuant to the Regulations on the Administration of Commercial Franchising ( ਠุत
஢຾ᐄ၍ଣૢԷ), or the Franchising Regulations, which promulgated by the State Council
on February 6, 2007, and became effective on May 1, 2007, commercial franchising refers to
the business activities where a franchisor, being an enterprise possessing registered trademarks,
corporate logos, patents, proprietary technology, or other business resources, licenses through
contracts its business resources to the franchisees, being other business operators, and the
franchisees carry out business operation under a uniform business model and pay franchising
fees to the franchisor pursuant to the contracts. The Franchising Regulations requires that any
enterprise engaging in trans-provincial franchise business shall register with the MOFCOM ,
and any enterprise engaging in franchise business within one province shall register with the
provincial counterpart of the MOFCOM. The Franchising Regulations also set forth a number
of requirements for the franchisors and to govern the franchise agreements. For example, the
franchisors and franchisees are required to enter into franchising agreements containing certain
required terms, and the franchise term thereunder shall be no less than three years unless
otherwise agreed by the franchisee.
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On December 12, 2011, the MOFCOM promulgated the Administrative Measures for the
Filing of Commercial Franchisees (), which became effective
on February 1, 2012, was most recently amended on December 29, 2023, and sets forth in detail
the procedures and documents required for such filing, including, among other things, within
15 days after executing the first franchise agreement, the franchisor shall file with the
MOFCOM or its local counterparts for record, and if there occurs any change to the
franchisor’s business registration, business resources, and the distribution of all franchisee
outlets throughout China, the franchisor shall apply to the MOFCOM for alteration within 30
days after the occurrence of such change. Furthermore, within the first quarter of each year, the
franchisor shall report the execution, revocation, termination, and renewal of the franchise
agreements occurring in the previous year to the MOFCOM or its local counterparts, the failure
of which may subject the franchisor to an order of rectification and a fine up to RMB50,000.
Pursuant to the Administrative Measures on the Information Disclosure of Commercial
Franchising (), promulgated by the MOFCOM on April
30, 2007, amended on February 23, 2012 and effective on April 1, 2012, the franchisor shall
disclose to franchisees a list of information in writing at least 30 days prior to the execution
of the franchising agreements, such as basic information of the franchisor and the franchise
activities, basic information of business resources owned by the franchisor and basic
information on franchise expenses.
REGULATIONS ON REAL ESTATE LEASING
According to the PRC Civil Code (Պ) which became effective
on January 1, 2021, an owner of immovable or movable property is entitled to possession, use,
earnings, and disposal of such property in accordance with the law. Subject to the consent of
the lessor, the lessee may sublease the leased premises to a third party. Where a lessee
subleases the premises, the lease contract between the lessee and the lessor remains valid. The
lessor is entitled to terminate the lease if the lessee subleases the premises without the consent
of the lessor. In addition, if the ownership of the leased premises changes during the lessee’s
possession in accordance with the terms of the lease contract, the validity of the lease contract
shall not be affected.
On December 1, 2010, the Ministry of Housing and Urban-Rural Development
promulgated the Administrative Measures on Leasing of Commodity Housing (ॡ
), which became effective on February 1, 2011. According to such measures, the
lessor and the lessee are required to complete property leasing registration and filing
formalities within 30 days from the execution of the property lease agreement with the
development authorities or real estate authorities of the municipality or county where the
leased property is located. If a company fails to do so, it may be ordered to rectify within a
stipulated period, and if such company fails to rectify, a fine ranging from RMB1,000 to
RMB10,000 may be imposed on each lease agreement.
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REGULATIONS ON PRICING
According to the Pricing Law of the PRC (), which was
promulgated by SCNPC on December 29, 1997 and took effect on May 1, 1998, business
operators must, as required by the government departments in charge of pricing, mark the
prices explicitly and indicate the name, production origin, specifications, and other related
particulars clearly. Business operators may not sell products at a premium or charge any fees
that are not explicitly indicated. Business operators must not commit the specified unlawful
pricing activities, such as colluding with others to manipulate the market price, providing
fraudulent discounted price information, using false or misleading prices to deceive customers
to transact, or conducting price discrimination against other business operators. Failure to
comply with the Pricing Law or other rules or regulations on pricing may subject business
operators to administrative sanctions such as warning, orders to cease unlawful activities,
payment of compensation to customers, confiscation of illegal gains, and/or fines. The business
operators may be ordered to suspend business for rectification, or have their business licenses
revoked if the circumstances are severe.
REGULATIONS ON E-COMMERCE
The E-commerce Law of the PRC (), enacted by the
SCNPC on August 31, 2018, and implemented from January 1, 2019, establishes fundamental
guidelines for e-commerce operators engaged in commercial activities. According to this
legislation, e-commerce operators are obligated to uphold principles of voluntariness, equality,
fairness, and good faith in their business dealings. They are further mandated to comply with
legal provisions and business ethics, participate equitably in market competition, fulfill
responsibilities pertaining to consumer rights protection, environmental preservation,
intellectual property safeguarding, network security, and personal information confidentiality.
E-commerce operators are also held accountable for the quality of their products and services.
In instances where e-commerce operators fail to meet their contractual obligations, breach
agreed-upon terms, or cause harm to others, they are liable for civil consequences as stipulated
by the Law. Moreover, e-commerce entities conducting business activities without obtaining
required administrative permits, offering goods or services prohibited by laws or
administrative regulations, or neglecting their obligations to provide necessary information,
may incur penalties imposed by the market supervision and management authorities, in
accordance with pertinent laws and administrative regulations. The E-commerce Law
emphasizes the importance of ethical conduct and legal compliance in the realm of electronic
commerce, aiming to ensure integrity, fairness, and accountability within the digital
marketplace.
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REGULATIONS ON CYBER SECURITY AND PRIV ACY PROTECTION
Cyber Security
The Cyber Security Law of the PRC (the “ Cyber Security Law ”, ʕശɛ͏΍ձ਷ၣ
) was promulgated by the SCNPC on November 7, 2016 and came into effect on
June 1, 2017. The Cyber Security Law applies to network construction, operation, maintenance
and use of the network as well as to the supervision and administration of cyber security within
PRC territory.
According to the Cyber Security Law, network operators, while carrying out business and
service activities, must abide by laws and administrative regulations, show respect for social
moralities, follow business ethics, act in good faith, comply with cyber security protection
obligations, accept supervision by the government and society and comply with their social
responsibilities. For the construction and operation of a network or the provision of services
through a network, in accordance with the provisions of laws administrative regulations and
mandatory national standards, technical and other necessary measures are required to ensure
the secure and stable operation of the network, effectively respond to cyber security incidents,
prevent crimes committed on the network, and to maintain the integrity, confidentiality and
availability of cyber data.
Network operators must keep users’ personal information that they have collected strictly
confidential, and establish and improve their system for the protection of users’ information.
To collect and use personal information, network operators must follow the principles of
legitimacy, integrity and necessity, disclose their rules of data collection and use, clearly
express the purpose, means and scope of collecting and using the information, and obtain the
consent of the persons whose data is gathered. Network operators must adopt technical and
other necessary measures to ensure the security of the personal information they have collected
and to prevent such information from being divulged, damaged or lost. If personal information
has been or may be divulged, damaged or lost, it is necessary to take immediate remedial
measures and inform users promptly according and report the same to the relevant competent
departments. Network operators who do not comply with the Cyber Security Law may be
subject to fines, suspension of their businesses, shutdown of their websites, and revocation of
their business licenses.
On July 30, 2021, the State Council promulgated the Regulations for Safe Protection of
Critical Information Infrastructure (ᚐૢԷ) (the “ Safe
Protection Regulations ”) which came into effect on September 1, 2021. Pursuant to the Safe
Protection Regulations, critical information infrastructure refers to important network
infrastructure and information system in public telecommunications, information services,
energy sources, transportation and other critical industries and domains, in which any
destruction or data leakage will have severe impact on national security, the nation’s welfare,
the people’s living and public interests.
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According to the Cybersecurity Review Measures (2021) (ج2021) )
promulgated by the Cyberspace Administration of China on December 28, 2021 and effective
on February 15, 2022, critical information infrastructure operators who purchase network
products and services that affect or may affect national security shall report to the
cybersecurity review office for a cybersecurity review. Online platform operators possessing
personal information of more than 1 million users must report to the cybersecurity review
office for a cybersecurity review before going public abroad. According to the Administration
Regulations on Cyber Data Security ( ၣഖᅰኽτΌ၍ଣૢԷ) promulgated by the State
Council of China on September 24, 2024 and came into effect on January 1, 2025, where
network data handlers carry out network data processing activities that affect or may affect
national security, they shall undergo a national security review in accordance with relevant
national regulations.
Personal Information Protection
Pursuant to the PRC Civil Code (Պ), personal information of a
natural person shall be protected by the law. Any organization or individual that needs to obtain
personal information of others shall obtain such information legally and ensure the safety of
such information, and shall not illegally collect, use, process or transmit personal information
of others, or illegally purchase or sell, provide, or make public personal information of others.
Further, the Ninth Amendment to the Criminal Law of the PRC (ج
ࣩ(ɘ)), which issued by the SCNPC on August 29, 2015, and became effective on
November 1, 2015, stipulates that any network service provider that fails to fulfill the
obligations related to information network security management as required by applicable laws
and administrative regulations and refuses to take corrective measures, will be subject to
criminal liability for causing (1) any large-scale dissemination of illegal information; (2) any
severe effect due to the leakage of users’ information; (3) any serious loss of evidence of
criminal activities; or (4) other severe situations, and any individual or entity that (i) sells or
provides personal information to others unlawfully or (ii) steals or illegally obtains any
personal information will be subject to criminal liability in severe situations.
The Data Security Law of the PRC (), which was
promulgated by the SCNPC on June 10, 2021 and took effect on September 1, 2021, provides
that China shall establish a data classification and grading protection system, formulate the
important data catalogs to enhance the protection of important data and establish national core
data management system to provide stricter protection of national core data. The conduct of
data processing activities shall be in compliance with the provisions of laws and regulations,
establishing and completing a data security management system for the entire workflow,
organizing and conducting data security education and training, adopting corresponding
technical measures and other necessary measures to ensure data security, strengthening risk
monitoring, taking immediately disposition measures and promptly reporting to relevant
authorities when data security incidents occur. Besides, data collection by any organization or
individual shall be conducted by lawful and proper means and the data shall not be acquired
by theft or other illegal means. Processors of important data shall specify the person
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responsible for data security and management agencies, implement data security protection
responsibilities, periodically conduct risk assessments of such data processing activities as
provided and submit risk assessment reports to the relevant authorities.
On 20 August 2021, the SCNPC promulgated the Law of Personal Information Protection
of PRC (the “ Personal Information Protection Law ”,),
which became effective on November 1, 2021. Pursuant to the Personal Information Protection
Law, the processing of personal information includes the collection, storage, use, processing,
transmission, provision, disclosure, deletion, etc. of personal information, and before
processing personal information, personal information processors should truthfully, accurately
and completely inform individuals of the following matters in a conspicuous manner and in
clear and easy-to-understand language: (1) the name and contact information of the personal
information processor; (2) purpose of processing personal information, processing method,
type of personal information processed, and retention period; (3) methods and procedures for
individuals to exercise their rights under the Personal Information Protection Law; and (4)
other matters that should be notified as required by laws and administrative regulations.
Personal information processors should also take the following measures to ensure that
personal information processing activities comply with laws and administrative regulations
based on the processing purpose, processing methods, types of personal information, impact on
personal rights and interests, and possible security risks, etc., and to prevent unauthorized
access and personal information leakage, tampering, and loss: (i) formulating internal
management systems and operating procedures; (ii) implementing classified management of
personal information; (iii) adopting corresponding security technical measures such as
encryption and de-identification; (iv) reasonably determining the operating authority for
personal information processing, and regularly conduct safety education and training for
practitioners; (v) formulating and organizing the implementation of emergency plans for
personal information security incidents; and (vi) other measures stipulated by laws and
administrative regulations.
Where personal information is processed in violation of the provisions of the Personal
Information Protection Law, or the processing of personal information fails to fulfill the
personal information protection obligations hereunder, the department performing personal
information protection duties shall order corrections, give warnings, confiscate illegal gains,
and order to suspend or terminate the provision of services by the applications that illegally
process personal information; if the personal information processor refuses to make
corrections, a fine of not more than RMB1 million shall be imposed; the directly responsible
person in charge and other directly responsible personnel shall be fined not less than
RMB10,000 but not more than RMB100,000. For any aforesaid illegal act with serious
circumstances, the department performing personal information protection duties at or above
the provincial level shall order the personal information processor to make corrections,
confiscate the illegal gains, and impose a fine of less than RMB50 million or less than 5% of
the previous year’s turnover. It can also order the suspension of relevant business or suspend
business for rectification, notify the relevant competent authority to revoke the relevant
permits or the business licence; impose a fine of RMB100,000 up to RMB1 million on the
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directly responsible person in charge and other directly responsible personnel, and may decide
to prohibit them from serving as a director, supervisor, senior manager and person in charge
of personal information protection of related companies within a certain period of time.
REGULATIONS ON FIRE PREVENTION
According to the Fire Prevention Law of the PRC (the “Fire Prevention Law”, ʕശɛ
) promulgated by the NPC on April 29, 1998 and amended on October 28,
2008, April 23, 2019 and April 29, 2021, respectively, and the Interim Provisions on Design
Inspection and Acceptance of Fire Protection of Construction Projects (ᄲ
) promulgated by the Ministry of Housing and Urban-Rural
Development of the PRC on April 1, 2020 and amended on August 21, 2023 and came into
effect on October 30, 2023, the competent housing and urban-rural development authority
replaced fire prevention and rescue departments to monitor and administer the fire protection
as-built acceptance check and filing. Upon completion of construction of a development
project which is required to apply for fire safety inspection and acceptance as stipulated by the
housing and urban-rural development authority, the developer shall apply to the housing and
urban-rural development authority for fire safety inspection and acceptance. For other
development projects, the developer shall complete filing formalities with the housing and
urban-rural development authority following the inspection and acceptance, the housing and
urban-rural development department shall conduct spot check. Pursuant to the Fire Prevention
Law, the construction project that fails to complete as-built acceptance check on fire prevention
shall be ordered by the relevant government authorities to close and shall be fined not less than
RMB30,000 but not more than RMB300,000. The construction project that fails to complete
fire safety filing shall be ordered to rectify and be subject to a fine of up to RMB5,000.
Furthermore, pursuant to the Fire Prevention Law (revised in 2019 and 2021), before the
use of or commencement of the business operations in public gathering places, any
construction entities or entities using such places must apply for a fire safety inspection with
the fire rescue agencies of the local people’s governments of such places at or above the county
level. Putting a public gathering place into use or into business operation without permission
and when the place has not undergone fire safety and protection inspections or has failed to
meet fire safety and protection requirements shall result in an order to suspend construction,
use, production or business operations and a fine of not less than RMB30,000 and not more
than RMB300,000 from the competent departments of housing and urban-rural development
and the relevant fire rescue agencies (according to their respective duties).
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REGULATIONS ON FOREIGN TRADE AND CUSTOMS LA W
Foreign Trade
According to the Foreign Trade Law of the PRC (), or the
Foreign Trade Law, promulgated by the SCNPC on May 12, 1994 and amended on December
30, 2022, since December 30, 2022, no registration of foreign trade operators is required. The
PRC government allows the free import and export of goods and technologies, unless otherwise
provided by laws and administrative regulations. Before December 30, 2022, pursuant to the
pre-amendment Foreign Trade Law, a foreign trade operator who is engaged in the import and
export of goods or technologies shall process the filing and registration with the foreign trade
authority under the State Council or its entrusted agencies, unless otherwise provided by the
laws, administrative regulations and requirements of the foreign trade authority under the State
Council. Where a foreign trade operator fails to do so, Customs shall not handle the formalities
for declaration and clearance of the goods imported or exported by the operator.
Customs Law
According to the Customs Law of the PRC (), adopted by the
SCNPC on January 22, 1987, most recently amended on April 29, 2021 and effective on the
same date, the Customs of the People’s Republic of China is the entry and exit customs
supervision and administration authority of PRC. According to the relevant laws and
administrative regulations, the Customs supervises the transportation vehicles, goods, luggage,
postal articles and other articles entering and leaving the country, collects customs duties and
other taxes and fees, prevents and counters smuggling, compiles customs statistics and handles
other customs operations.
According to the Regulations of PRC Customs on Administration of Recordation of
Declaration Entities (), adopted by the
General Administration of Customs on November 19, 2021 and effective on January 1, 2022,
customs declaration entities refer to the consignees and consignors of import and export goods
and customs declaration enterprises recorded with the customs. If the consignees and
consignors of import and export goods and customs declaration enterprises apply for
recordation, they shall obtain the qualification of market entities; among them, if the
consignees and consignors of import and export goods apply for recordation, they shall also
obtain the recordation of the foreign trade operators. The recordation of the customs
declaration entities is valid for a long period of time, while the temporary recordation is valid
for one year, after the expiry reapplication of recordation can be made.
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LA WS AND REGULATIONS ON ENVIRONMENTAL PROTECTION
The Environmental Protection Law of the PRC (the “ Environmental Protection Law ”,
) was promulgated and effective on December 26, 1989, and
amended on April 24, 2014. This legislation has been formulated for the purpose of protecting
and improving both the living environment and the ecological environment, preventing and
controlling pollution, other public hazards and safeguarding people’s health. According to the
provisions of the Environmental Protection Law, in addition to other relevant laws and
regulations of the PRC, the Ministry of Environmental Protection and its local counterparts
take charge of administering and supervising said environmental protection matters. According
to the provisions of the Environmental Protection Law, the environmental impact statement
shall be made for any such construction project and construction projects which have not
carried out environmental impact assessment shall not commence construction. Installations
for the prevention and control of pollution in construction projects must be designed, built and
commissioned together with the principal part of the project. Installations for the prevention
and control of pollution shall not be dismantled or left idle without authorization.
The Environmental Protection Law makes it clear that the liabilities for any violation of
said law include, fine, rectification within a time limit, compulsory ceasing of operations,
compulsory shutout or closedown, restitution, or even criminal punishment.
Environment Impact Assessment
Pursuant to Law of the PRC on Environment Impact Assessment ( ʕശɛ͏΍ձ਷ᐑྤ
), which was issued on October 28, 2002 and amended on July 2, 2016 and
December 29, 2018, the State implements a classification-based management on the
environmental impact assessment (the “ EIA”) of construction projects according to the impact
of the construction projects on the environment. Construction units shall prepare the
Environmental Impact Report (the “ EIR”) or the Environmental Impact Statement (the “ EIS”)
or fill out the Environmental Impact Registration Form (the “ EIRF ”) (hereinafter collectively
referred to as the “ EIA documents ”) according to the following rules: (i) For projects with
potentially serious environmental impacts, an EIR shall be prepared to provide a
comprehensive assessment of their environmental impacts; (ii) For projects with potentially
mild environmental impacts, an EIS shall be prepared to provide an analysis or specialized
assessment of their environmental impacts; and (iii) For projects with very small
environmental impacts so that an EIA is not required, an EIRF shall be filled out. The EIR or
EIS of a construction project shall be submitted by the construction unit in accordance with the
regulations of the State Council to the ecological environment department with powers to
approve the project for review and approval. The State shall implement a record-filing-based
management on EIRF. However, according to the Catalog for the Classified Administration of
the Environmental Impact Assessment of Construction Projects (2021) (ணධͦᐑྤᅂᚤ൙
ᄆʱᗳ၍ଣΤ፽(2021و)), construction projects with regard to the catering industry are
no longer required to submit the EIA documents.
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REGULATIONS ON LABOUR RIGHTS
Labor Law and Labor Contracts Law
According to the Labor Law of the PRC () promulgated on
July 5, 1994 and amended on August 27, 2009 and December 29, 2018, enterprises shall
establish and improve their system of workplace safety and sanitation, strictly abide by state
rules and standards on workplace safety, and conduct employee training on labor safety and
sanitation in the PRC. Labor safety and sanitation facilities shall comply with statutory
standards. Enterprises and institutions shall provide employees with a safe workplace and
sanitation conditions which are in compliance with applicable laws and regulations of labor
protection. The Labor Contract Law of the PRC ()
promulgated on June 29, 2007 and amended on December 28, 2012, and the Implementation
Rules of the Labor Contract Law of the PRC (ૢԷ)
promulgated on September 18, 2008, set out specific provisions in relation to the execution,
terms and termination of a labor contract and the rights and obligations of the employees and
employers, respectively. At the time of hiring, the employers shall truthfully inform the
employees of the scope of work, working conditions, working place, occupational hazards,
work safety, salary and other matters which the employees request to be informed about.
Law on Work Safety
Pursuant to the Law on Work Safety of the PRC (the “ Law on Work Safety ”,ʕശɛ
) effective on November 1, 2002 and amended on August 27, 2009,
August 31, 2014 and June 10, 2021 respectively, enterprises engaged in production activities
must strengthen safety production management, establish and improve the responsibility
system for safe production and ensure a safe production environment. The State establishes and
implements a system for the accountability of production safety accidents. If the company fails
to comply with the provisions of the Law on Work Safety, the supervisory authority on
production safety may issue a rectification order, impose a fine, order the company to cease
production and operation.
Regulations and Law on Social Insurance and Housing Fund
Pursuant to the Social Insurance Law of the PRC (),
which was promulgated on October 28, 2010, became effective on July 1, 2011 and most
recently amended on December 29, 2018, and the Interim Regulations on the Collection of
Social Insurance Fees (ᎈ൬ᅄᖮᅲБૢԷ) issued by the State Council on January
22, 1999 and most recently amended on March 24, 2019, employees shall participate in basic
pension insurance, basic medical insurance and unemployment insurance. Basic pension,
medical and unemployment insurance contributions shall be paid by both employers and
employees. Employees shall also participate in work-related injury insurance and maternity
insurance. Work-related injury insurance and maternity insurance contributions shall be paid
by employers rather than employees. Pursuant to the Notice of the General Office of the State
Council on Issuing the Plan for the Pilot Program of Combined Implementation of Maternity
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Insurance and Basic Medical Insurance for Employees (Ι೯<ᎈձ
ࣩ>) and the Opinions of the General Office of the
State Council on Comprehensively Promoting the Implementation of the Combination of
Maternity Insurance and Basic Medical Insurance for Employees (પ
จԈ) promulgated on January 19, 2017 and
March 6, 2019, maternity insurance and basic medical insurance for employees shall be
consolidated. According to the Social Insurance Law of PRC, employers must carry out social
insurance registration at the local social insurance agency, provide social insurance and pay or
withhold the relevant social insurance premiums for or on behalf of employees. For employers
failing to conduct social insurance registration, the administrative department of social
insurance shall order them to make corrections within a prescribed time limit; if they fail to do
so within the time limit, employers shall have to pay a penalty over one time but no more than
three times of the amount of the social insurance premium payable by them. Where an
employer fails to pay social insurance premiums in full or on time, the social insurance
premium collection agency shall order it to pay or make up the balance within a prescribed time
limit, and shall impose a daily late fee at the rate of 0.05% of the outstanding amount from the
due date; if still failing to pay within the time limit prescribed, a fine of one time to three times
the amount in default will be imposed on them by the competent administrative department.
Pursuant to the Regulations on the Administration of Housing Provident Fund (ʮ
၍ଣૢԷ) which was promulgated on April 3, 1999 and amended on March 24, 2002
and March 24, 2019, employers shall timely pay the housing provident fund in full and overdue
or insufficient payment shall be prohibited. Employers shall process the housing provident
fund payment and deposit registration in the housing provident fund administrative center. For
enterprises which violate the above laws and regulations and fail to apply for housing provident
fund deposit registration or open housing provident fund accounts for their employees, the
housing provident fund administrative center shall order the relevant enterprises to make
corrections within a designated period. Those enterprises failing to process registration
provident fund accounts for their employees within designated period shall be subject to a fine
ranging from RMB10,000 to RMB50,000. When enterprises violate those provisions and fail
to pay the housing provident fund in full amount as due, the housing provident fund
administrative center will order such enterprises to pay up the amount within a prescribed
period; if those enterprises still fail to comply with the regulations upon the expiration of the
above-mentioned time limit, further application will be made to the People’s Court for
mandatory enforcement.
On July 31, 2025, the Supreme People’s Court promulgated the Supreme People’s Court’s
Interpretation (II) on Several Issues Concerning the Application of Law in Labor Dispute Cases
(༆ᙑ(ɚ)) (the “ New Judicial
Interpretation ”), which took effect on September 1, 2025. Article 19(1) of the New Judicial
Interpretation stipulates that if an employer and an employee agree or the employee undertakes
that social insurance contributions need not be paid, the People’s Court shall deem such
agreement or undertaking invalid. Further, the relevant employee has the right to terminate the
labor contract and claim economic compensation from the employer pursuant to Article 38(3)
of the Labor Contract Law.
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REGULATIONS ON INTELLECTUAL PROPERTY RIGHTS
Trademarks
Trademarks are protected by the PRC Trademark Law ()
which was adopted in 1982 and subsequently amended in 1993, 2001, 2013 and 2019,
respectively, as well as the Implementation Regulation of the PRC Trademark Law ( ʕശɛ
ૢԷ) adopted in 2002 and amended in 2014 by the State Council. The
Trademark Office under National Intellectual Property Administration (the “ NIPA”) handles
trademark registrations and grants a term of ten years to registered trademarks which may be
renewed for consecutive ten-year periods upon request by the trademark owner. The trademark
registrant may, by concluding a trademark licensing contract, authorize other persons to use the
registered trademark. The licensor shall supervise the quality of the goods for which the
licensee uses the licensor’s registered trademark, and the licensee shall guarantee the quality
of the goods for which the registered trademark is used. The party authorized to use another’s
registered trademark must indicate the name of the licensee and the place of origin on the goods
that bear the registered trademark. When granting others use of the registered trademarks, the
licensor shall file the trademark license with the Trademark Office for their records, and the
Office shall announce the same. Without putting the trademark license on record, the trademark
may not be used to defend a bona fide third party.
The Patent Law
Pursuant to the Patent Law of the PRC () latest amended by
the SCNPC on October 17, 2020 and came into effect on June 1, 2021 and the Implementation
Rules of The Patent Law of the PRC () amended by the
State Council on January 9, 2010 and last amended on December 11, 2023 and came into effect
on January 20, 2024, patents in China are divided into invention patent, utility patent and
design patent. Invention patent refers to new technical solutions for a product, method or its
improvement; utility patent refers to new technical solutions for the shape, structure or the
combination of both shape and structure of a product, which is applicable for practical use;
design patent refers to new designs of the shape, pattern or the combination of shape and
pattern, or the combination of the color, the shape and pattern of a product with esthetic feeling
and industrial application value. Invention patent shall be valid for 20 years from the date of
application while utility patent shall be valid for 10 years and design patent shall be valid for
15 years from the date of application. The patent right entitled to its owner shall be protected
by the laws. Any person shall be licensed or authorized by the patent owner before using such
patent. Otherwise, the use constitutes an infringement of the patent right.
The Patent Law of the PRC has been amended by the SCNPC on October 17, 2020 and
came into effect on June 1, 2021. Compared with the valid Patent Law which was amended on
December 27, 2008 and come into effect on October 1, 2009, the main changes of the Patent
Law of the PRC (revised in 2020) are concentrated on the following aspects: (1) clarifying the
incentive mechanism for inventor or designer relating to service inventions; (2) extending the
duration of design patent; (3) establishing a new system of “open licensing” (஢̙); (4)
improving the distribution of burden of proof in patent infringement cases; and (5) increasing
the compensation for patent infringement.
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Domain Names
The Measures for the Administration of Internet Domain Names (the “ Domain Name
Measures ”,) was promulgated by the Ministry of Industry and
Information Technology of the PRC on August 24, 2017 and came into effect on November 1,
2017. The Implementation Rules for National Top-level Domain Name Registration (the
“Implementation Rules for Registration ”,) was promulgated
by the China Internet Network Information Center on June 18, 2019 and came into effect on
the same date. The Domain Name Measures regulate the registration of domain names.
Application for registration of national top-level domain names “.CN” and “.China” and
provision of national top-level domain name registration related services shall further comply
with the Implementation Rules for Registration.
The Copyright
The PRC has enacted various laws and regulations relating to copyright protection. The
Copyright Law of the PRC (), which was promulgated on
September 7, 1990, amended on February 26, 2010 and became effective from April 1, 2010
by the SCNPC, amended on November 11, 2020 and became effective from June 1, 2021 by
the SCNPC provides that PRC citizens, legal persons, or other organizations, whether
published or not, enjoy copyright in their works, which include, among others, works of
literature, art, natural science, social science, engineering technology, and computer software.
The term “copyright” includes moral rights and economic rights, and anyone who commits
copyright infringement is subject to civil liability.
The Regulations on Computer Software Protection (ᚐૢԷ), which
was promulgated on June 4, 1991, amended on January 30, 2013 and became effective on
March 1, 2013 by the State Council, stipulates that Chinese residents, legal entities or other
organizations enjoy copyright in the software which they have developed, whether published
or not, and a software copyright owner may register it with the software registration institution
recognized by the copyright administration department of the State Council. The Measures for
the Registration of Computer Software Copyright (),
promulgated by the National Copyright Administration on February 20, 2002 with immediate
effect, regulates registration of software copyright, exclusive licensing contracts for software
copyright and transfer contracts. The Copyright Protection Center of China (the “ CPCC ”) is
the designated software registration authority. The CPCC grants registration certificates to
computer software copyright applicants which conform to the provisions of both the
Regulations on Computer Software Protection and the Measures for the Registration of
Computer Software Copyright.
The PRC is also a signatory to some major international conventions on the protection of
copyright. For example, the PRC became a member of the Berne Convention for the Protection
of Literary and Artistic Works in October 1992, the Universal Copyright Convention in October
1992, and the Agreement on Trade-Related Aspects of Intellectual Property Rights in
December 2001. According to these conventions, a qualified foreign copyright owner may
enjoy certain copyright in China and a copyright owner in China may also acquire specific
foreign copyright protection.
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REGULATIONS ON OVERSEAS SECURITIES OFFERING AND LISTING
On February 17, 2023, the China Securities Regulatory Commission (the “ CSRC ”)
promulgated Trial Administrative Measures of the Overseas Securities Offering and Listing by
Domestic Companies () and five ancillary
interpretive guidelines (collectively, the “ Overseas Listing Trial Measures ”), which came
into effect on March 31, 2023.
Pursuant to the Overseas Listing Trial Measures, PRC domestic companies that seek to
offer and list securities in overseas markets, either directly or indirectly, are required to fulfill
the filing procedure with the CSRC and report the relevant information through filing reports
and legal opinions. The Overseas Listing Trial Measures provides that an overseas listing or
offering is explicitly prohibited, if any of the following: (i) such securities offering and listing
is explicitly prohibited by provisions in laws, administrative regulations and relevant state
rules; (ii) the intended securities offering and listing may endanger national security as
scrutinized and determined in accordance with law by competent authorities under the State
Council; (iii) the domestic company intending to make the securities offering and listing, or the
controlling shareholder(s) and the actual controller of such company, have committed relevant
crimes such as corruption, bribery, embezzlement, misappropriation of property or
undermining the order of the socialist market economy during the latest three years; (iv) the
domestic company intending to make the securities offering and listing is currently under
investigations for suspicion of criminal offenses or major violations of laws and regulations,
and no conclusion has yet been made thereof; or (v) there are material ownership disputes over
equity held by the domestic company’s controlling shareholder(s) or by other shareholder(s)
that are controlled by the controlling shareholder(s) and/or actual controller.
The Overseas Listing Trial Measures also provides that the overseas securities offering
and listing will be deemed as an indirect overseas offering by PRC domestic companies if (i)
50% or more of any of the issuer’s operating revenue, total profit, total assets or net assets as
documented in its audited consolidated financial statements for the most recent fiscal year are
accounted for by PRC domestic companies; and (ii) the issuer’s principal business activities are
conducted in the PRC, or its principal place(s) of business are located in the PRC, or the senior
executives responsible for its business operations and management are mostly Chinese citizens
or persons domiciled in the PRC. Where an issuer submits an application for offering or listing
to competent overseas regulators or overseas stock exchanges, such issuer must file with the
CSRC within three business days after such application is submitted to the overseas regulators.
The Overseas Listing Trial Measures also requires subsequent reports to be filed with the
CSRC on any material events, such as change of control, investigation or punishment taken by
overseas securities regulatory authorities or other competent authorities, change of listing
status or listing plate, or voluntary or forced delisting of the issuer(s) who have completed
overseas offerings and listings.
If domestic companies fail to fulfill the above-mentioned filing procedures or offer and
list in an overseas market against the prohibited circumstances, they would be ordered to
rectify, warned, and fined between RMB1 million and RMB10 million. The directly liable
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personnel would be warned and fined between RMB0.5 million and RMB5 million. The
controlling shareholders and actual controllers of such domestic companies that organize or
instruct the aforementioned violations would be warned and fined between RMB1 million and
RMB10 million. The directly liable personnel would be fined between RMB0.5 million and
RMB5 million. The securities companies and securities service providers failing to supervise
the domestic companies for compliance of relevant rules would be warned and fined between
RMB0.5 million and RMB5 million. The directly liable personnel would be warned and fined
between RMB0.2 million and RMB2 million. Also, if there is any false records, misleading
statement or any material omission in the filing documents, the domestic companies would be
ordered to rectify, warned, and fined between RMB1 million and RMB10 million. The directly
liable personnel would be imposed warnings and fined between RMB0.5 million and RMB5
million. The controlling shareholders and actual controllers of such domestic companies who
organize or instruct the aforementioned violations or conceal the relevant matters leading to the
occurrence of the aforementioned violations would be warned and fined between RMB1
million and RMB10 million. The directly liable personnel would be fined between RMB0.5
million and RMB5 million. The securities companies or securities service providers who fail
to act with due diligence, make false records, misleading statements or material omissions in
the documents produced and issued domestically, or in the documents produced and issued
overseas which led to disruption of the domestic market order and infringement on the lawful
rights and interests of domestic investors, would be, amongst others, fined up to 10 times of
the service fees or between RMB0.5 million and RMB5 million if there are no service fees or
the service fees are less than RMB0.5 million. The directly liable personnel would be warned
and fined between RMB0.2 million and RMB2 million.
REGULATIONS ON DIVIDEND DISTRIBUTION
The principal regulations governing the distribution of dividends of foreign-invested
enterprises include the PRC Company Law, the Foreign Investment Law and the Implementing
Regulation for the Foreign Investment Law of the PRC. Under these laws and regulations,
foreign-invested enterprises in China may pay dividends only out of their accumulated after-tax
profits, if any, determined following PRC accounting standards and regulations. In addition,
foreign-invested enterprises in China are required to allocate at least 10% of their respective
accumulated profits each year, if any, to fund certain reserve funds until these reserves have
reached 50% of the registered capital of the enterprises. A PRC company shall not distribute
any profits until any losses from prior fiscal years have been offset. Profits retained from prior
fiscal years may be distributed together with distributable profits from the current fiscal year.
Wholly foreign-owned companies may, at their discretion, allocate a portion of their after-tax
profits based on PRC accounting standards to staff welfare and bonus funds. These reserves are
not distributable as cash dividends.
REGULATIONS ON FOREIGN EXCHANGE
Pursuant to the Foreign Exchange Administrative Regulations of the PRC ( ʕശɛ͏΍
ձ਷̮ි၍ଣૢԷ), as amended in August 5, 2008, the RMB is freely convertible for current
account items, including for the distribution of dividends, interest payments, trade and
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service-related foreign exchange transactions, but not for capital account items, such as direct
investments, loans, repatriation of investments and investments in securities outside the PRC,
unless prior approval of the State Administration of Foreign Exchange (the “ SAFE ”) is
obtained and prior registration with SAFE is made.
According to the Circular of the State Administration of Foreign Exchange on Further
Simplifying and Improving the Foreign Exchange Management Policies for Direct Investment
() (the “ Circular
13”), which was promulgated on February 13, 2015 and with effect from June 1, 2015 partially
abolished on December 30, 2019, enterprises are not required to get foreign exchange
registration approval under domestic direct investment or overseas direct investment. Domestic
investors (including domestic foreign-invested enterprises, domestic investing entities of
foreign enterprises) should carry out foreign exchange registration of direct investment with
banks.
According to the Circular of the State Administration of Foreign Exchange on Reforming
the Management Approach regarding the Settlement of Foreign Exchange Capital of Foreign
invested Enterprises (ஷ
) (the “ Circular 19 ”) promulgated on March 30, 2015 and effective on June 1, 2015
partially abolished on December 30, 2019 and amended on March 23, 2023 and the Circular
of the State Administration of Foreign Exchange on Reforming and Regulating Policies on the
Control over Foreign Exchange Settlement under Capital Accounts (ҷ
) (the “ Circular 16 ”) promulgated and effective on
June 9, 2016 and amended on December 4, 2023, domestic enterprises (including Chinese-
funded enterprises and foreign-invested enterprises, excluding financial institutions) may go
through foreign exchange settlement formalities for their foreign debts at their discretion.
Where the current regulations contain any restrictive provisions on the foreign exchange
settlement of foreign exchange receipts under capital accounts of domestic institutions, such
provisions shall prevail. Domestic institutions may, at their discretion, settle up to 100% of
foreign exchange receipts under capital accounts for the time being. The SAFE may adjust the
above proportion in due time according to the balance of payments. While being eligible for
discretionary settlement of foreign exchange receipts under capital accounts, domestic
institutions may also opt to use their foreign exchange receipts according to the payment-based
settlement system. A bank shall, in handling each transaction of foreign exchange settlement
for a domestic institution according to the principle of payment-based settlement, review the
authenticity and compliance of the use of the funds settled in the previous transaction
(including discretionary settlement and payment-based settlement) of such institution.
The Circular of the State Administration of Foreign Exchange on Further Promoting
Cross-border Trade and Investment Facilitation (ආ
) (the “ Circular 28 ”) was promulgated and became effective on
October 23, 2019 and amended on December 4, 2023. According to the Circular 28,
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non-investment foreign-funded enterprises are allowed to lawfully make domestic equity
investments using their capital if the domestic investment projects are in compliance with the
prevailing special administrative measures for access of foreign investments and the relevant
regulations.
REGULATIONS ON TAXES
Corporate Income Tax
Pursuant to the Enterprise Income Tax Law of the PRC (੻೼
), which was promulgated on March 16, 2007 and last amended on December 29, 2018,
and the Regulation on the Implementation of the Enterprise Income Tax Law of the PRC ( ʕ
ૢԷ) which was promulgated on December 6, 2007 and
lately amended on December 6, 2024, the income tax rate for both domestic and foreign-
invested enterprises is 25%. Furthermore, resident enterprises, which are enterprises that are
set up in accordance with PRC law, or that are set up in accordance with the law of a foreign
country (region) but with their actual administration institution in the PRC, must pay enterprise
income tax originating both within and outside the PRC. While non-resident enterprises that
have set up institutions or premises in the PRC shall pay enterprise income tax in relation to
their income originating from the PRC and obtained by their institutions or establishments, and
their income incurred outside the PRC but where there is an actual relationship with the
institutions or establishments set up by such enterprises. Non-resident enterprises that have not
set up institutions or establishments in the PRC, or where institutions or establishments are set
up but where there is no actual relationship with the income obtained by the institutions or
establishments set up by such enterprises, they must pay enterprise income tax in relation to
the income originating from the PRC at the rate of 10%.
Value-added Tax
Pursuant to the V alue-added Tax of the PRC () promulgated
by SCNPC on December 25, 2024 and will become effective from January 1, 2026 and the
Provisional Regulations on V alue-added Tax of the PRC (೼ᅲБૢ
Է) promulgated on December 13, 1993 and last amended on November 19, 2017 and its
implementation rules, all entities or individuals in the PRC engaging in the sale of goods, the
provision of processing services, repairs and replacement services, and the importation of
goods are required to pay value-added tax (the “ VAT”). Pursuant to the Circular on
Comprehensively Promoting the Pilot Program of the Collection of V alue-added Tax in Lieu of
Business Tax () promulgated on March 23,
2016 and as amended on July 11, 2017, December 25, 2017 and March 20, 2019 respectively,
upon approval of the State Council, as of May 1, 2016, the pilot program of the collection of
value-added tax in lieu of business tax shall be promoted nationwide in a comprehensive
manner, and all taxpayers of business taxpayers engaged in the building industry, the real estate
industry, the financial industry and the life service industry shall be included in the scope of
the pilot program with regard to payment of value-added tax instead of business tax.
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Pursuant to the Provisional Regulations on V alue-added Tax of the PRC, the Circular on
Comprehensively Promoting the Pilot Program of the Collection of V alue-added Tax in Lieu of
Business Tax, the Circular of the Ministry of Finance and the State Administration of Taxation
on Adjusting V alue-added Tax Rates ()
promulgated by Ministry of Finance and State Administration of Taxation on April 4, 2018 and
became effective on May 1, 2018, and the Announcement on Relevant Policies for Deepening
V alue-Added Tax Reform (ʮ
ѓ) promulgated by the Ministry of Finance, the State Administration of Taxation and
General Administration of Customs on March 20, 2019 and became effective on April 1, 2019,
with respect to V A T taxable sales of a V A T general taxpayer, the applicable V A T rates are 13%,
9% and 6% respectively.
REGULATIONS RELATED TO THE “FULL CIRCULATION” OF H SHARE
“Full circulation” refers to the process of listing and trading on the Stock Exchange the
domestically unlisted shares of an H-share listed company. This includes unlisted domestic
shares owned by domestic shareholders before the overseas listing, unlisted domestic shares
issued additionally after the overseas listing, as well as unlisted shares held by foreign
shareholders.
On November 14, 2019, the CSRC announced the Guidelines for the “Full Circulation”
Program for Domestic Unlisted Shares of H-share Listed Companies ( Hٰ
΅͡ሗ“ஷ”ˏ)( “ Guidelines for the ‘Full Circulation ’”), which were amended
on August 10, 2023. As outlined in the Guidelines for “Full Circulation,” shareholders of
domestic unlisted shares have the flexibility to jointly determine the amount and proportion of
shares that will be included in the circulation application. This determination should be reached
through mutual consultation, ensuring compliance with relevant laws, regulations and policies
governing state-owned asset administration, foreign investment and industry regulation.
Subsequently, the H-share listed company corresponding to these shares may be authorized to
file for “full circulation” with the CSRC. An unlisted domestic joint stock company may file
with the CSRC for “full circulation” at the time of its initial public offering and listing
overseas. After domestic unlisted shares are listed and circulated on the Stock Exchange, they
may not be transferred back to China. Pursuant to the Overseas Listing Measures, which came
into effect on March 31, 2023, for a domestic company directly offering and listing overseas,
shareholders of its domestic unlisted shares applying to convert such shares into shares listed
and traded on an overseas trading venue shall conform to relevant regulations promulgated by
the CSRC. Additionally, they are required to authorize the domestic company to submit the
conversion application to the CSRC on their behalf.
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On December 31, 2019, China Securities Depository and Clearing Corporation Limited
(the “ CSDC ”) and Shenzhen Stock Exchange (the “ SZSE ”) jointly announced the Measures for
Implementation of H-share “Full Circulation” Business ( Hٰ“ஷ”) (the
“Measures for Implementation ”). The operations related to the “full circulation” of H-share,
including cross-border conversion registration, deposit and holding details maintenance,
transaction entrustment, instruction transmission, settlement, management of settlement
participants and services of nominal holders, are regulated by the Measures for
Implementation. In cases where the Measures for Implementation do not provide specific
guidance, procedures shall be followed by referring to other business rules established by the
CSDC and China Securities Depository and Clearing (Hong Kong) Company Limited, as well
as the SZSE.
HONG KONG LA WS AND REGULATIONS
This section sets out a summary of certain aspects of the laws and regulations which are
relevant to our Group’s operations and business in Hong Kong. Information contained in this
section should not be construed as a comprehensive summary of the laws and regulations in
Hong Kong applicable to our Group.
LA WS AND REGULATIONS ON OUR BUSINESS OPERATIONS IN HONG KONG
Public Health and Municipal Services Ordinance
The legal framework for food safety control in Hong Kong is set out in Part V of the
Public Health and Municipal Services Ordinance (Chapter 132 of the Laws of Hong Kong) (the
“PHMSO ”) and its relevant subsidiary legislation. All food premises in Hong Kong are
required to be licensed to ensure that they comply with the necessary health, fire and building
safety requirements before opening for business. The PHMSO requires the manufacturers and
sellers of food to ensure that their products are fit for human consumption and comply with the
requirements of food safety and food standards etc.
The Food and Environmental Hygiene Department (the “ FEHD ”) is responsible for the
enforcement of the relevant laws and regulations under the PHMSO. The FEHD may make
regulations to regulate the manufacturing and sale of food. It also has power to take samples
of all kinds of food products, examine, seize and remove any food which is intended for human
consumption.
Licences and approvals
Our Group requires the following registration, licences or approvals for the operation of
our restaurants in Hong Kong:
(1) Business registration certificate — under section 5 of the Business Registration
Ordinance (Chapter 310 of the Laws of Hong Kong), any person carrying on a
business must obtain a business registration certificate.
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(2) General restaurant licence — any person operating a restaurant in Hong Kong is
required to obtain a restaurant licence from the FEHD under the PHMSO and the
Food Business Regulation (Chapter 132X of the Laws of Hong Kong) before
commencing the restaurant business. A general restaurant licence permits the
licensee to prepare and sell any kind of food for consumption on the premises.
(3) Demerit points system — The demerit points system is a penalty system operated by
the FEHD to sanction food businesses for repeated violations of relevant hygiene
and food safety legislations.
(4) Warning letter system — The FEHD has implemented a warning letter system where
it can cancel provisional and full food business licences in respect of breaches of
licensing requirements or conditions. Breaches of licensing requirements will result
in issuing of verbal/written warnings to the licensee.
LA WS AND REGULATIONS ON EMPLOYMENT IN HONG KONG
Employment Ordinance
The Employment Ordinance (Chapter 57 of the Laws of Hong Kong) provides for,
amongst other things, the protection of the wages of employees, to regulate general conditions
of employment, and for matters connected therewith.
Employees’ Compensation Ordinance
The Employees’ Compensation Ordinance (Chapter 282 of the Laws of Hong Kong)
establishes a no-fault and non-contributory employee compensation system for work injuries
and lays down the rights and obligations of employers and employees respectively in respect
of injuries or death caused by accidents arising out of and in the course of employment.
Minimum Wage Ordinance
The Minimum Wage Ordinance (Chapter 608 of the Laws of Hong Kong) provides for a
statutory minimum hourly wage rate (currently set at HK$42.1) during the wage period for
every employee engaged under a contract of employment. Any provision of a contract of
employment that purports to extinguish or reduce any right, benefit or protection conferred on
the employee by the ordinance is void.
Mandatory Provident Fund Schemes Ordinance
Section 7 of the Mandatory Provident Fund Schemes Ordinance (Chapter 485 of the Laws
of Hong Kong) requires every employer of a relevant employee must take all practicable steps
to ensure that the employee becomes a member of a registered scheme within the permitted
period after the relevant time.
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Occupiers Liability Ordinance
The Occupiers Liability Ordinance (Chapter 314 of the Laws of Hong Kong) regulates the
obligations of a person occupying or having control of premises on injury resulting to persons
or damage caused to goods or other property lawfully on the land.
LA WS AND REGULATIONS ON OTHER LEGAL COMPLIANCES IN HONG KONG
Water Pollution Control Ordinance
In Hong Kong, the discharge of trade effluents into specific water control zones is subject
to control and the discharger is required to obtain a water pollution control licence granted by
the Director of Environmental Protection under the Water Pollution Control Ordinance
(Chapter 358 of the Laws of Hong Kong) before commencing the discharge.
Personal Data (Privacy) Ordinance
The Group’s operations in Hong Kong are primarily governed by the Personal Data
(Privacy) Ordinance (Chapter 486 of the Laws of Hong Kong), which regulates the collection,
storage, usage, transfer, disclosure, and destruction of personal data. Key compliance
requirements include adherence to the six Data Protection Principles in accordance with the
ordinance.
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OVERVIEW
We are a modern Chinese noodle restaurants operator in China. We operate the Xiao
Noodles (༾Ԉʃᙢ) brand in the Chinese Mainland and Hong Kong SAR. Our restaurant
network encompassed 451 restaurants in 22 cities in the Chinese Mainland and 14 restaurants
in Hong Kong SAR as of the Latest Practicable Date. Leveraging our strong growth
momentum, we had 115 new restaurants in pre-opening preparation as of the Latest Practicable
Date. According to Frost & Sullivan, we were the largest Sichuan-Chongqing style noodle
restaurants operator and the fourth largest Chinese noodle restaurants operator in China in
terms of GMV in 2024. We have also achieved the highest CAGR of GMV from 2022 to 2024
among 2024’s top ten Chinese noodle restaurants operators in China.
Our Origin
In 2014, our founding team, Mr. Song, Mr. Su and Ms. Luo, established their first
single-location noodle house on Tiyu East Street in Guangzhou, embarking on their
entrepreneurial journey. Our founding team, Mr. Song, Mr. Su and Ms. Luo, graduated from
South China University of Technology, a tertiary science and engineering institution in
Guangzhou. Mr. Song and Ms. Luo also obtained master’s degrees from the Hong Kong
University of Science and Technology. Under the leadership of our founding team, in
particular, Mr. Song, our founder, who had practical experience in international fast food chain,
we have developed a business model with high degree of standardization, comprehensive
management systems and digitalization, which forms the cornerstone of our success,
integrating the traditional appeal of the Chinese noodle houses with modern restaurant
management, characterized by our adoption of data-driven management approach with the
support of digital infrastructure.
Signature dishes (ۜ)
Our foundation was built on Chongqing noodles (ᅅʃᙢ), a series of spicy flavor staple
dishes originated in the mountain city Chongqing, which has garnered popularity across the
country. According to Frost & Sullivan, we ranked the first among all restaurant chains in
China in terms of offline sales volume of Chongqing noodles, noodles with peas and meat
sauce ( ሣᕏᙢ) and hot and sour sweet potato noodles ( აჂ४) from 2022 to 2024 for three
consecutive years. Being a Chinese restaurant chain (೐) that specializes in
Chongqing noodles, we have expanded our offerings to a diverse range of spicy and non-spicy
dishes encompassing noodles, rice, snacks and beverages.
Diversified Business Operation ( εʩʷ຾ᐄ)
Over the past decade, we have built our Xiao Noodles restaurants around the diversified
business operation models of serving diverse tastes, around-the-clock and wide-ranging
scenarios with our self-operated and franchising models. We cater to diverse customer groups
covering the elderly, middle-aged and young adults, and children, suitable for both individual
meals and group gatherings. We provide around-the-clock service covering breakfast, lunch,
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afternoon tea, dinner, and late-night snacks. As of the Latest Practicable Date, we had 68
restaurants operating 24 hours a day. Our restaurants operate across various scenarios including
shopping centers, office areas, residential areas, campuses, exhibition centers, scenic spots, and
transportation hubs such as airports, railway stations, ports, highway service areas and ports of
entry. Our diversified business operation approach drives greater customer traffic and visiting
frequency as well as the growth of our restaurant network.
Systematic Management ( ᜗ӻʷ၍ଣ)
We have developed a management system with high degree of standardization,
comprehensive management systems and digitalization, covering the operational aspects of
menu offerings development, procurement, supply chain, site selection and restaurant
establishment, restaurant operations, training, marketing and quality control. Our centralized
headquarters model applies to both self-operated and franchised restaurants, streamlining
operations, adhering to uniform standards, standardizing brand image, and enhancing operation
efficiency. All restaurants, staff, and menu items are connected under our management system.
We firmly believe that as we scale, only through an aligned system can we secure a disciplined
management, ensuring strict adherence to our standards, maintaining consistent dining
environments, service standards and food quality — ultimately delivering a high quality and
reliable customer experience.
Our comprehensive diversified business operation and efficient systematic management
are the building blocks for our competitive advantages, enabling successful replication and
scalable growth of our restaurants.
The Four Pillars of Our Business Development
The development of Xiao Noodles relies on our customers, staff, franchisees and business
partners, who collectively form the four pillars of the development of Xiao Noodles —
symbolized by our brand logo “rhombus-shaped Xiao Noodles (ʃᙢഷҖ)”
.
Market Opportunities
Noodles have long been one of the daily main dishes in the Chinese community.
Operating in the Chinese noodle restaurants segment, our restaurants strive to fulfill the strong
consumer demand for quick and convenient dining experience with the enduring appeal of
noodle dishes. According to Frost & Sullivan, the prosperity of Chinese noodle restaurants in
China has been fueled by the accelerating urbanization process, rising disposable incomes and
the popularity of digital ordering and takeaway platforms. As consumer preferences continue
to evolve, Chinese noodle restaurants are expected to achieve sustained growth through menu
innovation and improved operational efficiency.
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According to Frost & Sullivan, the total GMV of the Chinese noodle restaurant market in
China had expanded from RMB183.3 billion in 2020 to RMB296.2 billion in 2024, at a CAGR
of 12.7%. Looking forward, the growth of the Chinese noodle restaurant market is expected to
accelerate further to reach the total GMV of RMB510.0 billion by 2029, at a CAGR of 10.9%
from 2025 to 2029, based on further urbanization, increase in disposable income and increase
in the proportion of consumers dining out in China. Within the Chinese noodle restaurant
market, the total GMV of market of Chinese noodle restaurants specializing in Sichuan and
Chongqing-style in China had expanded from RMB45.0 billion in 2020 to RMB72.7 billion in
2024, at a CAGR of 12.8%, and is expected to reach the total GMV of RMB135.7 billion by
2029, at a CAGR of 13.2% from 2025 to 2029, which is the highest among the markets of
Chinese noodle restaurants for different types of regional cuisine in China. We have achieved
the highest CAGR of GMV from 2022 to 2024 among 2024’s top ten Chinese noodle
restaurants operators in China in terms of GMV .
Results of Operations
Our success is evidenced by our strong financial track record. During the Track Record
Period, we had managed to sustain expansion of our restaurant number and achieved rapid
growth of our financial performance. From the beginning of the Track Record Period to the
Latest Practicable Date, the number of our restaurants had grown by 249.6% from 133 to 465
restaurants. Our revenue increased from RMB418.1 million in 2022 to RMB800.5 million in
2023 and further increased to RMB1,154.4 million in 2024, representing a CAGR of 66.2%.
Our revenue further increased by 33.8% from RMB525.7 million for the six months ended June
30, 2024 to RMB703.2 million for the six months ended June 30, 2025. During the same
periods, we turned our loss of RMB36.0 million in 2022 into profit of RMB45.9 million,
RMB60.7 million, RMB21.4 million and RMB41.8 million in 2023, 2024 and the six months
ended June 30, 2024 and 2025, respectively. In addition, as a result of our successful operation,
we recorded net cash generated from operating activities of RMB104.8 million, RMB245.1
million, RMB313.5 million, RMB145.7 million and RMB202.1 million in 2022, 2023, 2024
and the six months ended June 30, 2024 and 2025, respectively. We also generally recorded
steady growth in the number and performance results of our restaurants during the Track
Record Period. In 2022, 2023, 2024 and the six months ended June 30, 2024 and 2025, our seat
turnover rate was 3.1, 3.8, 3.7, 3.7 and 3.3, respectively. In 2022, 2023, 2024 and the six
months ended June 30, 2024 and 2025, our average daily orders per restaurant was 327, 408,
387, 390 and 371, respectively. In 2022 and 2023, we had 96 same stores and our same store
sales were RMB381.8 million and RMB491.3 million with same store seat turnover rate of 3.1
and 3.8, and same store average daily orders per restaurant of 329 and 416, respectively; in
2023 and 2024, we had 145 same stores and our same store sales were RMB740.4 million and
RMB709.0 million with same store seat turnover rate of 3.9 and 4.1, and same store average
daily orders per restaurant of 412 and 418, respectively. For the six months ended June 30,
2024 and 2025, we had 214 same stores and our same store sales were RMB479.8 million and
RMB465.1 million with same store seat turnover rate of 3.7 and 3.5, and same store average
daily orders per restaurant of 388 and 391, respectively.
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Restaurant Network Expansion
Driven by our highly standardized operation system, digitalization initiatives, and
constant menu optimization, our restaurant network have achieved significant growth during
the Track Record Period. Our total number of restaurants increased from 170 as of December
31, 2022 to 417 as of June 30, 2025, representing a growth rate of 145.3%. Among which, the
number of our self-operated restaurants and franchised restaurants increased from 111 and 59
as of December 31, 2022 to 331 and 86 as of June 30, 2025, respectively. During the Track
Record Period, we primarily focused on establishing our market presence in first-tier cities in
the Chinese Mainland. We took advantage of our brand reputation in these cities and opened
new restaurants in locations with high pedestrian traffic, such as transportation hubs, shopping
centers, office areas and residential areas. During the Track Record Period, as part of our effort
to understand the market conditions and customer preferences in new markets, a total of 54 and
seven restaurants were opened in tier two and lower tier cities in the Chinese Mainland and
Hong Kong SAR, respectively. We expect such effort will serve as a foundation for our future
expansion in these new markets.
For the six months ended June 30, 2025, 63 new self-operated and franchised restaurants
were opened. We plan to open approximately 150 to 180, 170 to 200 and 200 to 230 new
restaurants in 2026, 2027 and 2028, respectively, in China and overseas. As of the Latest
Practicable Date, leveraging our strong growth momentum, we had 115 new restaurants in
pre-opening preparation. We plan to increase our market share by further elevating our market
presence in the existing markets, expanding our business into new markets, and gradually
increasing the proportion of our franchised restaurants.
Management System
Our successful management system is built upon the following three features:
 Standardization . We believe standardization management is one of the building
blocks for us to ensure brand consistency, operational efficiency, and customer
satisfaction across different markets and regions. We provide customers with
consistent dining experience in terms of flavor, portion size, food quality and
serving time along with a comfortable and hygienic dining environment across our
Xiao Noodles restaurants, whether self-operated or franchised.
 Comprehensive management systems . We adopt the modern scientific approach as
our management principle. In view of the rapidly growing Chinese noodle
restaurants industry and ever-changing customer demands, we value fast and
continuous learning capability, which allows us to adapt and stay competitive in the
market. Based on years of experience in restaurant operations and our continuous
fine-tuning efforts, we have formulated a comprehensive set of systems for every
critical aspect in the management of a restaurant chain. For example, we have
developed a unified performance evaluation mechanism across our restaurants to
objectively evaluate the performance of each restaurant. Our evaluation mechanism
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quantifies critical metrics in the operation of our restaurants such as customer
service, shift scheduling, dish management, personnel management, food safety,
financial management and inventory management.
 Digitalization . We are committed to digitalizing our restaurants, establishing
technological infrastructure, and exploring the application scenarios of AI and other
advanced technologies in restaurant operation and management. Our applications of
technologies in quality control, dining environment management, customer
feedback analysis and sales estimation enable us to enhance our operational
efficiency, reduce costs, improve the overall dining experience of our customers and
expedite the replication of our existing success to more restaurants. Utilizing the
transaction data collected from our digitalized ordering and membership systems,
we can implement tailored marketing initiatives targeted at specific groups of
customers such as distributing coupons and displaying advertisements.
COMPETITIVE STRENGTHS
Modern Chinese noodle restaurants operator, favorably positioned to capture future
market opportunities
We are a well-known modern Chinese noodle restaurants operator in China. According to
Frost & Sullivan, we were the largest Sichuan-Chongqing style noodle restaurants operator and
the fourth largest Chinese noodle restaurants operator in China in terms of GMV in 2024. We
have also achieved the highest CAGR of GMV from 2022 to 2024 among 2024’s top ten
Chinese noodle restaurants operators in China in terms of GMV .
According to Frost & Sullivan, the Chinese noodle restaurant market in China reached
RMB296.2 billion in GMV in 2024, expanding from RMB183.3 billion in 2020 with a CAGR
of 12.7%. Looking forward, based on the accelerated urbanization, rise in disposable income
and increase in proportion of consumers dining out in China, the growth of the Chinese noodle
restaurant market is projected to further accelerate, with an anticipated GMV of RMB510.0
billion by 2029 and a projected CAGR of 10.9% from 2025 to 2029. We are well-positioned
to capture the market opportunities given our decade of effort in establishing our market
presence. In 2014, we set up our first noodle house in Guangzhou. We have since expanded to
451 restaurants in 22 cities in the Chinese Mainland and 14 restaurants in Hong Kong SAR as
of the Latest Practicable Date.
We are favorably positioned to capture opportunities in the fast-growing Chinese noodle
restaurant market and solidify our market position.
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Diverse menu offerings and affordable dining experience catering to the needs of
customers through our diversified business operation model
We provide diverse menu items comprising dishes of Sichuan and Chongqing cuisine that
are universally enjoyed by consumers, which include our signature Chong Qing-style Noodles
with Peas and Meat Sauce (ມሣᕏᙢ), Hot and Sour Sweet Potato Noodles (ມაჂ४) and
Hot and Spicy Wonton Soup (ϼ௦ң˓). Covering Specialty Noodles (तЍʃᙢ), Maocai
Hotpot (ൄ), Wonton Soup Series (ң˓ӻΐ), Rice Series (Ϸඵӻΐ), Skewer Series (⼮
Еӻΐ), Specialty Appetizers (࠮desserts and beverages, our diversified menu items
form an extensive product matrix. Our menu offerings serve as an optimal choice for
consumers’ daily meals. Each of our restaurants typically offers 30 to 40 SKUs. Leveraging the
variety and compatibility of Sichuan and Chongqing cuisine, we regularly update our menu to
include new menu items and seasonal specialties in order to enhance our customers’ dining
experience.
Capitalizing on our diversified business operation models, we are committed to
maintaining the consistency of our menu items in terms of taste, quantity, quality and serving
time. In order to cater to the demands of different customers across all spectrum and
geographical areas, the dining experience in Xiao Noodles restaurants encompasses the
following features:
 Serving diverse tastes . Our comprehensive and diverse range of culinary offerings
covering both spicy and non-spicy dishes cater to the dining needs of various
customer groups. We cater to diverse customer groups covering the elderly,
middle-aged and young adults, and children, suitable for both individual meals and
group gatherings. Our menus encompass main dishes, snacks, and beverages,
featuring a variety of staple items such as noodles, rice, Maocai hotpot and wontons,
suitable for individual meals and group dining.
 Around-the-clock . We provide around-the-clock service with corresponding menus
to cater to the varied preferences and dining arrangements of our customers. Beyond
the typical peak hours for lunch and dinner, customers can enjoy a diverse array of
our Sichuan and Chongqing dishes throughout the day, encompassing breakfast,
afternoon tea, and late-night snacks. As of the Latest Practicable Date, we had 68
restaurants operating 24 hours a day.
 Wide-ranging scenarios . Our restaurants are strategically located in shopping
centers, office areas, residential areas, campuses, exhibition centers, scenic spots,
and transportation hubs such as airports, railway stations, ports, highway service
areas, and ports of entry in China, catering to the demands across different dining
scenarios.
In general, for the six months ended June 30, 2025, we have strategically designed our
menu in the Chinese Mainland within the unit price range of approximately RMB12 to RMB34
for our main dishes. For the six months ended June 30, 2025, the average price of our main
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dishes in the Chinese Mainland was approximately RMB21 and the average spending per
customer in the Chinese Mainland was approximately RMB27. We have adopted a dynamic
pricing strategy that aims to stimulate market demand and drive sales volume by offering
competitive prices. We strive to increase our operational efficiency and optimize our
procurement costs to sustain these competitive prices. We adjust our menu and pricing in
accordance with the local conditions and the service scenarios of our restaurants to maintain
our competitive advantage. Leveraging our pricing strategy, we are well positioned to compete
in the Chinese noodle restaurant market, establish market recognition and enhance customer
loyalty. In 2024, our stored value member payment rate was approximately 36.5%. In 2024, the
repurchase rate of our stored value members reached approximately 44.5%, which was higher
than the industry average according to Frost & Sullivan.
Highly standardized operational model with high replicability
We have built a highly standardized and scalable business model, which is subject to
continuous fine tuning and proven to be resilient with a solid track record. Our commitment
to the refinement of standardization management is instrumental to our success in achieving
competitive pricing and continuous restaurant network expansion. We believe standardization
management is the building block for us to ensure brand consistency, operational efficiency,
and customer satisfaction across different markets and regions. By standardizing our
operational processes, we create a replicable business model that supports sustainable growth
and smooth expansion. All Xiao Noodles restaurants, whether self-operated or franchised,
operate under a unified set of standard systems:
 Standardization of menus and preparation process . In order to achieve consistent
cooking operations and taste throughout our restaurants, we have standardized our
menus through a structured menu system that utilizes consistent and compatible
ingredients, implementing a straightforward and systematic food preparation
process. Our headquarters oversee our entire supply chain and implement
centralized procurement for all of our restaurants to ensure food safety, quality and
cost efficiency.
 Standardization of customer experience. We have streamlined the ordering process
across our restaurant network and achieved digitalization by encouraging customers
to order and pay with their mobile devices. Our restaurant staff mainly provide
standardized and easy-to-learn services, such as daily pre-opening routines,
customer greetings, table arrangements, delivery of dishes and restaurant hygiene
maintenance, according to their specific positions’ standard operation and service
guidelines.
 Standardization of trainings. We have set up an online training system with offline
training sessions to provide restaurants personnel with a platform to improve
technical, operational and management capabilities through frequent and
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comprehensive in-house trainings and guiding sessions tailored for each of their
positions. We believe that our training mechanism facilitates effective
implementation of standardization across all our restaurants.
 Standardization of performance evaluation mechanism. We have adopted a unified
mechanism across our restaurants to objectively evaluate the performance of each
restaurant. Our evaluation mechanism quantifies critical metrics in the operation of
our restaurants such as customer service, shift scheduling, dish management, food
safety, financial management and inventory management. We set out rational and
controllable evaluation criteria for our restaurants. For example, our system
provides daily staffing recommendations to each of the restaurants based on
estimation of sales. One of our performance indicators is the restaurants’ adherence
rate to our system’s staffing recommendations. Restaurants with satisfactory
performance are rewarded with bonuses. We believe such unified evaluation
mechanism fosters healthy competition among our restaurants and enhances the
overall operational efficiency.
 Standardization of restaurant expansion . We have developed a holistic restaurant
expansion planning system and have set up a development and expansion team for
restaurant expansion execution. We have full-process control over all standardized
steps of restaurant expansion, including restaurant network planning, site selection,
commercial negotiations, design and decoration, construction, legal compliance and
marketing activities. All these steps are visualized in the expansion planning system.
We have also set up a restaurant network planning department that utilizes big data
analytics to advise us on different dimensions of site selection for new restaurants.
Benefited from our effective expansion planning system, the initial breakeven
periods of our self-operated restaurants opened during the Track Record Period and
in operation as of the Latest Practicable Date were generally within two months of
opening.
Leveraging our highly standardized and scalable business model, our restaurant network
has achieved significant growth during the Track Record Period. Our total number of
restaurants increased from 170 as of December 31, 2022 to 417 as of June 30, 2025,
representing a growth rate of 145.3%. In 2022, 2023, 2024 and the six months ended June 30,
2025, 43, 92, 120 and 63 new self-operated and franchised restaurants were opened,
respectively.
Systematic management of self-operated and franchised restaurants
Our success stems from the efficient and systematic management of all Xiao Noodles
restaurants, including both self-operated restaurants and franchised restaurants. We have
established a centralized management model in which key business functions, such as
marketing, menu development, procurement, supply chain management, personnel and
remuneration management, and financial management, are conducted by our headquarters.
Based on our brand development strategies, our headquarters formulate unified standards and
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provide detailed guidelines to our restaurants for the execution of the standards. To ensure
brand consistency, all Xiao Noodles restaurants, whether self-operated or franchised, are
required to follow the unified standards and adhere to the headquarters’ operational guidelines.
We also set out rational and controllable performance evaluation criteria for our restaurants.
This model can streamline our operation procedures, standardize our brand image and enhance
management efficiency.
Capitalizing on the success of our self-operated model, we strive to further expand our
market presence through the franchise model under centralized management at our
headquarters. We take advantage of the key benefits of the franchise model, including (i)
accelerated expansion of our restaurant network and enhanced regional penetration, driving
increased market share, and (ii) leveraging the entrepreneurial spirit, local connections and
resources of franchisees.
We consider our franchisees as long-term partners. To ensure that every aspect of their
restaurant operation is properly managed and optimized for success, we adopt a rigorous
franchisee selection process and maintain strong oversight of franchised restaurants. We
support our franchisees through the provision of standardized guidelines, methodologies and
systemic tools for their restaurant operation. For the purpose of maintaining sustainable
business growth and ensuring successful operation of new franchised restaurants, we work
closely and continuously with our franchisees to deliver high-quality dishes and dining
experiences. Our franchisees are typically responsible for initial capital investment and site
selection for the opening of the franchised restaurants, which are then managed uniformly in
accordance with our Group’s guidelines after opening. The success of our franchise model is
proven by the steady growth in the number of our franchised restaurants during the Track
Record Period. Except for the restaurants under authorized operation model which were closed
by the first half of 2023, the number of our franchised restaurants that were closed was nil, nil,
three, nil and four in 2022, 2023, 2024 and the six months ended June 30, 2024 and 2025,
respectively.
For example, our centralized management system provides tailored recommendations on
the ordering of ingredients and staffing schedules for each of the restaurants. Managers at
individual restaurants are primarily responsible for overseeing the operational conditions of the
restaurants, managing the daily workflow of the restaurants, and supervising their respective
teams of restaurant staff, who are typically assigned standardized and easy-to-learn tasks, such
as daily pre-opening routines, customer greetings, table arrangements, food preparation,
delivery of dishes and restaurant hygiene maintenance, according to our operation standards
and service guidelines.
We believe our centralized and standardized management not only ensures the quality of
our culinary offerings and attracts more customers but also brings more franchisees under our
brand, further propelling our growth. As of June 30, 2025, we had 86 franchised restaurants.
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Digitalization supporting restaurant and operations management
We are committed to digitalizing our restaurants and establishing technological
infrastructure for our restaurant management and overall business operations. We constantly
develop new tools and adopt new technologies to accommodate our ever-changing business
needs. As of June 30, 2025, a majority of our restaurant operation systems were self-developed
by our in-house information technology R&D team, which ensures the coherence and
adaptability of the digital systems with our operational needs. Leveraging our technological
infrastructure that digitalizes and streamlines the complexity of restaurant operations at both
our headquarters and restaurant level, we are able to enhance our operational efficiency, reduce
costs, improve the overall dining experience of our customers and expedite the replication of
our existing success to more restaurants.
Our proprietary technological infrastructure supports and enhances every aspect of our
business operations ranging from front-end ordering of dishes by customers to back-end digital
systems for shift scheduling, dish management, procurement, inventory, supply chain, human
resource, employee training and evaluation.
 Digital ordering system . Our self-developed mobile ordering system allows us to
streamline the ordering process and shorten the ordering time for each customer.
Customers can order at the tables of our restaurants by scanning the QR code on the
table with their mobile devices. Our self-developed system allows a greater degree
of customization and faster iteration that could flexibly align with our sales and
marketing strategies to deliver an enhanced customer experience. Furthermore, we
encourage our customers to use mobile payment and therefore streamline our
checkout process. In 2024, approximately 98.5% of the total amount paid by our
dine-in customers was settled through mobile payment. As part of our marketing
initiatives, customers are also invited to become our members in the digital ordering
process, fostering customer loyalty and further promoting our brand. In 2024, our
stored value member payment rate was approximately 36.5%. In 2024, the
repurchase rate of our stored value members reached approximately 44.5%.
 Restaurant operations. We have developed digital systems for the seamless and
standardized operations across our restaurants. Our technology and digital systems
establish a closed-loop management process that covers every stage from order
receipt to dish delivery, including ingredient preparation and cooking processes.
These systems manage ingredient shelf life with automatic disposal reminders and
guide our restaurant staff in the preparation process through standardized steps
while tracking dish delivery times to customers. Our food preparation system
leverages our accumulated experience of food preparation and cooking time to
optimize the workflow of our restaurants in real-time in accordance with the
in-coming customers’ orders.
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 Procurement, inventory and supply chain management . We have also put in place an
efficient and centralized digital supply system developed by the research and
development team of our information technology department for collecting supply
orders from our restaurants. The system enables our restaurant staff to place orders
based on the system’s recommendations to ensure that stocks are adequate. In
particular, it typically takes our restaurant staff approximately 15 to 30 minutes to
finish the ordering process in our system. The system also enables our procurement
team to continuously monitor the inventory depletion in our restaurant network, as
well as the procurement amount and inventory level of each restaurant, thereby
reducing waste.
 Human resource, employee training and evaluation . We have developed digital
systems for staff recruitment and retention. For example, our self-developed staffing
system provides daily staffing recommendations to each of the restaurants based on
estimation of sales. Our e-learning and personal development platforms facilitate
our internal training process. We also adopt digital performance appraisal systems.
Our self-developed management system collects real-time operational data and performs
comprehensive business and financial analysis. Such analysis provides our management with
insights into our entire restaurant network, supporting data-driven decision making to optimize
our restaurant operations. Our system automatically generates analytics dashboard for
headquarters management, tracking key indicators such as sales, discount rate, sales volume
and sold-out status of menu offerings in real-time as well as producing daily management profit
and loss statement of each restaurant and in-depth sales analysis. This enables us to quickly
identify underperforming restaurants and make timely operational adjustments. In addition, the
performance indicators used in our digital restaurant performance evaluation mechanism are
automatically and periodically generated by our management system with minimal manual
processing. This provides accurate rankings across our restaurant network for our management
team to efficiently evaluate and improve the overall performance of our restaurants.
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We constantly explore the applications of advanced technologies such as AI to enhance
operational efficiency and quality.
 Quality control management . We have adopted an AI-empowered visual recognition
system that enables us to monitor the operation of all of our restaurants in real time.
This system allows us to ensure efficient and quality services are provided at our
restaurants and make timely adjustments to the restaurant operations as necessary.
For example, our AI-empowered visual recognition system can oversee preparation
of dishes in our restaurants through network cameras. Our operation system also
tracks the inventory and expiration dates of food ingredients at our restaurants and
pushes reminders to our restaurant staff.
 Dining environment . To optimize the dining environment for our customers and our
costs of operation, we have applied IoT and installed sensors in our restaurants to
collect real-time data of energy consumption and room temperature, which can be
accurately monitored by our headquarters. Our system also automatically generates
equipment maintenance reminders to our restaurants.
 Customer feedback analysis . Our AI-empowered system collects and collates
customer feedback from third-party platforms, performs real-time semantic analysis
and extracts relevant data for our menu iteration and optimization, precision
marketing initiatives and risk control.
 Business performance estimation . Our AI-empowered system collects and organizes
business data across multiple dimensions, including online and offline factors as
well as the surrounding environment of each restaurant. By leveraging an extensive
big data platform and AI models, the system estimates future business performance
trends of our restaurants, refining our decisions in respect of ingredients ordering,
food preparation and shift scheduling, achieving optimization of our resource
allocation.
 Marketing . Our marketing department utilizes AI technologies to efficiently prepare
and optimize promotional images to be used in our marketing initiatives.
 Employee training . Our employees have access to our knowledge bases powered by
external AI models, which allow them to acquire relevant work-related knowledge
intuitively and easily master the skills required in their respective positions.
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Management team with entrepreneurial spirit and strong shareholder support
We have an experienced management team led by Mr. Song, our founder, chairman of our
Board of Directors and chief executive officer, who is primarily responsible for overseeing the
business development and directions, planning and executing the overall strategies of our
Group, including the expansion plan of our Group in China and overseas, and leading our
Board. Mr. Song graduated from South China University of Technology and obtained a
master’s degree from the Hong Kong University of Science and Technology. With over 14
years of experience in the food and beverage industry, Mr. Song has a solid understanding of
the market and experience in formulating development strategies, expanding restaurant
network, implementing operation standardization, and uplifting the quality of dishes and
services. Prior to founding our Group, Mr. Song had worked in international fast food
enterprises where he gained deep insights in chain restaurant operations and accumulated an
exceptional comprehension of the Chinese noodle restaurants industry. In 2014, based on
extensive market research and in-person studying of the techniques in the preparation of
Chongqing noodles at Chongqing, Mr. Song, together with Mr. Su and Ms. Luo, co-founded the
Xiao Noodles brand in Guangzhou, embracing the mindset of “scientific attitude and dedication
to achieving excellence in the smallest details” (ၚग़). Under
the leadership of Mr. Song, we expanded our restaurant network from 170 as of December 31,
2022 to 417 as of June 30, 2025, representing a growth rate of 145.3%.
We have also assembled a talented senior management team with substantial experience
across a broad range of disciplines, including menu innovation, marketing, restaurant
operations, supply chain management, restaurant expansion, information technology
management, human resource management, business analysis and financial management. Most
of our senior management personnel have over 10 years of experience in the catering industries
and they are equipped with diverse professional background, on-the-job experience in
international restaurant chains and specialized skills in various fields, bringing scientific and
modern management principles to our operations. We believe that the extensive industry
experience of management team is crucial to the implementation of our business strategies and
will help us maintain sustainable growth in the future.
We have been backed by renowned investors who recognize our development strategies
and have been instrumental in our development and success. We believe that our shareholders’
reputation and brand recognition have contributed and will continue to contribute to our
expansion strategy. Renowned investment institutions, Chinese cuisine restaurant brand
manager and operator, and individual investors, such as Mr. Gu Dongsheng (͛΋͛),
Qingcong Capital (㌾༟͉), Jiu Mao Jiu ( ɘˣɘ), Best Food ( ϵ၅) of Hony Capital ( ̾ᆇ
ҳ༟), Mr. Gao Defu ( ৷ᅃ၅΋͛) and Country Garden V enture Capital (෤௴ҳ), have
invested in and supported our business development, provided invaluable guidance for our
business expansion strategy and sustainable growth, and have played an important role in
boosting our influence in the industry.
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DEVELOPMENT STRATEGIES
Strategically expand our self-operated and franchised restaurant network to deliver
sustainable growth
We plan to open approximately 150 to 180, 170 to 200 and 200 to 230 self-operated and
franchised new restaurants in 2026, 2027 and 2028, respectively.
Our restaurants are mainly located in CBDs, residential areas and transportation hubs of
major cities, such as Guangzhou, Shenzhen, Beijing, Shanghai, Xiamen, Foshan and Wuhan.
We will continue to identify suitable sites with significant pedestrian traffic, covering all
scenarios such as shopping centers, office areas, residential areas, campuses, exhibition
centers, scenic spots, and transportation hubs such as airports, railway stations, ports, highway
service areas and ports of entry.
Our expansion strategy mainly consists of the following initiatives:
 Elevating our market presence in existing higher-tier markets in the Chinese
Mainland . We plan to continue to expand our restaurant network in our existing
markets in the Chinese Mainland, including Guangzhou, Shenzhen, Beijing and
Shanghai. According to Frost & Sullivan, the Chinese noodle restaurant market in
China is expected to reach the total GMV of RMB510.0 billion by 2029, at a CAGR
of 10.9% from 2025 to 2029. We believe that by expanding our restaurant network
in our existing markets, we can capture potential business opportunities and enhance
our market position.
 Tapping into lower-tier markets in the Chinese Mainland . Leveraging our success in
cities where we have established our market presence and our competitive strengths,
we plan to gradually tap into tier two and lower tier cities in the Chinese Mainland,
which will be new drivers of our business growth in the future. We believe there is
huge growth potential for Chinese noodle restaurants in tier two and lower tier cities
in the Chinese Mainland. According to Frost & Sullivan, the Chinese noodle
restaurant market in tier two and lower tier cities in the Chinese Mainland is
expected to grow at a CAGR of 12.8% from RMB238.6 billion in 2025 to
RMB386.1 billion in 2029 in terms of GMV . We will dynamically adjust our targets
based on the actual market demands in the future. When we enter a new geographic
market, we will initially open a limited number of restaurants to develop insights as
to the local customers and operation environment. After we identify the appropriate
approach for serving the market, we will open more restaurants to further penetrate
the market.
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 Expanding into Hong Kong SAR and overseas markets . In April 2024, we expanded
our restaurant network into Hong Kong SAR, where we had opened 14 new
restaurants as of the Latest Practicable Date. We had six new restaurants in Hong
Kong SAR in pre-opening preparation as of the Latest Practicable Date. According
to Frost & Sullivan, the Chinese QSR market in Hong Kong SAR is expected to
reach RMB14.7 billion by 2029, with a CAGR of 7.8% from 2025 to 2029 in terms
of GMV .
We plan to open one to two new self-operated restaurants in Singapore by December
31, 2025. According to Frost & Sullivan, the Chinese QSR market in Singapore is
expected to reach RMB2.3 billion by 2029, with a CAGR of 12.9% from 2025 to
2029 in terms of GMV .
We intend to apply approximately 60.0% or HK$331.0 million of the net proceeds from
the Global Offering to finance this strategy. The remainder will be funded by our internal
resources. See “Future Plans and Use of Proceeds — Use of Proceeds” for details.
Continue to invest in technology and digitalization
We will continue to invest in and upgrade our technology infrastructure to further
digitalize and automate our operations and reduce our costs of labor. We will continuously
iterate and fine-tune our self-developed digital systems for the business and financial analyses
of our restaurants, procurement, inventory and supply chain management, as well as human
resource, employee training and evaluation.
We plan to optimize and consolidate our existing technological infrastructure into a
one-stop system, which is expected to further increase our operation efficiency. Leveraging the
technological advancement in our current set of digital tools, we plan to interlink digitally each
stage of our operational value chain, so as to integrate the front-end restaurant operations and
customer feedbacks, the middle-end data processing and centralization, and the back-end
supporting functions such as marketing, menu development, supply chain management,
financial management, and human resources management, with the ultimate goal of
constructing a comprehensive and closed-loop digitalized industry chain system.
In addition to our current use of AI technologies for real-time monitoring of our restaurant
operation and analyzing customer feedback, we plan to further adopt AI technologies, IoT
systems and big data analytics in the iteration of our existing technology infrastructure to
support our growing operation scale, in particular:
 Quality control management . We also plan to upgrade the visual recognition
technologies of our current AI-empowered visual recognition system and expand its
capabilities in the recognition of all menu offerings in our restaurants.
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 Dining environment . We plan to upgrade the IoT systems in our restaurants to allow
our headquarters to oversee the dining environment at our restaurants on a real-time
basis, control energy consumption and directly adjust the room temperature of our
restaurants.
 Sales estimation . Through accumulation and analysis of real-life business and
financial data collected in our restaurant operations, we plan to refine our
AI-empowered system for more precise estimation of sales of our restaurants, which
is expected to increase the accuracy of our restaurants’ procurement of ingredients
and staffing arrangement.
 Marketing . We plan to leverage AI technologies to conduct customer tagging for the
prediction of repurchase probability. This will enable differentiated customer
engagement strategies, boosting conversion rates by targeting each customer
segment with precision.
 Employee training . We plan to apply AI technologies to assist and provide support
to our employees in the internal training process.
We intend to apply approximately 10.0% or HK$55.2 million of the net proceeds from the
Global Offering to finance this strategy. The remainder will be funded by our internal
resources. See “Future Plans and Use of Proceeds — Use of Proceeds” for details.
Continuously invest in brand building and strengthen customer loyalty
Our vision is to share the delight of Chongqing noodles across the globe. Dedicated to the
development of our single Xiao Noodles brand, we have been making efforts to continuously
enhance our brand awareness and market presence as well as build up customer loyalty. We are
committed to promoting and strengthening our brand through various marketing initiatives,
which mainly include:
 enhancing our brand through comprehensive upgrade of our restaurant image. This
initiative includes optimizing interior design, standardizing signage, and enhancing
the dining environment to create a distinctive and highly recognizable brand identity
for the purpose of attracting more customers and driving foot traffic to our
restaurants.
 collaborating with local lifestyle platforms and food influencers. We plan to make
use of such external sources of traffic and launch online and offline promotional
campaigns to attract new customers and enhance our brand reputation.
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 forming cross-industry partnerships with well-known brands in various sectors.
These collaborations will integrate Sichuan-Chongqing culture into diverse
scenarios, expanding our brand’s influence across different consumer segments and
deepening consumers’ understanding of the Sichuan and Chongqing culinary culture
that our brand represents.
 further enriching our brand through crafting compelling brand stories and
developing merchandise. These initiatives will enrich our brand’s cultural depth and
strengthen emotional connections with consumers.
 further expanding our membership base. We plan to engage third-party customer
data platforms (CDPs) to obtain data-driven insights about consumer trends and
preferences. We also plan to attract traffic to our membership system through
precision marketing, private domain traffic attraction, promotional discounts,
captivating more customers in existing and new geographical markets.
In addition, we will continuously optimize our diversified product portfolio by adapting
to the changing needs of our customers, refining our menu and enriching our product matrix
as we gain further insights into our customers and market conditions.
It is our strategy to expand into the international markets. Since our brand is new to the
international markets, we believe that brand building and new market entry promotion are
important for our brand to successfully develop in such markets. As such, we plan to carry out
marketing and promotional activities to support our expansion into Singapore, such as
organizing public relations activities, establishing social media content and connections,
inviting celebrities, food critics and/or key opinion leaders for tasting and other promotional
events. Similar activities have been carried out in Hong Kong SAR to enhance our brand image
and strengthen our market position in the region.
We intend to apply approximately 10.0% or HK$55.2 million of the net proceeds from the
Global Offering to finance this strategy. The remainder will be funded by our internal
resources. See “Future Plans and Use of Proceeds — Use of Proceeds” for details.
Enhance operating efficiency through pursuing strategic investments
We intend to strategically invest in enterprises in the upstream food processing industry.
In particular, we plan to invest in suppliers of our major ingredients such as meat, noodles
and/or condiments. We will primarily look for target companies in the Chinese Mainland with
(i) established presence in food processing industry and functioning supply chain and (ii)
proven track records and experience in processing meat, noodles and/or condiments. We
believe such strategic investments can ensure stability and quality in the supply of food
ingredients as well as create synergy between our business and the upstream enterprises, which
are expected to support our business growth, participate in our continuous menu development
process and supply customized ingredients according to our business needs.
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We intend to apply approximately 10.0% or HK$55.2 million of the net proceeds from the
Global Offering to finance this strategy. The remainder will be funded by our internal
resources. See “Future Plans and Use of Proceeds — Use of Proceeds” for details.
As of the Latest Practicable Date, we had not identified any specific investment targets.
OUR BUSINESS
We are a modern Chinese noodle restaurants operator in China. We operate the Xiao
Noodles (༾Ԉʃᙢ) brand in the Chinese Mainland and Hong Kong SAR. Established in 2014
from a single-location noodle house in Guangzhou, we have since expanded to 451 restaurants
in 22 cities in the Chinese Mainland and 14 restaurants in Hong Kong SAR under our
self-operated and franchising models as of the Latest Practicable Date. During the Track
Record Period, we primarily generated our revenue from self-operated restaurant operations
and franchise management. We also generated revenue from certain other sources, including
sales of retail products under our Xiao Noodles brand. The following table sets forth the
components of our revenue for the periods indicated:
For the year ended December 31, For the six months ended June 30,
2022 2023 2024 2024 2025
(unaudited)
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
Self-operated
restaurant
operations /H1118/H1118/H1118336,736 80.5 671,940 83.9 1,001,010 86.7 452,740 86.1 626,074 89.0
– Dine-in
services /H1118/H1118/H1118270,998 64.8 547,353 68.4 820,301 71.1 370,612 70.5 497,176 70.7
– Delivery
business /H1118/H1118/H111865,738 15.7 124,587 15.5 180,709 15.6 82,128 15.6 128,898 18.3
Franchise
management /H1118/H111880,511 19.3 127,694 16.0 152,530 13.2 72,472 13.8 76,662 10.9
Others
(1) /H1118/H1118/H1118/H1118/H1118849 0.2 880 0.1 894 0.1 445 0.1 449 0.1
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118418,096 100.0 800,514 100.0 1,154,434 100.0 525,657 100.0 703,185 100.0
Note:
(1) This represents revenue generated from sales of retail products under our Xiao Noodles brand on
e-commerce platforms.
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The Xiao Noodles Dining Experience — Manifestation of our Diversified Business
Operation Models
We are committed to providing dining experience with quality culinary items efficiently
at competitive prices, serving as an optimal choice for consumers’ daily meals with an
affordable experience. Due to the broad appeal of the Xiao Noodles dining experience,
customers may opt for our restaurants for a variety of occasions, such as casual daily dining,
meals with colleagues, and gatherings with friends and family. In order to cater to the demands
of different customers across all spectrum and geographical areas, we adopt diversified
business operation models and the dining experience in Xiao Noodles restaurants encompasses
the following features:
 Serving diverse tastes . Our comprehensive and diverse range of culinary offerings
covering both spicy and non-spicy dishes cater to the dining needs of various
customer groups. We cater to diverse customer groups covering the elderly,
middle-aged and young adults, and children, suitable for both individual meals and
group gatherings. Our menus encompass main courses, snacks, and beverages,
featuring a variety of staple items such as noodles, rice, Maocai hotpot and wontons,
suitable for individual meals and group dining.
 Around-the-clock. We provide around-the-clock service with corresponding menus
to cater to the varied preferences and dining arrangements of our customers. Beyond
the typical peak hours for lunch and dinner, customers can enjoy our Sichuan and
Chongqing dishes throughout the day, encompassing breakfast, afternoon tea, and
late-night snacks. As of the Latest Practicable Date, we had 68 restaurants operating
24 hours a day.
 Wide-ranging scenarios . Our restaurants are strategically located in shopping
centers, office areas, residential areas, campuses, exhibition centers, scenic spots,
and transportation hubs such as airports, railway stations, ports, highway service
areas and ports of entry in China, catering to the demands across different dining
scenarios. Set forth below are samples of our restaurants located in different
scenarios.
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Office
Campus
Residential area
Shopping mall Airport
Scenic spot
The following table sets forth the number of our restaurants by location settings as of the
dates indicated.
As of December 31,
As of
June 30,
2022 2023 2024 2025
Shopping centers /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118113 165 229 256
Street-front stores /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820 37 55 66
Office areas /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111817 20 38 50
Transportation hubs /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111819 26 30 33
Others (1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118148 1 2
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118170 252 360 417
Note:
(1) Others include campuses, exhibition centers and scenic spots.
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Cuisine and Menu
We strive to offer our customers a wide selection of menu items with both spicy and
non-spicy offerings catering to the needs of a wide range of customers. We provide diverse
menu items comprising dishes of Sichuan and Chongqing cuisine that are universally enjoyed
by consumers across various cultures, which include our signature Chong Qing-style Noodles
with Peas and Meat Sauce (ມሣᕏᙢ), Hot and Sour Sweet Potato Noodles (ມაჂ४) and
Hot and Spicy Wonton Soup (ϼ௦ң˓). Covering Specialty Noodles (तЍʃᙢ), Maocai
Hotpot (ൄ), Wonton Soup Series (ң˓ӻΐ), Rice Series (Ϸඵӻΐ), Skewer Series (⼮
Еӻΐ), Specialty Appetizers (࠮desserts and beverages, our diversified menu items
form an extensive product matrix. Typically, each of our restaurants offers approximately 30
to 40 SKUs. Set forth below are pictures and information with respect to some of our popular
menu items.
Chong Qing-style Noodles with
Peas and Meat Sauce
(ມሣᕏᙢ)
Freshly mixed condiments with
secret chili oil, crispy peanuts,
tender mashed peas and sesame
peanut butter sauce, ensuring
each bite is full of flavor.
According to Frost & Sullivan,
we ranked the first among all
restaurant chains in China in
terms of offline sales volume of
Chongqing noodles from 2022 to
2024 for three consecutive years.
Hot and Sour Sweet Potato
Noodles
(ມაჂ४)
Sweet potato noodles with both
tender and firm textures, served
with a large spoonful of meat
sauce, golden beans and pickled
vegetables, delivering a satiating
experience at great value.
According to Frost & Sullivan,
we ranked the first among all
restaurant chains in China in
terms of offline sales volume of
hot and sour sweet potato
noodles from 2022 to 2024 for
three consecutive years.
Hot and Spicy Wonton Soup
(ϼ௦ң˓)
Filling with a balanced ratio of
selected fat and lean pork, with
aromatic scallions, served with
bone broth and secret chili oil,
fresh aroma and numbing tingles
awakening the taste buds with
energizing effects.
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Braised Beef Maocai Hotpot
(ൄ)
Selected braised beef tendon
with rich fragrance, served with
sweet potato noodles, layered
tofu sheets, enoki mushrooms,
fish tofu, braised dried tofu and
green vegetables. Simmered in
the broth for two minutes, this
dish delivers delicious and deep
flavors.
Angus Beef Maocai Hotpot
(ൄ)
Selected braised Australian
Angus beef with rich fragrance,
served with sweet potato
noodles, layered tofu sheets,
enoki mushrooms, fish tofu,
braised dried tofu and green
vegetables. Simmered in the
broth for two minutes, this dish
delivers delicious and deep
flavors.
Wonton Soup (non-spicy)
(৶ಷң˓)
Filling with a balanced ratio of
selected fat and lean pork,
simmered in a deeply rich bone
broth with a fresh and savory
aroma.
Beef and Lamb Skewer
(ˬϺЂЕ)
Selected Inner Mongolian
premium beef and lamb, with
tender and succulent texture and
a balanced fat distribution. Each
bite offers a caramelized aroma
complemented by juicy
tenderness.
Deep-Fried Potatoes
(ᒢˋɺԌ)
The potatoes are crispy on the
outside and tender on the inside
with a strong potato aroma.
Comes with two options of spicy
tingling pepper and tomato
sauce.
Crispy Fried Chicken (half)
(।Ⴁঌͤ̒৳ᕒ)
First marinated and fried, a
crispy golden exterior with
tender and juicy meat on the
inside. Best enjoyed fresh and
hot.
In general, for the six months ended June 30, 2025, we have strategically designed our
menu in the Chinese Mainland within the unit price range of approximately RMB12 to RMB34
for our main dishes. For the six months ended June 30, 2025, the average price of our main
dishes in the Chinese Mainland was approximately RMB21. For the six months ended June 30,
2025, average spending per customer in the Chinese Mainland was approximately RMB27. We
adjust our menu and pricing in accordance with the local conditions and the service scenarios
of our restaurants to maintain our competitive advantage.
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Leveraging the flexibility and diversity of Sichuan and Chongqing cuisine, we regularly
update our menu to refresh and enhance our customers’ dining experience and adapt to the
latest trends. For details, see “— Product and Menu Development”.
Dining Ambience
We endeavor to create a cozy and inviting atmosphere for our customers. The interior
design of our restaurants is dedicated to recreating the cultural essence of Sichuan and
Chongqing cuisine, allowing our customers to immerse in a dining environment that captures
both aromatic sensation and the authentic ambience. Embodying such vibrant culinary
traditions, our restaurants are places where customers can enjoy the flavorful Sichuan and
Chongqing cuisine. The warm and bright ambiance of our restaurants recreates the comforting
and welcoming feeling of enjoying a bowl of soup noodles at the neighborhood of our
customers. A Xiao Noodles restaurant typically has an area of approximately 100 to 150 sq.m..
A uniform design and decoration system is adopted across Xiao Noodles restaurants to
provide a uniform dining experience for our customers and reinforce our brand image in the
market. Such design and decoration system allow us to maintain a consistent brand image
across our restaurant network.
Set forth below are pictures presenting the typical dining environment of Xiao Noodles
restaurants.
Restaurant Operation Model
Our restaurants are operated under either a self-operated model or a franchise model,
which has generated synergies and fueled the expansion of our restaurant network. Our
self-operated restaurants provide a strong foundation for scalable growth of our business
through franchised restaurants. In particular, self-operated restaurants provide the necessary
management capabilities for the effective supervision of franchisees, which facilitates the
standardization of our brand image and enhancement of management efficiency.
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Self-operated Model
We opened our first Xiao Noodles restaurant in 2014 in Guangzhou, Guangdong province.
As of June 30, 2025, we owned and operated 331 self-operated restaurants. Through the
continuous refinement of our self-operated model, we have achieved a high degree of
standardization throughout our restaurant network. The uniformity in our dishes, services and
operational protocols not only elevates our operational efficiency but also underpins the
sustainable growth of our business. Furthermore, it allows us to exercise comprehensive
control over all critical aspects of our daily operations, from the procurement of raw materials
to the delivery of meals to our customers.
Franchise Model
Harnessing the success of our self-operated model and our well-established brand
recognition, we ventured into the franchise model under our centralized management in 2019.
Since adopting the franchise model, the number of our franchised restaurants has grown
steadily during the Track Record Period. As of June 30, 2025, we had 86 franchised restaurants.
Our franchised restaurants followed the same standards we set for the self-operated
restaurants. We maintain strong oversight of franchised restaurants, ensuring that every aspect
of restaurant operation is properly managed and optimized for success. For the purpose of
maintaining sustainable business growth and ensuring successful launch of new franchised
restaurants, we have been working closely with our franchisees to deliver high-quality dishes
and dining experiences. Our franchisees are typically responsible for initial capital investment
and site selection for the opening of the franchised restaurants, which are then managed
uniformly in accordance with our Group’s guidelines after opening.
Going forward, we intend to continue expanding our franchised restaurant network and
gradually increasing the proportion of our franchised restaurants. For details on our franchise
model, see “— Our Franchisees.”
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Restaurant Network
From the beginning of the Track Record Period to the Latest Practicable Date, the number
of our restaurants had grown by 249.6% from 133 to 465 restaurants, covering 22 cities in nine
provinces in the Chinese Mainland and Hong Kong SAR.
During the Track Record Period, we primarily focused on establishing our market
presence in the CBDs, transportation hubs and residential areas of major cities, such as
Guangzhou, Shenzhen, Shanghai, Beijing, Xiamen, Foshan and Wuhan. During the Track
Record Period, we generated most of our GMV in the Chinese Mainland, particularly in
Guangdong province. The map below illustrates the geographic location of restaurants in our
network that are in operation as of the Latest Practicable Date.
Provinces with 20 to 50 restaurants
Provinces with 5 to 19 restaurants
Provinces with less than 5 restaurants
Provinces with over 50 restaurants
Beijing (56)
Tianjin (1)
Qingdao (3)
Wuhan (20)
Xiangyang (1)
Xiamen (21)
Fuzhou (1)
Zhangzhou (1)
Hefei (1)
Shanghai (36)
Haikou (3)
Guangzhou (148)
Shenzhen (96)
Foshan (37)
Zhuhai (9)
Zhongshan (5)
Dongguan (4)Hong Kong SAR (14)
Huizhou (2)
Zhaoqing (2)
Yangjiang (2)
Shantou (1)
Maoming (1)
For illustrative purpose only, the map (Map Review Number ( ᄲྡ໮): GS(2023)2764) is
presented to demonstrate our footprint in China.
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The following table sets forth our restaurant count in various regions in China as of the
dates indicated.
As of December 31,
As of
June 30,
2022 2023 2024 2025
Self-operated restaurants
First-tier and new first-tier
cities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118102 173 253 298
Second-tier cities and below /H1118 91 02 32 6
Hong Kong SAR /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––37
Subtotal of self-operated
restaurants /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118111 183 279 331
Franchised restaurants
First-tier and new first-tier
cities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111838 34 35 36
Second-tier cities and below /H1118 21 35 46 50
Subtotal of franchised
restaurants /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111859 69 81 86
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118170 252 360 417
The following table sets forth movement in the number of our restaurants for the periods
indicated.
For the year ended December 31,
For the
six months
ended
June 30,
From
June 30,
2025 to the
Latest
Practicable
Date2022 2023 2024 2025
At the beginning of the
period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118133 170 252 360 417
Newly opened during the
period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111843 92 120 63 55
Closed during the
period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(6)(1) (10) (1) (12) (6) (7)
At the end of the
period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118170 252 360 417 465
Note:
(1) As of January 1, 2022 and 2023, we authorized an Independent Third Party to operate twelve and nine
restaurants, respectively. In 2022 and 2023, three and nine of such restaurants were closed, respectively.
For details of the background of our restaurants under authorized operation model, see “— Our
Franchisees.”
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The following table sets forth movement in the number of our self-operated restaurants
for the periods indicated.
For the year ended December 31,
For the
six months
ended
June 30,
From
June 30,
2025 to the
Latest
Practicable
Date2022 2023 2024 2025
At the beginning of
the period /H1118/H1118/H1118/H1118/H1118/H1118/H111882 111 183 279 331
Newly opened during
the period /H1118/H1118/H1118/H1118/H1118/H1118/H111832 68 101 54 45
Converted from
franchised
restaurants /H1118/H1118/H1118/H1118/H1118/H1118/H1118–54–4
Closed during the
period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(3) (1) (9) (2) (5)
At the end of the
period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118111 183 279 331 375
Reasons for closure of our self-operated restaurants during the Track Record Period
primarily included (i) the actual customer traffic of the restaurants not meeting our
expectations as a result of the decline in the popularity and consumer traffic of the commercial
areas surrounding the restaurants; (ii) the increase in rent of the leased properties; or (iii)
change of the business plan on the part of the landlords such as closure of shopping malls
where we opened our restaurants leading to the termination of the leases. Some of our
franchised restaurants were converted into self-operated restaurants during the Track Record
Period primarily because of change of the business plan on the part of the franchisees.
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The following table sets forth movement in the number of our franchised restaurants for
the periods indicated.
For the year ended December 31,
For the
six months
ended
June 30,
From
June 30,
2025 to the
Latest
Practicable
Date2022 2023 2024 2025
At the beginning of the
period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111851 59 69 81 86
Newly opened during the
period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811 24 19 9 10
Converted to self-operated
restaurants /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (5) (4) – (4)
Closed during the period /H1118 (3)(1) (9)(1) (3)(2) (4)(3) (2)(4)
At the end of the period /H1118 59 69 81 86 90
Notes:
(1) As of January 1, 2022 and 2023, we authorized an Independent Third Party to operate twelve and nine
restaurants, respectively. In 2022 and 2023, three and nine of such restaurants were closed, respectively.
For details of the background of our restaurants under authorized operation model, see “— Our
Franchisees.”
(2) Among the three franchised restaurants closed during the year ended December 31, 2024, two were
closed due to change of business plans on the part of the franchisee/landlord and one was closed due
to underperformance.
(3) Among the four franchised restaurants closed during the six months ended June 30, 2025, two were
closed due to change of business plans on the part of the franchisees and two were closed due to
underperformance.
(4) Among the two franchised restaurants closed during the period from July 1, 2025 to the Latest
Practicable Date, one was closed due to change of business plans on the part of the landlord and one
was closed due to underperformance.
The following table sets forth a breakdown of the number of our self-operated and
franchised restaurants by range of number of years in operation as of the Latest Practicable
Date:
Range of number of years in operation Number of restaurants
Less than one year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118138
One to two years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118122
Two to five years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118155
More than five years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111850
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Restaurant Network Expansion Plan and Management
The success of our business stems from the continued healthy expansion of our restaurant
network. We have established a highly scalable business model by standardizing key aspects
of restaurant operations, and we believe that we will be able to consistently expand our
restaurant network by replicating and optimizing our proven managerial and operational
procedures, applying digital systems and adopting standardized procedures for new restaurant
expansion.
We plan to continue to grow our presence in the China and overseas by deepening our
current market penetration and broadening our geographic reach to new markets. We plan to
open approximately 150 to 180, 170 to 200 and 200 to 230 self-operated and franchised new
restaurants in 2026, 2027 and 2028, respectively.
We plan to continue to expand our restaurant network and increase market share in our
existing markets in the Chinese Mainland, including first-tier and second-tier cities such as
Guangzhou, Shenzhen, Beijing, Shanghai, Xiamen and Foshan. We believe that by expanding
our restaurant network in our existing markets, we can capture the potential business
opportunities and strengthen our market position. Leveraging our success in cities where we
have established our market presence and our competitive strengths, we plan to gradually tap
into second-tier and lower tier cities in the Chinese Mainland. For Hong Kong SAR and
overseas markets, we plan to expand into Southeast Asia, which we believe will be new drivers
of our business growth in the future. We believe that growing our restaurant presence and
density will further promote our brand awareness and drive our revenue growth.
The estimated upfront expenses generally range from RMB0.7 million to RMB0.9 million
for opening a new self-operated Xiao Noodles restaurant in the Chinese Mainland, mainly
depending on the area and location of the restaurant. Such upfront expenses primarily include
costs relating to decoration, purchase of equipment and other one-off expenses associated with
the opening of a restaurant. We plan to fund our restaurant network expansion in 2026, 2027
and 2028 with a mix of the proceeds from the Global Offering, cash on hand, cash flows
generated from our operations, as well as other external financings that we may seek to pursue
at that time. For the years ending December 31, 2026, 2027 and 2028, our planned investment
costs for opening new self-operated Xiao Noodles restaurants are expected to be approximately
RMB198.0 million, RMB217.5 million and RMB247.5 million, respectively. With respect to
the new self-operated restaurants that we have opened and expect to open in 2025, we have
incurred approximately RMB84.4 million since January 1, 2025 and up to the Latest
Practicable Date, which was funded by our existing internal resources. For details, see “Future
Plans and Use of Proceeds.”
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We mainly manage and standardize our restaurant expansion process from the following
aspects:
Market Research and Planning
Prior to the opening of new restaurants in existing markets where we have established
market presence, our restaurant network planning team typically conducts market research to
assess the local market conditions and reviews the relevant market and operation data collected
from our restaurant operation in the regions. We take into account factors such as demographic
trends, traffic patterns and the competitive landscape.
For expansion into new geographical regions, in addition to conducting comprehensive
market research on the targeted regions, we typically open a limited number of restaurants at
the initial stage to develop insights as to the local customers and operation environment. After
we identify the appropriate approach for serving the market, we will open more restaurants to
further penetrate the market.
Site Selection
Our restaurants are typically located in transportation hubs, shopping centers, office
areas, residential areas, campuses and scenic spots. We will continue to identify suitable sites
with significant pedestrian traffic, such as residential areas, shopping malls and transportation
hubs.
When evaluating a site, our expansion department conducts thorough analysis of market
data and site visits to form a holistic view as to its suitability. Relevant factors for site selection
include, among other things:
 average disposable income, consumption expenditure, age distribution and
population density of the local community;
 the number and nature of other restaurants in the vicinity;
 estimated customer traffic and accessibility to public transportation; and
 rental costs and estimated return on investment.
We have also adopted and will continue to adopt various measures to avoid
cannibalization among our existing and newly opened restaurants through our standardized
approach of expansion management which involves careful consideration of demographic and
geographical factors at the site selection stage. For example, we generally do not open multiple
restaurants in one shopping mall, residential district or office area.
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In particular, we have adopted, and will continue to adopt, the following strategies to
avoid potential cannibalization among our self-operated and franchised restaurants:
 We select sites for our new self-operated and franchised restaurants with a
disciplined approach. We consider a series of factors during site selection, including,
amongst others, population density, age distribution, average disposable income,
estimated consumer traffic and accessibility to public transportation. We generally
avoid opening restaurants within the radius of one kilometer to minimize the risk of
cannibalization among our restaurants. We have also set up a restaurant network
planning department that utilizes big data analytics to advise us on different
dimensions of site selection for new restaurants, including potential competition
within our restaurant network.
 Any proposal to open a new self-operated or franchised restaurant is subject to
approval by our headquarters, which standardizes and oversees the expansion of our
restaurant network with the assistance of an expansion planning system to avoid
over-aggressive expansion and potential cannibalization.
 We adopt a unified pricing model for our self-operated and franchised restaurants in
the same geographical areas. We closely monitor the pricing of our restaurants to
avoid price competitions within our restaurant network.
 We conduct periodic review of the operational and financial performance of our
self-operated and franchised restaurants after they have been opened for a period of
time. This allows us to monitor the operational and financial performance of the
restaurants and, where the performance is unsatisfactory, we will carry out analysis
and adjust our expansion strategies accordingly, taking into account the potential
impact of cannibalization among existing restaurants.
Our management oversees the entire expansion process and, combined with conducting
regular post-investment reviews of new restaurants, adjusts our expansion strategy accordingly
if the performance of new restaurants is not satisfactory due to potential cannibalization. In the
event that our management observes potential cannibalization of restaurants in a particular
region, further expansion in such region would be paused. During the Track Record Period and
up to the Latest Practicable Date, we had not observed any significant cannibalization effects
within our restaurant network, demonstrating the effectiveness of our strategic site selection
and expansion practices.
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Lease arrangement
After the selection of ideal new sites, our headquarters engages with the relevant property
owners to negotiate and finalize lease agreements. The lease arrangements for our restaurants
generally last for four to six years. According to such lease contracts, we pay to the lessor and
bear the necessary expenses such as property charges and utilities within the lease term. Our
leases typically include a rent-free period of one to two months to facilitate the decoration and
renovation of the premises. We do not own any property for our restaurant sites and believe
such approach reduces our capital investment requirements.
Design, construction, renovation
Our headquarters will design our restaurants following the applicable laws and
regulations and file our design plans with the local regulatory authority for approval. Upon the
approval of our design plans by the relevant authorities, we will engage third-party decoration
companies to conduct construction and renovation for our new restaurants following our
in-house guidelines.
Licenses and compliance
Our headquarters is responsible for collecting supporting documents from the landlords,
such as license, certificate and floor plan of the premises. For our self-operated restaurants, our
headquarters is responsible for making applications with relevant local authorities for
necessary licenses and permits, such as the business license, food safety license and fire safety
inspection certificate. For our franchised restaurants, our franchisees are required to obtain and
submit to us copies of such necessary licenses and permits.
Staff training
To facilitate the smooth opening of a new restaurant, we deploy employees at key
functions in a new restaurant from our existing restaurants. These experienced employees,
being familiar with our operational procedures, standards and requirements, can use their
experience and know-how to better coordinate the work in the new restaurant and help new
employees to quickly adapt to our systems and culture. The restaurant managers, human
resources department at our headquarters and franchisees are responsible for the recruitment of
restaurant frontline staff for a new restaurant. Once recruited, these new staff undergo
comprehensive training sessions before the opening of the new restaurants. These training
programs equip them with a thorough understanding of our standardized processes, ensuring
the delivery of a consistently high-quality dining experience.
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Marketing initiatives
Before the opening of our new restaurants, we typically place QR codes outside the
restaurants, invite pedestrians to join our private domain groups and giveaway welcoming
coupons. Upon the opening of our new restaurants, we carry out marketing and promotional
activities such as organizing public relations activities, establishing social media content and
connections, inviting celebrities, food critics and/or key opinion leaders for tasting and other
promotional events, to enhance our brand image and strengthen our market position.
OUR RESTAURANT PERFORMANCE
The following table sets forth certain key performance indicators of our self-operated and
franchised Xiao Noodles restaurants
(1) in China by region for the periods indicated.
For the year ended December 31,
For the six months ended
June 30,
2022 2023 2024 2024 2025
GMV(2) (RMB’000)
Self-operated
restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118/H1118/H1118340,086 668,021 944,708 433,913 544,954
Second-tier cities and
below /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111829,866 45,095 67,946 29,389 42,621
Hong Kong SAR /H1118/H1118/H1118/H1118/H1118– – 15,723 (3) 3,674 42,272
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118369,952 713,116 1,028,378 466,976 629,847
Franchised restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118/H1118/H111868,110 129,871 152,693 74,394 72,981
Second-tier cities and
below /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111873,146 117,081 167,351 76,353 96,122
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118141,257 246,952 320,044 150,747 169,104
Average daily sales per
restaurant
(4)
(RMB)
Self-operated
restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118/H1118/H111812,059 14,143 12,405 12,714 11,355
Second-tier cities and
below /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810,169 12,132 10,605 11,360 9,773
Hong Kong SAR /H1118/H1118/H1118/H1118/H1118– – 51,215 51,021 42,357
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,881 13,997 12,410 12,693 11,805
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For the year ended December 31,
For the six months ended
June 30,
2022 2023 2024 2024 2025
Franchised restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118/H1118/H111811,802 14,234 12,688 12,904 11,880
Second-tier cities and
below /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,554 12,872 12,104 12,181 11,215
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,672 13,554 12,376 12,528 11,493
Total number of
orders
(5)
(thousands)
Self-operated
restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118/H1118/H11189,416 19,498 29,581 13,385 17,666
Second-tier cities and
below /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118817 1,349 2,176 924 1,428
Hong Kong SAR /H1118/H1118/H1118/H1118/H1118– – 260 57 699
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810,233 20,847 32,018 14,365 19,794
Franchised restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118/H1118/H11181,922 3,913 4,864 2,359 2,404
Second-tier cities and
below /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,004 3,459 5,212 2,336 3,061
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,927 7,372 10,076 4,695 5,465
Average spending per
order (6) (RMB)
Self-operated
restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118/H1118/H111836.1 34.3 31.9 32.4 30.8
Second-tier cities and
below /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111836.5 33.4 31.2 31.8 29.8
Hong Kong SAR /H1118/H1118/H1118/H1118/H1118– – 60.4 64.7 60.4
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111836.2 34.2 32.1 32.5 31.8
Franchised restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118/H1118/H111835.4 33.2 31.4 31.5 30.4
Second-tier cities and
below /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111836.5 33.8 32.1 32.7 31.4
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111836.0 33.5 31.8 32.1 30.9
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For the year ended December 31,
For the six months ended
June 30,
2022 2023 2024 2024 2025
Average daily orders
per restaurant (7)
Self-operated
restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118/H1118/H1118334 413 388 392 368
Second-tier cities and
below /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118278 363 340 357 327
Hong Kong SAR /H1118/H1118/H1118/H1118/H1118– – 848 788 701
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118329 409 386 390 371
Franchised restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118/H1118/H1118333 429 404 409 391
Second-tier cities and
below /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118317 380 377 373 357
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118324 405 390 390 371
Seat turnover rate (8)
Self-operated
restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118/H1118/H11183.2 4.0 3.8 3.8 3.4
Second-tier cities and
below /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182.5 3.1 3.1 3.2 2.6
Hong Kong SAR /H1118/H1118/H1118/H1118/H1118– – 6.8 6.9 6.0
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183.1 3.9 3.8 3.8 3.4
Franchised restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118/H1118/H11183.2 4.1 3.9 3.9 3.5
Second-tier cities and
below /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182.8 3.2 3.3 3.2 2.9
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183.0 3.6 3.6 3.6 3.1
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Notes:
(1) The above key performance indicators of our self-operated and franchised Xiao Noodles restaurants do
not include the restaurants that were authorized to be operated by an Independent Third Party in 2022
and 2023. For details of the background of our restaurants under authorized operation model, see “—
Our Franchisees.”
(2) Representing the total sales value of food and beverage sold under the restaurant operations and delivery
business of restaurants under our self-operated and franchise models over the period, after deducting any
fees or costs such as discounts or returns.
(3) In 2024, we operated three self-operated restaurants in Hong Kong SAR, which were opened in April,
November and December, 2024.
(4) Average daily sales per restaurant is calculated by dividing (i) the total GMV generated from restaurant
operations and delivery business of restaurants under our self-operated and franchise models by (ii) the
total operation days of such restaurants for the period. The number of the total operation days of such
restaurants is the sum of the operation days of all Xiao Noodles restaurants in the relevant regions.
(5) Total number of orders include the number of orders placed by dine-in customers and customers of our
delivery services for the period in the relevant regions.
(6) Average spending per order is calculated by dividing (i) the total GMV generated from restaurant
operations and delivery business of restaurants under our self-operated and franchise models by (ii) the
total number of orders, including orders placed by both dine-in customers and customers of our delivery
services, for the period in the relevant regions.
(7) Average daily orders per restaurant is calculated by dividing (i) the total number of orders, including
orders placed by both dine-in customers and customers of our delivery services, by (ii) the total
operation days of such restaurants for the period. The number of the total operation days is the sum of
the operation days of all Xiao Noodles restaurants in the relevant regions.
(8) Seat turnover rate is calculated by dividing the aggregate number of orders placed by dine-in customers
during a specific period by the total number of available seats in that period, which is determined by
multiplying the restaurants’ seat count by their operation days.
During the Track Record Period, there was no significant difference in the performance
of our self-operated and franchised restaurants. Our standardized management of restaurant
locations and pricing ensures comparable average daily sales per restaurant, average spending
per order and seat turnover rate between self-operated and franchised restaurants across city
tiers.
The average spending per order at our self-operated and franchised restaurants decreased
from RMB36.2 and RMB36.0 in 2022 to RMB34.2 and RMB33.5 in 2023, and further
decreased to RMB32.1 and RMB31.8 in 2024, and decreased from RMB32.5 and RMB32.1 for
the six months ended June 30, 2024 to RMB31.8 and RMB30.9 for the six months ended June
30, 2025, respectively, primarily because we took the initiative to reduce the prices of our
menu items and provide customers with a more affordable dining experience in order to attract
customers and increase our overall sales.
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Our average daily sales per restaurant at our self-operated and franchised restaurants
increased from RMB11,881 and RMB11,672 in 2022 to RMB13,997 and RMB13,554 in 2023,
respectively, primarily due to the rebound of consumers’ spendings after the gradual
phasing-out of the COVID-19 pandemic in 2023. Our average daily sales per restaurant at our
self-operated and franchised restaurants decreased to RMB12,410 and RMB12,376 in 2024,
and decreased from RMB12,693 and RMB12,528 for the six months ended June 30, 2024 to
RMB11,805 and RMB11,493 for the six months ended June 30, 2025, respectively, primarily
because of (i) the normalization of consumer spending pattern in the catering market in the
Chinese Mainland following the rapid surge thereof during the first several months in 2023
following the gradual phasing-out of the COVID-19 pandemic, which was in line with the
spending patterns in other consumer sectors according to Frost & Sullivan, and (ii) our
initiative to reduce the prices of our menu items in order to attract more customers and increase
our overall sales as mentioned above.
Benefited from our continuous effort to increase our operational efficiency through our
business model with high degree of standardization, comprehensive management systems and
digitalization, our overall seat turnover rate at our self-operated and franchised restaurants
increased from 3.1 and 3.0 in 2022 to 3.9 and 3.6 in 2023, and remained relatively stable at 3.8
and 3.6 in 2024, respectively, which was higher than the industry average range of 2.0 to 2.4
in the Chinese QSR market in 2024, according to Frost & Sullivan. Our overall seat turnover
rate at our self-operated and franchised restaurants decreased from 3.8 and 3.6 for the six
months ended June 30, 2024 to 3.4 and 3.1 for the six months ended June 30, 2025, primarily
due to the intensified promotional activities on delivery platforms in the first half of 2025,
which prompted some of the customers from dining in to placing orders on the delivery
platforms.
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Same Store Sales
The following table sets forth details of our same store sales in China during the Track
Record Period. Same store sales for a given period refer to the revenue of all restaurants that
qualified as same stores during that period. We define our same store base to be those
restaurants that opened for at least 300 days and had the same number of seats in both 2022
and 2023 and in both 2023 and 2024, and opened for at least 150 days and had the same number
of seats in both the six months ended June 30, 2024 and 2025.
For the year ended December 31,
For the six months ended
June 30,
2022 2023 2023 2024 2024 2025
Number of same
stores
Self-operated
restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118 59 96 155
Second-tier cities
and below /H1118/H1118/H1118/H1118/H111881 0 1 1
Total/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111867 106 166
Franchised
restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118 13 20 23
Second-tier cities
and below /H1118/H1118/H1118/H1118/H111816 19 25
Total/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111829 39 48
Same store sales (1)
(RMB’000)
Self-operated
restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118234,969 310,458 496,652 471,765 344,758 333,521
Second-tier cities
and below /H1118/H1118/H1118/H1118/H111827,569 35,669 44,397 45,621 24,250 24,013
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118262,538 346,127 541,049 517,386 369,008 357,534
Franchised
restaurants
First-tier and new
first-tier cities /H1118/H1118/H111852,775 65,004 106,281 100,353 55,494 53,199
Second-tier cities
and below /H1118/H1118/H1118/H1118/H111866,488 80,146 93,048 91,297 55,312 54,355
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118119,263 145,150 199,330 191,651 110,806 107,554
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For the year ended December 31,
For the six months ended
June 30,
2022 2023 2023 2024 2024 2025
Same store sales
growth (%)
Self-operated
restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118 32.1 (5.0) (3.3)
Second-tier cities
and below /H1118/H1118/H1118/H1118/H111829.4 2.8 (1.0)
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111831.8 (4.4) (3.1)
Franchised
restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118 23.2 (5.6) (4.1)
Second-tier cities
and below /H1118/H1118/H1118/H1118/H111820.5 (1.9) (1.7)
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111821.7 (3.9) (2.9)
Same store average
daily orders per
restaurant
(2)
Self-operated
restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118339 427 416 418 387 386
Second-tier cities
and below /H1118/H1118/H1118/H1118/H1118276 361 363 388 373 400
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118331 419 411 415 386 387
Franchised
restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118333 417 434 441 420 433
Second-tier cities
and below /H1118/H1118/H1118/H1118/H1118318 403 392 412 369 377
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118325 409 413 427 393 404
Same store average
spending per
order
(3)
First-tier and new
first-tier cities /H1118/H1118/H111835.5 34.0 34.3 32.7 32.3 31.2
Second-tier cities
and below /H1118/H1118/H1118/H1118/H111836.0 33.9 33.5 32.2 32.5 30.3
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111835.5 33.9 34.2 32.6 32.3 31.2
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For the year ended December 31,
For the six months ended
June 30,
2022 2023 2023 2024 2024 2025
Franchised
restaurants
First-tier and new
first-tier cities /H1118/H1118/H111835.5 33.1 33.8 31.5 32.0 30.2
Second-tier cities
and below /H1118/H1118/H1118/H1118/H111836.5 34.1 34.3 32.2 33.1 31.9
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111836.1 33.7 34.0 31.8 32.5 31.0
Same store seat
turnover rate (4)
Self-operated
restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118 3.2 4.0 4.0 4.2 3.8 3.6
Second-tier cities
and below /H1118/H1118/H1118/H1118/H11182.5 3.1 3.1 3.4 3.3 3.1
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183.1 3.9 3.9 4.1 3.7 3.6
Franchised
restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118 3.3 4.0 4.2 4.5 4.1 4.0
Second-tier cities
and below /H1118/H1118/H1118/H1118/H11182.8 3.3 3.2 3.6 3.2 3.0
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183.0 3.6 3.7 4.0 3.6 3.5
Notes:
(1) Same store sales refer to the total GMV generated from our same stores, including those generated from
dine-in and delivery orders.
(2) Same store average daily orders per restaurant is calculated by dividing (i) the total number of orders,
including orders placed by both dine-in customers and customers of our delivery services, by (ii) the
sum of restaurant operation days of each same store restaurant for the period.
(3) Same store average spending per order is calculated by dividing (i) the total GMV generated from
restaurant operations and delivery business of same store restaurants by (ii) the total number of orders
from our same stores, including orders placed by both dine-in customers and customers of our delivery
services, for the period in the relevant regions.
(4) Same store seat turnover rate is calculated by dividing the aggregate number of orders placed by dine-in
customers during a specific period by the total number of available seats in that period, which is
determined by multiplying the restaurants’ seat count by their operation days.
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Our same store average daily orders per restaurant increased in 2022 and 2023, 2023 and
2024, as well as the six months ended June 30, 2024 and 2025 primarily because we took the
initiative to reduce the prices of our menu items and provide customers with more affordable
dining experience in order to attract more customers and increase our overall sales. Benefited
from our price reduction initiative, we recorded an increase in same store seat turnover rate,
which mainly reflects the performance of our dine-in services, in 2022 and 2023 as well as
2023 and 2024. Our same store seat turnover rate decreased in the six months ended June 30,
2024 and 2025 primarily due to the intensified promotional activities on delivery platforms in
the first half of 2025, which prompted some of the customers from dining in to placing orders
on the delivery platforms.
Our same store sales increased in 2022 and 2023 primarily due to the rebound of
consumers’ spendings after the gradual phasing-out of the COVID-19 pandemic in 2023. We
recorded a decrease in same store sales in 2023 and 2024 primarily because of (i) the
normalization of consumer spending pattern in the catering market in the Chinese Mainland
following the rapid surge thereof during the first several months in 2023 following the gradual
phasing-out of the COVID-19 pandemic, which was in line with the spending patterns in other
consumer sectors according to Frost & Sullivan, and (ii) our initiative to reduce the prices of
our menu items in order to attract more customers and increase our overall sales as mentioned
above. We recorded a slight decrease in same store sales for the six months ended June 30,
2024 and 2025 primarily because we continued our price reduction initiative in order to provide
a more affordable dining experience for our customers and increase our overall sales, which
was reflected in the increase in our same store average daily orders per restaurant in the same
period.
Initial Breakeven Period and Investment Payback Period
Initial Breakeven Period
During the Track Record Period, the initial breakeven periods of our self-operated
restaurants opened during the Track Record Period and in operation as of the Latest Practicable
Date were generally within two months of opening.
All the self-operated restaurants that were opened during the Track Record Period and
were in operation as of the Latest Practicable Date had achieved initial breakeven as of the
Latest Practicable Date.
Investment Payback Period
Among the self-operated restaurants which were (i) opened during the Track Record
Period and (ii) were in operation as of the Latest Practicable Date, the average investment
payback period was approximately 15.5 months. We aim to shorten the investment payback
period for new restaurants with ongoing refinement of our business model with high degree of
standardization, comprehensive management systems and digitalization.
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Loss-Making Restaurants
In 2022, 2023, 2024 and the six months ended June 30, 2025, the number of our
loss-making self-operated restaurants was 67, 36, 35 and 37, respectively. We regard a
restaurant as loss-making restaurant, if that restaurant records restaurant-level operating loss in
the specific year/period. Such restaurants recorded restaurant-level operating loss primarily
because of one or the combined effect of the following factors: (i) in 2022, 2023, 2024 and the
six months ended June 30, 2025, we had 17, 29, 22 and 20 restaurants that were still in the
ramp-up phase and had not yet been opened for long enough to generate profit, (ii) the
COVID-19 pandemic adversely affected the operating activities of certain restaurants in 2022,
and (iii) certain restaurants failed to achieve the expected GMV due to unfavorable changes in
restaurant operating environment and market competition.
For the purpose of improving the performance of such restaurants, our initial step
involves assessing the root cause of underperformance, identifying issues attributed to human
factors and taking prompt corrective actions, which include the replacement of management if
alternative corrective actions do not lead to improvements. In the event that the underlying
reasons are related to, among other things, the restaurant location and surrounding business
environment, we would consider relocating the relevant restaurants. As of the Latest
Practicable Date, 61, 30, 25 and 22 of the self-operated restaurants that recorded restaurant-
level operating loss in 2022, 2023 and 2024 and the first half of 2025 had achieved turnaround
through recording their first monthly restaurant level operating profit after the relevant
loss-making period, respectively. We closed six, six, six and two loss-making restaurants in
2022, 2023 and 2024 and the first half of 2025 due to underperformance, respectively.
DELIVERY SERVICE
We offer our delivery services primarily through major third-party online food delivery
platforms. As of June 30, 2025, we entered into cooperation agreements with four third-party
online food delivery platforms. Our Directors are of the view that we are not overly reliant on
any single third-party online food delivery platform as we maintain partnerships with various
major service providers in the market. To a lesser extent, our restaurants also engage
third-party courier platforms for delivery of orders made on our WeChat and Alipay mini
programs. Our headquarters manage and oversee online promotion, order placement, and
delivery operations on these platforms, negotiating on behalf of all our self-operated and
franchised restaurants to secure favorable commercial terms and maintain consistent service
quality and standards across our operations. According to the contractual terms with these
third-party platforms, they are typically responsible for displaying our menus, managing online
orders, notifying our restaurants and coordinating the delivery. The third-party online food
delivery platforms are typically responsible for ensuring timely and intact delivery and are
responsible for any losses caused by failures, damage, or delays in delivery. We pay the
platforms (i) commission fee of approximately 2.0% (together with a lump-sum base service
fee per order) to 20.0% of the revenue generated through the orders delivered and (ii) delivery
fee based on the distance of the delivery. We are responsible for food preparation and any
liabilities related to the delivery orders made on these platforms. For end-customers’
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complaints received through online food delivery platforms, our restaurants would primarily
respond to the customers and resolve the issues. For details, see “— Operations Management
— Customer Feedback Management.” There had not been any material incidents or complaints
in relation to delivery orders during the Track Record Period and up to the Latest Practicable
Date.
We have implemented stringent quality control protocols for delivery orders performed by
third-party online food delivery platforms, which include, among other things:
 Packaging standards : Our restaurant staff are required to securely pack and seal all
delivery orders to prevent contamination and damage during delivery.
 Delivery equipment : We require third-party platforms to use standardized delivery
boxes to ensure optimal food quality throughout transportation.
 Performance review : We continuously evaluate the performance of third-party
platforms such as service quality, delivery punctuality and order acceptance rates.
 Customer feedback : We systematically documented and tracked customer feedback
for the assessment of third-party delivery platforms.
The revenue from delivery business of self-operated restaurants amounted to RMB65.7
million, RMB124.6 million, RMB180.7 million, RMB82.1 million and RMB128.9 million in
2022, 2023, 2024 and the six months ended June 30, 2024 and 2025, respectively, accounting
for 15.7%, 15.5%, 15.6%, 15.6% and 18.3% of our revenue, respectively.
FRANCHISE MANAGEMENT
We generated revenue from franchise management during the Track Record Period. In
2022, 2023, 2024 and the six months ended June 30, 2024 and 2025, franchise management
contributed 19.3%, 16.0%, 13.2%, 13.8% and 10.9% of our total revenue, respectively. We
enter into franchise agreements with all franchisees. As the franchisor, we provide franchise
management services under our franchise agreements with franchisees. A franchise is a right
to sell products in a particular area using our brand name and trademarks. We also sell food
ingredients and restaurant supplies to our franchisees. Our franchise management services
revenue mainly includes sales of food ingredients and restaurant supplies as well as royalty and
franchising income. For details, see “— Our Franchisees.”
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OTHER SOURCES OF REVENUE
During the Track Record Period, we also generated revenue from the sales of retail
products under our Xiao Noodles brand on e-commerce platforms. In 2022, 2023, 2024 and the
six months ended June 30, 2024 and 2025, sales of retail products contributed 0.2%, 0.1%,
0.1%, 0.1% and 0.1% of our total revenue, respectively. Generally, we design the product
specifications and packaging while engaging third-party manufacturers for production.
Throughout this process, we maintain close oversight and quality control of the raw materials
used and the final finished products. We have in place a meticulous selection process, which
involves careful consideration and vetting of third-party manufacturers.
PRODUCT AND MENU DEVELOPMENT
Our R&D department develops our new menu items. We also collaborate with suppliers
who propose ideas of new menu items. Typically, each of our restaurants offers approximately
30 to 40 SKUs, of which over 80% are self-developed. Leveraging the flexibility and diversity
of Sichuan and Chongqing cuisine, we regularly update our menu to refresh our customers’
dining experience and adapt to the latest trends. Our ability to continuously introduce new and
popular menu items drives customers’ enthusiasm towards our restaurants and differentiates us
from other Chinese noodle restaurants. We typically design new menu items under a particular
theme each year. For example, during the Track Record Period, we set the theme of “hearty
dish” ( ೷ൄ) with the aim to provide customers with a more value for money and satisfying
meal, under which our Crispy Fried Chicken series ( ঌͤ̒৳ᕒӻΐ), Maocai Hotpot series
(ൄӻΐ), Skewer Series ( ˬϺЂЕӻΐ) and Angus Beef Series (ˬӻΐ) were
introduced.
Our menu development cycle typically consists of the following key steps:
 Project proposal . Our R&D department proposes a number of new items based on
(i) AI-empowered analysis of market data, (ii) analysis of social media content, and
(iii) suggestions from our suppliers.
 Concept screening. Our R&D department conduct screening of the proposals and
determine whether the proposed menu items can be mass-produced and whether they
are operationally feasible.
 Committee approval . A menu item that passes the screening process will be
evaluated by a culinary committee led by Mr. Song, Mr. Su and Ms. Luo. The
committee consists of the department heads of R&D department, marketing
department, business analysis department, supply chain department and staff
training department.
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 Trial launch. We conduct a trial launch at a single store to assess the popularity of
the new menu item and the consistency of its production. We collect feedback from
our customers and fine-tune the taste and quality of the menu item during the trial
launch.
 Small-scale test sales . We conduct further small-scale test sales, ensuring that the
menu item is suitable for adoption across our restaurant network.
A W ARDS AND RECOGNITIONS
We have received various honors and awards in recognition of, among others, our scale,
innovation and culinary offerings. The following table sets out our major awards:
Y ear Award/recognition Awarding body
2025 /H1118/H1118/H1118/H1118Top 10 Noodle House Brands
(೐)
Hongcan (᎛ၣ)
2025 /H1118/H1118/H1118/H1118Consumer Sector Blue Chip Brand
(೐)
Forbes China ( ၅̺౶ʕ਷)
2025 /H1118/H1118/H1118/H1118Consumer Sector Impactful Chain
(೐)
Frost & Sullivan (౶तӍл˖)
2024 /H1118/H1118/H1118/H1118China (South China) Brand of the
Y ear with the Most Attention
from Shopping Centers ( ʕ਷(ശ
ی)೐)
The 19th China (South China)
Commercial Real Estate
Innovation Summit Organization
Committee (ʕ਷(ی)
ึଡ଼։ึ)
2023 /H1118/H1118/H1118/H1118Sina Guangdong Charity Action of
the Y ear Award 2023 (2023 ϋอ
ʮूБਗᆤ)
Sina Guangdong (؇)
2023 /H1118/H1118/H1118/H1118Top 100 Catering Enterprises in
Guangdong (᎛භϵ੶Άุ)
Guangdong Catering Service
Association (ਕБ
ุ՘ึ)
2022 /H1118/H1118/H1118/H1118Digital Pioneers Enterprise
(ᅰοʷ΋ቜΆุ)
WeChat Open Class (ʮකሙ)
2022 /H1118/H1118/H1118/H1118Superior Taste Award 2022 (2022 ϋ
բɽᆤ)
International Taste Institute
2021 /H1118/H1118/H1118/H1118Top 10 Brands of Chinese Noodles
(೐)
Red Cyprinoid Awards (ᕫᆤ)
2021 /H1118/H1118/H1118/H1118Top 10 Annual Growth Brands (10
೐)
Huxiu (෠ၣ)
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ORGANIZATIONAL STRUCTURE
We have established a centralized management model for all our restaurants, whether
self-operated or franchised, under our headquarters. Our organizational structure enables us to
implement uniform standards across our nationwide restaurant network, while providing our
restaurants with sufficient flexibility to address local conditions.
Headquarters
Our headquarters maintain centralized control over key operational processes, including
menu design and updates, expansion planning, pricing, brand and marketing initiatives, supply
chain, franchise management, legal compliance, digital systems, human resources management
and financial management. Standardized guidelines, methodologies, and systemic tools are
formulated by the headquarters and provided to the restaurants for execution. We believe
centralized management of these operational processes ensures the quality and consistency of
our dishes, the dining experience we deliver, and the efficient allocation of resources.
Restaurants
Restaurant managers are responsible for the day-to-day operations of our restaurants,
which include overseeing the conditions of the restaurants, managing daily workflows and
supervising their respective teams of restaurant staff. Restaurant staff are typically assigned
standardized and easy-to-learn tasks, such as daily pre-opening routines, customer greetings,
table arrangements, food preparation, delivery of dishes to customers and restaurant hygiene
maintenance, according to the operation standards and service guidelines set by our
headquarters.
OPERATIONS MANAGEMENT
Standardization
We rely on standardized operations to maintain consistency in the quality of food and
services and the overall dining experience across our self-operated and franchised restaurant
network. We have established a comprehensive set of standards and specifications with respect
to the key aspects of our restaurant operations, including customer service, procurement,
employee conduct, digital systems, as well as employee training programs. For details, see “—
Competitive Strengths — Highly standardized operational model with high replicability.”
Pricing
We offer high quality food at affordable prices to bring affordable dining experience to
our customers. Generally, pricing of our menu items is determined by our headquarters with
reference to local conditions. When making pricing decisions with respect to a particular
region, we consider a number of factors, including the average disposable income, spending
patterns of consumers in the local community, procurement and rental costs of the restaurants,
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prices set by competitors and our target profit margin. We also closely monitor the pricing of
our competitors in the same city to evaluate our pricing. We may update our pricing from time
to time to reflect market trends and general economic conditions. In addition, we have adopted
a dynamic pricing strategy that aims to stimulate market demand and drive sales volume by
offering competitive prices. We strive to optimize our procurement costs to sustain these
competitive prices. This strategy allows us to maintain affordable pricing, increase sales
volume, solidify our leading market position and become the optimal choice for our customers’
daily meals.
Restaurant Performance Evaluation
We conduct periodic evaluations of the performance of our restaurants. In order to
continuously optimize our restaurant management and enhance the overall performance across
our restaurant network, we have implemented a unified mechanism across our restaurants to
objectively evaluate the performance of each restaurant. Our evaluation mechanism quantifies
critical metrics in the operation of our restaurants such as customer service, kitchen operation,
personnel management, food safety, financial management and inventory management. We set
out rational and controllable evaluation criteria for our restaurants. For example, our system
provides daily staffing recommendations to each of the restaurants based on estimation of
sales. One of our performance indicators is the restaurants’ adherence rate to our system’s
staffing recommendations. Managers of restaurants with satisfactory performance are rewarded
with bonuses. We believe such unified evaluation mechanism fosters healthy competition
among our restaurants and incentivizes performance improvements.
Our restaurant performance evaluation mechanism is built on the foundation of our digital
infrastructure. Most of the indicators and criteria are automatically generated by our digital
system. At the same time, the mechanism is supported by our training department and
inspection department consisting of individuals who have extensive management backgrounds
and on-the-job experience in restaurant operations. Such individuals contribute to the
continuous optimization of our restaurant performance evaluation mechanism through
transforming insights from practical business needs into new indicators and criteria in the
mechanism in response to the ever-changing business environment.
When we identify a low rating restaurant, we investigate the underlying reasons, which
may be related to, among other things, the restaurant location, surrounding business
environment, menu offerings, pricing and/or staffing. For our self-operated restaurants, our
initial step involves assessing the root cause of underperformance, identifying issues attributed
to human factors and taking prompt corrective actions, which include the replacement of
management if alternative corrective actions do not lead to improvements.
Regarding our franchised restaurants, we offer support in diagnosing underlying issues
and formulating improvement plans. Should external factors be identified as the causes of
underperformance, adjustments such as franchise fee reductions may be implemented to
alleviate operational pressures of our franchisees.
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Customer Feedback Management
We pay close attention to customer feedback to maintain the popularity of the Xiao
Noodles dining experience. We provide standard guidelines for our restaurant staff to handle
customer complaints. Depending on the nature and extent of severeness of a complaint, the
guidelines set out the corresponding procedures to handle such incidents. We provide
comprehensive trainings on these guidelines to ensure adherence and maintain high service
standards. Restaurant managers are authorized to address and resolve any concerns related to
food quality or service at the restaurant level, including taking immediate remedial action when
necessary. Complaints received through our service hotline and social media channels are
handled by our customer service team, while those from third-party online delivery platforms
are handled directly by the respective restaurants. All complaints are documented, assigned to
the appropriate personnel for investigation, and followed up systematically.
Our customer service team continuously monitors customer feedback based on the output
of our software that analyses customer comments online. Our AI-empowered system collects
and collates customer feedback from third-party platforms, performs real-time semantic
analysis and extracts relevant data for our menu optimization, precision marketing initiatives
and risk control. Our AI-empowered system automatically generates reports to our customer
service team. For example, if a customer posts on a platform about the flavor of our new menu
items, our AI-empowered system will capture such comments in its report for us to fine-tune
the flavor of our menu items proactively. During the Track Record Period and up to the Latest
Practicable Date, we did not receive any material customer complaint with respect to our
restaurants.
Settlement and Cash Management
We accept cash, credit cards, WeChat Pay, Alipay and other online payments at our
restaurants, as non-cash payments become increasingly common. In 2024, approximately
98.5% of the total amount paid by our dine-in customers was settled through mobile payment.
During the same period, approximately 0.9% of total amount paid by our dine-in customers was
settled by cash.
To avoid misappropriation and embezzlement of cash, we have developed a digital cash
management system for restaurant operations. The restaurant managers record cash inflows and
outflows, count and hand over the cash during each shift. We have also implemented a
operational and financial reconciliation system where the finance department reconciles any
discrepancies with the cash management app regularly. In addition, the inspection team
conducts random cash counts at the restaurants monthly.
During the Track Record Period and up to the Latest Practicable Date, we had not
encountered any incident of cash misappropriation or embezzlement that had a material
adverse impact on our business, results of operations or financial condition.
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OUR FRANCHISEES
Our franchisees stand as one of the four pillars of the development of Xiao Noodles .W e
ventured into the franchise model in 2019 and have continuously explored its development
since then. During this period, we tapped into franchising with franchisees who typically
opened a few franchised restaurants. We also engaged in and placed emphasis on regional
franchising, where the franchisees are typically responsible for opening franchised restaurants
in designated cities or regions. As of the Latest Practicable Date, our largest regional franchisee
opened 22 franchised restaurants. According to Frost & Sullivan, the franchise model has been
widely adopted in the catering industry, offering key benefits such as (i) accelerated expansion
of restaurant network and enhanced regional penetration, driving increased market share, and
(ii) leveraging the entrepreneurial spirit, local connections and resources of franchisees.
Some of our former employees became our franchisees because of their recognition of our
business model, appreciation of our brand, and the trust established with us during their
employment. As of December 31, 2022, 2023, 2024 and June 30, 2025, five, four, four and
three franchisees were our former employees, respectively, and they collectively operated
eight, seven, seven and seven franchised restaurants at the respective time. Revenue generated
from our sale of food ingredients and restaurant supplies to as well as royalty and franchising
income from these franchised restaurants contributed to less than 5% of our total revenue for
each year/period during the Track Record Period. According to Frost & Sullivan, it is not
uncommon for practitioners in our industry to engage former employees as franchisees.
We treat such franchisees generally in the same way that we treat our other franchisees.
We applied the same selection criteria when enrolling the franchisees and the franchise
agreements that we entered into with these franchisees contained the similar terms and
conditions that we offered to independent franchisees. To the best of our knowledge, other than
as described above, our franchisees were all Independent Third Parties during the Track Record
Period.
In 2022 and 2023, we have explored the feasibility of the authorized operation model with
an Independent Third Party, which, as the franchisee, was fully responsible for the operation
of the franchised restaurants under our brand. We authorized the use of our brand and allowed
such franchised restaurants to submit procurement orders through our centralized procurement
system. The main differences between the authorized operation and our current franchise
models lies in the degree of operational control and support provided. While we require our
franchisees to strictly follow standardized operational procedures and we maintain close
oversight of franchised restaurants to ensure their compliance with the required procedures, we
did not impose any standardization requirement or exercise managerial supervision on the
operation of restaurants under the authorized operation model. We explored the authorized
operation model for the purpose of expanding our market presence while minimizing capital
expenditure and operational risks. As of January 1, 2022 and 2023, we authorized the
Independent Third Party to operate twelve and nine franchised restaurants, respectively. In
2022, 2023, 2024 and the six months ended June 30, 2025, revenue from the restaurants under
the authorized operation model in each year/period accounted for 1.7%, 0.1%, nil and nil of our
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total revenue for the respective periods. During the Track Record Period, we gradually ceased
the authorized operation model and closed all such restaurants by the first half of 2023
primarily because such model proved incompatible with our strategic focus on systematic
management. We took into account several key factors for the decision to close restaurants
under the authorized operation model, including maintaining brand consistency across all
locations, ensuring uniform customer experiences, and addressing operational management
challenges. We believed that, without the implementation of our standardized systems and
procedures, the dining experience in and service quality of such restaurants would be
inconsistent and may compromise our brand reputation. Given the limited number of
restaurants under the authorized operation model which contributed to a relatively small
portion of our revenue during the Track Record Period, the gradual cessation of authorized
operation model did not have any material impact on the profitability of our restaurant
operations.
We seek to foster long-term, robust relationships with our franchisees. During the Track
Record Period, we terminated relationships with only a few franchisees. Reasons for these
terminations primarily included (i) underperformance by franchisees who failed to meet our
evaluation standards, and (ii) change of business plans on the part of the franchisees.
The following table sets forth movement in the number of franchisees for the periods
indicated.
For the year ended December 31,
For the
six months
ended
June 30,
2022 2023 2024 2025
At the beginning of the
period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111830 36 40 42
Newly added /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186 1 063
Terminated /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (6) (4) (3)
At the end of period /H1118/H1118/H1118/H1118/H1118/H1118/H111836 40 42 42
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The following table sets forth a breakdown of number of the Group’s franchise
agreements by remaining term as of the Latest Practicable Date:
Remaining term
Number of the Group’s
franchise agreements
Less than one year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111816
One to three years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111835
Three to five years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111839
In 2022, 2023, 2024 and the six months ended June 30, 2025, a total of nil, nil, eleven
and six franchise agreements expired, respectively. Among the eleven franchise agreements
that expired in 2024, six were renewed, while three were converted to self-operated restaurants.
The remaining two franchise agreements were discontinued. Among the six franchise
agreements that expired in the first half of 2025, two were renewed, two were discontinued due
to change of business plans on the part of the franchisees, and two were discontinued due to
underperformance.
As of December 31, 2022, 2023, 2024 and the six months ended June 30, 2025, the
average number of restaurants per franchisee was 1.5, 1.8, 2.0 and 2.1, respectively, and the
range of number of restaurants per franchisee was one to ten, one to 15, one to 18 and one to
20, respectively. To the best of our knowledge, our franchisees during the Track Record Period
were not related to each other and there was no group of related franchisees. As none of the
franchisees held more than 25% of the franchised restaurants at the end of each year/period
during the Track Record Period, we believe that there was no concentration of restaurants
among a small number of franchisees during the Track Record Period.
Onboarding Process
We implement a rigorous onboarding process for new franchisees, covering every critical
phase from initial selection to restaurant opening. Each candidate undergoes a thorough
selection procedure, measured against comprehensive criteria to ensure alignment with our
business values and the capability to successfully operate a restaurant. Generally, it takes
approximately two to three months to complete the entire process from franchisee selection to
new restaurant opening.
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Our systematic restaurant opening system mainly includes site selection, project
management, training and recruitment, marketing and legal compliance. The franchisee
onboarding process includes the following key stages:
 Selection of franchisees. Franchisees should possess self-management capabilities
and a commitment to sustainable operations. In addition, preference is given to
franchisees who have previous restaurant management experience with strong local
connections and resources.
 Mandatory training. We require franchisee candidates and their key employees to
attend mandatory training programs provided by our headquarters covering the
necessary knowledge and know-how before launching of franchised restaurants.
 Site selection . Upon completion of their mandatory training, we work closely with
the franchisees and provide them with network planning data support for the
selection of restaurant locations. Before proceeding with opening a new restaurant,
franchisees must undergo the same process as the opening of our self-operated
restaurants and obtain prior approval from our headquarters in respect of the site
selection. We offer comprehensive guidance and support for selecting new
franchised restaurant sites, including location recommendations and data-driven
analysis.
Management of Our Franchisees
We manage our franchisees in the following aspects to ensure high-quality restaurant
operations and enhance customer satisfaction:
 Restaurant design . Franchisees are required to adhere to the same standardized
design and equipment specifications as our self-operated restaurants. This ensures
the creation of a dining environment that aligns with our brand standards and
provides a consistent experience for customers across all restaurants.
 Construction management . We guide our franchisees in the construction process of
franchised restaurants, such as budgeting, construction works management, project
acceptance and costs analysis.
 Standardized employee management and training . Franchisees must strictly adhere
to our guidelines on employee management such as recruitment, training and
management structure.
 Platform system . Similar to our self-operated restaurants, all franchised restaurants
have installed a uniform operation system covering the entire restaurant
management process including ordering of dishes, food preparation and staff
management, which enables us to perform real-time tracking on operational data.
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 Standardized operations . We have established comprehensive operational measures
and management policies to guide our franchisees in their daily restaurant
operations.
 Centralized procurement . Our headquarters exercises complete control over the
procurement of food ingredients, restaurant supplies and equipment. Franchisees can
place orders through our centralized procurement system.
 Performance review . Our restaurant performance evaluation mechanism is
implemented across both our self-operated and franchised restaurants. This ensures
that all restaurants are evaluated on the basis of objective and quantifiable metrics
such as customer service, kitchen operation, personnel management, food safety,
financial management and inventory management. See “— Operations Management
— Restaurant Performance Evaluation”.
 Quality control . All franchisees shall adhere strictly to all applicable laws and
regulations concerning food quality, safety, and hygiene, as well as our internal
protocols. We conduct site visits to supervise operations and guide restaurants in
addressing food safety and quality control issues. Furthermore, our AI-empowered
system allows us to visually oversee the preparation of dishes in the franchised
restaurants through network cameras.
 Compliance management . The franchisees are responsible for obtaining all
necessary licenses and permits, such as the business license, restaurant operation
license and fire safety inspection certificate, as applicable. The franchisees are
required to submit to us copies of such necessary licenses and permits.
We have a buyer/seller relationship with our franchisees. For details of our revenue
recognition for sale of food ingredients and restaurant supplies to franchisees and royalty and
franchising income, see “Financial Information — Revenue and other income — (i) Revenue
from contracts with customers”.
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The following table sets forth a breakdown of our revenue from franchise management by
nature for the periods indicated:
For the year ended December 31,
For the six months ended
June 30,
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Sales of food
ingredients and
restaurant
supplies /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111867,964 104,965 125,488 59,736 62,787
Royalty and franchising
income and provision
of service /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,547 22,729 27,042 12,736 13,875
– Monthly royalty fee /H1118 10,385 18,295 21,767 10,302 10,851
– Upfront initial fee /H1118/H1118 578 1,156 1,719 854 1,078
– Others
(1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,584 3,278 3,556 1,580 1,946
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111880,511 127,694 152,530 72,472 76,662
Note:
(1) This represents revenue generated from restaurant design, provision of system software, and provision
of trainings.
The increase in our revenue from royalty and franchising income and provision of service
during the Track Record Period was in line with the increase in the number of our franchised
restaurants.
Pricing Policy
We set the amount of royalty and franchising fees and provision of services fees charged
to franchisees considering a number of factors, including but not limited to (i) the local
purchasing power and competitive landscape, (ii) our market position and recognition in the
region, (iii) the extent of pre-opening and operational support provided, and (iv) the
franchisees’ potential capacity for expansion of restaurant network.
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We set the prices of food ingredients and restaurant supplies to our franchisees
considering a number of factors, including but not limited to (i) pricing of comparable food
ingredients and restaurant supplies by reputable retailers or other suppliers in the market, (ii)
procurement and production costs for the relevant food ingredients and restaurant supplies, and
(iii) logistics costs and other miscellaneous costs and expenses in providing the food
ingredients and restaurant supplies. During the Track Record Period, the average mark-up
percentage on cost for sales of food ingredients and restaurant supplies to our franchisees was
11.4%, which is the gross profit margin of our sales of food ingredients and restaurant supplies
to franchisees during the Track Record Period, calculated by dividing (i) the sum of gross profit
of our sales of food ingredients and restaurant supplies to franchisees for each year/period in
the Track Record Period by (ii) the sum of our revenue generated from sales of food ingredients
and restaurant supplies to franchisees for each year/period in the Track Record Period.
Agreements with Franchisees
Following the onboarding process, we enter into agreements with the franchisees to cover
the key aspects of the operation of franchised restaurants. During the Track Record Period and
up to the Latest Practicable Date, we were not aware of any franchisee committing any breach
of their franchise agreements that had a material adverse impact on our business operations.
Key Terms of Franchise Agreements
Term, renewal and termination /H1118/H1118Our franchise agreement typically has an initial term of
approximately five years. In the last six months before an
agreement expires, our franchisees can submit a written
request to renew provided that they have not breached the
franchise agreement. If our franchisees do not submit
written requests or if we decide not to renew, our
franchise agreement will be automatically terminated.
Franchise fee and deposit /H1118/H1118/H1118/H1118/H1118/H1118We require franchisees to pay a fixed amount of deposit
at the beginning of the franchise term to ensure their full
compliance with the franchise agreement terms. Upon
termination of the franchise agreements, the deposit will
be returned to the franchisees after deduction of any
outstanding amounts owed by the franchisees.
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We typically charge franchisees (i) a non-refundable
upfront initial fee upon entering into franchise
agreements for pre-opening support services provided to
the franchisees, including market and location analysis,
certain advisory services like license application and
pre-opening marketing and (ii) a royalty fee, which is a
monthly fee based on predetermined percentages of the
GMV generated by the franchised restaurants. We have a
right to adjust the royalty fees based on the operating
performance of franchised restaurants. Upon the opening
of franchise restaurants, we charge franchisees a one-
time fee for restaurant design and system software
installation. Subsequently, a recurring monthly fee is
charged for software maintenance on top of the monthly
royalty fee. We typically charge franchisees for training
sessions as incurred. We generally adopt a cost-plus
pricing model for the fees we set for restaurant design,
installation and maintenance of system software, and
provision of trainings, taking into account factors such as
(i) the estimated manpower required and (ii) the scale and
location of the franchise restaurants.
Financial arrangement /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118We require our franchised restaurants to use our POS
system uniformly for billing, cashiering and revenue
recording.
Operational standard. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118We reserve the right to determine various operational
aspects of our franchised restaurants, including interior
design, procurement, menu offerings, equipment,
technology systems, and marketing materials. We also
closely monitor the operation of our franchised
restaurants to ensure our standards are consistently met.
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Anti-cannibalization /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Our franchisees are required to operate their franchised
restaurants in the designated premises and areas as
outlined in the franchise agreement. In addition, any
selection of restaurant locations and premises must be
approved by us in writing before the opening of
additional franchised restaurants.
Unified menu offering /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118We have the right to decide the menu offerings provided
at our franchised restaurants. Our franchisees are not
permitted to provide products or services outside of the
permitted scope without our written approval.
Mandated selling prices /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Our franchisees must provide menu offerings at the retail
prices set by us and are not permitted to adjust these
selling prices on their own.
Sales target /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118We do not impose any sales targets on our franchisees
under the franchise agreement.
Minimum purchase amount /H1118/H1118/H1118/H1118/H1118We do not set any minimum purchase amount for our
franchisees under the franchise agreement.
Intellectual property /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Our franchisees are authorized to use our brand,
trademarks and our proprietary operational guidelines
within the designated premises.
Sub-franchising /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Sub-franchising is generally not permitted without our
prior written approval.
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Key Terms of Procurement Agreements with Franchisees
Order placement /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Franchisees are required to submit procurement orders
through our centralized procurement system.
Product return /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Franchisees may return defective products on the spot
upon delivery. Our return policy is generally in line with
industry practice according to Frost & Sullivan.
Payment and credit terms /H1118/H1118/H1118/H1118/H1118/H1118Monthly invoices are issued to the franchisees, who are
required to settle the payment within the same month. In
the monthly invoices, on top of the previous month’s total
payment amount, franchisees are required to pay a sum
that equals to half of the previous month’s total payment
amount (as an estimation of the current half-month’s
payment amount), which will be deducted in the
calculation of next month’s total payment amount in the
next invoice.
Delivery /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118We will arrange for the delivery of purchased supplies
and equipment to the franchised restaurants.
PROCUREMENT
We strive to obtain high quality supplies from reliable sources at reasonable prices. We
primarily procure (i) food ingredients, such as meat and condiments as well as (ii) decoration
materials, equipment and other supplies used in our restaurants. We have established a
procurement team at our headquarters to implement a centralized procurement system for all
purchase orders. Currently, we procure food ingredients from third-party suppliers primarily
through a logistics and supply chain service company located in Beijing and a group of
companies under its common control (collectively, the “ Supply Chain Service Group ”), all of
which are Independent Third Parties located in the Chinese Mainland providing supply chain
services to us. For details, see “— Procurement — Procurement Arrangement with the Supply
Chain Service Group.”
Supplier Selection and Evaluation
Our suppliers are one of the four pillars of the development of Xiao Noodles .W e
continuously identify and evaluate prospective suppliers to optimize our supply chain
arrangements. We utilize a comprehensive set of criteria to evaluate the suitability of each
prospective supplier. Such criteria include, among other things, pricing, quality and safety of
products, market reputation, financial conditions, qualifications and production capacities.
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Our procurement team conducts market research on an ongoing basis and invites
competent candidates to our selection process. We conduct thorough assessments, such as
product sampling, before we engage each new supplier. With respect to food processing
companies, we also conduct site visits of their facilities both before engagement and
periodically afterwards. During such site visits, we assess whether the equipment and
production environment meet our comprehensive set of quality control, hygiene and food
safety criteria. We also collect feedback from our restaurants as to the quality of the supplies
they receive.
Supply Agreements
As of the Latest Practicable Date, we collaborated with approximately 460 suppliers. We
generally enter into standard one-year framework agreements with our suppliers, salient terms
are set forth below:
 Quality . We generally provide detailed specifications regarding the quality of the
goods supplied. We require all suppliers to comply with relevant quality standards
and specifications in accordance with relevant laws and regulations, as well as
industry standards.
 Pricing . The prices are generally fixed for prescribed periods of time set out in the
agreements.
 Delivery schedule . We generally stipulate the delivery schedule in our agreements
with both our suppliers and the Supply Chain Service Group. The supplier is
responsible for the delivery to the Supply Chain Service Group’s warehouses while
the Supply Chain Service Group is responsible for the delivery to our restaurants.
The delivery schedule depends on the types of products procured.
 Inspection and Acceptance . The food products and ingredients are subject to our
inspection upon arrival at our designated location, and we may refuse acceptance of
any defective products and ingredients. In case of any quality defects, we are
entitled to replacement or refund by the suppliers.
 Payment . We generally settle payments with our suppliers through the Supply Chain
Service Group monthly.
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Supplier Management
We had 341, 424, 439 and 452 authorized suppliers as of December 31, 2022, 2023, 2024
and June 30, 2025, respectively. On average, we have approximately five years of business
dealings with our major suppliers.
We typically have multiple suppliers for each of our main food ingredients to minimize
any potential disruption in our operations, maintain sourcing stability, avoid over-reliance risk,
and secure competitive prices from suppliers. We do not believe that we face material supplier
concentration risks. During the Track Record Period and up to the Latest Practicable Date, we
did not experience any interruption in our supply of food ingredients, early termination of
supply agreements, or failure to secure sufficient quantities of supplies that had any material
adverse impact on our business or results of operations.
Our suppliers generally offer us a credit term of up to 60 days. We typically settle trade
payable obligations with respect to our suppliers through bank transfers.
Purchases from our five largest suppliers in each year/period during the Track Record
Period accounted for 28.7%, 30.1%, 30.5% and 33.1% of our total purchases for the respective
year/period. Purchases from our largest supplier in each year/period during the Track Record
Period accounted for 7.2%, 10.1%, 11.6% and 13.3% of our total purchases for the respective
year/period. To the best of our knowledge, during the Track Record Period and up to the Latest
Practicable Date, all of our five largest suppliers in each year/period during the Track Record
Period were Independent Third Parties. To the best of the knowledge of our Directors, none of
our Directors, their respective associates or any shareholder who owns more than 5% of our
issued share capital had any interest in any of our five largest suppliers in each year/period
during the Track Record Period. We procured from our five largest suppliers in each
year/period during the Track Record Period through the Supply Chain Service Group. For
details, see “— Procurement — Procurement Arrangement with the Supply Chain Service
Group.”
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The table below sets forth the details of our top five largest suppliers in each year/period
during the Track Record Period:
For the six months ended June 30, 2025
Supplier
Main products
purchased
by us
Y ear of
commencement
of the
relationship
with us
Credit
terms
Settlement
method
Purchase
amount (11)
Percentage
of total
Purchase
(RMB in
thousands) (%)
Supplier A (1) /H1118/H1118/H1118Meat products 2020 30-60 days Bank transfer 28,079 13.3
Supplier H (9) /H1118/H1118/H1118Condiments 2021 30-60 days Bank transfer 12,271 5.8
Supplier C (3) /H1118/H1118/H1118Noodles 2019 30-60 days Bank transfer 10,193 4.8
Supplier I (10) /H1118/H1118/H1118Meat products 2024 30-60 days Bank transfer 10,000 4.8
Supplier E (5) /H1118/H1118/H1118Noodles 2017 30-60 days Bank transfer 9,157 4.4
Our total
purchase from
the top five
suppliers /H1118/H1118/H1118/H1118
69,700 33.1
For the year ended December 31, 2024
Supplier
Main products
purchased
by us
Y ear of
Commencement
of the
relationship
with us
Credit
terms
Settlement
method
Purchase
amount (11)
Percentage
of total
Purchase
(RMB in
thousands) (%)
Supplier A (1) /H1118/H1118/H1118Meat products 2020 30-60 days Bank transfer 43,020 11.6
Supplier B (2) /H1118/H1118/H1118Meat products 2022 30-60 days Bank transfer 18,470 5.0
Supplier C (3) /H1118/H1118/H1118Noodles 2019 30-60 days Bank transfer 18,219 4.9
Supplier D (4) /H1118/H1118/H1118Condiments 2019 30-60 days Bank transfer 17,309 4.7
Supplier E (5) /H1118/H1118/H1118Noodles 2017 30-60 days Bank transfer 15,983 4.3
Our total
purchase from
the top five
suppliers /H1118/H1118/H1118/H1118
113,001 30.5
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For the year ended December 31, 2023
Supplier
Main products
purchased
by us
Y ear of
Commencement
of the
relationship
with us
Credit
terms
Settlement
method
Purchase
amount (11)
Percentage
of total
Purchase
(RMB in
thousands) (%)
Supplier A (1) /H1118/H1118/H1118Meat products 2020 30-60 days Bank transfer 28,921 10.1
Supplier B (2) /H1118/H1118/H1118Meat products 2022 30-60 days Bank transfer 17,250 6.0
Supplier D (4) /H1118/H1118/H1118Condiments 2019 30-60 days Bank transfer 14,724 5.1
Supplier C (3) /H1118/H1118/H1118Noodles 2019 30-60 days Bank transfer 13,095 4.6
Supplier E (5) /H1118/H1118/H1118Noodles 2017 30-60 days Bank transfer 12,334 4.3
Our total
purchase from
the top five
suppliers /H1118/H1118/H1118/H1118
86,324 30.1
For the year ended December 31, 2022
Supplier
Main products
and/or services
purchased
by us
Y ear of
Commencement
of the
relationship
with us
Credit
terms
Settlement
method
Purchase
amount (11)
Percentage
of total
Purchase
(RMB in
thousands) (%)
Supply Chain
Service
Group
(6) /H1118/H1118/H1118/H1118/H1118
Meat products,
condiments,
restaurant
supplies, and
supply chain
services such as
logistics and
warehousing
2019 30-60 days Bank transfer 10,807 7.2
Supplier F
(7) /H1118/H1118/H1118Condiments,
beverages and
restaurant
supplies
2020 30-60 days Bank transfer 9,507 6.3
Supplier E
(5) /H1118/H1118/H1118Noodles 2017 30-60 days Bank transfer 8,630 5.7
Supplier D (4) /H1118/H1118/H1118Condiments 2019 30-60 days Bank transfer 7,985 5.3
Supplier G (8) /H1118/H1118/H1118Meat products 2022 Prepayment Bank transfer 6,292 4.2
Our total
purchase from
the top five
suppliers /H1118/H1118/H1118/H1118
43,221 28.7
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Notes:
(1) Supplier A is a group of companies engaged in the production, processing, and sales of food products and
condiments under the common control of a company, including (i) a company located in Chengdu; incorporated
in 1993; RMB10.0 million registered capital; (ii) a company located in Bengbu; incorporated in 2020;
RMB116.9 million registered capital.
(2) Supplier B is a private company located in Shenzhen and incorporated in 2018 with a registered capital of
RMB10.0 million. Its principal business mainly involves the sales of rice, oil, non-staple food, seafood, as well
as agricultural, meat, and egg products.
(3) Supplier C is a group of companies engaged in the processing, storage and sales of food products and
condiments under the common control of a company, including (i) a company located in Dongguan;
incorporated in 2007; USD31.7 million registered capital; (ii) branch companies of a company located in
Shanghai; incorporated in 2009; RMB68.0 million registered capital.
(4) Supplier D is a private company located in Chengdu and incorporated in 2008 with a registered capital of
RMB8.0 million. Its principal business mainly involves the production and sales of food products and
condiments.
(5) Supplier E is a private company located in Zhongshan and incorporated in 2015 with a registered capital of
RMB0.3 million. Its principal business mainly involves the production and sales of food products.
(6) Supply Chain Service Group consists of a company, located in Beijing and established in 2014 with a
registered capital of approximately RMB117.0 million, and a group of companies under its common control.
For details, see “— Procurement — Procurement Arrangement with the Supply Chain Service Group.”
(7) Supplier F is a private company located in Guangzhou and incorporated in 2007 with a registered capital of
RMB6.0 million. Its principal business mainly involves the sales of agricultural and food products.
(8) Supplier G is a private company located in Shenzhen and incorporated in 1991 with a registered capital of
USD23.0 million. Its principal business mainly involves the production and sales of meat products as well as
other food products.
(9) Supplier H is a private company located in Chengdu and incorporated in 2007 with a registered capital of
RMB80.0 million. Its principal business mainly involves the sales of pre-packaged food products and
condiments.
(10) Supplier I is a private company located in Liaocheng and incorporated in 2014 with a registered capital of
RMB5.0 million. Its principal business mainly involves the production and sales of meat products as well as
other food products.
(11) The purchase amount of raw materials and consumables from the supplier.
Procurement arrangement with the Supply Chain Service Group
We have engaged the Supply Chain Service Group for the procurement of food
ingredients since 2019. The Supply Chain Service Group primarily engages in the provision of
“one-stop-shop” supply chain services (including purchase, process, warehouse storage,
logistics, and sales of food products) to catering service brands and is reputable in the food and
beverage supply chain services market. The Supply Chain Service Group’s capabilities align
with our expansion strategy, forming the foundation for our initial collaboration and creating
opportunities for more comprehensive collaboration. While our procurement team is fully in
charge of the selection, management and evaluation of as well as negotiations with our
suppliers, the Supply Chain Service Group provides supply chain services such as logistics and
warehousing for our purchased products. We enter into purchase agreements directly with
third-party suppliers regarding the purchases from them through the Supply Chain Service
Group. We also sourced some of our food ingredients and restaurant supplies directly from the
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Supply Chain Service Group. The Supply Chain Service Group conducts inspection of the
purchased products upon delivery to its warehouses. The food products and ingredients are
subject to our inspection upon arrival at our designated location. We also conduct regular
on-site inspections at the warehouses of the Supply Chain Service Group and manufacturing
facilities of third-party suppliers.
The salient terms of our agreement with the Supply Chain Service Group are set forth
below:
 Duration. Our agreements with the Supply Chain Service Group generally last for
three years.
 Scope of services. In accordance with our instructions, the Supply Chain Service
Group mainly provides (i) services of placing procurement orders with our selected
third-party suppliers on behalf of us after obtaining our confirmation, (ii)
warehousing services with regular reports of the inventory status of our purchased
products to us, (iii) logistics services for delivery of our purchased products from
the warehouses of the Supply Chain Service Group to our designated locations, and
(iv) settlement services with third-party suppliers on behalf of us.
 Service fees . The Supply Chain Service Group charges service fees based on
predetermined percentages of the purchase value depending on the types of products
purchased by us.
 Obligations of the Supply Chain Service Group. The Supply Chain Service Group
manages stock of our purchased products and arrange delivery schedules according
to our instructions in order to ensure sufficient supply of food ingredients for our
restaurants.
We believe the use of the Supply Chain Service Group’s supply chain services allows our
management to focus on our core business to enhance the operational efficiency of our
restaurants and drive scalable growth. In particular, the Supply Chain Service Group provides
efficient integrated solutions for logistics and warehousing systems which streamline our
supply chain management. Such arrangement can meet our nationwide warehousing needs.
Under the settlement services, the Supply Chain Service Group pays third-party suppliers and
then subsequently charges us for an aggregate sum of total procurement amount and supply
chain service fees. The settlement services improve payment efficiency by consolidating and
streamlining our payment process and reducing our administrative workload for entering into
purchase orders and executing settlements with each supplier.
According to Frost & Sullivan, it is common practice for chain restaurants to engage
third-party supply chain services. In 2022, 2023 and 2024 and the six months ended June 30,
2025, the total purchase of our Group supplied through the Supply Chain Service Group were
RMB150.1 million, RMB299.2 million, RMB400.1 million and RMB219.4 million,
respectively, among which the supply chain service fees charged by the Supply Chain Service
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Group were RMB8.5 million, RMB16.2 million, RMB22.8 million and RMB12.7 million,
respectively. According to Frost & Sullivan, the service fees charged by the Supply Chain
Service Group were comparable to the prevailing market prices, and there are alternative
suppliers of similar services available in the Chinese Mainland which are able to provide
services comparable to those provided by the Supply Chain Service Group. Our Directors are
of the view that we are not materially reliant on the Supply Chain Service Group as there are
readily available alternative suppliers of similar services in the market and we maintain a pool
of alternative supplier candidates, allowing us to procure similar services from other suppliers
in the market without materially and adversely affecting our business and results of operations
should we decide to do so.
The service fees charged by the Supply Chain Service Group include (i) procurement and
warehousing services which are calculated based on predetermined percentages of the
procurement amounts charged on a monthly basis and (ii) logistics and delivery services which
are charged for each delivery made. The following table sets forth a breakdown of the service
fees paid to the Supply Chain Service Group by nature for the periods indicated:
For the year ended December 31,
For the
six months
ended
June 30,
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Procurement and warehousing
services (1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,398 11,066 15,784 8,695
Logistics and delivery
services (2) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,087 5,120 7,012 4,014
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11188,484 16,186 22,796 12,709
Notes:
(1) The service fees for procurement and warehousing services are reflected in (i) raw materials and
consumables used and (ii) materials for restaurant operation under other expenses in our consolidated
statements of profit or loss and other comprehensive income.
(2) The service fees for logistics and delivery services are reflected in transportation expenses under other
expenses in our consolidated statements of profit or loss and other comprehensive income.
In 2022, 2023, 2024 and the six months ended June 30, 2025, the total purchases sourced
directly from the Supply Chain Service Group was RMB11.8 million, RMB12.1 million,
RMB1.9 million and RMB0.3 million, respectively. The total purchases directly from the
Supply Chain Service Group decreased in 2024 and the first half of 2025 primarily due to (i)
our enhanced bargaining power with end-suppliers resulting from increased purchasing volume
and restaurant network expansion, and (ii) successful diversification of our supplier base
BUSINESS
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through market procurement channel development. Similar to our arrangements with other
suppliers, the pricing of such products is generally fixed for prescribed periods of time set out
in the respective supply agreements.
Price Management and Price Sensitivity Analysis
We implement various measures to control our purchase costs, including (i) arranging
agreed-upon prices or price ranges with select suppliers in advance to secure sufficient supplies
at reasonable costs, (ii) establishing long-term, stable relationships with upstream suppliers,
and (iii) stocking certain food ingredients according to market conditions and sales records.
Moreover, we believe we are able to obtain favorable terms from suppliers as we generally
conduct centralized procurement in large volumes.
The table below sets forth the sensitivity analysis of the impact on our results of
operations during the Track Record Period from the fluctuations of the raw materials and
consumables used. Our actual results may differ from this hypothetical illustration depending
on the actual fluctuations, if any, in our cost for sales of goods and other related items.
-10% -5% +5% +10%
(RMB’000)
Hypothetical change in profit for the year
Y ear ended December 31, 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,010 6,005 (6,005) (12,010)
Y ear ended December 31, 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111821,770 10,885 (10,885) (21,770)
Y ear ended December 31, 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111829,678 14,839 (14,839) (29,678)
Six months ended June 30, 2025 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111816,570 8,285 (8,285) (16,570)
Anti-bribery Measures
We have set forth guidelines against engaging in bribery and creating circumstances
which may create a conflict of interest between us and our employees. For example, all of our
suppliers are required to sign an anti-bribery agreement with us, and we may terminate our
cooperation with the supplier if it violates any relevant laws or regulations or fails to report an
incident of bribery involving such supplier. We have also implemented a whistle-blower
program under which employees will report instances of bribery or kickbacks directly to our
headquarters. The centralized procurement system also enables us to limit the number of
employees with the authority to select suppliers and thus to increase the effectiveness of our
internal control measures. As of the Latest Practicable Date, two of our employees had such
authority. No other employee has the authority to select suppliers. During the Track Record
Period and up to the Latest Practicable Date, there was no kickback arrangement with any of
our suppliers.
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Sources of Supply and Ingredient Shelf Lives
We manage our suppliers and procurement strategy based on the categories of food and
supply, and the source of our major food ingredients and their shelf life are summarized as
follows:
 Meat . We purchase beef, pork and other processed meat products primarily from
China with typical shelf lives of six to twelve months. During the Track Record
Period, in general, the turnover days of our meat was approximately two to four
days. Upon delivery, our staff request test reports for chemical testing (including
bacteria and other chemical substances) and conduct quality inspection procedures
such as visual inspections on color, smell, packaging and quality.
 Condiments . We purchase condiments from China with typical shelf lives of six to
twelve months. During the Track Record Period, in general, the turnover days of our
condiments was approximately four to seven days. Upon delivery, our staff conduct
quality inspection procedures such as visual inspections on color, smell, packaging
and quality.
Procurement Procedure
We have established centralized purchase procedures for all purchase orders for our food
ingredients. Our procurement team at headquarters is responsible for selection of and
negotiations with our suppliers. Our restaurant managers can place orders through our
centralized procurement system, which generates procurement recommendations for the
restaurant managers to make necessary adjustments, if any, and, upon placing of the
procurement orders, automatically submits the orders to our suppliers.
In addition, we have established internal review, approval and monitoring procedures for
all purchase orders for our key food ingredients. Our procurement team devises regular
procurement plans based on the consumption estimation for our restaurants with reference to
our market outlook and our past experiences. We collect and analyze our historical monthly
procurement data and make such data available in our internal system. We also conduct weekly
reviews to ensure that our procurement plans align with the latest demand trend.
LOGISTICS
We engaged the Supply Chain Service Group for logistics and warehousing services. We
bear the cost for logistics and warehousing services provided by the Supply Chain Service
Group, and risks associated with the shipment are assumed by suppliers or the Supply Chain
Service Group, as the case may be. For details, see “— Procurement — Procurement
arrangement with the Supply Chain Service Group.” We also engage reputable and large-scale
third-party transportation companies with cold-chain food delivery capabilities (if required) to
provide logistics services to us. We currently collaborate with three third-party logistics
companies.
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FOOD SAFETY AND QUALITY CONTROL
We place the highest priority on the health and safety of our customers, and we dedicate
substantial resources, including our procurement team and headquarters staff, to help ensure
that our customers enjoy safe food at our restaurants. Ms. Luo, our Executive Director and vice
president, leads a team of 12 members at our headquarters to oversee our food safety and
quality control practices and are responsible for food safety control in our operations. We also
implement stringent food safety and quality control standards and measures throughout
different aspects of our operations, including (i) procurement, (ii) logistics and storage and (iii)
restaurant operations.
The flowchart below sets forth the key quality control measures we have adopted in our
business:
- Inspection of the purchased
products by the Supply
Chain Service Group upon
delivery to the warehouses
- Supplies are stored under
appropriate temperature and
storage conditions in
accordance with our food
safety requirements
- Customer feedback analysis
- Internal report mechanism
for food safety incidents
- Remedial measures to
address food safety incidents
- Food safety training to all
our restaurant frontline staff
- AI-empowered visual
recognition system
- Customer feedback analysis
- Internal report mechanism
for food safety incidents
- Remedial measures to
address food safety incidents
- Food safety training to all
our restaurant frontline staff
- Inspections by inspection
department and secret guests
- Regular on-site inspections at
the warehouses of the Supply
Chain Service Group
- The food products and
ingredients are subject to
our inspection upon arrival
at our designated location
- Regular supplier evaluation,
including periodic on-site
visits
- Rigorous supplier selection
procedures and criteria,
including pricing, quality
and safety of products,
financial conditions,
qualifications and
production capacities
- Anti-kickback measures
Our Suppliers
Delivery to warehouses of the
Supply Chain Service Group
Delivery of food ingredients
to our restaurants
Delivery business
Dine-in service
Supply Chain
Service Group Our restaurants Our customers
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Procurement
All of our suppliers are required to comply with quality standards imposed by relevant
regulatory authorities with respect to their food ingredients and other supplies. When
evaluating prospective suppliers, we visit their facilities and test samples in accordance with
our comprehensive set of technical and safety criteria. We have formulated detailed quality
inspection standards. We actively conduct quality inspections and reviews of our existing
suppliers, including site visits to the facilities of our suppliers. In addition, we implement
centralized procurement and strictly prohibit our restaurants from making independent
purchases to ensure full control over the quality of our supplies.
Logistics and Storage
Supplies are delivered to our restaurants directly by the Supply Chain Service Group and
other third-party logistics companies, which constantly monitor and maintain appropriate
temperature during the delivery process. Upon delivery of supplies to our restaurants, our
restaurant staff will store such supplies under appropriate temperature and storage conditions
in accordance with our food safety requirements.
Restaurant Operations
We adopt stringent food safety and quality control standards for all our restaurants:
 Inspections by inspection department and secret guests. Our inspection department
conducts unannounced inspections of our restaurants to identify and rectify potential
quality and food safety issues. The inspection team evaluates, among other things,
food safety, hygiene, kitchen operations and digital system operations. We also
arrange on-site inspections by secret guests, who are Independent Third Parties.
Secret guests submit reports covering key areas such as service quality, food quality
and restaurant hygiene after their inspections.
 AI-empowered visual recognition system . Through an AI-empowered visual
recognition system, issues at our restaurants are automatically detected and flagged.
For example, our AI-empowered system can visually oversee the preparation of
dishes in our restaurants through network cameras. Our system also tracks the
inventory and expiration dates of food ingredients at our restaurants and pushes
reminders to our restaurant staff.
 Customer feedback analysis . Our AI-empowered system collects and collates
customer feedback from third-party platforms, performs real-time semantic analysis
and extracts relevant data to identify any potential food safety issues.
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 Food ingredients preparation . Our kitchens implement strict safety and hygiene
protocols for food handling. All work surfaces and tools are sanitized regularly,
while staff are required to use gloves and hairnets during operations. We have set up
guidelines for the storage of semi-processed food products and food ingredients,
which would undergo thorough cleaning before precise cutting and portioning in
designated zones of our restaurants to prevent cross-contamination.
 Internal report mechanism for food safety incidents . We have set up clear internal
procedures for the documentation and report of food safety incidents to the food
safety management team for investigation and follow-up actions.
 Remedial measures to address food safety incidents . Regarding food safety incidents
concerning restaurants or food ingredients hygiene, we would conduct thorough
cleaning of the affected restaurants, discard the affected food ingredients, issue
warnings to the employees involved and provide trainings to all employees to
prevent similar incidents from reoccurrence.
 Trainings . We provide food safety training and remind all restaurant frontline staff
to strictly comply with our food safety related internal control measures and
procedures especially in respect of personal hygiene, handling of food ingredients
and cleaning and sanitizing restaurant premises.
During the Track Record Period and up to the Latest Practicable Date, there had been
certain isolated food safety incidents concerning restaurants hygiene resulting in ratification
orders and/or warnings issued by the relevant authorities. In July 2022, one of our branch
companies was reported for incomplete disinfection records and temperature-check logs by the
local authority and was required to fulfil the relevant pandemic prevention and control
responsibilities; in June 2024, one of our branch companies received an official warning from
the local authority and was ordered to enhance our food safety management system; in
November 2024, one of our branch companies received an official warning from the local
authority for failing to keep the dining/food preparation area sufficiently tidy and was ordered
to rectify the issues.
As of the Latest Practicable Date, we had rectified the abovementioned food safety
incidents as required by the relevant authorities through a number of remedial measures, such
as (i) maintaining the required disinfection records and temperature-check logs, (ii) enhancing
the internal control measures in relation to food safety management system, in particular,
implementing a food safety accountability mechanism through the appointment of food safety
management personnel and establishing food safety risk control checklists to facilitate daily
control, weekly inspection and monthly review mechanisms, and (iii) conducting thorough
cleaning of the dining and food preparation area of the relevant restaurant. Such remedial
measures had sufficiently addressed the food safety incidents and there had been no follow-up
regulatory action by the relevant authorities as of the Latest Practicable Date.
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As advised by the PRC Legal Advisor, the abovementioned food safety incidents,
individually or collectively, did not have a material and adverse impact on the Group’s
business, financial conditions or results of operations during the Track Record Period and up
to the Latest Practicable Date on the basis that (i) the notices, orders and warnings issued by
the relevant authorities in each of the three incidents were part of the standard routine
regulatory inspection for food service businesses and the administrative penalties incurred
were in form of warnings without any monetary penalty or order for suspension of operation;
(ii) we had taken rectification measures as required by the relevant authorities to rectify such
incidents and there had been no follow-up regulatory action by the relevant authorities as of
the Latest Practicable Date; (iii) the number of the administrative penalties incurred were
relatively small considering our extensive restaurant network; and (iv) we had obtained official
credit information reports from the National Enterprise Credit Information Publicity System or
the official website of the national or local center for public credit information, each of which
sets out that the relevant restaurants were not subject to material administrative penalties in
relation to food safety issues during the Track Record Period and up to the Latest Practicable
Date.
During the Track Record Period and up to the Latest Practicable Date, there had been no
material food safety incidents and/or complaints involving the Group’s self-operated and
franchised restaurants. See “— Compliance, Licenses and Permits.”
CUSTOMER BASE AND MARKETING
Customers
Customers forms one of the four pillars supporting the development of Xiao Noodles . Our
restaurants offer Sichuan and Chongqing cuisine, as well as an affordable dining experience,
to our customers. As a testament to our popular appeal, the total number of orders we served
in our self-operated and franchised restaurants in 2022, 2023, 2024 and the six months ended
June 30, 2024 and 2025 was 14.2 million, 28.2 million, 42.1 million, 19.1 million and 25.3
million, respectively. The total number of orders we served significantly increased in 2023,
2024 and the six months ended June 30, 2025, which were in line with the growth of the
number of our restaurants during the same periods.
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To foster customer loyalty and promote our brand, we have established a membership
system, which includes regular and stored value members. Our regular members create
membership accounts free of charge by registering their mobile numbers on our membership
system. Regular members can earn reward points through purchases at our restaurants,
allowing them to obtain discount with the accumulated points. On the other hand, our stored
value members can top up their membership accounts by depositing a minimum of RMB88,
which can be used for payment at our restaurants. We offer a discount of approximately 8.0%
to 10.0% for payments made with stored value membership accounts. Stored value in
membership accounts remain valid indefinitely, while issued vouchers and reward points are
subject to defined validity periods, typically for one to two years. In particular, reward points
are used for obtaining vouchers that offer discounts. Stored value in membership accounts and
issued vouchers can be used in both self-operated and franchised restaurants. We perform
monthly reconciliations with franchised restaurants, remitting payments for all transactions
processed through stored value in membership accounts and issued vouchers. The balances in
stored value membership accounts and issued vouchers are recorded as our contract liabilities.
The amount of discount offered through stored value, issued vouchers and reward points as a
percentage of total revenue was approximately 2.4% and 2.1% for the year ended December 31,
2024 and the six months ended June 30, 2025, respectively.
(Note 1) For the years ended
December 31, 2022, 2023, 2024 and the six months ended June 30, 2025, the revenue generated
from stored value and issued vouchers was RMB83.6 million, RMB149.9 million, RMB256.5
million and RMB141.5 million, respectively, which was calculated by adjusting the stored
value and issued vouchers that were utilized in self-operated restaurants during the respective
year/period to exclude output V A T in the Chinese Mainland based on the relevant V A T rate. In
general, the main difference between our revenue generated by our self-operated restaurants
from stored value and issued vouchers and the amount of stored value and vouchers sold under
the membership accounts is the amount of stored value and issued vouchers spent at franchised
restaurants. As of the Latest Practicable Date, our membership system had attracted more than
22.7 million members. As of December 31, 2022, 2023, 2024 and June 30, 2025, the number
of active paying members was approximately 3.9 million, 6.4 million, 8.3 million and 8.7
million, respectively.
Note 1: The amount of discount offered through stored value, issued vouchers and reward points in 2022 and 2023
are not available as the third-party SaaS system utilized by the Group prior to late 2023 could only generate
the records of discount offered in general, which included discount offered through stored value, issued
vouchers and reward points as well as other discounts such as internal discounts offered to employees or
occasional discounts offered to customers on the Company’s mini-applications. The previous third-party
SaaS system lacked the functionality to generate detailed breakdown of the amount of discount offered
through stored value, issued vouchers and reward points.
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The following table sets forth movement in stored value under the membership accounts
for the periods indicated.
For the year ended December 31,
For the
six months
ended
June 30,
From
June 30,
2025 to the
Latest
Practicable
Date2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At the beginning of the
period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111817,938 34,051 55,561 78,513 106,043
Newly stored during the
period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118158,235 262,296 396,349 224,960 182,139
Utilized in self-operated
restaurants during the
period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(88,637) (158,997) (271,818) (150,016) (127,076)
Utilized in franchised
restaurants during the
period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(53,485) (81,789) (101,579) (47,414) (36,993)
At the end of the period /H1118/H111834,051 55,561 78,513 106,043 119,883
The following table sets forth movement in vouchers sold under the membership accounts
for the periods indicated.
For the year ended December 31,
For the
six months
ended
June 30,
From
June 30,
2025 to the
Latest
Practicable
Date2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At the beginning of the
period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118222 177 190 190 38
Newly sold during the
period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111830 14 – 10 16
Utilized in self-operated
restaurants during the
period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(4) (1) – (162) (17)
Utilized in franchised
restaurants during the
period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(71) – – – (3)
At the end of the
period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118177 190 190 38 34
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Under the franchising model, we also regard our franchisees as our customers. In 2022,
2023, 2024 and the six months ended June 30, 2025, our five largest customers in each
year/period comprised our franchisees. In 2022, 2023, 2024 and the six months ended June 30,
2025, revenue from our five largest customers in each year/period accounted for 8.5%, 6.8%,
4.9% and 4.2% of our total revenue for the respective periods. Our largest customer in each
year/period during the Track Record Period accounted for approximately 3.7%, 3.5%, 2.8% and
2.2% of our total revenue for 2022, 2023, 2024 and the six months ended June 30, 2025,
respectively. During the Track Record Period, we were not subject to any material customer
concentration risk. To the best of our knowledge, during the Track Record Period and up to the
Latest Practicable Date, all of our five largest customers in each year/period during the Track
Record Period were Independent Third Parties. To the best of the knowledge of our Directors,
none of our Directors, their respective associates or any shareholder who owns more than 5%
of our issued share capital had any interest in any of our five largest customers in each
year/period during the Track Record Period.
Marketing
Our brand and reputation have primarily been built through word-of-mouth
recommendations by enthusiastic customers who have enjoyed the Xiao Noodles dining
experience. In addition, we promote our restaurants through both online and offline channels.
We maintain official accounts on several leading social media platforms, where we post
marketing information relating to new menu items and new restaurant openings, engaging with
our followers to strengthen direct communication between our brand and consumers.
Set forth below are some of our typical marketing initiatives for the promotion of our
brand:
 Continuous restaurant image upgrades . We strive to enhance our brand identity by
modernizing restaurant interiors, standardizing visual branding, and creating a more
inviting dining atmosphere. These upgrades strengthen our distinctive image,
improve customer recognition, and drive increased foot traffic.
 Leveraging digital and influencer marketing . By partnering with lifestyle platforms
and food influencers, we amplify our reach through targeted online and offline
campaigns. These collaborations attract new customers while reinforcing our brand
reputation.
 Strategic cross-industry brand collaborations . We actively collaborate with leading
brands across industries to integrate Sichuan-Chongqing culture into new consumer
experiences. For example, we collaborated with well-known brands and popular
animated intellectual properties in the Chinese Mainland in our marketing
campaigns to attract new customers.
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 Growing our membership base . In addition to inviting customers to be our members
during the ordering process, we actively organize marketing campaigns and offer
discounts to attract new members. For example, we drive new member acquisition
through coupon promotions in partnership with well-known brands.
OUR TECHNOLOGIES
Our technological capabilities serve as the foundation of our restaurant management.
Specifically, our digital technology infrastructure encompasses our front-end, mid-end, and
back-end operations. This infrastructure forms the backbone that supports and enhances our
operational efficiency. As of June 30, 2025, a majority of our digital systems and tools are
self-developed, with certain standard tools developed by third parties.
Our proprietary technological infrastructure supports and enhances every aspect of our
business operations ranging from front-end ordering of dishes by customers to back-end digital
systems for kitchen operation, management of procurement, inventory, supply chain, human
resource, employee training and evaluation.
 Digital ordering system . Our mobile ordering system allows us to streamline the
ordering process and shorten the ordering time for each table. Customers can order
at the tables of Xiao Noodles restaurants by scanning the QR code with their mobile
devices. Such system enables us to efficiently track customers’ orders, understand
customer preferences and improve our menu offerings. Furthermore, we encourage
our customers to use mobile payment and therefore streamline our checkout process.
In 2024, approximately 98.5% of the total amount paid by our dine-in customers was
settled through mobile payment. As part of our marketing initiatives, customers are
also invited to become our members and follow our WeChat official account in the
digital ordering process.
 Restaurant operations. We have developed digital systems for the seamless and
standardized operations across our restaurants. Our technology and digital systems
establish a closed-loop management process that covers every stage from order
receipt to dish delivery, including ingredient preparation and cooking processes.
These systems are able to manage ingredient shelf life with automatic disposal
reminders and guide our restaurant staff in the preparation process through
standardized steps while tracking dish delivery times to customers. Our food
preparation system leverages our accumulated experience of food preparation and
cooking time to optimize the workflow of our restaurants in real-time in accordance
with the in-coming customers’ orders. For example, for an order that comprises main
dish and snacks, our system automatically generates the optimized preparation plan
with precise cooking procedures and time that allows our restaurant staff to deliver
both dishes to the customer at the same time.
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 Procurement, inventory and supply chain management . We have also put in place an
efficient and centralized digital supply system developed by the research and
development team of our information technology department for collecting supply
orders from our restaurants. The system enables our restaurant staff to place orders
based on the system’s recommendations to ensure that stocks are adequate. In
particular, it typically takes our restaurant staff approximately 15 to 30 minutes to
finish the ordering process in our system. The system also enables our procurement
team to continuously monitor the inventory depletion in our restaurant network, as
well as the costs, procurement amount and inventory level of each restaurant,
thereby reducing waste.
 Human resource, employee training and evaluation . We have developed digital
systems for staff recruitment and retention. For example, our self-developed staffing
system provides daily staffing recommendations to each of the restaurants based on
estimation of sales. Our e-learning and personal development platforms facilitate
our internal training process. We also adopt digital performance appraisal systems.
Our self-developed management system collects real-time operational data and performs
comprehensive business and financial analysis. Such analysis provides our management with
insights into our entire restaurant network, supporting data-driven decision making to optimize
our restaurant operations. Our system automatically generates analytics dashboard for
headquarters management, tracking key indicators such as sales, discount rate, sales volume
and sold-out status of menu offerings in real-time as well as composing daily management
profit and loss statement of each restaurant and in-depth sales analysis. This enables us to
quickly identify underperforming restaurants and make timely operational adjustments. In
addition, the performance indicators used in our digital restaurant performance evaluation
mechanism are automatically and periodically generated by our management system with
minimal manual processing. This provides accurate rankings across our restaurant network for
our management team to efficiently evaluate and improve the overall performance of our
restaurants.
We constantly explore the applications of advanced technologies such as AI to enhance
operational efficiency and quality.
 Quality control management . We have established an AI-empowered visual
recognition system that enables us to monitor the operation of all of our restaurants
in real time. This system allows us to ensure efficient and quality services are
provided at our restaurants and make timely adjustments to the restaurant operations
as necessary. For example, our AI-empowered visual recognition system can oversee
the preparation of dishes in our restaurants through network cameras. Our system
also tracks the inventory and expiration dates of food ingredients at our restaurants
and pushes reminders to our restaurant staff.
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 Dining environment . To optimize the dining environment for our customers and our
costs of operation, we have applied IoT and installed sensors in our restaurants to
collect real-time data of energy consumption and room temperature, which can be
accurately monitored by our headquarters. Our system also automatically generates
equipment maintenance reminders to our restaurants.
 Customer feedback analysis . Our AI-empowered system collects and collates
customer feedback from third-party platforms, performs real-time semantic analysis
and extracts relevant data for our menu iteration and optimization, precision
marketing initiatives and risk control.
 Business performance estimation . Our AI-empowered system collects and organizes
business data across multiple dimensions, including online and offline factors as
well as the surrounding environment of each restaurant. By leveraging an extensive
big data platform and AI models, the system estimates future business performance
trends of our restaurants, refining our decisions in respect of ingredients ordering,
food preparation and shift scheduling, achieving optimization of our resource
allocation.
 Marketing . Our marketing department utilizes AI technologies to efficiently prepare
and optimize promotional images to be used in our marketing initiatives.
 Employee training . Our employees have access to our knowledge bases powered by
external AI models, which allow them to acquire relevant work-related knowledge
intuitively and easily master the skills required in their respective positions.
USER PRIV ACY AND DATA SAFETY
We are committed to complying with data protection and privacy laws and protecting data
security.
In the ordinary course of business, we collect, store and use certain personal information
of our individual franchisees, customers and other individuals from time to time after obtaining
necessary consents. In providing our offerings and services, we may access certain customer
data. We clearly inform consumers of the scenarios and purposes for collecting their personal
information through our privacy policy, which is presented prior to them logging into our
membership system or accessing our WeChat and Alipay mini programs. Personal information
is collected only with their explicit consent, such as (i) when customers place online orders
through our mini programs, we may collect their user codes, locations, and order information
(including payment time, payment amount, payment method, and purchased dishes). Especially
when customers choose delivery services, we may additionally collect delivery information
including the recipient’s name, phone number, and delivery address, (ii) when customers
register as members through our mini programs, we may also collect their nickname, mobile
number, birthday, gender or delivery address to offer member benefits, and (iii) during the
franchisee on-boarding process, we collect franchisees’ basic information, such as their names,
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ID numbers, phone numbers, ages and bank account information. Customers of both
self-operated and franchised restaurants use our mini-programs to register as members and
place orders. Accordingly, we collect data directly from our customers through mini-programs.
Our franchisees cannot collect customers’ data on their own, and we do not collect customers’
data from our franchisees through the customer loyalty scheme. In collecting and collating
customer feedback from third-party platforms with our Al-empowered system, we do not
collect any personal information.
The storage of personal information by us follows the principle of minimum necessity,
specifically: when our registered members request to delete their personal information or
cancel their membership, we will promptly delete or anonymize their personal information,
except as otherwise provided by laws and regulations. According to relevant PRC laws and
regulations, the storage period for product and service information and transaction information
shall be no less than three years from the date of completion of the transaction, and the storage
period for network security logs shall be no less than six months.
We have implemented a series of data protection policies and measures governing the
collection, processing, storage, and usage of personal information to safeguard personal
information and ensure data security based on evolving regulatory requirements and industry
standards. These policies include:
 Data collection. We conduct compliance assessments when collecting data with
notifications to users and log records of the collection process.
 Data processing. We strictly process data in a manner that protects the legitimate
rights of data subjects. We process data for a specific and reasonable purpose and
limit our data processing activities to the minimum extent for achieving that
purpose.
 Data storage. Our operations do not involve any cross-border transmission of data.
All information and data we received in the Chinese Mainland have been stored and
preserved within the Chinese Mainland. After collecting information, we take
appropriate measures, such as data encryption and de-identification processing, to
ensure customer and consumer privacy and prevent data leakage.
 Data usage. We have clear and strict authorization and authentication procedures
and policies in place. Our employees only have access to data that is directly
relevant and necessary for their responsibilities and for limited purposes, and they
are required to verify authorization upon every access attempt.
 Our information technology department is responsible for overall information
security management to effectively monitor data-related activities, with designated
personnel overseeing data security and personal information protection.
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 We developed a robust system of regulations, including personal information
protection, information security management, data classification, and risk
monitoring protocols, to provide institutional support for personal information
protection and data security.
 We have implemented various technical and managerial measures to fulfill data
protection obligations, such as data retention, data encryption for data transmission
and storage, backup procedures, and strict access control mechanisms. Our digital
ordering system has attained Classified Protection of Information Security Level 3,
which testifies to our data security capability.
 We also conducted training on enhancing employees’ awareness of privacy and data
security.
Besides, we have cooperation agreements with our franchisees and third-party service
providers, including that (i) the rights and obligations of both the third-party service providers
and us regarding personal information involved, protection measures (such as processing
personal information only to the minimum extent necessary) and processing purposes have
been specified in our cooperation agreements; (ii) we have confidentiality agreements (or
provisions) with our franchisees and third-party service providers, and they are subject to
liability in case of the breach of confidentiality; and (iii) our franchisees only have access to
the data of their respective customers to process relevant orders and view the operation of their
franchised restaurants, and cannot collect customers’ data on their own. We do not share with,
transfer, or disclose personal information to any third parties except under certain limited
circumstances, including when it is expressly authorized by consumers, necessary to fulfill our
main services to consumers, or in compliance with the applicable laws and regulations. With
respect to using the data collected, we adopt encrypted storage and backup measures to store
and protect customers’ personal information.
Going forward, we will continuously refine our management systems and diligently
implement relevant regulatory requirements in accordance with the latest applicable laws and
regulations, including regular training sessions for employees to continuously enhance their
awareness and proficiency in personal information protection and data security. Furthermore,
we will strengthen the evaluation and oversight of franchisees and third party service
providers, encompassing various dimensions such as personal information protection, cyber
security, data security and management security.
During the Track Record Period and up to the Latest Practicable Date, we had not
received any third-party claim against us on the ground of infringement of the party’s right to
data protection as provided by any applicable laws and regulations. In addition, as advised by
our PRC Data Compliance Advisor, during the Track Record Period and up to the Latest
Practicable Date, we complied with the applicable laws and regulations in the Chinese
Mainland regarding personal information privacy and data security in all material aspects. We
also collect personal data in Hong Kong SAR. As advised by our Hong Kong Legal Counsel,
during the Track Record Period and up to the Latest Practicable Date, we complied with the
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applicable laws and regulations regarding personal information privacy and data security in
Hong Kong SAR in all material aspects. During the Track Record Period and up to the Latest
Practicable Date, there was no transfer of data between our restaurants in the Chinese Mainland
and Hong Kong SAR.
As of the Latest Practicable Date, we had not been notified by any authorities of being
classified as a critical information infrastructure operators under the Cybersecurity Review
Measures () or being involved in any investigations on cybersecurity
review made by cybersecurity authorities. Based on our PRC Data Compliance Advisor’s
consultations with China Cybersecurity Review Technology and Certification Center ( ʕ਷ၣ
ҦஔၾႩᗇʕː) (the “ CCRC ”, currently China Cybersecurity Review,
Certification and Market Regulation Big Data Center, which is the competent authority
entrusted by the CAC to set up cybersecurity review consultation hotlines) on behalf of us in
April 2025, a listing in Hong Kong does not fall within the definition of “Foreign Listing,” and
therefore the obligation to proactively apply for cybersecurity review by an entity seeking
listing in a foreign country shall not be applicable to the Listing. However, we cannot rule out
the possibility that we will trigger the cybersecurity review in the future. If we are subject to
cybersecurity review, we may incur significant costs and face challenges, both in the review
process and in making enhancements to our cybersecurity measures that may be required.
Our PRC Data Compliance Advisor advises that the Administration Regulations on Cyber
Data Security ( ၣഖᅰኽτΌ၍ଣૢԷ) are applicable to us. During the Track Record
Period and up to the Latest Practicable Date, we had not been subject to any material
administrative penalties or other sanctions by any competent regulatory authorities in relation
to cybersecurity and data protection, nor had there been material cybersecurity and data
protection incidents or infringement upon any third parties, or other legal proceedings,
administrative or governmental proceedings, pending or, to the best of our knowledge in
relation to cybersecurity and data protection, threatened against or relating to us. Additionally,
we have adopted a series of internal policies, procedures and measures regarding user privacy
and data security. During the Track Record Period and up to the Latest Practicable Date, as
advised by our PRC Data Compliance Advisor and Hong Kong Legal Counsel, we had not
experienced any incident of leakage of personal data in the Chinese Mainland or Hong Kong
SAR. Based on the aforementioned factors, we, our PRC Data Compliance Advisor and our
Hong Kong Legal Counsel believe that, during the Track Record Period and up to the Latest
Practicable Date, we were in compliance with existing applicable laws and regulations in the
Chinese Mainland and Hong Kong SAR relating to data security, cybersecurity, privacy and
personal information protection in all material aspects.
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COMPETITION
The Chinese noodle restaurant market is highly fragmented, with the top five players
accounting for 3.0% market share in terms of GMV in 2024. This fragmentation presents
significant opportunities for market consolidation. With the current landscape offering ample
opportunities for strategic mergers, acquisitions, and organic chain expansion, established
players can leverage economies of scale, streamline operations, and enhance supply chain
efficiencies.
According to Frost & Sullivan, the total GMV of the Chinese noodle restaurant market in
China had expanded from RMB183.3 billion in 2020 to RMB296.2 billion in 2024, at a CAGR
of 12.7%. Looking forward, the growth of the Chinese noodle restaurant market is expected to
accelerate further to reach the total GMV of RMB510.0 billion by 2029, at a CAGR of 10.9%
from 2025 to 2029, based on further urbanization, increase in disposable income and increase
in the proportion of consumers dining out in China. Within the Chinese noodle restaurant
market, the total GMV of market of Chinese noodle restaurants specializing in Sichuan and
Chongqing-style in China had expanded from RMB45.0 billion in 2020 to RMB72.7 billion in
2024, at a CAGR of 12.7%, and is expected to reach the total GMV of RMB135.7 billion by
2029, at a CAGR of 13.2% from 2025 to 2029.
We operate in this rapidly growing market, where key entry barriers include brand
influence and recognition, integrated supply chain management capabilities, standardized and
scalable operational management, product development expertise, and digitalized operational
systems. We believe we are well-positioned to compete effectively, leveraging our strengths in
these areas.
For more information on the competitive landscape of our industry, see “Industry
Overview.”
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EMPLOYEES
As of December 31, 2022, 2023, 2024 and the six months ended June 30, 2025, we had
a total of 2,121, 2,620, 1,443 and 1,501 employees, respectively. All of our employees are
based in the Chinese Mainland, Hong Kong SAR and Singapore. The table below sets forth our
employees by function as of June 30, 2025.
Function Number of Employees
Restaurant staff /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,198
Management and administrative staff /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118113
Operations Management /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111843
Marketing and branding /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111840
Information technology and R&D /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111830
Training and inspection /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111825
Supply chain management /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818
Development and Expansion /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111824
Menu offerings development /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,501
We may use third-party human resources companies from time to time to provide staff
members to us in order to ensure sufficient staffing and efficient transfer of staff among
different restaurants. We typically enter into agreements with such human resources companies
for a period of one year. Under such agreements, the human resources companies typically
charge us monthly service fees and are responsible for arranging outsourced staff to work in
our agreed locations. We are entitled to request replacement of such outsourced staff if they
cannot meet our service standards. We usually require third-party human resources companies
to pay the social insurance and housing provident funds for outsourced restaurant staff. To
ensure service and food quality at our restaurants, we implement strict oversight measures for
outsourced staff, who are required to attend mandatory introduction programs on restaurant
hygiene, food safety and brand standards before deployment. We also provide standardized
operating procedures to outsourced staff and conduct regular evaluations on their adherence to
our quality benchmarks. The number of our employees reduced in 2024 primarily because,
since 2023, we have expanded our initiative to engage and increase the proportion of
outsourced staff. We may continue to engage outsourced staff to better support our restaurant
operations. We believe that the engagement of outsourced staff enhances our operational
flexibility while streamlining recruitment-related expenditures. As of June 30, 2025, we
engaged 4,018 outsourced staff, who served as our restaurant staff. As advised by the PRC
Legal Advisor, our arrangement with third-party human resources companies in respect of
outsourced staff does not constitute labor dispatch under The Labor Contract Law of the PRC
() and Interim Provisions on Labor Dispatch (჆ᅲБ
) because our arrangement with third-party human resources companies does not
involve features of labor dispatch, in particular, (i) the outsourced staff are instructed by the
third-party human resources companies to provide relevant services to us in accordance with
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the scope of work agreed between us and the third-party human resources companies, and (ii)
the third-party human resources companies are primarily responsible for settling salary
payments with the outsourced staff. As advised by the PRC Legal Advisor, such arrangement
is in compliance with all the applicable PRC Law in all material aspects. During the Track
Record Period and up to the Latest Practicable Date, we did not discover any third-party human
resources companies that did not fulfill their obligations or had made material underpayments;
neither had there been any disqualification of, or termination of collaboration with, third-party
human resources companies due to incidents of non-compliance with relevant laws and
regulations or breaches of agreements by them. As advised by the PRC Legal Advisor, the
Group would not bear any responsibility or liability in the event that these third-party human
resources companies fail to comply with relevant PRC Law as the Group and such third-party
human resources companies are separate legal entities and there is neither any PRC Law nor
any contractual arrangement that imposes on the Group any obligation to assume responsibility
for the non-compliance of such third-party human resources companies, if any.
Our staff serves as one of the four pillars of the development of Xiao Noodles . Our
success depends on our ability to attract, motivate and retain a sufficient number of qualified
staff, in particular, restaurant managers. We offer our staff competitive compensation packages.
Compensation for our staff includes base salary, bonuses and other benefits, such as employee
meals. In 2022, 2023, 2024 and the six months ended June 30, 2024 and 2025 our staff costs
amounted to RMB109.3 million, RMB175.2 million, RMB265.1 million, RMB121.8 million
and RMB158.8 million, representing 26.1%, 21.9%, 23.0%, 23.2% and 22.6% of our revenue,
respectively.
Recruitment, Retention and Training
We recruit our employees primarily through campus recruitment programs, recruitment
advertisements, agencies, online platforms, and referrals. We attract and retain suitable
personnel by offering competitive wages and benefits.
We enter into standard labor contracts with our employees. We also enter into
non-compete and confidentiality agreements with senior management and key personnel. We
believe that we maintain a good working relationship with our employees, and we have not
experienced any major labor disputes.
We conduct comprehensive online and offline training programs for all employees. Upon
onboarding, we provide comprehensive pre-employment training for new employees,
emphasizing our values and professional standards. During daily operations we have set up a
primarily online training system based upon our digital infrastructure. Through the integration
of personnel development platform, knowledge base, E-learning platform, and the restaurant
performance evaluation mechanism, we are able to provide a standardized training program
that efficiently cultivates talents across our restaurants. By promoting standardization across
our operations, we ensure a seamless and enjoyable experience for our customers.
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INSURANCE
As of the Latest Practicable Date, we maintained various insurance policies relating to our
business operations, including public liability insurance to cover liability for damages arising
out of our restaurant operations, property insurance to protect our business from certain natural
disasters and other unfortunate events, and casualty insurance. We consider that the coverage
from the insurance policies maintained by us is adequate for our present operations and is in
line with industry norms.
INTELLECTUAL PROPERTY
Our intellectual property rights are key to our success and competitiveness. Our
intellectual property rights primarily consist of trademarks, copyrights, patents and domain
names. As of the Latest Practicable Date, we had 265 registered trademarks, 107 copyrights,
six patents and seven domain names in the Chinese Mainland as well as seven registered
trademarks in Hong Kong SAR. See “Appendix VI — Statutory and General Information — B.
Further Information about our Business — 2. Our Material Intellectual Property Rights.” We
also protect our intellectual property rights through a series of confidentiality agreements or
provisions with all of our employees. We clearly state all rights and obligations regarding the
ownership and protection of intellectual properties in all employment agreements and
commercial agreements we enter into.
In addition, we have taken the following key measures to protect our intellectual property
rights: (i) implementing a set of comprehensive internal policies to establish robust
management over our intellectual property rights, (ii) deploying a special team to guide,
manage, supervise and monitor our daily work regarding intellectual properties, (iii) timely
registration, filing and application for ownership of our intellectual properties, and (iv)
engaging professional intellectual property service providers.
During the Track Record Period and up to the Latest Practicable Date, we did not
experience any threatened or pending disputes relating to the infringement of intellectual
property rights that would have a material adverse effect on our business. See “Risk Factors
— We may not be able to adequately protect our intellectual property, which could harm the
value of our brand and adversely affect our business and operation.”
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PROPERTIES
Leased Properties
As of the Latest Practicable Date, we leased 418 properties in China and Singapore with
a total GFA of approximately 68,579.3 sq.m. primarily as our restaurants, warehouses and
offices. Our leases generally have a term between four to six years, which are, according to
Frost & Sullivan, in line with the industry standard. We are generally allowed to terminate lease
agreements with a prior notice, which provides us with operational flexibility, albeit usually at
the cost of forfeiting deposits and/or paying a termination fee.
The following table sets forth a breakdown of the number of leases by remaining term as
of the Latest Practicable Date:
Remaining term Number of leases
Less than one year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111864
One to two years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111858
Two to five years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118222
More than five years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111874
For leases with a remaining term of less than one year, if the premises align with our
restaurant network planning, we typically initiate lease renewal negotiations with the lessors
when there are approximately six months remaining. This proactive approach helps secure the
retention of suitable locations for our restaurants.
The following table sets forth a breakdown of number of leases by fixed, variable and
hybrid rent arrangement as of the dates indicated:
As of December 31,
As of
June 30,
2022 2023 2024 2025
RMB’000
V ariable rent arrangement (1) /H1118 5778
Fixed rent arrangement (2) /H1118/H1118/H1118 39 64 111 138
Hybrid rent arrangement (3) /H1118/H1118 67 112 161 185
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118111 183 279 331
Note:
(1) For variable rent arrangements, we are obliged to pay a certain percentage of the total GMV of a
restaurant.
(2) For fixed rent arrangements, we are obliged to pay fixed rent for the duration of the lease.
(3) For hybrid rent arrangements, fixed and variable rent components are combined for the calculation of
rent.
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As of June 30, 2025, none of the properties held or leased by us has a carrying amount
of 15% or more of our consolidated total assets. Therefore, according to section 6(2) of the
Companies (Exemption of Companies and Prospectuses from Compliance with Provisions)
Notice (Chapter 32L of the Laws of Hong Kong), this prospectus is exempted from compliance
with the requirements of section 342(1)(b) of the Companies (Winding Up and Miscellaneous
Provisions) Ordinance in relation to paragraph 34(2) of the Third Schedule to the Companies
(Winding Up and Miscellaneous Provisions) Ordinance which requires a valuation report with
respect to all our interests in land or buildings.
COMPLIANCE, LICENSES AND PERMITS
In accordance with the PRC Law, we are required to obtain various licenses and
regulatory approvals to operate our business, such as the Food Business License (຾ᐄ஢
̙ᗇ) and the Certificate or Opinion for the Fire Safety Inspection of Public Gathering Places
before the Use or Commencement of the Business Operations, if required by local authorities
(ᗇ/ࣣ“() Fire Safety Inspection
Approval ”). For details, see “Regulatory Overview.”
As advised by our PRC Legal Advisor, as of the Latest Practicable Date, we had complied
with all relevant PRC Law in all material respects and had obtained all requisite licenses,
approvals and permits from relevant authorities that are material for our operations in the
Chinese Mainland and such licenses, approvals and permits are valid and effective. As of the
Latest Practicable Date, we had complied with all relevant laws and regulations in the Hong
Kong SAR in all material respects and had obtained all requisite licenses, approvals and
permits from relevant authorities that are material for our operations in the Hong Kong SAR
and such licenses, approvals and permits are valid and effective. During the Track Record
Period and as of the Latest Practicable Date, all of our self-operated restaurants in the Chinese
Mainland had obtained the necessary Food Business Licenses in accordance with the relevant
PRC Law. The expiration dates of such Food Business Licenses range from November 24, 2025
to November 13, 2030. As of the Latest Practicable Date, all of our self-operated restaurants
that were in operation had obtained Fire Safety Inspection Approvals, where applicable.
The following table sets forth a summary of material licenses, permits, approvals and
certificates of our self-operated restaurants as of the Latest Practicable Date:
Licenses, permits, approvals and certificates
Number of
Licenses
Validity Period
(since issuance)
Food Business License /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118361 Five years
Fire Safety Inspection Approval /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118198 Not applicable
As of the Latest Practicable Date, neither our PRC Legal Advisor nor we had been
informed of any legal impediment in renewing all material licenses, approvals and permits that
have expired or are going to expire in 2025.
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As advised by the PRC Legal Advisor, based on searches via public websites of China
Judicial Documents (ၣ), China Enforcement Information Publication ( ʕ਷ੂБ
ʮකၣ) and Credit China (͜ʕ਷), we are not aware of any self-operated or franchised
restaurants of the Group that had been party to any non-compliance incidents, material food
safety incidents and/or complaints that resulted in administrative penalties, which could,
individually or collectively, have a material and adverse impact on the Group’s business,
financial conditions or results of operations during the Track Record Period and up to the
Latest Practicable Date. During the Track Record Period and up to the Latest Practicable Date,
there had been no material food safety incidents and/or complaints involving the Group’s
self-operated and franchised restaurants.
Social Insurance and Housing Provident Funds
Background
According to the relevant PRC Law, we are required to make contributions to social
insurance and housing provident fund for the benefit of our employees in the Chinese
Mainland. During the Track Record Period and as of the Latest Practicable Date, we did not
make full contribution to the social insurance and housing provident funds for some of our
employees in accordance with the relevant PRC Law. The shortfall of social insurance and
housing provident fund contributions amounted to approximately RMB11.7 million, RMB12.7
million, RMB5.3 million and RMB2.6 million, in 2022, 2023, 2024 and the six months ended
June 30, 2025, respectively.
We were unable to make full social insurance and housing provident funds for the relevant
employees, primarily because (i) similar to many other enterprises in the catering industry in
the Chinese Mainland, we hire an extensive team of employees with high turnover rate; (ii)
certain employees were unwilling to pay the social insurance and housing provident fund
contributions in full as it requires additional contributions from the employees; and (iii) certain
employees prefer participation in the rural social security contribution plans in their residential
places or their hometowns.
Potential Legal Consequences
As advised by our PRC Legal Advisor, pursuant to relevant PRC Law, (i) the
under-contribution of social insurance within a prescribed period may be subject to an overdue
charge of 0.05% of the delayed payment amount per day and the competent authority may
further impose a fine of one to three times of the overdue amount if such payment is not made
within the stipulated period; and (ii) in respect of outstanding housing provident fund
contributions, we may be ordered to pay the outstanding housing provident fund contributions
within a prescribed time period. An application may be made to a people’s court for
compulsory enforcement if the payment of the outstanding housing provident fund
contributions is not made after the expiration of the time limit. During the Track Record Period
and up to the Latest Practicable Date, no administrative action, fine or penalty had been
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imposed by the relevant regulatory authorities with respect to our social insurance
contributions and housing provident funds contributions, nor had we received any order or
been informed to settle the deficit amount.
On July 31, 2025, the Supreme People’s Court promulgated the Supreme People’s Court’s
Interpretation (II) on Several Issues Concerning the Application of Law in Labor Dispute Cases
(༆ᙑ(ɚ)) (the “ New Judicial
Interpretation ”), which took effect on September 1, 2025. Article 19(1) of the New Judicial
Interpretation stipulates that if an employer and an employee agree or the employee undertakes
that social insurance contributions need not be paid, the People’s Court shall deem such
agreement or undertaking invalid. Further, the relevant employee has the right to terminate the
labor contract and claim economic compensation from the employer pursuant to Article 38(3)
of the Labor Contract Law. For details, see “Regulatory Overview — Regulations on Labour
Rights — Regulations and Law on Social Insurance and Housing Fund.” As of the Latest
Practicable Date, we had not received any notice from the relevant government authorities or
any claim or request from these employees in this regard.
Our Directors are of the view that the New Judicial Interpretation would not have a
material adverse effect on our business, financial condition or results of operations primarily
because, as advised by the PRC Legal Adviser, the New Judicial Interpretation does not expand
the scope of penalties or repeal the provisions of existing laws and regulations.
Remedial Measures
We have taken the following internal control measures to ensure compliance with the
social insurance and housing provident fund contribution requirements under the relevant laws
and regulations to the extent practicable:
 Training . Strengthen the training of our personnel, including training on various
compliance-related topics for our employees;
 Internal control measures . Establish an internal control team to monitor our ongoing
compliance with the social insurance and housing provident fund contributions
regulations and oversee the implementation of any necessary measures;
 Increasing awareness of developments in the law . Regularly keep abreast of the
latest developments in PRC Law relating to social insurance and housing provident
funds; and
 External counsel . Consult external legal counsel for advice on relevant PRC Law.
Our PRC Legal Advisor has advised us that, according to the interviews with the relevant
competent regulatory authorities, the likelihood that we would be subject to (i) centralized
collection of historical shortfall of social insurance and housing provident fund contributions
required by relevant government authorities on their initiative or (ii) material administrative
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penalties due to our failure to provide full social insurance and housing provident fund
contributions during the Track Record Period for our employees, is remote. We undertake to
make timely payments for the deficient amount and overdue charges as soon as requested by
the competent governmental authorities.
Pursuant to the Urgent Notice on Enforcing the Requirement of the General Meeting of
the State Council and Stabilizing the Levy of Social Insurance Payment (஫࿏ໝྼ਷ਕ
) promulgated on September 21,
2018 by the Ministry of Human Resources & Social Security, administrative enforcement
authorities are prohibited from organizing and conducting centralized collection of enterprises’
historical social insurance arrears without permission.
In view of the above, our Directors are of the view that such non-compliance did not and
will not have a material adverse impact on our Group on the grounds that: (i) as advised by our
PRC Legal Advisor, based on the interviews with relevant authorities and the relevant
regulatory policies and the facts stated above, the likelihood that we would be required by
relevant authorities to pay the shortfall for social insurance and housing provident fund
contributions or being subject to material administrative penalties due to our failure to provide
full social insurance and housing provident fund contributions within the stipulated period for
our employees is remote; (ii) there were no material disputes between our employees and us
regarding the social insurance or housing provident fund contributions during the Track Record
Period and up to the Latest Practicable Date; (iii) we had not been subject to any material
administrative penalties during the Track Record Period and up to the Latest Practicable Date;
(iv) during the Track Record Period and as of the Latest Practicable Date, we had not received
any notification from the relevant authorities in the Chinese Mainland requiring us to pay
shortfalls or the penalties with respect to social insurance and housing provident funds; and (v)
during the Track Record Period and as of the Latest Practicable Date, we had neither
experienced any disagreement from relevant social insurance or housing provident fund
authorities with respect to such contributions. As a result, we did not make any provisions in
connection with such non-compliances during the Track Record Period and up to the Latest
Practicable Date.
Going forward, we will continue to implement the above measures to ensure we are in
compliance with the social insurance and housing provident fund contributions requirements
under the relevant laws and regulations. We undertake to fully comply with the relevant laws
and regulations as soon as practicable, subject to the cooperation of each of our employees to
make full contributions of social insurance and housing provident funds going forward. If the
relevant authorities order us to fully contribute the social insurance and/or housing provident
funds, we would make full contributions and rectification measures as soon as possible within
the specified period. In addition, we will proactively communicate with relevant local
authorities to keep up to date with the applicable laws and regulations concerning social
insurance and housing provident funds. We will also communicate such updates with our
employees to allow them to better understand the relevant laws and regulations, increasing
their understanding of the regulatory requirements so as to enhance our compliance with the
applicable laws and regulations.
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Leased Properties
During the Track Record Period, we had certain non-compliant incidents involving our
leased properties, mainly due to (i) absence of valid title certificates, (ii) usage defects and (iii)
lack of requisite approvals (collectively, “ Defective Leased Properties ”) and (iv) non-
registration of lease agreements (“ Lease Agreements without Registration ”). Such leased
properties were primarily used as our restaurants, warehouses and offices.
The table below sets forth the breakdown of the Lease Agreements without Registration
and Defective Leased Properties by remaining lease term as of the Latest Practicable Date:
Defective Leased
Properties
Lease Agreements
without
Registration
Less than one year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111815 62
One to two years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810 51
Two to five years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111856 190
More than five years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111821 63
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118102 366
As advised by the PRC Legal Advisor, (i) the likelihood that we would be penalized due
to non-registration of lease agreements at the same time or within a short period is remote,
considering that these properties are geographically dispersed; and (ii) we, as the lessee, would
not be subject to any administrative penalties due to absence of valid title certificates, usage
defects or lack of requisite approval of leased properties. As such, we did not make any
provisions in connection with those Defective Leased Properties during the Track Record
Period and up to the Latest Practicable Date. For risks relating to our leased properties, see
“Risk Factors — Risks Relating to Our Business and Industry — Our leased property interests
may be defective and our lease agreements may not be registered, our right to lease the
properties affected by such defects may be challenged, which could cause significant
disruption to our business.”
Absence of V alid Title Certificates
As of the Latest Practicable Date, lessors of 74 of our leased properties in China with an
aggregate GFA of approximately 12,169.0 sq.m., representing approximately 17.7% of our total
leased GFA, which are primarily used as restaurants, have not provided us with valid title
certificates or relevant authorization documents evidencing their rights to lease the properties
to us. If the relevant lessor has no right to lease the leased property and a third person other
than the parties to the relevant lease contracts have legal title to such leased property, such third
person may claim that the relevant lease contracts are null and void or have no effect thereto,
or even request us to cease our use and move out of such leased property. In addition, in
accordance with the relevant provisions of the PRC Civil Code, if the lessee is unable to use
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or accrue proceeds from the leased property due to any claim by a third person, the lessee may
request reduction of rent or refuse to pay rent. Based on the above, our PRC Legal Advisor is
of the view that we, as the lessee of such properties, would not be subject to any administrative
penalties with respect to these properties, but our leases may be affected if the lessors of the
leased properties do not have the requisite rights to lease the relevant properties. However,
where a dispute arises on the said leases, or we suffer a loss as a result of the said leases, we
have a right to request a reduction in rent or refuse to pay rent or require the lessor to indemnify
such losses under the lease agreements. For the years ended December 31, 2022, 2023, 2024
and the six months ended June 30, 2025, revenue generated from our restaurants absent of valid
title certificates provided by relevant lessors as a percentage of our total revenues was 18.7%,
23.0%, 20.3% and 19.0%, respectively.
Our Directors believe that the likelihood of our business and results of operations being
materially and adversely affected by these title defects is remote, considering that (i) as of the
Latest Practicable Date, we have not been required to cease operations due to challenges from
third-party rights holders against the lessors’ right to lease that have resulted in a material
adverse impact on our business, results of operations, or financial condition; (ii) it is unlikely
that we would be subject to claims of rights from third parties with respect to a significant
number of these leased properties at the same time, considering that these properties are
geographically dispersed and are leased from different counterparties; and (iii) we maintain a
pool of site candidates, and our Directors believe that we would be able to relocate to a
different site without materially and adversely affecting our business and results of operations
should we be required to do so.
To prevent recurrence of such potential defects in our leased properties, we have
designated our staff to proactively reach out to and communicate with lessors to obtain valid
title certificates or relevant authorization documents evidencing their rights to lease the
properties.
Leased Properties with Usage Defects
As of the Latest Practicable Date, the actual use of 13 of our leased properties with an
aggregate GFA of approximately 2,135.0 sq.m., representing approximately 3.1% of our total
leased GFA, did not fit into the prescribed scope of usage shown on the relevant ownership
certificates. Such leased properties were used as our restaurants. The specified usage on the
property ownership certificates of such leased properties primarily included industrial and
transportation use, which, as advised by our PRC Legal Advisor, could not be legally used to
operate restaurants. According to Frost & Sullivan, it is an industry norm for restaurants
operators in the catering industry in the Chinese mainland to operate restaurants in properties
with usage defects. For the years ended December 31, 2022, 2023, 2024 and the six months
ended June 30, 2025, revenue generated from our restaurants with usage defects as a
percentage of our total revenues was 1.1%, 1.5%, 2.3% and 2.6%, respectively.
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According to the relevant provisions of the PRC Civil Code, any owner may not alter a
residential property into a property used for business purposes by violating any law, regulation
or stipulation on property management; where an owner intends to alter a residential property
into a property used for business purposes, the owner shall, in addition to observing laws,
regulations and stipulations on property management, obtain the consent of all other owners
who are interested in the property. Meanwhile, in accordance with the relevant provisions of
the Administrative Measures for Commodity House Leasing (), any
property whose use is altered in violation of relevant regulations may not be leased, for which
any such alteration violating relevant regulations shall be ordered by the construction (real
estate) administrative authority of a municipality directly under the Central Government, city
or county to make corrections within a prescribed time limit, and if there is no illegal income,
a fine of not more than RMB5,000 may be imposed thereon; if there is any illegal income, a
fine of one to three times of the illegal income may be imposed thereon, subject to a cap of
RMB30,000. Based on the above, our PRC Legal Advisor is of the view that we, as the lessee
of such properties, would not be subject to any administrative penalties, but may not be able
to occupy and use such leased properties if the lease was challenged by any interested party
or if the lessor was penalized by the competent government authority. As advised by our PRC
Legal Advisor, the usage defects did not affect the relevant Fire Safety Inspection Approvals
obtained by such restaurants as all the self-operated restaurants with usage defects had
obtained Fire Safety Inspection Approvals, where applicable, which were specifically obtained
for restaurant operations.
In view of the foregoing, our Directors are of the view that the abovementioned usage
defects will not materially and adversely affect our business and results of operations and our
Group continues to use such leased properties on the grounds that: (i) to the best of our
Directors’ knowledge, our leases with respect to these defective leased properties had not been
subject to claims or disputes in connection with the actual use of such leased properties during
the Track Record Period and up to the Latest Practicable Date, (ii) as advised by our PRC Legal
Advisor, we, as the lessee of such properties, would not be subject to any administrative
penalties, and (iii) we believe that we would be able to relocate to a different site relatively
easily on comparable commercial terms and at similar prices with immaterial relocation costs
should we be required to do so. Taking into account the above considerations, given their prime
locations and proven ability to generate consistent sales, the Group has decided to continue our
operation on such leased properties.
To prevent the recurrence of inconsistent use of leased properties with the prescribed
scope of usage shown on the relevant ownership certificates, we enhanced our internal
procedural requirements for lease approvals to make sure the consistent use of leased
properties with the intended purpose contained in the relevant ownership certificates before
execution of any lease agreements.
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Lack of Requisite Approval for Certain Leased Properties
As of the Latest Practicable Date, with respect to 19 of our leased properties built on
allocated land ( ྌᅡ͜ή) with an aggregate GFA of approximately 3,237.4 sq.m, representing
approximately 4.7% of our total leased GFA, the lessors could not provide documents proving
that the corresponding approval procedures for such properties leased to us had been
completed. For the years ended December 31, 2022, 2023, 2024 and the six months ended June
30, 2025, revenue generated from our restaurants on allocated land which were absent of
requisite approval as a percentage of our total revenues was 4.0%, 3.7%, 4.1% and 3.8%,
respectively.
As advised by our PRC Legal Advisor, properties on allocated land shall not be leased
without authorization from relevant authorities. There is no guarantee that the lessors had
obtained authorizations from the relevant land administration departments to lease the
properties. If the lessors did not obtain the requisite approval for leasing such properties in
accordance with the relevant laws and regulations, the lessors would be found in violation of
the relevant PRC Law and the validity of the relevant leasing contracts may be uncertain.
Based on the above, our PRC Legal Advisor is of the view that we, as the lessee of such
properties, would not be subject to any administrative penalties. In the event that we are not
able to continue to use the leased properties, we consider that the leased properties can be
replaced by other suitable properties on comparable commercial terms and at similar prices
with immaterial relocation costs. In view of the foregoing, our Directors are of the view that
such property defects do not have any material adverse impact on the operation of the Group.
To prevent recurrence of such potential defects in our leased properties, we have
designated our staff to proactively reach out to and communicate with lessors to obtain
documents proving completion of the corresponding approval procedures for leasing such
properties to us.
Upon expiry of the existing lease agreements of the Defective Leased Properties, we will
assess the legal risk when renewing the relevant lease agreements. If we are not able to
continue to use such leased properties due to title defects, usage defects or lack of requisite
approval, we expect to be able to identify alternative places for relocation in a timely manner
without incurring material related loss due to the availability of alternative properties at
comparable rental rates on the market. Typically, for a restaurant which would need to be
relocated, we estimate that such relocation would involve around RMB0.7 million to RMB0.9
million for opening a new restaurant, and the estimated timeline to relocate a restaurant is
approximately one to two months.
As advised by the PRC Legal Advisor, we, as the lessee, would not be subject to any
administrative penalties due to absence of valid title certificates, usage defects or lack of
requisite approval of leased properties. As such, we did not make any provisions in connection
with those Defective Leased Properties during the Track Record Period and up to the Latest
Practicable Date.
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Non-registration of Lease Agreements
As of the Latest Practicable Date, we had not completed lease registration for 369 of the
properties we leased in China with an aggregate GFA of approximately 60,515.6 sq.m.,
representing approximately 88.2% of our total leased GFA, primarily due to the difficulty of
procuring the relevant lessors’ cooperation to register their leases. As advised by our PRC
Legal Advisor, the lack of registration for the lease contracts will not affect the validity or the
binding effect of the lease contracts over contracting parties or result in the Group being
required to vacate the leased properties under PRC Law. As the registration of a lease
agreement requires the cooperation between the lessor and lessee and lessors are typically
unwilling to undertake the administrative burden, we were not able to complete the registration
of lease agreements mentioned above. We have adopted internal policies that (i) request our
employees to proactively coordinate with lessors to complete the registration for all of our
lease agreements and (ii) require our employees to complete the registration of lease
agreements in instances in which lessors are willing to cooperate in such procedures.
As advised by our PRC Legal Advisor, the relevant authorities in the Chinese Mainland
may request us to complete the registration, and if we still fail to do so, we may be imposed
a fine ranging from RMB1,000 to RMB10,000 for each of such lease agreements. The
aggregate amount of maximum fine will be approximately RMB3.7 million, which our
Directors believe will not, individually or in the aggregate, have any material adverse impact
on our business or results of operations. As advised by the PRC Legal Advisor, the likelihood
that we would be penalized due to non-registration of lease agreements by various local
authorities at the same time or within a short period is remote, considering that these properties
are geographically dispersed.
As of the Latest Practicable Date, in relation to the leased properties that had not
completed lease registration, we have not been required by the relevant local housing
administrative authorities to complete the registrations, nor been penalized or fined by the
relevant authorities. In addition, we have been more stringent in terms of requiring our lessors
to cooperate with us in registering our lease agreements with the relevant housing
administrative authorities.
Based on the foregoing, our Directors believe that the lack of registration for lease
agreements does not constitute material nor systemic non-compliance of us, and the
non-registration of lease agreements described above will not, individually or in the aggregate,
materially affect our business and results of operation. As such, we did not make any provisions
in connection with those Lease Agreements without Registration during the Track Record
Period and up to the Latest Practicable Date.
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As part of our enhanced internal policies, our lease agreements are required to be
registered with relevant authorities. As the registration of a lease agreement requires the
cooperation of the lessor, upon the execution of lease agreements, we would proactively
request and assist the lessors or other relevant parties with registration and filing of lease
agreements. We will regularly review registration status of our leases and remind the lessors
who have not completed the registration to fulfill the relevant obligations. Upon expiry of lease
agreements, we will assess the legal risks and will not renew a lease agreement if the risk is
too high.
Fire Safety
Background and Reasons for Historical Non-compliance
As of the Latest Practicable Date, all of our self-operated and franchised restaurants in
operation, including the restaurants that were opened before the Track Record Period, had
obtained Fire Safety Inspection Approvals and other requisite licences and regulatory
approvals for their operations under the relevant PRC Law, where applicable.
In 2022, 2023, 2024 and the six months ended June 30, 2025, we had eight, eleven, five
and nil newly opened self-operated restaurants and nil, nil, six and nil newly opened franchised
restaurants, respectively, that commenced operations before obtaining the required Fire Safety
Inspection Approvals (the “ Historically Non-compliant Restaurants ”). Since December 2,
2024, there had been no restaurant, whether self-operated or franchised, that commenced
operations before obtaining the required Fire Safety Inspection Approvals. As advised by our
PRC Legal Advisor, the defects in our leased properties had not affected our restaurants in
obtaining the relevant Fire Safety Inspection Approvals.
The aforementioned restaurants commenced operation prior to obtaining the Fire Safety
Inspection Approvals during the Track Record Period, primarily because (i) for 15 of the
Historically Non-compliant Restaurants, we were requested by the relevant commercial
property operators to open those restaurants by certain deadlines in order to align with their
overall opening plans for the shopping malls or schedules for marketing campaigns, and we
opened the relevant restaurants in order to maintain good relationships with them; (ii) for ten
of the Historically Non-compliant Restaurants, the landlords had not yet obtained Fire Safety
Inspection Approvals for the whole premises which those restaurants are located in; and (iii)
for five of the Historically Non-compliant Restaurants, the non-compliances were because of
the lack of comprehensive understanding of, and inadvertence in monitoring those restaurants’
compliance status with certain regional fire safety policies and regulatory requirements on the
part of our responsible staff. As one of our remedial actions, we have strengthened our internal
control policies and staff trainings with respect to fire safety inspections to avoid the
recurrence of such non-compliance incidents in the future.
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Legal Consequences
We have taken, and required our franchisees to take remedial measures such as
strengthening internal control and obtaining Fire Safety Inspection Approvals. For all the
Historically Non-compliant Restaurants that had subsequently obtained the Fire Safety
Inspection Approvals, as of the Latest Practicable Date, none of these restaurants had been
subject to any material administrative penalty for past non-compliance after obtaining the Fire
Safety Inspection Approvals. Based on the above, our PRC Legal Advisor has advised us that
the risk that the Historically Non-compliant Restaurants would be subject to material
administrative penalties for past non-compliance by the relevant fire safety authorities after
obtaining the Fire Safety Inspection Approvals is remote.
Internal Control Measures
We have engaged an internal control consultant to conduct an internal control review on
us. We have enhanced our internal control measures as recommended by our internal control
consultant to manage associated risks and prevent the re-occurrence of such non-compliance
incidents. In particular, we have adopted the license and certificate management policies,
which govern the applications for the required as-built acceptance check on fire prevention,
fire safety approval filing or the fire safety inspections, as the case may be. The license and
certificate management policies explicitly require each new restaurant to be opened only after
we have obtained all necessary licenses, permits and approvals required under the relevant
PRC Law. In addition, we conduct training for our staff, including periodic training on general
fire safety awareness and knowledge, regular updates and training on fire safety rules and
regulations. We also require our franchisees to obtain Fire Safety Inspection Approvals before
commencing operation of franchised restaurants. Going forward, our restaurants will only
commence operation after the restaurants have obtained the necessary licenses and regulatory
approvals as required by applicable PRC Law.
LEGAL PROCEEDINGS
We may, from time to time, become a party to various legal, arbitral or administrative
proceedings arising in the ordinary course of our business. During the Track Record Period and
up to the Latest Practicable Date, we had not been and were not a party to any legal, arbitral
or administrative proceedings, and we were not aware of any pending or threatened legal,
arbitral or administrative proceedings against us or our Directors that could, individually or in
the aggregate, have a material adverse effect on our business, financial condition and results
of operations.
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ENVIRONMENTAL, SOCIAL AND CORPORATE GOVERNANCE
ESG Governance
We have been taking and will continue to take effective measures to embrace ESG into
every aspect of our business operations. To this end, we will establish a two-tier ESG
governance framework, comprising of our Board and an ESG working group.
Our Board has accepted relevant ESG trainings and will take the overall responsibility for
our ESG strategy and reporting. Our Board will be directly involved in setting up our overall
ESG governance management policies, strategies, priorities and targets, reviewing our ESG
policies on an annual basis to ensure its effectiveness, and fostering a culture of acting in
accordance with our core ESG values.
Our ESG working group, consisting of our senior management and staff with a solid
understanding of current and emerging ESG issues and our business, will directly report to the
Board on ESG issues. Set forth below are the key responsibilities of our ESG working group:
 ensure that we abide by the latest ESG laws and regulations, including the applicable
sections of the Listing Rules, and keep the Board informed of any changes in the
laws and regulations and update our ESG policies accordingly;
 assess ESG risks on a regular basis according to applicable laws, regulations and
policies, and formulate strategic plans and mitigating measures to ensure our
responsibilities with respect to ESG matters are met;
 monitor local environmental, social, and climate changes in regions where we
operate and take timely measures to mitigate the risks associated with volatile
changes during our daily business operations;
 monitor the implementation of our ESG policies and engage third-party consultants
to support us in fulfilling our ESG goals if the working group considers it necessary;
 identify our key stakeholders based on our business operations and understand the
stakeholders’ influences and dependence with respect to ESG matters;
 conduct compliance training for employees routinely;
 hold meetings on a regular basis to identify, assess, and manage our progress in
achieving our key ESG targets; and
 prepare ESG report routinely, report to our Board on our ESG performance and the
effectiveness of our ESG policy, and provide our Board with recommendations
relating to ESG matters.
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During the Track Record Period and as at the Latest Practicable Date, we have complied
with all applicable PRC Law relating to social, health, safety, and environmental matters in all
material respects. We have not been subject to any fines or other penalties due to violations of
social, health, safety, or environmental laws and regulations.
Board and Management Levels Diversity
We have adopted a Board Diversity Policy which sets out the objective and approach to
achieve and maintain the diversity of our Board. For more information about Board Diversity
Policy, see “— Directors, Supervisors and Senior Management — Board Diversity.” At present,
our Board consists of one female Director and six male Directors, and female constitute
approximately 27.3% of our Directors, Supervisors and senior management. After Listing, we
will periodically review the Board Diversity Policy to ensure its ongoing effectiveness.
Environmental Protection
Our operations are subject to various environmental protection laws and regulations
related to air and noise pollution issued by national, provincial, and municipal governments in
China. For details, see “Regulatory Overview.” We fully recognize the critical importance of
environmental protection and sustainable development. We require our employees to actively
implement various environmental protection measures, including the prevention of air
pollution, noise pollution, and water pollution.
Metrics and Targets
Our air emissions, greenhouse gas (“ GHG”) emissions, and resource usage statistics
during the Track Record Period covered our Group’s operation in China. The reporting scope
is determined based on the significance of our ESG impact.
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Air Emissions
The air emissions we generate primarily include nitrogen oxides (“ NOx”), sulfur oxides
(“SOx”), and particulate matter (“ PM”), with the main source being emissions from vehicle
use. The following table presents our air emissions data during the Track Record Period:
For the year ended
December 31,
For the
six months
ended June 30,
Unit 2022 2023 2024 2025
NOx /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118kg 44.6 44.3 42.7 22.1
SOx /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118kg 0.1 0.1 0.1 0.1
PM /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118kg 4.2 4.1 4.0 2.1
Note: Air emissions are calculated in accordance with “How to prepare an ESG Report — Appendix 2:
Reporting guidance on Environment KPIs” issued by the Stock Exchange.
Despite the continuous expansion of our business, we strive to limit the use of company
vehicles and encourage greater reliance on public transportation. As a result, there has not been
a significant change or increase in trends of our air emissions during the Track Record Period.
Looking forward, we will continue to focus on controlling vehicle emissions and enhancing our
environmental sustainability efforts. We are committed to maintaining the current emission
intensity or reducing emissions of NOx, SOx, and PM by 5% for the year ending December 31,
2026 with the baseline year ended December 31, 2024.
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GHG Emissions
During the Track Record Period, the GHG emissions primarily originate from Scope 1
direct emissions generated using company vehicles, Scope 2 indirect GHG emissions
associated with the consumption of purchased electricity, and Scope 3 other indirect GHG
emissions incurred from electricity used for fresh water processing. The following table sets
forth the GHG emissions performance during the Track Record Period:
For the year ended
December 31,
For the
six months
ended June 30,
Unit 2022 2023 2024 2025
Scope 1 Direct GHG
Emissions
– Petrol /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
tCO2e 14.4 14.3 13.8 7.3
Scope 2 Indirect GHG
Emissions
– Purchased electricity /H1118/H1118/H1118
tCO
2e 11,926.8 21,020.9 33,420.5 19,978.6
Scope 3 Other Indirect GHG
Emissions
– Fresh water /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
tCO
2e 54.5 83.7 129.9 76.6
Total GHG Emissions /H1118/H1118/H1118/H1118/H1118tCO2e 11,995.7 21,118.9 33,564.2 20,062.5
Total GHG Emissions
Intensity (Scope 1+2) /H1118/H1118/H1118
tCO2e/number
of operating
restaurants
at the end
of the year
70.2 83.5 92.9 47.9
Total GHG Emissions
Intensity (Scope 1+2+3) /H1118/H1118
tCO
2e/
number of
operating
restaurants
at the end
of the year
70.6 83.8 93.2 48.1
Notes:
1. GHG emissions data is presented in carbon dioxide equivalent (CO 2e) and is calculated with reference
to guidelines including, but not limited to, the “Notice on Carrying Out GHG Emission Reporting and
V erification for Key Industry Enterprises from 2023 to 2025” (ਂλ2023-2025ᓃБุΆุ
ٝissued by the Ministry of Ecology and Environment of the PRC
and the “WSD Annual Report 2023/24” of the Water Supplies Department.
2. As at December 31, 2022, 2023, 2024 and June 30, 2025, the Group’s operating restaurants were 170,
252, 360 and 417 respectively (including self-operated and franchised restaurants). This data will also
be used for calculating other intensity data.
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Our overall GHG emissions have shown a slight upward trend. This includes efforts to
reduce the usage of company vehicles, which has led to a minor decrease in Scope 1 emissions
in 2024. However, Scope 2 emissions from purchased electricity have risen, primarily due to
the increase in the number of restaurants, resulting in higher overall electricity consumption
and an increase in total GHG emissions and its intensity.
In terms of the Group’s ESG performance and metrics for 2023 compared to its peers, the
intensities of Scope 1 and 2 GHG emissions and water usage among our peers are on average
over 70% higher than ours. The primary reason for this difference lies in food preparation
methods. Unlike many of our peers, the Group does not use any stationary gas-fueled cooking
appliances. Instead, all of our stores consistently utilise more environmentally friendly electric
stoves. As a result, the Group’s emissions and consumption are relatively lower, reflecting a
more sustainable and eco-conscious operational approach.
Looking forward, we are committed to implementing measures to control our GHG
emissions and enhance our sustainability initiatives. We will continue to monitor the relevant
GHG data, identify potential reduction opportunities where applicable, and implement
emission reduction measures. See “— Environmental, Social and Corporate Governance —
Environmental Protection Initiatives — Energy Conservation and Emissions Reduction.” We
strive to reduce our total GHG emissions intensity by 5% for the year ending December 31,
2026 with the baseline year ended December 31, 2024.
Waste Management
To mitigate the impact of waste, we conduct waste collection and sorting in accordance
with relevant PRC laws and regulations. The sorted waste is subsequently collected and
processed by the relevant urban sanitation departments, with all processes adhering to
applicable environmental protection standards. Given our business nature, our operations do
not produce hazardous waste. For non-hazardous waste, we generate food waste in our daily
operations. Such waste is managed by a third-party service provider, and as a result, we do not
maintain specific data records. The Group will actively collaborate with third-party waste
management providers to ensure transparency of data and to adopt environmentally friendly
methods for waste disposal. The table below sets forth our waste disposal costs for the Track
Record Period.
For the year ended
December 31,
For the
six months
ended June 30,
Unit 2022 2023 2024 2025
Environmental Compliance
Cost – Waste Disposal /H1118/H1118/H1118
thousands of
RMB
873.4 952.8 1,438.6 886.4
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The increase in environmental compliance costs related to waste disposal above is
primarily attributed to the growth in the number of our restaurants during the Track Record
Period. We have implemented clear waste disposal guidelines and provided training for
employees on how to identify, collect, store, and manage waste. The guidelines included three
procedures for handling food waste, namely dry waste processing, organic waste processing,
and bamboo stick waste processing. For dry waste, segregation occurs at the point of
generation, followed by storage in designated containers until collection by a third-party
service provider. Organic waste is initially separated from other waste types, thoroughly
cleaned to remove contaminants, and then placed in designated containers for collection.
Bamboo stick waste is also collected separately, stored in a designated area to maintain
hygiene, and regularly collected for appropriate disposal or recycling. These procedures are
designed to ensure compliance with environmental regulations, minimize the environmental
impact of food waste, promote strong corporate environmental awareness and reduce our
overall environmental impact.
Food Waste Management and Reduction Initiatives
The Group is committed to minimising food waste through a comprehensive approach
focusing on prevention, proper classification, and effective surplus food management. Key
measures include:
Source Reduction
– Implementing reasonable procurement and inventory management based on actual
demand to avoid overstocking and spoilage.
– Designing scientifically balanced menus with diverse and appropriate portion sizes to
reduce leftovers.
– Adjusting portion sizes precisely according to customer consumption habits and group
size to prevent over-preparation.
– Optimising food processing techniques to minimise waste during cutting and preparation.
Kitchen Waste Classification and Collection
– Providing dedicated, clearly labeled containers for kitchen waste to facilitate proper
disposal.
– Training chefs and staff on correct waste segregation to avoid contamination with other
waste types.
– Regular cleaning and maintenance of waste containers to prevent odors and bacterial
growth.
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Surplus Food Management
– Adhering to strict food safety controls, including standardized storage and shelf-life
management, to reduce waste caused by spoilage.
Continuous Monitoring and Improvement
– Conducting regular on-site inspections by monitoring teams to identify and address
potential waste generation points.
The Group aims to conduct regular quarterly employee training sessions on kitchen waste
segregation to ensure proper collection and subsequent resource recovery of food waste,
underscoring our dedication to sustainable and responsible business practices.
Energy Consumption
Our energy consumption primarily comes from direct energy consumption by company
vehicles and indirect energy consumption from purchased electricity. The following table sets
forth our energy consumption during the Track Record Period:
For the year ended
December 31,
For the
six months
ended June 30,
Unit 2022 2023 2024 2025
Direct Energy Consumption
– Petrol /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
MWh 52.3 52.0 50.0 26.4
Indirect Direct Energy
Consumption – Purchased
Electricity /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
MWh 20,913.1 36,859.4 58,687.5 35,270.2
Total Energy Consumption /H1118MWh 20,965.4 36,911.4 58,737.5 35,296.6
Total Energy Consumption
Intensity /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
MWh/number
of operating
restaurants
at the end
of the year
123.3 146.5 163.2 84.64
Note: The method for converting the units of direct energy consumption data is based on the “Energy Statistics
Manual” issued by the International Energy Agency.
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Our trend in energy consumption closely mirrors that of our GHG emissions, showing an
upward trend. The changes in direct energy consumption from company vehicles’ petrol usage
and the indirect energy consumption from purchased electricity align with the reasons for the
variations in GHG emissions. Specifically, efforts to reduce the use of company vehicles have
led to a minor decrease in direct energy consumption in 2024. However, the increase in the
number of restaurants has resulted in higher total electricity consumption, contributing to an
overall rise in energy consumption and its intensity.
We use monthly average electricity consumption per restaurant as a key performance
indicator in the daily management of our restaurants. In 2022, 2023, 2024 and the six months
ended June 30, 2025, our monthly average electricity consumption per restaurant was 11,922.1
kWh, 15,552.0 kWh, 15,061.8 kWh and 15,188.1 kWh, respectively. Looking forward, we are
dedicated to implementing measures to control energy consumption and enhance our
sustainability initiatives. See “— Environmental, Social and Corporate Governance —
Environmental Protection Initiatives — Energy Conservation and Emissions Reduction.” We
strive to reduce our total energy consumption intensity by 5% for the year ending December
31, 2026 with the baseline year ended December 31, 2024.
Water Consumption
Our primary water consumption stems from daily restaurant operations. Our main water
source is municipal tap water, and consequently, we do not face any issues in obtaining suitable
water sources. We promote water conservation concepts to our employees, post water-saving
reminders in all water usage areas, and conduct periodic inspections to conserve water
resources. The following table sets forth our water usage during the Track Record Period:
For the year ended
December 31,
For the
six months
ended June 30,
Unit 2022 2023 2024 2025
Total Water Consumption /H1118/H1118/H1118m3 212,822.3 326,868.2 507,232.9 299,185.2
Total Water Consumption
Intensity /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
m3/number of
operating
restaurants
at the end of
the year
1,251.9 1,297.1 1,409.0 717.5
Due to our ongoing expansion and opening of new restaurants during the Track Record
Period, there had been an upward trend in water consumption and its intensity. We are
committed to implementing effective water management strategies to control and reduce water
usage, ensuring a sustainable approach to our operations.
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We use monthly average water consumption per restaurant as a key performance indicator
in the daily management of our restaurants. In 2022, 2023, 2024 and the six months ended June
30, 2025, our monthly average water consumption per restaurant was 131.1 m
3, 152.0 m 3,
129.6 m 3 and 129.8 m 3, respectively. We strive to reduce our water consumption intensity by
5% for the year ending December 31, 2026 with the baseline year ended December 31, 2024.
Packaging Materials
The Group’s packaging materials primarily consist of tableware and utensils used in
dining, including plastics, wood (such as chopsticks), and paper (such as cups). In 2022, 2023,
2024 and the six months ended June 30, 2025, our total volume of packaging materials was
611.8 tonnes, 1,087.0 tonnes, 3,000.0 tonnes and 1,815.5 tonnes, respectively. Moving forward,
we are targeted to progressively reducing the overall consumption of packaging materials by
continuously optimising usage, increasing the adoption of sustainable alternatives, and actively
exploring the use of recyclable and biodegradable packaging materials and utensils.
Environmental Protection Initiatives
To meet our targets, we implement various measures to reduce the resource consumption
and stay compliant with respect to ESG matters.
Energy Conservation and Emissions Reduction
We are committed to enhancing energy efficiency and reducing emissions across all our
restaurants and offices through the implementation of targeted measures. These include:
 Optimizing V ehicle Usage : We strive to improve vehicle efficiency by minimizing
unnecessary travel and conducting regular vehicle maintenance to enhance
performance.
 Electricity Management : We utilize energy-efficient and recyclable lighting options.
We conduct regular checks of electricity usage.
 Water Management : We implement effective water conservation measures to
minimize waste and promote sustainability.
 Waste Management : We conduct waste collection and sorting in accordance with
relevant PRC Law. The sorted waste is subsequently collected and processed by the
relevant urban sanitation departments, with all processes adhering to applicable
environmental protection standards. We advocate for a paperless office environment.
 Employee Engagement : We encourage all employees to turn off electrical devices
when leaving their workspace and maintain office temperatures at 25.5 degrees
Celsius or higher. Informative signage and reminders help foster energy-saving
habits among staff.
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By integrating these practices into our operations and adhering to our policy, we reinforce
our dedication to sustainable practices and continuous improvement. Through these efforts, we
aim to create a positive impact on the environment and uphold our commitment to corporate
social responsibility.
Green Procurement
The Group incorporates ESG principles into its key policies, including the Annual
Procurement Framework Contract (ΥΝ) and the Supplier Management
System and Grading Assessment Management Policy (၍ଣ፬
). These principles guide the selection and management of delivery and logistics service
providers, suppliers, and franchisees through the following essential criteria and measures:
Basic Requirements for Suppliers
– Must operate legally with valid business licenses and relevant industry qualifications.
– Preferably hold ISO 14001 Environmental Management System certification and have no
significant environmental violations.
Environmental Management Capability
– Establish a comprehensive environmental management system with clearly assigned
responsibilities.
– Demonstrate capacity for environmental risk identification and control, and conduct
regular environmental impact assessments.
Product Environmental Standards
– Prioritise procurement of biodegradable, recyclable, and low-pollution raw materials,
auxiliary materials, and utensils (e.g., green-certified flour, organic vegetables).
– Ensure packaging materials comply with national environmental standards, promote the
use of recyclable and reusable materials, and reduce plastic usage.
– Prohibit procurement of products containing harmful substances such as excessive heavy
metals or formaldehyde.
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Green Innovation and Energy Efficiency
– Suppliers should adopt green technological innovations, such as energy-saving
production equipment and carbon emission reduction measures.
– Preference for suppliers implementing energy-saving and emission reduction initiatives
during production and transportation.
Social Responsibility and Transparency
– Comply with labor laws and ensure employee health and safety.
– Regularly report environmental and social responsibility data to maintain transparency.
– Encourage participation in environmental protection projects and community welfare
activities.
On-site Audits
– The Group’s procurement department conducts regular and ad hoc environmental
compliance audits on supplier sites.
– Non-compliant suppliers may face suspension of procurement contracts and are required
to rectify issues within a specified time frame.
ESG Compliance in Contracts with Suppliers and Franchisees
– ESG elements are incorporated into the Group’s annual procurement framework
contracts, ensuring strategic partners clearly understand and comply with ESG strategies.
– Partners must strictly follow the Group’s ESG standards and guidelines, covering
environmental protection, labor rights, ethical business conduct, and integrity.
– Failure to comply may result in corrective action demands and, in severe cases, contract
termination.
Sustainable Packaging
The Group ensures that packaging materials and utensils used throughout its operations
prioritise recyclability and biodegradability to minimise environmental impact.
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Climate-related Risks
Climate change impacts not only our environment but also the Group’s operational
stability. Effectively identifying and managing associated risks and opportunities is vital for
our business. In line with the recommendations from the Task Force on Climate-related
Financial Disclosures (TCFD), we have evaluated two primary categories of climate-related
risks:
(i) Physical Risks — Direct physical impacts from extreme weather events and
long-term climate changes.
(ii) Transition Risks — Costs and risks associated with policy, legal, technological, and
market changes.
The primary physical risks affecting us stem from acute climate disaster events such as
heavy rainfall. These extreme events may impact employee safety, work environments, health,
and our daily business operations. We proactively identify and assess climate risks and
opportunities, integrating climate change risk identification, adaptation, and mitigation into our
decision-making processes.
Transition risks primarily relate to the shift towards a low-carbon economy,
encompassing changes in policies, laws, technology, and markets. With evolving
environmental regulations and legislation, we may face increased compliance costs and
operational litigation risks. Failure to comply with all environmental laws and regulations, or
allegations of environmental protection negligence, could result in potential fines, penalties, or
even forced operational suspension. Moreover, such events could adversely affect our
reputation and reduce market competitiveness. To address these transition risks, we assess their
likelihood and impact, integrating them into our overall risk assessment and management
processes. We closely monitor trends in climate-related regulatory requirements and potential
transition risk policies, striving to mitigate their impact on our operations.
During the Track Record Period and up to the Latest Practicable Date, due to our effective
internal controls, we did not identify any significant adverse impacts from climate-related
events.
Corporate Governance
We are committed to promoting sustainable corporate governance and integrating it into
all major aspects of our business operations.
Food Safety : Maintaining the highest standards of food safety and quality is of paramount
importance to us. We have established comprehensive food safety systems that span the entire
business process to ensure the safety and quality of all our menu offerings.
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 Procurement . Our procurement process includes rigorous reviews of new suppliers
to ensure full compliance with applicable regulations. Sample testing is conducted
to verify that supplies meet national quality and safety standards. A raw material
inspection and management system enables regular safety checks throughout food
production. If any non-compliance is detected, the responsible employee is promptly
notified to implement corrective actions within a specified timeframe. Follow-up
inspections are conducted to verify compliance and improvements.
 Restaurants operation . In our restaurants, we have established clear inspection
procedures for food ingredient reception, covering storage requirements, shelf-life
monitoring, usage durations, and proper handling methods. A facility and equipment
management system ensures that restaurant environments are clean, safe, and
conducive to a pleasant dining experience. Our inspection team oversees regular
inspections, ensuring compliance with food safety practices at all locations. Food
safety is integrated into our performance review of our restaurants as part of our
restaurant performance evaluation mechanism.
 Employee Training and Accountability. To ensure all employees possess the
necessary food safety knowledge, we have implemented mandatory training and
assessment systems. Employees must complete comprehensive food safety training
before assuming their roles, with annual refresher courses to reinforce their
knowledge of food laws, regulations, and best practices.
Supply Chain : We have established rigorous mechanisms and policies to identify,
evaluate, and manage environmental and social risks throughout our supply chain.
 Strict Admission Standards . We implement stringent admission procedures for
suppliers to ensure they meet our high standards. Suppliers must undergo
comprehensive sample testing and verification of qualification documents. A
preliminary assessment is conducted based on key criteria, including pricing, quality
and safety of products, market reputation, financial conditions, qualifications and
production capacities.
This is followed by a thorough review by our procurement team. Suppliers are only
added to our approved supplier list after successfully passing food safety audits and
service capability assessments.
If issues arise with a supplier’s products, we follow standardized procedures to
address them. This includes verifying concerns with relevant employees, notifying
the supplier to resolve the problem, and closely monitoring progress to ensure
effective and timely resolution.
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 Periodic Assessments . We conduct monthly performance evaluations of suppliers
based on their performance across key criteria such as product quality, delivery
timeliness, order fulfilment, pricing, and service reliability.
Suppliers found to be involved in unresolved quality issues, fraudulent activities, or
unlawful conduct — such as contract violations, deception, or bribery resulting in
severe consequences — will be permanently removed from our supplier pool.
 Product Management . To uphold product quality and food safety, we have
implemented a standardized raw material inspection and management system. This
includes regular reviews and inspections of incoming goods, such as verification of
testing reports and pesticide residue analyses. These measures ensure that all
supplies meet our stringent standards before entering the production process.
After Listing, we will continuously improve on our measures through collaboration with
professional ESG consultants. Our Company will conduct regular reviews of these material
issues and update their effectiveness based on the constantly changing business environment
and our Company’s business strategy.
Corporate Social Responsibility
Employee Well-being
We firmly believe that human resources are our most valuable asset and the foundation
for sustainable corporate development. Therefore, we are committed to improving our
employment system to attract, nurture, and retain talent. We adhere to a people-centric
governance approach and have established an employee handbook, Annual Performance
Evaluation Form, Interview Evaluation Form, Salary Grading Table, Salary Distribution
System, Leave Management System, Restaurant Attendance Management System, to ensure the
protection of employees’ rights. These policies standardize employment practices and ensure
that employees clearly understand their rights and responsibilities while respecting and
safeguarding the legal rights of each employee. These systems cover rights protection in areas
such as recruitment, training, compensation, promotion, working hours, resignation, and other
benefits. We will continuously improve our talent policies and welfare measures, establish
effective employee communication mechanisms, and focus on work-life balance. This
approach aims to strengthen employees’ sense of belonging and motivation, jointly promoting
the company’s sustainable and healthy development. For details, see “— Employees.”
Our recruitment process strictly adheres to principles of fairness, impartiality, and
transparency, providing equal opportunities to individuals of diverse backgrounds, cultures,
and genders. We firmly oppose discrimination and prohibit all forms of discriminatory
practices. As of June 30, 2025, the gender distribution of our employees were approximately
49.2% male and 50.8% female.
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We strictly prohibit any form of child labor or forced labor in our operations. If suspected
cases of child or forced labor are discovered, our human resources department will promptly
communicate with relevant personnel to address the issue. We commit to thoroughly
investigating all reports and taking appropriate corrective and disciplinary measures to protect
employees’ rights and ensure a safe work environment. All our employees meet the minimum
working age requirements set by national laws and regulations. During the Track Record Period
and up to the Latest Practicable Date, we have not encountered any incidents of child or forced
labor.
We are dedicated to continuously improving our human resource management practices
to ensure an adequate talent pipeline while fully protecting employee rights and providing a
positive work environment with growth opportunities.
Occupational Health and Safety
During the Track Record Period and up to the Latest Practicable Date, we had strictly
complied with all occupational health and safety-related laws and regulations in China in all
material aspects. Our Group is dedicated to implementing safety measures that ensure a safe
and healthy workplace for all employees. We provide essential information, instruction, and
supervision to protect employees from injury, health risks, and anti-fraud concerns.
During the Track Record Period and up to the Latest Practicable Date, we did not
experience any significant safety incidents or work-related fatalities. All reported injuries were
minor and were addressed appropriately. We have also established internal procedures for
handling various types of work-related injuries to safeguard our employees.
We will regularly educate and remind employees about the importance of occupational
health and safety in accordance with relevant work safety guidelines to prevent similar
incidents from occurring. Through training, various forms of communication, emergency drills,
and regular safety inspections, we provide our employees with the latest information on
occupational safety and emergency response.
Charity
In 2023, we launched the “Baobao Meal Charity Program (ྌ).” For every
charity meal sold, RMB0.1 is allocated to charitable causes. As of June 30, 2025, cumulative
sales volume of charity meal reached approximately 1.77 million, generating approximately
RMB177,000 in charitable funds. In 2023, we jointly held a painting competition with Orange
Public Welfare (ɿʮू) and assembled a mosaic of outstanding pieces to raise public
awareness about left-behind children.
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Commemorating the founding team’s alma mater and supporting educational
development, we partnered with South China University of Technology to establish the
“Campus Construction Fund” and the “Innovation and Entrepreneurship Public Welfare Fund”.
In 2024, we donated RMB600,000 and plan to donate RMB3.0 million over a period of five
years. In the first half of 2025, we donated RMB300,000 to such funds.
RISK MANAGEMENT AND INTERNAL CONTROL
We have implemented a series of risk management policies and procedures to identify,
assess and manage risks we are exposed to in our operations. For details on the major risks
identified by our management, see “Risk Factors.” The measures we have taken relate to our
restaurant operations, procurement, logistic and food safety and quality.
To monitor the ongoing implementation of our risk management policies and corporate
governance measures after the Global Offering, we have adopted or will continue to adopt,
among other things, the following risk management measures on the Group level:
 We have established an Audit Committee to review and supervise our financial
reporting process and internal control system. Our audit committee consists of three
members, namely Mr. Chan Kwok Bun ( ௓਷੸), who serves as chairman of
committee, Mr. Xu Lei (ཤ) and Mr. Zhong Jiesheng (͛). For the
qualifications and experience and experience of these committee members, see
“Directors, Supervisors and Senior Management — Directors;”
 We have adopted various policies to ensure compliance with the Listing Rules,
including but not limited to aspects related to risk management, connected
transactions and information disclosure; and
 We will continue to organize training sessions for our Directors and senior
management in respect of the relevant requirements of the Listing Rules and duties
of directors of companies listed in Hong Kong SAR.
In addition, we plan to engage an internal control consultant to review the effectiveness
of our internal controls associated with our major business processes, identify deficiencies and
areas for improvement, provide recommendations and review the implementation status of
these remedial actions on an annual basis. The Company has implemented various policies and
procedures to ensure effective management in its operation, production, financial reporting and
recording, and compliance with applicable laws and regulations.
Our Directors are of the view that our enhanced internal control system is adequate and
effective for our current operations.
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DIRECTORS
Our Board currently consists of seven Directors, comprising three executive Directors,
one non-executive Director and three independent non-executive Directors. The following
table sets forth certain information regarding our Directors:
Name Age Position(s)
Date of joining
our Group
Date of
appointment as
our Director Roles and responsibilities
Relationships with
other Directors,
Supervisors or senior
management members
Mr. Song Qi
(҂փ) /H1118/H1118/H1118
39 Chairman of our
Board, executive
Director and
chief executive
officer
February 14,
2014
February 14,
2014
Formulating the overall
development strategy of
our Group and
supervising our Group’s
operations
Spouse of Ms. Luo
Mr. Su
Xuxiang
(ᘽϛജ) /H1118/H1118
38 Executive Director
and vice
president
February 14,
2014
February 14,
2014
Overseeing our Group’s
marketing, branding and
information technology
Cousin of
Ms. Zhang Qi
(ੵೡ), our
Supervisor
Ms. Luo
Y anling
(ᖯዲᜳ) /H1118/H1118
40 Executive Director
and vice
president
February 14,
2014
April 1, 2025 Overseeing our Group’s
supply chain, food safety,
menu development and
the formulation of
operational standards
Spouse of Mr. Song
Mr. Wang
Xiaolong
(ˮʃᎲ) /H1118/H1118
50 Non-executive
Director
November 28,
2016
November 28,
2016
Providing professional
advice and making
recommendations to our
Board
None
Mr. Xu Lei
(ཤ) /H1118/H1118/H1118
50 Independent
non-executive
Director
April 1, 2025 April 1, 2025 Providing independent
advice and judgment to
our Board
None
Mr. Chan
Kwok Bun
(௓਷੸) /H1118/H1118
53 Independent
non-executive
Director
April 1, 2025 April 1, 2025 Providing independent
advice and judgment to
our Board
None
Mr. Zhong
Jiesheng
(͛) /H1118/H1118
53 Independent
non-executive
Director
April 1, 2025 April 1, 2025 Providing independent
advice and judgment to
our Board
None
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Executive Directors
Mr. Song Qi ( ҂փ), aged 39, is the chairman of our Board, an executive Director and the
chief executive officer of our Company. He has served as an executive Director since February
2014. Mr. Song is primarily responsible for formulating the overall development strategy of
our Group and supervising our Group’s operations.
From November 2011 to May 2012, Mr. Song worked at Y um! Restaurants (Guangdong)
Co., Ltd. ( ϵ௷᎛භ(؇)ʮ̡), a company primarily engaged in the operation of chain
restaurants, including brands such as KFC and Pizza Hut, and was responsible for the
expansion and development of its restaurants. From October 2010 to June 2011, Mr. Song was
responsible for managing restaurant operations at MHK Restaurants Limited (formerly known
as McDonald’s Restaurants (Hong Kong) Limited (ʮ̡)), a company incorporated
in Hong Kong primarily engaged in the food and beverage sector.
Mr. Song obtained his master’s degree in mechanical engineering from The Hong Kong
University of Science and Technology in November 2009 and his bachelor’s degree in
materials science and engineering from the South China University of Technology in China in
July 2008.
Mr. Su Xuxiang ( ᘽϛജ), aged 38, is our executive Director and vice president. He has
served as an executive Director since February 2014. He is primarily responsible for
overseeing our Group’s marketing, branding and information technology. Mr. Su also serves as
the supervisor, director and/or manager of several subsidiaries in our Group.
From July 2011 to January 2012, Mr. Su worked at Johnson & Johnson (Shanghai)
Medical Devices Co., Ltd. ( ੶͛(ɪऎ)ʮ̡), a company primarily engaged in
medical technology. From August 2010 to June 2011, he worked at C&D (Guangzhou) Co.,
Ltd. (೯(ᄿψ)ʮ̡), a company primarily engaged in the provision of supply
procurement and other consulting services.
Mr. Su obtained his bachelor’s degree in polymer materials and engineering from the
South China University of Technology in China in July 2010.
Ms. Luo Y anling ( ᖯዲᜳ), aged 40, is our executive Director and vice president. She
co-founded our Group in February 2014, has served as our vice president since July 2015 and
was appointed as our executive Director in April 2025. She is primarily responsible for
overseeing our Group’s supply chain, food safety, menu development and the formulation of
operational standards.
Prior to joining our Group, from June 2009 to June 2015, Ms. Luo served as a business
representative of Cluster Technology Limited, a company primarily engaged in the provision
of computing technologies.
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Ms. Luo obtained her master’s degree in telecommunications from The Hong Kong
University of Science and Technology in November 2009 and her bachelor’s degree in
information engineering from the South China University of Technology in China in July 2007.
Non-executive Director
Mr. Wang Xiaolong ( ˮʃᎲ), aged 50, is our non-executive Director. He has served as
the deputy chairman of our Board since November 2016 and was re-designated as our
non-executive Director in April 2025. He is primarily responsible for providing professional
advice and making recommendations to our Board.
Mr. Wang has been consistently focusing on investment in the consumer and retail sector
during the past 20 years, with a particular emphasis on subsectors of retail, fast-moving
consumer goods, catering and fast-food franchises. Since August 2016, Mr. Wang has served
as an executive director of Best Food Holding Company Limited (ʮ̡)( “ Best
Food ”), a company primarily engaged in the operation of, and investment in, food and
beverage brands, the shares of which are listed on the Stock Exchange (stock code: 1488).
Since August 2019, he has also served as the chief executive officer of Best Food. In July 2003,
Mr. Wang joined Beijing Hony Y uanfang Investment Consulting Co., Ltd. ( ̏ԯ̾ᆇჃ˙ҳ༟
ʮ̡)( “ Beijing Hony ”), a company controlled by Hony Capital and engaged in
management consultancy, investment consultancy and business information consultancy. As of
the Latest Practicable Date, Mr. Wang served as a managing director of Beijing Hony.
In March 2025, Mr. Wang was recognized as a 2025 Big Consumer Investment Figure of
the Y ear (2025يin China by Frost & Sullivan. In 2024, Mr. Wang received
the Best CEO Award ( ௰ԳCEOᆤ) at The 9th Zhitong Caijing Capital Market Annual
Conference. From 2021 to 2023, while Mr. Wang served as the chief executive officer of Best
Food, Best Food was awarded the China Catering Industry Red Bull Award — Top 10
Investment Institutions in the Catering Industry (ˬᆤ — ᎛භପุҳ༟ዚ࿴
TOP 10) for three consecutive years.
Mr. Wang obtained his master’s degree in business administration from Tsinghua
University in China in July 2004 through an international MBA program co-developed by the
Massachusetts Institute of Technology and Tsinghua University.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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Independent non-executive Directors
Mr. Xu Lei (ཤ), aged 50, was appointed as our independent non-executive Director in
April 2025. He is primarily responsible for providing independent advice and judgment to our
Board.
Mr. Xu has extensive experience in corporate and business management. From April 2022
to May 2023, Mr. Xu was an executive director of JD.com, Inc. (“ JD.com ”), a company
primarily engaged in the provision of supply chain-based technology and services, the shares
of which are listed on the Stock Exchange (stock code: 9618) and the NASDAQ Stock Market
(stock code: JD). From December 2021 to May 2023, he was a director of Y onghui Superstores
Co., Ltd. (ʮ̡), a company primarily engaged in the operation of
supermarkets in China, the shares of which are listed on the Shanghai Stock Exchange (stock
code: 601933). From June 2020 to August 2022, he served as a director of Dada Nexus Limited,
a company primarily engaged in the operation of a local on-demand retail and delivery
platform in China, the shares of which are listed on the NASDAQ Stock Market (stock code:
DADA). From June 2019 to April 2022, he served as a non-executive director of JD Health
International Inc., a company primarily engaged in the provision of healthcare services, the
shares of which are listed on the Stock Exchange (stock code: 6618). From June 2019 to
September 2022, he served as a director of A TRenew Inc., a company primarily engaged in the
operation of a pre-owned consumer electronics transactions and services platform in China, the
shares of which are listed on the New Y ork Stock Exchange (stock code: RERE).
From January 2009 to May 2023, Mr. Xu held various senior roles in JD.com including
head of marketing department, head of JD Wireless, chief marketing officer of JD.com, chief
executive officer of JD.com’s retail business, president of JD.com and chief executive officer
of JD.com. Prior to joining JD.com, Mr. Xu served as its marketing consultant in May 2007.
Mr. Xu was named among the “50 Most Influential Business Leaders in China” in two
consecutive years by Fortune China and was also named by China Entrepreneur magazine as
one of the “25 Most Influential Business Leaders” in 2022. In June 2019, Mr. Xu was conferred
the qualification of senior economist in the speciality of enterprise management.
Mr. Xu obtained his master’s degree in business administration from the China Europe
International Business School in China in June 2013.
Mr. Chan Kwok Bun ( ௓਷੸), aged 53, was appointed as our independent non-executive
Director in April 2025. He is primarily responsible for providing independent advice and
judgment to our Board.
With over 30 years of experience in management, finance, strategic planning and a strong
background in information technology, Mr. Chan has held management positions throughout
his career with prestigious multinational companies. Most recently, for over seven years from
July 2017 to November 2024, he was the chief financial and technology officer at MHK
Restaurants Limited (formerly known as McDonald’s Restaurants (Hong Kong) Limited ( ௥຅
ʮ̡)), a company incorporated in Hong Kong primarily engaged in the food and
beverage sector, where he oversaw financial and technological transformation, driving both
operational efficiency and innovation.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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From February 2015 to May 2017, he worked at Maersk Hong Kong Limited (“ Maersk ”),
a company primarily engaged in shipping and supply chain management, with his last position
being the chief financial officer of Asia Pacific Finance. At Maersk, he was responsible for
financial strategies that supported Maersk’s operations across the Asia Pacific Region. His
management experience also includes his tenure from March 2008 to January 2015 as the
finance and IT director at V olkswagen Hong Kong Limited and from January 2013 to January
2015 as the group finance director at V olkswagen Group Hong Kong Limited, where he led
various projects relating to car dealership.
Earlier in his career, from January 2004 to February 2008, he worked at Hongkong
International Theme Parks Limited (ʮ̡), a joint venture between The
Walt Disney Company and the Hong Kong SAR Government, which manages the Hong Kong
Disneyland Resort, with his last position as the manager of pricing, revenue, and profit
management line of business. Mr. Chan started his career as a group management trainee with
the John Swire & Sons (H.K.) Limited of The Swire Group back in September 1994.
Mr. Chan has been a member of the Hong Kong Institute of Certified Public Accountants
since May 2003, has been a member of the Hong Kong University of Science and Technology
MBA Alumni Advisory Board since 2012, was awarded a diploma in company direction by The
Hong Kong Institute of Directors in June 2017 and completed the Asian International
Executive Programme at INSEAD in Singapore in November 2011.
Mr. Chan obtained his master’s degree in business administration from The Hong Kong
University of Science and Technology in November 2000 and obtained his bachelor’s degree
in social science from the Chinese University of Hong Kong in December 1994.
Mr. Zhong Jiesheng (͛), aged 53, was appointed as our independent non-executive
Director in April 2025. He is primarily responsible for providing independent advice and
judgment to our Board.
Mr. Zhong has close to 30 years of experience in corporate management. Since July 2022,
Mr. Zhong has served as a supervisor of Shanghai Aonling Enterprise Management Co., Ltd.
(ʮ̡), a company primarily engaged in corporate management
consulting. Since October 2021, he has served as an executive director of Shanghai Baoju
Enterprise Management Consulting Co., Ltd. (ʮ̡), a company
primarily engaged in corporate management consulting. Since December 2024, he has served
as the chairman of the supervisory committee of Chengdu Macko Macromolecule Materials
Co., Ltd. (ʮ̡)( “ Chengdu Macko ”), a company primarily
engaged in the provision of new polymer materials and technology, the shares of which are
listed on the National Equities Exchange and Quotations (stock code: 836843). Since August
2021, he has served as an executive director of Shanghai Shenyoucheng Enterprise
Management Co., Ltd. (ʮ̡), a company primarily engaged in
corporate management consulting.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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From July 2022 to May 2024, Mr. Zhong served as a non-executive director of Plus Group
Holdings Inc., a company primarily engaged in the provision of sales and marketing services
for fast-moving consumer goods brand owners and distributors, the shares of which are listed
on the Stock Exchange (stock code: 2486). From September 2015 to July 2021, he served in
various positions, including consultant, director and general manager, at Chengdu Macko.
From July 1995 to June 2015, he worked in the customer business development department of
Procter & Gamble (Guangzhou) Ltd. (ʮ̡). He has served as the sales general
manager of Procter & Gamble Hong Kong Limited in Hong Kong and worked at The Procter
& Gamble Company (“ P&G”) in the United States. P&G is a multinational consumer goods
company, the shares of which are listed on the New Y ork Stock Exchange (stock code: PG).
Mr. Zhong obtained his bachelor’s degree in computer software from Sichuan University
in China in July 1995.
SUPERVISORS
Our supervisory committee consists of three supervisors. All of our Supervisors meet the
qualification requirements under relevant PRC Law for their positions. The following table sets
forth certain information regarding our Supervisors:
Name Age Position(s)
Date of joining
our Group
Date of
appointment as
our Supervisor Roles and responsibilities
Relationships with
other Directors,
Supervisors or senior
management members
Ms. Qin Y an
(ॢዲ) /H1118/H1118/H1118
40 Chairwoman of our
supervisory
committee
February 22,
2021
September 7,
2023
Presiding over the work of
our supervisory
committee, supervising
and monitoring the
performance of our
Board
None
Mr. Peng Y ue
(ుᚔ)
(formerly
named
Peng
Nianyue
(ుϋᚔ)) /H1118
49 Supervisor May 5, 2017 September 7,
2023
Supervising and monitoring
the performance of our
Board
None
Ms. Zhang Qi
(ੵೡ) /H1118/H1118/H1118
31 Supervisor March 14,
2016
November 28,
2016
Supervising and monitoring
the performance of our
Board
Cousin of Mr. Su
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Ms. Qin Y an ( ॢዲ), aged 40, was appointed as our Supervisor in September 2023 and
is the chairwoman of our supervisory committee. She joined our Group in February 2021 as our
senior finance manager and has been responsible for overseeing the financial accounting of our
Group since then. She is primarily responsible for presiding over the work of our supervisory
committee, supervising and monitoring the performance of our Board.
Prior to joining our Group, from March 2014 to October 2020, Ms. Qin served as the
finance manager of Guangzhou Huasheng Enterprise Management Services Co., Ltd. ( ᄿψശ
ʮ̡), a company primarily engaged in the provision of automobile repair
services. From January 2008 to February 2014, she worked at Guangzhou Night Sky Rainbow
Optoelectronics Technology Co., Ltd. (ʮ̡), a company
primarily engaged in the provision of lighting design and lighting engineering services.
Ms. Qin obtained an Intermediate Level Accounting Qualification Certificate issued by
the Human Resource and Social Security Department of Guangdong Province (ɛɢ༟
ღᝂ) in January 2014.
Ms. Qin obtained her bachelor’s degree majoring in accounting from Sun Y at-sen
University in China in July 2016 through online learning.
Mr. Peng Yue ( ుᚔ) (formerly named Peng Nianyue ( ుϋᚔ)), aged 49, was appointed
as our Supervisor in September 2023. He joined our Group in May 2017 and has served as our
research and development director since then. He is primarily responsible for supervising and
monitoring the performance of our Board and managing our Group’s development of menu
items.
Prior to joining our Group, from September 2007 to August 2017, Mr. Peng served as the
head of the research and development department of Beijing Xidan Spice Spirit Catering Co.,
Ltd. (ʮ̡), a company primarily engaged in the restaurant
industry.
Ms. Zhang Qi ( ੵೡ), aged 31, was appointed as our Supervisor in November 2016. Ms.
Zhang joined our Group in March 2016 as treasury specialist and was promoted to treasury
supervisor in January 2021. She has served as our finance manager and is responsible for
overseeing funds management for our Group since October 2023. She is primarily responsible
for supervising and monitoring the performance of our Board. Ms. Zhang also serves as the
supervisor, director and/or manager of several subsidiaries in our Group.
Ms. Zhang obtained her college diploma majoring in computerized accounting from the
Guangdong Polytechnic Institute in China in June 2016.
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SENIOR MANAGEMENT
Our executive Directors and senior management are responsible for the day-to-day
management and operation of our business. For information concerning our executive
Directors, see “— Directors — Executive Directors.” The table below sets out certain
information regarding our senior management:
Name Age Position(s)
Date of joining
our Group
Date of
appointment
as senior
management Roles and responsibilities
Relationships with
other Directors,
Supervisors or senior
management members
Mr. Song Qi
(҂փ) /H1118/H1118/H1118
39 Chairman of our
Board, executive
Director and
chief executive
officer
February 14,
2014
February 14,
2014
Formulating the overall
development strategy of
our Group and
supervising our Group’s
operations
Spouse of Ms. Luo
Mr. Su
Xuxiang
(ᘽϛജ) /H1118/H1118
38 Executive Director
and vice
president
February 14,
2014
February 14,
2014
Overseeing our Group’s
marketing, branding and
information technology
Cousin of Ms.
Zhang Qi ( ੵೡ),
our Supervisor
Ms. Luo
Y anling
(ᖯዲᜳ) /H1118/H1118
40 Executive Director
and vice
president
February 14,
2014
July 1, 2015 Overseeing our Group’s
supply chain, food safety,
menu development and
the formulation of
operational standards
Spouse of Mr. Song
Mr. Xu Zhi
(஢౽) /H1118/H1118/H1118
36 Chief financial
officer and vice
president
October 14,
2020
October 14,
2020
Managing our Group’s
finances, human
resources, legal affairs
and commercial analysis
None
Mr. Song Qi ( ҂փ), aged 39, is the chairman of our Board, an executive Director and the
chief executive officer of our Company. See “— Directors — Executive Directors” for his
biographical details.
Mr. Su Xuxiang ( ᘽϛജ), aged 38, is our executive Director and vice president. See “—
Directors — Executive Directors” for his biographical details.
Ms. Luo Y anling ( ᖯዲᜳ), aged 40, is our executive Director and vice president. See “—
Directors — Executive Directors” for her biographical details.
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Mr. Xu Zhi ( ஢౽), aged 36, is our chief financial officer and vice president. Mr. Xu
joined our Group in October 2020 as our finance director and was promoted to vice president
and chief financial officer in March 2022. He is primarily responsible for managing our
Group’s finances, human resources, legal affairs and commercial analysis.
Prior to joining our Group, from April 2020 to October 2020, Mr. Xu served as the vice
president of finance of Guangzhou Guangfeng Jiyue Digital Technology Co., Ltd. (ࠬ
ʮ̡), a company primarily engaged in the provision of technical services,
and was responsible for overseeing its financial and legal affairs. From June 2019 to January
2020, Mr. Xu served as the internal control deputy director of Guangzhou Lalami Information
Technology Stock Co., Ltd. (ʮ̡) (formerly known as
Guangzhou Lalami Information Technology Co., Ltd. (ʮ̡)), a
company primarily engaged in cross-border brand management. From October 2016 to May
2019, Mr. Xu served as a manager of AE Majoris (Guangzhou) Advisory Company Limited (׼
ɽ(ᄿψ)ʮ̡), which is wholly-owned by AE Majoris Advisory Company
Limited, a company primarily engaged in the provision of the corporate finance and advisory
services. From October 2012 to January 2015, Mr. Xu served as a senior auditor of Deloitte
Touche Tohmatsu Certified Public Accountants LLP Guangzhou Branch (ԫਕ
ה(౷ஷΥྫ)ה.)
Mr. Xu has been a certified public accountant in China accredited by The Chinese
Institute of Certified Public Accountants since February 2019. Mr. Xu obtained his bachelor’s
degree in business administration (majoring in accounting) from the Macau University of
Science and Technology in June 2012.
GENERAL
Save as disclosed above, each of our Directors and Supervisors confirms with respect to
himself or herself that he or she (1) did not hold any other directorships in the three years prior
to the Latest Practicable Date in any public companies of which the securities are listed on any
securities market in Hong Kong and/or overseas; and (2) there are no other matters concerning
our Directors or Supervisors’ appointment that need to be brought to the attention of our
Shareholders and the Stock Exchange or required be disclosed pursuant to Rules 13.51(2)(h)
to (v) of the Listing Rules.
Save as disclosed in “Statutory and General Information — C. Further Information about
Our Directors, Supervisors and Substantial Shareholders — 1. Disclosure of interests of our
Directors, Supervisors and Chief Executive” in Appendix VI, each of our Directors and
Supervisors confirms with respect to himself or herself that he or she did not hold any interest
in our Shares which would be required to be disclosed pursuant to Part XV of the SFO.
Save as disclosed above and in this prospectus, each of our Directors and Supervisors
confirms with respect to himself or herself that he or she had no other relationship with any
Directors, Supervisors, senior management or substantial shareholders of our Company as of
the Latest Practicable Date.
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JOINT COMPANY SECRETARIES
Mr. Zhang Hua ( ௝㏞), aged 36, joined our Group in February 2024 as our finance
director. He was appointed as a joint company secretary of our Company in April 2025.
Mr. Zhang has over 12 years of experience in accounting and finance. From November
2020 to November 2023, he served as the assistant chief financial officer of Tibet Green Tea
Catering Management Co., Ltd. (ʮ̡), a company primarily engaged
in the management of catering investment. In October 2012, Mr. Zhang began his career at
PricewaterhouseCoopers Zhong Tian LLP , Xiamen Branch and served as the manager of the
audit department before his departure in November 2020.
Mr. Zhang has been a certified public accountant in China accredited by The Chinese
Institute of Certified Public Accountants since July 2017.
Mr. Zhang obtained his bachelor’s degree majoring in accounting from Qingdao
University in China in June 2012.
Ms. Tang King Yin ( ቎౻ሬ), aged 39, was appointed as a joint company secretary of our
Company in April 2025.
Ms. Tang is a senior manager of Company Secretarial Services of Tricor Services Limited.
Ms. Tang has over 10 years of experience in the corporate secretarial field. She has been
providing professional corporate services to companies listed on the Stock Exchange as well
as multinational, private and offshore companies. Ms. Tang currently serves as the joint
company secretary of MIXUE Group, a company primarily engaged in the freshly-made drinks
market, the shares of which are listed on the Stock Exchange (stock code: 2097).
Ms. Tang is a Chartered Secretary, a Chartered Governance Professional and an associate
of both The Hong Kong Chartered Governance Institute and The Chartered Governance
Institute in the United Kingdom.
Ms. Tang obtained her master’s degree of corporate governance and compliance from the
Hong Kong Baptist University in November 2021 and a bachelor’s degree in business
administration from Hong Kong Shue Y an University in July 2011.
BOARD COMMITTEES
We have formed three board committees, namely, the audit committee of the Board (the
“Audit Committee ”), the remuneration and appraisal committee of the Board (the
“Remuneration and Appraisal Committee ”) and the nomination committee of the Board (the
“Nomination Committee ”).
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Audit Committee
Our Company established an Audit Committee with written terms of reference in
compliance with Rule 3.21 of the Listing Rules and the Corporate Governance Code as set out
in Appendix C1 to the Listing Rules (the “ CG Code ”). The Audit Committee consists of three
members, namely Mr. Chan Kwok Bun, Mr. Xu Lei and Mr. Zhong Jiesheng, our independent
non-executive Directors. Mr. Chan Kwok Bun has been appointed as the chairman of the Audit
Committee and is our independent non-executive Director possessing the appropriate
professional qualifications. The primary duties of the Audit Committee are to review and
supervise the financial reporting process and internal control system of our Group, oversee the
audit process, review and oversee the existing and potential risks of our Group and perform
other duties and responsibilities as assigned by our Board.
Remuneration and Appraisal Committee
Our Company established a Remuneration and Appraisal Committee with written terms of
reference in compliance with Rule 3.25 of the Listing Rules and the CG Code. The
Remuneration and Appraisal Committee consists of Mr. Zhong Jiesheng and Mr. Chan Kwok
Bun, our independent non-executive Directors, and Mr. Song. Mr. Zhong Jiesheng has been
appointed as the chairman of the Remuneration and Appraisal Committee. The primary duties
of the Remuneration and Appraisal Committee are to establish and review the policy and
structure of the remuneration for our Directors, Supervisors and senior management and make
recommendations on employee benefit arrangements.
Nomination Committee
Our Company established a Nomination Committee with written terms of reference in
compliance with Rule 3.27A of the Listing Rules and the CG Code. The Nomination
Committee consists of Mr. Xu Lei and Mr. Zhong Jiesheng, our independent non-executive
Directors, and Ms. Luo. Mr. Xu Lei has been appointed as the chairman of the Nomination
Committee. The primary duties of the Nomination Committee are to make recommendations to
our Board on the appointment and removal of Directors.
BOARD DIVERSITY
We have adopted our board diversity policy (the “ Board Diversity Policy ”) which sets
out the objectives and approaches to achieve and maintain diversity on our Board. Our Board
Diversity Policy provides that our Company should endeavor to ensure that our Board members
have the appropriate balance of skills, experience and diversity of perspectives that are
required to support the execution of our business strategies.
We seek to achieve Board diversity through the consideration of a number of factors,
including but not limited to professional experience, skills, knowledge, gender, age, cultural
and education background, ethnicity and length of service. Our Nomination Committee is
delegated by our Board to be responsible for monitoring our compliance with the relevant code
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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provisions governing board diversity under the CG Code. After Listing, our Nomination
Committee will review our Board Diversity Policy from time to time to ensure its continued
effectiveness and we will disclose in our corporate governance report about the implementation
of our Board Diversity Policy on an annual basis.
Our Board comprises seven members, including three executive Directors, one non-
executive Director and three independent non-executive Directors. Our Directors have a
balanced mix of experiences, including experiences in overall management and strategic
development, finance, audit, private equity and investment, corporate and business
management and information technology in addition to industry experience relevant to our
Group’s operations and business. Our Board has a gender composition consisting of one female
member and six male members. Our Directors range from 38 years old to 53 years old, and are
able to bring diverse perspectives to our Board. After due consideration, our Board believes
that based on the meritocracy of our Directors, the composition of our Board satisfies our
Board Diversity Policy.
W AIVER GRANTED BY THE STOCK EXCHANGE
We have applied to the Stock Exchange for, and the Stock Exchange has granted, a waiver
from strict compliance with the requirement of Rules 8.12 and 19A.15 of the Listing Rules in
relation to the requirement of management presence in Hong Kong. For details of the waiver,
see “Waiver from Strict Compliance with the Listing Rules — Waiver in Relation to
Management Presence in Hong Kong.”
We have applied to the Stock Exchange for, and the Stock Exchange has granted, a waiver
from strict compliance with the requirement of Rules 3.28 and 8.17 of the Listing Rules in
relation to the academic or professional qualifications of our Company’s joint company
secretaries. For details of the waiver, see “Waiver from Strict Compliance with the Listing
Rules — Waiver in respect of Joint Company Secretaries.”
CORPORATE GOVERNANCE
Our Company aims to achieve high standards of corporate governance, which are crucial
to our development, and safeguard the interests of our Shareholders. Our Company intends to
comply with all code provisions in the CG Code after Listing save for code provision C.2.1 of
the CG code, which stipulates that the roles of chairman of the Board and chief executive
should be separate and should not be performed by the same individual.
Mr. Song Qi is the chairman of our Board and also assumes the role of chief executive
officer of our Company. In view of Mr. Song’s experience, personal profile and substantial
contribution to our Group since his appointment to his roles, we consider it to be beneficial to
the management and business development of our Group to have Mr. Song act as the chairman
of the Board and continue his role as the chief executive officer of our Company after Listing.
Our Board believes this arrangement with Mr. Song will continue the strong and consistent
leadership he has provided to our Group since our founding.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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While this would constitute a deviation from code provision C.2.1 of the CG Code, our
Board believes that this structure will not impair the balance of power and authority between
our Board and the management of our Company, given that: (i) there are sufficient checks and
balances on our Board, as decisions to be made by our Board requires the approval of at least
a majority of our Directors, and our Board comprises three independent non-executive
Directors as required under the Listing Rules; (ii) Mr. Song and our other Directors are aware
of and undertake to fulfil their fiduciary duties as Directors, which require, among others, that
they act for the benefit and in the best interests of our Company and will make decisions for
our Group accordingly; and (iii) the balance of power and authority is ensured by the
operations of our Board which comprises experienced and high caliber individuals who meet
regularly to discuss issues affecting the operations of our Company. Furthermore, the key
business, financial, and operational policies of our Group as well as the overall strategic
development goals of our Group are made collectively by our Board and senior management
after thorough discussions.
Our Board will continue to evaluate and consider if dividing the roles of the chairman of
our Board and the chief executive of our Company at an appropriate time is necessary, taking
into account the circumstances of our Group as a whole.
EMPLOYEE INCENTIVE PLATFORM
In order to incentivize our Directors, Supervisors, senior management and other
participants for their contribution to our Group and to attract and retain talented personnel for
our Group, we adopted the Pre-IPO Employee Incentive Scheme in August 2019. For further
details, see “Statutory and General Information — D. Pre-IPO Employee Incentive Scheme”.
COMPENSATION OF OUR DIRECTORS, SUPERVISORS AND SENIOR
MANAGEMENT
Our Directors, Supervisors and members of our senior management receive compensation
from our Company in the form of salaries, allowances and other benefits, retirement scheme
contributions, share-based payments and discretionary bonuses.
The aggregate amount of remuneration our Directors and Supervisors have received
(including salaries, allowances and other benefits, retirement scheme contributions, share-
based payments and discretionary bonuses) for the years ended December 31, 2022, 2023, 2024
and the six months ended June 30, 2025 were approximately RMB1.5 million, RMB2.9 million,
RMB4.7 million and RMB2.7 million, respectively.
The aggregate amount of salaries and other emoluments, retirement scheme contributions,
share-based payments and discretionary bonuses paid to the six highest paid individuals
(joint-fifth highest) of our Company, including Directors, Supervisors and senior management,
for the years ended December 31, 2022, 2023 and 2024 were approximately RMB4.3 million,
RMB5.4 million and RMB6.0 million, respectively.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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The aggregate amount of salaries and other emoluments, retirement scheme contributions,
share-based payments and discretionary bonuses paid to the five highest paid individuals of our
Company, including Directors and senior management, for the six months ended June 30, 2025
were approximately RMB3.2 million.
It is estimated that remuneration equivalent to approximately RMB5.3 million (including
salaries, allowances and other benefits, retirement scheme contributions, share-based payments
and discretionary bonuses) in aggregate will be paid and granted to our Directors and
Supervisors by us in respect of the financial year ending December 31, 2025 under the
arrangements in force at the date of this prospectus.
No remuneration was paid or payable by us to our Directors, Supervisors or the five
highest paid individuals as an inducement to join or upon joining us or as compensation for loss
of office in respect of the years ended December 31, 2022, 2023, 2024 and the six months
ended June 30, 2025. Further, none of our Directors, Supervisors waved or agreed to waive any
remuneration during the same period.
Save as disclosed above, no other payments have been made or are payable by our Group
to our Directors or Supervisors in respect of the years ended December 31, 2022, 2023, 2024
and the six months ended June 30, 2025.
Our Board will review and determine the remuneration and compensation packages of our
Directors, Supervisors and senior management which, following the Listing, will receive
recommendations from our Remuneration and Appraisal Committee which will take into
account salaries paid by comparable companies, time commitment and responsibilities of our
Directors, Supervisors and senior management and the performance of our Group.
CONFIRMATION FROM OUR DIRECTORS
Rule 3.09D of the Listing Rules
Each of our Directors confirms that he or she (i) has obtained the legal advice referred
to in Rule 3.09D of the Listing Rules on April 2, 2025, and (ii) understands his or her
obligations as a director of a listed issuer under the Listing Rules.
Rule 3.13 of the Listing Rules
Each of the independent non-executive Directors confirms (i) his independence with
regard to each of the factors referred to in Rule 3.13(1) to (8) of the Listing Rules; (ii) that he
has no past or present financial or other interest in the business of our Company or its
subsidiaries or any connection with any core connected person of our Company under the
Listing Rules as of the Latest Practicable Date; and (iii) that there are no other factors that may
affect his independence at the time of his appointment.
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Rule 8.10 of the Listing Rules
Mr. Wang Xiaolong, our non-executive Director, serves as an executive director of Best
Food. Apart from its interest in our Group, Best Food also operates and/or invests in several
food and beverage brands in China in the Chinese QSR market, which include “HHG” Chinese
fast food, “King of Clay Pot” claypot rice, “Foook” malatang, “Dafulan” Hunan-style rice
noodles and snacks, and “Bingz” northwestern Chinese fast food. Other than “HHG”, which is
operated by a non-wholly owned subsidiary of Best Food (“ HHG Company ”), Best Food only
holds a minority interest in these brands. According to Best Food’s 2024 Annual Report, the
audited revenue of Best Food and its subsidiaries amounted to RMB474 million for the year
ended December 31, 2024.
Notwithstanding the above, our Directors are of the view that Best Food’s food and
beverages businesses do not compete or are unlikely to compete, either directly or indirectly,
with our Group’s business due to the following reasons:
(i) Best Food is primarily a passive investor of these brands (other than “HHG”).
Despite Best Food may appoint Mr. Wang to become a director of the holding
companies of these brands as a representative of Best Food, neither Best Food nor
Mr. Wang participates in the daily management and operation of these brands;
(ii) although Best Food owns the brand “HHG” which is a Chinese fast food brand with
Mr. Wang being the chairman of the board of HHG Company, HHG focuses on
rice-based meals, which can be clearly distinguished from our Group’s signature
Sichuan-Chongqing style noodles; and
(iii) the brands invested by Best Food that operate in the Chinese QSR market serve
cuisines and dishes such as malatang, Hunan-style snacks and rice noodles, claypot
rice, and northwestern style fast food, which are different from that of our Group
i.e., Sichuan-Chongqing style noodles. Further, these brands have distinctive and
different brand images, restaurant setting and dining environment, which can be
clearly distinguished from restaurants under our brand, attracting different customer
groups.
In view of the above and after taking into account that Mr. Wang is not involved in the
daily management and operation of our Company given his non-executive role in our Company,
our Directors believe that our business and the food and beverage businesses of Best Food are
clearly delineated from each other and the risk of potential conflicts of interest is
comparatively low.
Save as disclosed above, each of our Directors (excluding our independent non-executive
Directors) confirms that as of the Latest Practicable Date, he or she did not have any interest
in a business which competes or is likely to compete, either directly or indirectly, with our
Company’s business which would require disclosure under Rule 8.10 of the Listing Rules.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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COMPLIANCE ADVISOR
We have appointed Altus Capital Limited as our compliance advisor (the “ Compliance
Advisor ”) upon listing of our Shares on the Stock Exchange in compliance with Rule 3A.19
of the Listing Rules. Pursuant to Rule 3A.23 of the Listing Rules, the Compliance Advisor will
provide advice to us when consulted by us in the following circumstances:
 before the publication of any regulatory announcement, circular or financial report;
 where a transaction, which might be a notifiable or connected transaction, is
contemplated, including share issues, sales or transfers of treasury shares and share
repurchases;
 where we propose to use the proceeds of the Global Offering in a manner different
from that detailed in this prospectus or where our business activities, developments
or results deviate from any forecast, estimate, or other information in this
prospectus; and
 where the Stock Exchange makes an inquiry of our Company concerning unusual
movements in the price or trading volume of our Shares, the possible development
of a false market in our Shares, or any other matters in accordance with Rule 13.10
of the Listing Rules.
The term of the appointment of the Compliance Advisor shall commence on the Listing
Date and end on the date on which our Company distributes its annual report in respect of its
financial results for the first full financial year commencing after the Listing Date.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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OUR CONTROLLING SHAREHOLDERS
Huai’an Chuangtao was established by Mr. Song and Mr. Su in April 2016 as their
shareholding platform. As of the Latest Practicable Date, Huai’an Chuangtao held
approximately 49.04% of the total issued Shares of our Company. Mr. Song, as the general
partner, and Mr. Su, as the limited partner, held 66.67% and 33.33% of the partnership interests
in Huai’an Chuangtao, respectively.
As of the Latest Practicable Date, Mr. Song was entitled to exercise the voting rights
attached to approximately 4.24% of the total issued Shares of our Company by virtue of being
the general partner of Huai’an Y ujian Haoren, our Company’s employee incentive platform.
Immediately following the completion of the Global Offering, Huai’an Chuangtao will be
entitled to exercise the voting rights attaching to 42.33% of the total issued Shares of our
Company (without taking into account any Shares which may be issued pursuant to the exercise
of the Over-allotment Option). Further, by virtue of their interests in Huai’an Chuangtao, a
shareholding platform between them, both Mr. Song and Mr. Su will be regarded as a group of
controlling shareholders pursuant to Chapter 1.1C of the Guide for New Listing Applicants
published by the Stock Exchange. In addition, Mr. Song through Huai’an Y ujian Haoren will
be entitled to exercise the voting rights attaching to 3.66% of the total issued Shares of our
Company (without taking into account any Shares which may be issued pursuant to the exercise
of the Over-allotment Option).
Based on the above, Mr. Song, Mr. Su, Huai’an Chuangtao, and Huai’an Y ujian Haoren
will together form our group of Controlling Shareholders upon Listing.
For details on Mr. Song, Mr. Su, Huai’an Chuangtao, and Huai’an Y ujian Haoren, see
“Directors, Supervisors and Senior Management — Directors”, “History, Development and
Corporate Structure — Establishment and Major Shareholding Changes of our Company — 4.
Establishment of shareholding platform and transfer of Shares in September 2016” and
“History, Development and Corporate Structure — Employee Incentive Platform”.
COMPETING INTERESTS
Our Controlling Shareholders have confirmed that as of the Latest Practicable Date, none
of them or any of their respective close associates had any interest in a business, apart from
the business of our Group, which competes or is likely to compete, directly or indirectly, with
our business, which would require disclosure under Rule 8.10 of the Listing Rules.
RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS
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INDEPENDENCE FROM OUR CONTROLLING SHAREHOLDERS
Having considered the following factors, our Directors are satisfied that we are capable
of carrying out our business independently from our Controlling Shareholders and their
respective close associates after the Listing.
Management Independence
The day-to-day management of the business of our Group rests primarily with our Board
and our senior management. Our Board comprises seven Directors, comprising three executive
Directors, one non-executive Director and three independent non-executive Directors.
Although Mr. Song is the chairman of our Board and the chief executive officer of our
Company, and both Mr. Song and Mr. Su are our executive Directors and Controlling
Shareholders, our management and operational decisions are made by our Board and senior
management members collectively. The balance of power and authority is ensured by the
operation of the senior management and our Board. For further details, see “Directors,
Supervisors and Senior Management”.
We believe that our Board as a whole, together with our senior management, is able to
perform the managerial role in our Group independently from our Controlling Shareholders for
the following considerations:
(a) each of our Directors is aware of his/her fiduciary duties as a Director which require,
among others, that he/she must act for the benefit of and in the best interests of our
Company and not allow any conflict between his/her duties as a Director and his/her
personal interests;
(b) our day-to-day management and operation decisions rest primarily with our
executive Directors and senior management members, all of whom have substantial
experience in the industry in which we are engaged and will be able to make
business decisions that are in the best interest of our Group. For the background and
biographical details of our executive Directors and senior management, see
“Directors, Supervisors and Senior Management”;
(c) we had appointed three independent non-executive Directors, comprising more than
one-third of the total number of Directors on our Board, who have sufficient
knowledge, experience and competence with a view to bring independent judgment
to the decision-making process of our Board and provide independent advice to our
Board committees;
(d) in the event that there is a potential conflict of interest arising out of any transaction
to be entered into between our Group and a Director and/or his/her associate, he/she
shall abstain from voting and shall not be counted towards the quorum for the
voting; and
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(e) we have adopted a series of corporate governance measures to manage conflicts of
interest, if any, between our Group and our Controlling Shareholders which would
support our independent management. For further details, see “— Corporate
Governance Measures”.
Based on the above, our Directors are satisfied that our Board as a whole together with
our senior management team are able to perform the managerial role in our Group
independently.
Operational Independence
We have full rights to make all decisions regarding, and to carry out, our own business
operations independently. Our Company (through our subsidiaries) holds or enjoys the benefit
of all relevant licenses necessary to carry out our businesses, and has sufficient capital,
technology, equipment, access to customers and suppliers, and employees to operate our
business independently from our Controlling Shareholders and their respective close
associates. In addition, our organizational structure is made up of individual departments, each
with specific areas of responsibilities. None of our operational personnel or administrative
personnel is under the employment of our Controlling Shareholders or their respective close
associates. We have also established a set of internal control measures to facilitate the effective
operation of our business. For details of our Group’s risk management and internal control
systems, see “Business — Risk Management and Internal Control.” Our Directors do not
expect that there will be any significant transactions between our Group and our Controlling
Shareholders upon or shortly after the Listing.
Based on the above, our Directors are satisfied that we have been operating independently
from our Controlling Shareholders and their respective close associates during the Track
Record Period and up to the Latest Practicable Date, and will continue to operate
independently.
Financial Independence
During the Track Record Period and up to the Latest Practicable Date, our Group had our
own internal control, accounting and financial management system and we make financial
decisions independently according to our own business needs. We have independent bank
accounts and do not share any of our bank accounts, loan facilities or credit facilities with our
Controlling Shareholders or their respective close associates. In addition, our Group has
sufficient capital and credit facilities to operate our business independently, and has adequate
internal resources and credit profile to support our daily operations.
RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS
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Our Directors confirm that all guarantees provided by our Controlling Shareholders and
their respective close associates are being procured by the Company to be, and would be fully
repaid or released before the Listing. For further details of guarantees provided by our
Controlling Shareholders and their close associates during the Track Record Period, see Note
30 to the Accountants’ Report as set out in Appendix I. Our Directors believe that we are
capable of obtaining financing from external sources without reliance on our Controlling
Shareholders.
Based on the above, our Directors believe that we have the ability to operate
independently from our Controlling Shareholders and their respective close associates from a
financial perspective and are able to maintain financial independence from our Controlling
Shareholders and their respective close associates.
CORPORATE GOVERNANCE MEASURES
Our Directors recognize the importance of good corporate governance in protecting our
Shareholders’ interests. We have adopted the following measures to safeguard good corporate
governance standards and to avoid potential conflict of interest between our Group and our
Controlling Shareholders:
(a) as part of our preparation for the Global Offering, we have amended our Articles of
Association to comply with the Listing Rules. In particular, our Articles of
Association provide that, unless otherwise provided, a Director shall not vote on any
resolution approving any contract or arrangement or any other proposal in which
such Director or any of his/her close associates have a material interest nor shall
such Director be counted in the quorum present at the meeting;
(b) a Director with material interests shall make full disclosure in respect of matters that
conflict or potentially conflict with our interest and absent himself/herself from the
board meetings on matters in which such Director or his/her close associates have
a material interest, unless the attendance or participation of such Director at such
meeting of our Board is specifically requested by a majority of the independent
non-executive Directors;
(c) our Company has established internal control mechanisms to identify connected
transactions. Upon the Listing, if our Company enters into connected transactions
with our Controlling Shareholders or any of their associates, our Company will
comply with the applicable Listing Rules;
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(d) we are committed that our Board should include a balanced composition of
executive and non-executive Directors (including independent non-executive
Directors). We have appointed three independent non-executive Directors to our
Board. We believe our independent non-executive Directors possess sufficient
experience and are free of any business or other relationship which could interfere
in any material manner with the exercise of their independent judgment and will be
able to provide impartial and external opinions to protect the interests of our public
Shareholders. For details of our independent non-executive Directors, see
“Directors, Supervisors and Senior Management — Directors — Independent
non-executive Directors”;
(e) in the event that the independent non-executive Directors are requested to review
any conflicts of interest circumstances between our Group on the one hand and our
Controlling Shareholders and/or our Directors on the other hand, our Controlling
Shareholders and/or our Directors shall provide the independent non-executive
Directors with all the necessary information and our Company will disclose the
decisions of the independent non-executive Directors either through our interim and
annual reports or by way of announcements;
(f) pursuant to the Corporate Governance Code as set out in Appendix C1 to the Listing
Rules, our Directors, including our independent non-executive Directors, will be
able to seek independent professional advice from independent professionals in
appropriate circumstances at our Company’s expense; and
(g) we have appointed Altus Capital Limited as our compliance advisor to provide
advice and guidance to us in respect of compliance with the applicable laws and the
Listing Rules including various requirements relating to directors’ duties and
corporate governance.
Based on the above, our Directors believe that sufficient corporate governance measures
have been put in place to manage conflicts of interest that may arise between our Group and
our Controlling Shareholders and to protect our Shareholders’ interests as a whole after the
Listing.
RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS
– 283 –


--- page 293 ---
So far as our Directors are aware, immediately following the completion of the Global
Offering (without taking into account any H Shares which may be issued pursuant to the
exercise of the Over-allotment Option), the following persons will have an interest or a short
position in our Shares or underlying Shares which will be required to be disclosed to us and
the Stock Exchange pursuant to the provisions of Divisions 2 and 3 of Part XV of the SFO or
will be, directly or indirectly, interested in 10% or more of the nominal value of any class of
share capital carrying rights to vote in all circumstances at general meetings of our Company:
Name of Shareholder Nature of interest
As of the Latest Practicable Date (1)
Immediately after the Global Offering
and the Conversion of Unlisted Shares
into H Shares (without taking into
account any H Shares which may be
issued pursuant to the exercise of the
Over-allotment Option) (1)
Number of Shares
Approximate
percentage of
interest in the
total issued
share capital Number of Shares
Approximate
percentage of
interest in the
total issued
share capital
Mr. Song /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Interest in controlled
corporation (2)(3)
326,795,850
Unlisted Shares
53.28% – –
– – 326,795,850 H Shares 45.98%
Ms. Luo /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Interest of
spouse (2)(3)
326,795,850
Unlisted Shares
53.28% – –
– – 326,795,850 H Shares 45.98%
Huai’an Chuangtao Enterprise
Management Partnership
(Limited Partnership) ( ଊτ̹௴
ᗱΆุ၍ଣΥྫΆุ(Υྫ))
(“Huai’an Chuangtao ”) /H1118/H1118/H1118/H1118
Beneficial owner
(3) 300,800,000
Unlisted Shares
49.04% – –
– – 300,800,000 H Shares 42.33%
Mr. Su /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Interest in controlled
corporation (3)
300,800,000
Unlisted Shares
49.04% – –
– – 300,800,000 H Shares 42.33%
Ms. Li Jieru ( ҽᆎন) /H1118/H1118/H1118/H1118/H1118/H1118Interest of spouse (3) 300,800,000
Unlisted Shares
49.04% – –
– – 300,800,000 H Shares 42.33%
SUBSTANTIAL SHAREHOLDERS
– 284 –


--- page 294 ---
Name of Shareholder Nature of interest
As of the Latest Practicable Date (1)
Immediately after the Global Offering
and the Conversion of Unlisted Shares
into H Shares (without taking into
account any H Shares which may be
issued pursuant to the exercise of the
Over-allotment Option) (1)
Number of Shares
Approximate
percentage of
interest in the
total issued
share capital Number of Shares
Approximate
percentage of
interest in the
total issued
share capital
Wonderful Dawn Holdings
Limited (“ Wonderful Dawn ”) /H1118
Beneficial owner 94,725,310
Unlisted Shares
15.44% – –
– – 94,725,310 H Shares 13.33%
Best Food Holding Company
Limited (“ Best Food ”)/H1118/H1118/H1118/H1118/H1118
Interest in controlled
corporation (4)
94,725,310
Unlisted Shares
15.44% – –
– – 94,725,310 H Shares 13.33%
Sonic Tycoon Limited /H1118/H1118/H1118/H1118/H1118/H1118Interest in controlled
corporation (4)
94,725,310
Unlisted Shares
15.44% – –
– – 94,725,310 H Shares 13.33%
Fortune Eight Alps Limited
(“Fortune Eight ”)/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Interest in controlled
corporation (4)
94,725,310
Unlisted Shares
15.44% – –
– – 94,725,310 H Shares 13.33%
Hony Capital Fund VIII
(Cayman), L.P . (“ Hony Capital
Fund ”) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Interest in controlled
corporation (4)
94,725,310
Unlisted Shares
15.44% – –
– – 94,725,310 H Shares 13.33%
Hony Capital Fund VIII GP
(Cayman), L.P . (“ HCF VIII
GP”) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Interest in controlled
corporation (4)
94,725,310
Unlisted Shares
15.44% – –
– – 94,725,310 H Shares 13.33%
Hony Capital Fund VIII GP
(Cayman) Limited (“ HCF VIII
GP Ltd ”) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Interest in controlled
corporation (4)
94,725,310
Unlisted Shares
15.44% – –
– – 94,725,310 H Shares 13.33%
SUBSTANTIAL SHAREHOLDERS
– 285 –


--- page 295 ---
Name of Shareholder Nature of interest
As of the Latest Practicable Date (1)
Immediately after the Global Offering
and the Conversion of Unlisted Shares
into H Shares (without taking into
account any H Shares which may be
issued pursuant to the exercise of the
Over-allotment Option) (1)
Number of Shares
Approximate
percentage of
interest in the
total issued
share capital Number of Shares
Approximate
percentage of
interest in the
total issued
share capital
Hony Group Management Limited
(“Hony Group ”) /H1118/H1118/H1118/H1118/H1118/H1118/H1118
Interest in controlled
corporation (4)
94,725,310
Unlisted Shares
15.44% – –
– – 94,725,310 H Shares 13.33%
Hony Managing Partners Limited
(“Hony Managing ”)/H1118/H1118/H1118/H1118/H1118/H1118
Interest in controlled
corporation (4)
94,725,310
Unlisted Shares
15.44% – –
– – 94,725,310 H Shares 13.33%
Exponential Fortune Group
Limited (“ Exponential
Fortune ”)/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Interest in controlled
corporation (4)
94,725,310
Unlisted Shares
15.44% – –
– – 94,725,310 H Shares 13.33%
Zhao John Huan ( Ⴛ˿ᛇ) /H1118/H1118/H1118/H1118Interest in controlled
corporation (4)
94,725,310
Unlisted Shares
15.44% – –
– – 94,725,310 H Shares 13.33%
Guangzhou Chenghui Equity
Investment Management Co.,
Ltd. (ᛆҳ༟၍ଣϞ
ப΂ʮ̡)( “ Guangzhou
Chenghui ”) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Interest in controlled
corporation
(5)
55,548,400 Unlisted
Shares
9.06% – –
– – 55,548,400 H Shares 7.82%
Shenzhen Country Garden
Innovation Investment
Management Co., Ltd. ( ଉέ̹
ʮ̡)
(“Country Garden Innovation
Investment ”) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Interest in controlled
corporation
(5)
55,548,400 Unlisted
Shares
9.06% – –
– – 55,548,400 H Shares 7.82%
SUBSTANTIAL SHAREHOLDERS
– 286 –


--- page 296 ---
Name of Shareholder Nature of interest
As of the Latest Practicable Date (1)
Immediately after the Global Offering
and the Conversion of Unlisted Shares
into H Shares (without taking into
account any H Shares which may be
issued pursuant to the exercise of the
Over-allotment Option) (1)
Number of Shares
Approximate
percentage of
interest in the
total issued
share capital Number of Shares
Approximate
percentage of
interest in the
total issued
share capital
Country Garden Holdings
Company Limited (“ Country
Garden Holdings ”) /H1118/H1118/H1118/H1118/H1118/H1118
Interest in controlled
corporation (5)
55,548,400 Unlisted
Shares
9.06% – –
– – 55,548,400 H Shares 7.82%
Foshan Shunde District Rongyue
Enterprise Management Co.,
Ltd. ( Нʆ̹නᅃਜ࿲ᚔΆุ၍
ʮ̡)( “ Rongyue
Enterprise Management ”) /H1118/H1118
Interest in controlled
corporation
(5)
55,548,400 Unlisted
Shares
9.06% – –
– – 55,548,400 H Shares 7.82%
Gu Dongsheng (͛)(6) /H1118/H1118/H1118/H1118Beneficial owner 48,499,373 Unlisted
Shares
7.91% – –
– – 48,499,373 H Shares 6.82%
Guangzhou Pinxin Y uegu
Enterprise Management Co.,
Ltd. (ᇅΆุ၍ଣϞ
ʮ̡)( “ Pinxin Yuegu ”) /H1118/H1118/H1118
Beneficial owner 39,894,000 Unlisted
Shares
6.50% – –
– – 39,894,000 H Shares 5.61%
Jiumaojiu (Guangzhou) Holdings
Limited ( ɘˣɘ(ᄿψ)ࠢ
ʮ̡)( “ Jiumaojiu
Guangzhou ”) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Interest in controlled
corporation
(7)
39,894,000 Unlisted
Shares
6.50% – –
– – 39,894,000 H Shares 5.61%
JMJ Catering Holdings Limited
(ʮ̡)
(“JMJ Catering ”) /H1118/H1118/H1118/H1118/H1118/H1118/H1118
Interest in controlled
corporation (7)
39,894,000 Unlisted
Shares
6.50% – –
– – 39,894,000 H Shares 5.61%
JMJ Enterprises Limited (“ JMJ
Enterprises ”) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Interest in controlled
corporation (7)
39,894,000 Unlisted
Shares
6.50% – –
– – 39,894,000 H Shares 5.61%
SUBSTANTIAL SHAREHOLDERS
– 287 –


--- page 297 ---
Name of Shareholder Nature of interest
As of the Latest Practicable Date (1)
Immediately after the Global Offering
and the Conversion of Unlisted Shares
into H Shares (without taking into
account any H Shares which may be
issued pursuant to the exercise of the
Over-allotment Option) (1)
Number of Shares
Approximate
percentage of
interest in the
total issued
share capital Number of Shares
Approximate
percentage of
interest in the
total issued
share capital
Jiumaojiu International Holdings
Limited (“ Jiumaojiu
International ”) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Interest in controlled
corporation (7)
39,894,000 Unlisted
Shares
6.50% – –
– – 39,894,000 H Shares 5.61%
GYH J Limited /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Interest in controlled
corporation (7)
39,894,000 Unlisted
Shares
6.50% – –
– – 39,894,000 H Shares 5.61%
Guan Yihong ( ၍ᆇ҃) /H1118/H1118/H1118/H1118/H1118/H1118Interest in controlled
corporation (7)
39,894,000 Unlisted
Shares
6.50% – –
– – 39,894,000 H Shares 5.61%
Y ang Sanyin ( เɧვ) /H1118/H1118/H1118/H1118/H1118/H1118Interest of spouse (7) 39,894,000 Unlisted
Shares
6.50% – –
– – 39,894,000 Shares 5.61%
Notes:
(1) All interests are held in long positions.
(2) As of the Latest Practicable Date, Huai’an Y ujian Haoren, our Company’s employee incentive platform, was
a limited partnership established under PRC Law and directly held 25,995,850 Shares, representing 4.24% of
our issued capital. Mr. Song was the general partner of Huai’an Y ujian Haoren.
Accordingly, under Part XV of the SFO, Mr. Song is deemed to be interested in all the Shares held by Huai’an
Y ujian Haoren.
(3) As of the Latest Practicable Date, Huai’an Chuangtao was a limited partnership established under PRC Law.
It was established by Mr. Song and Mr. Su in April 2016 as their shareholding platform. Mr. Song, as the
general partner, and Mr. Su, as the limited partner, held 66.67% and 33.33% of the partnership interest therein,
respectively.
Accordingly, under Part XV of the SFO, Mr. Song and Mr. Su are deemed to be interested in all the Shares
held by Huai’an Chuangtao.
SUBSTANTIAL SHAREHOLDERS
– 288 –


--- page 298 ---
Ms. Luo is spouse of Mr. Song and Ms. Li Jieru ( ҽᆎন) is the spouse of Mr. Su. Therefore, Ms. Luo is deemed
to be interested in the Shares in which Mr. Song is deemed to be interested in and Ms. Li is deemed to be
interested in the Shares in which Mr. Su is deemed to be interested in.
(4) As of the Latest Practicable Date, Wonderful Dawn was a private company limited by shares incorporated
under the laws of Hong Kong. Wonderful Dawn was a wholly-owned subsidiary of Best Food, a company listed
on the Stock Exchange (stock code: 1488).
To the best knowledge of our Directors, Best Food was owned as to 75.00% by Sonic Tycoon Limited, which
was owned as to 74.84% by Fortune Eight, which was wholly-owned by Hony Capital Fund. The sole general
partner of Hony Capital Fund was HCF VIII GP , which was managed by HCF VIII GP Ltd, its sole general
partner. HCF VIII GP Ltd was wholly-owned by Hony Group, which was in turn owned as to 80.00% by Hony
Managing, which was in turn wholly-owned by Exponential Fortune, which was in turn owned as to 49.00%
by Zhao John Huan ( Ⴛ˿ᛇ).
Accordingly, under Part XV of the SFO, Best Food, Sonic Tycoon Limited, Fortune Eight, Hony Capital Fund,
HCF VIII GP , HCF VIII GP Ltd, Hony Group, Hony Managing, Exponential Fortune and Zhao John Huan ( Ⴛ
˿ᛇ) are deemed to be interested in all the Shares held by Wonderful Dawn.
(5) As of the Latest Practicable Date, Foshan Nanhai Huibi No. 1 Equity Investment Partnership (Limited
Partnership) (ᛆҳ༟ΥྫΆุ(Υྫ)) (“ Huibi No. 1 ”) and Huibi No. 2 directly
held 24,362,800 Shares and 31,185,600 Shares, representing 3.97% and 5.08% of our issued capital,
respectively. Huibi No. 1 and Huibi No. 2 were limited partnerships established under PRC Law. The general
partner of both Huibi No. 1 and Huibi No. 2 was Guangzhou Chenghui.
As of the Latest Practicable Date, Guangzhou Chenghui was an indirect subsidiary of Country Garden
Holdings, a company listed on the Stock Exchange (stock code: 2007).
As of the Latest Practicable Date, Huibi No. 1 had two limited partners, Country Garden Innovation Investment
and Rongyue Enterprise Management, and each held approximately 49.92% partnership interest therein. The
remaining partnership interest was held by Guangzhou Chenghui, the general partner. The limited partners of
Huibi No. 2 were also Country Garden Innovation Investment and Rongyue Enterprise Management, and, as
of the Latest Practicable Date, each held approximately 49.95% partnership interest therein. The remaining
partnership interest was held by Guangzhou Chenghui, the general partner.
As of the Latest Practicable Date, Country Garden Innovation Investment was an indirect wholly-owned
subsidiary of Country Garden Holdings.
Accordingly, under Part XV of the SFO, Country Garden Holdings and its intermediary subsidiary entities
through which it holds interest in Huibi No. 1 and Huibi No. 2, and Rongyue Enterprise Management are
deemed to be interested in all the Shares held by Huibi No. 1 and Huibi No. 2.
(6) As of the Latest Practicable Date, Mr. Gu Dongsheng (͛) was an individual investor who specialized in
the catering industry and was an Independent Third Party.
(7) As of the Latest Practicable Date, Pinxin Y uegu was a limited company incorporated under PRC Law. Pinxin
Y uegu was wholly-owned by Jiumaojiu Guangzhou, which was in turn wholly-owned by JMJ Catering, which
was in turn wholly-owned by JMJ Enterprises, which was in turn wholly-owned by Jiumaojiu International,
a company listed on the Stock Exchange (stock code: 9922). To the best knowledge of the Directors, Jiumaojiu
International was owned as to 39.24% by GYH J Limited, the voting shares of which were in turn
wholly-owned by Mr. Guan Yihong ( ၍ᆇ҃). To the best knowledge of the Directors, Ms. Y ang Sanyin ( เɧ
ვ) was the spouse of Mr. Guan Yihong.
Accordingly, under Part XV of the SFO, Jiumaojiu Guangzhou, JMJ Catering, JMJ Enterprises and Jiumaojiu
International, GYH J Limited and Mr. Guan Yihong are deemed to be interested in all the Shares held by Pinxin
Y uegu. Further, Ms. Y ang Sanyin is deemed to be interested in the Shares in which her spouse Mr. Guan Yihong
is deemed to be interested in.
SUBSTANTIAL SHAREHOLDERS
– 289 –


--- page 299 ---
Save as disclosed above and in “Statutory and General Information — C. Further
Information about Our Directors, Supervisors and Substantial Shareholders — 1. Disclosure of
Interests of our Directors, Supervisors and Chief Executive” in Appendix VI, our Directors are
not aware of any person who will, immediately following the completion of the Global
Offering and without taking into account any H Shares which may be issued pursuant to the
exercise of the Over-allotment Option, have an interest or a short position in the Shares or
underlying Shares which will be required to be disclosed to us and the Stock Exchange under
the provisions of Divisions 2 and 3 of Part XV of the SFO or will be, directly or indirectly,
interested in 10% or more of the nominal value of any class of share capital carrying rights to
vote in all circumstances at general meetings of our Company.
SUBSTANTIAL SHAREHOLDERS
– 290 –


--- page 300 ---
THE CORNERSTONE PLACING
We have entered into cornerstone investment agreements (each a “ Cornerstone
Investment Agreement ” and collectively, the “ Cornerstone Investment Agreements ”) with
the cornerstone investors set out below (each a “ Cornerstone Investor ” and collectively, the
“Cornerstone Investors ”), pursuant to which the Cornerstone Investors have agreed to,
subject to certain conditions, subscribe, or cause their designated entities to subscribe, at the
Offer Price for such number of Offer Shares (rounded down to the nearest whole board lot of
500 H Shares) that may be subscribed for an aggregate amount of approximately US$22.0
million (or approximately HK$171.0 million, calculated based on the exchange rate set out in
the section headed “Information about this Prospectus and the Global Offering – Exchange
Rate Conversion” in this Prospectus) (the “ Cornerstone Placing ”). The aggregate amount of
the investment contributed by the Cornerstone Investors does not include brokerage, SFC
transaction levy, AFRC transaction levy and Hong Kong Stock Exchange trading fee which the
Cornerstone Investors will pay in respect of the International Offer Shares to be subscribed by
them. The number of Offer Shares to be subscribed for by the Cornerstone Investors are subject
to the determination of the final Offer Price.
Assuming an Offer Price of HK$7.04, being the high-end of the indicative Offer Price
range set out in this Prospectus, the total number of Offer Shares to be subscribed by the
Cornerstone Investors would be 24,292,500 Offer Shares, representing approximately 24.95%
of the Offer Shares pursuant to the Global Offering (assuming the Over-allotment Option is not
exercised).
Assuming an Offer Price of HK$6.50 or lower, the total number of Offer Shares to be
subscribed by the Cornerstone Investors would be 26,295,500 Offer Shares, representing
approximately 27.01% of the Offer Shares pursuant to the Global Offering (assuming the
Over-allotment Option is not exercised). In such circumstances, the investment amounts of
certain Cornerstone Investors, excluding HHLRA and Haidilao Singapore (each as defined
below), may be adjusted downward at the sole and absolute discretion of the Sole Sponsor and
the Sponsor-Overall Coordinator pursuant to the terms of the relevant cornerstone investment
agreements. In any event, the total number of Offer Shares to be subscribed by the Cornerstone
Investors shall not exceed 26,295,500, in order to satisfy the minimum free float requirement
under Rule 8.08A (as amended and replaced by Rule 19A.13C) of the Listing Rules. For the
purpose of illustration, assuming an Offer Price of HK$5.64, being the low-end of the
indicative Offer Price range set out in this Prospectus, the aggregate subscription amount from
the Cornerstone Investors will be reduced to approximately US$19.1 million, (or
approximately HK$148.3 million, calculated based on the exchange rate set out in the section
headed “Information about this Prospectus and the Global Offering — Exchange Rate
Conversion” in this Prospectus).
We believe that the Cornerstone Placing signifies our Cornerstone Investors’ confidence
in our Company and our business prospect, and that the Cornerstone Placing will help to raise
the profile of our Company. Our Company became acquainted with each of the Cornerstone
Investors during its ordinary course of operations, either through the Group’s business network
or through introduction by the Company’s business partners or the Underwriters.
CORNERSTONE INVESTORS
– 291 –


--- page 301 ---
The Cornerstone Placing will form part of the International Offering, and the Cornerstone
Investors and their respective close associates will not subscribe for any Offer Shares under the
Global Offering other than pursuant to the Cornerstone Investment Agreements. The Offer
Shares to be subscribed by the Cornerstone Investors will rank pari passu in all respects with
the fully paid Shares in issue and all the H Shares to be subscribed by the Cornerstone Investors
will be counted towards the public float for the purpose of Rule 8.08 (as amended and replaced
by Rule 19A.13A) of the Listing Rules. Immediately following the completion of the Global
Offering, the Cornerstone Investors will not have any Board representation in our Company;
and none of the Cornerstone Investors will become a substantial shareholder of our Company.
The Cornerstone Investors do not have any preferential rights in the Cornerstone Investment
Agreements compared with other public Shareholders, other than a guaranteed allocation of the
relevant Offer Shares at the Offer Price.
As confirmed by each of the Cornerstone Investors, there are no side arrangements or
agreements between our Company and the Cornerstone Investors or any benefit, direct or
indirect, conferred on the Cornerstone Investors by virtue of or in relation to the Listing, other
than a guaranteed allocation of the relevant Offer Shares at the final Offer Price, following the
principles as set out in Chapter 4.15 of the Guide for New Listing Applicants.
The Cornerstone Investors have agreed to pay for the relevant Offer Shares that they have
subscribed before dealings in the Company’s H Shares commence on the Stock Exchange.
There will be no deferred settlement of the Offer Shares to be subscribed by the Cornerstone
Investors. Certain Cornerstone Investors have agreed that our Company and the Sole
Sponsor-OC in their sole discretion may defer the delivery of all or part of the Offer Shares
in full it will subscribe to on a date later than the Listing Date. Such delayed delivery
arrangement is in place to facilitate the over-allocation in the International Offering. There will
be no delayed delivery if there is no over-allocation in the International Offering. Where
delayed delivery takes place, (i) there would be delayed delivery of Offer Shares to some of
the Cornerstone Investors based on commercial negotiations with the Cornerstone Investors,
(ii) the delayed delivery date should be no later than five business days following the last day
on which the Over-allotment Option may be exercised, (iii) no extra payment will be made to
the relevant Cornerstone Investors for the purpose of the delayed delivery arrangement, and
(iv) each Cornerstone Investor that may be affected by such delayed delivery arrangement has
agreed that it shall nevertheless pay for the relevant Offer Shares in full before the Listing. As
such, there will not be any deferred settlement in payment by the Cornerstone Investors.
To the best of the knowledge, information and belief of our Company, (i) each of the
Cornerstone Investors is an Independent Third Party; (ii) none of the Cornerstone Investors is
accustomed to take and has not taken instructions from the Company, our Directors,
Supervisors, chief executive, the Controlling Shareholders, substantial shareholders, existing
Shareholders or any of their subsidiaries or their respective close associates in relation to the
acquisition, disposal, voting or other disposition of the Offer Shares; and (iii) none of the
subscription of the Offer Shares by the Cornerstone Investors is directly or indirectly financed
by the Company, our Directors, Supervisors, chief executive, the Controlling Shareholders,
substantial shareholders, existing Shareholders or any of their subsidiaries or their respective
close associates.
CORNERSTONE INVESTORS
– 292 –


--- page 302 ---
To the best knowledge of our Company, (i) the Cornerstone Investors make independent
investment decisions, and (ii) their subscription under the Cornerstone Investment Agreements
would be financed by their own internal resources or (in the case of Cornerstone Investors
which are funds or investment managers) financial resources of the assets managed for their
investors as the source of funding for the subscription of the Offer Shares, and they each have
sufficient funds to settle their respective investments under the Cornerstone Placing. Each of
the Cornerstone Investors has confirmed that all necessary approvals have been obtained with
respect to the Cornerstone Placing, and that no specific approval from any stock exchange (if
relevant) or its shareholders is required for their participation in the Cornerstone Placing.
Details of the actual number of Offer Shares to be allocated to the Cornerstone Investors
will be disclosed in the allotment results announcement of our Company to be published on or
around December 4, 2025.
THE CORNERSTONE INVESTORS
The information about our Cornerstone Investors set forth below has been provided by
our Cornerstone Investors in connection with the Cornerstone Placing.
HHLRA
HHLR Advisors, Ltd. (“ HHLRA ”), part of the Hillhouse Group, is an exempted company
incorporated in the Cayman Islands that acts as the investment manager of investment funds
(collectively the “ HHLRA Funds ”), which are limited partnerships formed under the laws of
the Cayman Islands. There is no individual limited partner investor who holds an economic
interest of 30% or more in the HHLRA Funds. HHLRA intends to hold the Offer Shares through
one of the HHLRA Funds, namely HACF, L.P .
HHLRA collaborates with industry-defining enterprises, aiming to establish alignment
with sustainable, forward-thinking companies across consumer, industrial, healthcare and
business services sectors. HHLRA manages capital for global institutions, including non-profit
foundations, endowments, and pensions. HHLRA is entering the cornerstone investment
agreement with the Company in its capacity as an investment manager and on behalf of the
HHLRA Funds.
Dream’ee Investors
Dream’ee (Hong Kong) Open-ended Fund Company (“ Dream’ee HK Fund ”) and Guotai
Junan Investments (Hong Kong) Limited (“ GTINV ”, together with Dream’ee HK Fund,
“Dream’ee Investors ”) have, respectively, entered into Cornerstone Investment Agreements
with our Company.
CORNERSTONE INVESTORS
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GTINV
GTINV and Guotai Haitong Securities Co., Ltd (“ GTHT ”) will enter into a series of cross
border delta-one OTC swap transactions (the “ Dream’ee OTC Swaps ”) with each other and
with Dream’ee Qibu Private Equity Securities Investment Fund (ږ)
the “ GTHT Ultimate Client (Dream’ee) ”o r“ Dream’ee Qibu ”), pursuant to which GTINV
will hold the Offer Shares on a non-discretionary basis to hedge the Dream’ee OTC Swaps
while the economic risks and returns of the underlying Offer Shares are passed to the GTHT
Ultimate Client (Dream’ee), subject to customary fees and commissions. The Dream’ee OTC
Swaps will be fully funded by the GTHT Ultimate Client (Dream’ee). During the terms of the
Dream’ee OTC Swaps, all economic returns of the Offer Shares subscribed by GTINV will be
passed to the GTHT Ultimate Client (Dream’ee) and all economic loss shall be borne by the
GTHT Ultimate Client (Dream’ee) through the Dream’ee OTC Swaps, and GTINV will not
take part in any economic return or bear any economic loss in relation to the Offer Shares. The
terms of the Dream’ee OTC Swaps are equal to or longer than the lock-up period and that the
GTHT Ultimate Client (Dream’ee) shall not early terminate the Dream’ee OTC Swaps at their
own discretions before the end of the lock-up period. Despite that GTINV will hold the legal
title of the Offer Shares by itself, it will not exercise the voting rights attaching to the relevant
Offer Shares during the terms of the Dream’ee OTC Swaps according to its internal policy. To
the best of GTINV’s knowledge having made all reasonable inquiries, the GTHT Ultimate
Client (Dream’ee) is an Independent Third Party of GTINV , GTHT and the companies which
are members of the same group of GTHT.
GTINV is a Hong Kong incorporated company. Its principal business activities are trading
and investments. It is indirectly wholly owned by Guotai Haitong Securities Co., Ltd., a
leading securities firm in China with its shares dually listed in both Shanghai (SSE:601211)
and Hong Kong (HKEX:2611). Dream’ee Qibu is an investment fund managed by Shenzhen
Dream’ee Private Equity Securities Fund Management Co., Ltd. (၍ଣ
ʮ̡)( “ Dream’ee Shenzhen ”). To the Company’s best knowledge, no person other than
Mr. Zhang Gangqiang (੶), who is an Independent Third Party, holds 30% or more of the
interest in Dream’ee Qibu. Mr. Zhang Gangqiang holds 67.9% interest in Dream’ee Qibu.
Dream’ee Shenzhen was established in Shenzhen in 2014. Dream’ee Shenzhen was
ultimately owned by Mr. Lan Kun ( ᚆտ), Ms. Zhang Jingruo (߰and Shenzhen Dream’ee
Puyuan Technology Enterprise (Limited Partnership) (ҦΆุ(Υྫ))
(“Dream’ee Puyuan ”) as to 51.67%, 18.33% and 30%, respectively. To the Company’s best
knowledge, Dream’ee Puyuan is ultimately controlled by Mr. Lan Kun, an Independent Third
Party. Dream’ee Shenzhen is licensed as a private investment fund manager (၍
ࣸ.)
Dream’ee HK Fund
Dream’ee HK Fund is a private open-ended fund company incorporated in Hong Kong in
August 2025 as an umbrella fund governed by the SFO, primarily engaged in cornerstone
investment. The investment manager of Dream’ee HK Fund is Dream’ee (Hong Kong) Capital
Limited (֝(ಥ)ʮ̡)( “ Dream’ee Hong Kong ”), a limited company
CORNERSTONE INVESTORS
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incorporated in Hong Kong in February 2024 wholly-owned by Mr. Lan Kun and licensed by
the SFC to conduct Type 9 (Asset Management) regulated activities in Hong Kong. To the
Company’s best knowledge, Mr. Lan Kun holds 45% interest in, and none of the other fund
investors holds 30% or more of the interest in the sub-fund under Dream’ee HK Fund that will
participate in the Global Offering. Mr. Lan Kun is the founder and an executive director of
Dream’ee Shenzhen and Dream’ee Hong Kong, both of which primarily focus on investments
in IPO placings and refinancing market. Mr. Lan Kun has been engaging in investment banking
and asset management for over 20 years. Mr. Lan Kun is also the founder of Shenzhen Left-up
Charity Foundation (ึ). To the Company’s best knowledge, Mr. Lan is an
Independent Third Party.
Shengying Investment
Hong Kong Shengying Investment Limited (“ Shengying Investment ”) is a company
incorporated under the laws of Hong Kong. It primarily engages in investment management
activities. To the Company’s best knowledge, the ultimate beneficial owners of Shengying
Investment are Mr. Wang Zhao ( ˮ১) and Mr. Sha Hanghang ( Ӎঘঘ), each holding 50%
interest in Shengying Investment, respectively. Mr. Wang and Mr. Sha co-founded Beijing
Fidenlity&Trust Capital (ʮ̡)(“Fidenlity&Trust Capital ”), a private
investment fund manager registered with the Asset Management Association of China
(Registration Code: P1020566), in 2015. Fidenlity&Trust Capital has led investments in
several projects such as 360 Security Technology Inc. (SSE:601360), Horizon Robotics
(HKEX:09660) and Breton Technology Co., Ltd. (HKEX:01333). To the Company’s best
knowledge, both Mr. Wang and Mr. Sha are Independent Third Parties.
Zeta Fund
Zeta Wisdom OFC (“ Zeta Fund ”) is an open-ended fund company incorporated in Hong
Kong in November 2024 as an umbrella fund governed by the SFO, which is primarily engaged
in investment holding. The investment manager of Zeta Fund is Zeta Capital (H.K.) Limited
(“Zeta Capital ”), a company established in Hong Kong in September 2014 and licensed by the
SFC to carry on Type 4 (Advising on Securities) and Type 9 (Asset Management) regulated
activities in Hong Kong. As of the Latest Practicable Date, Zeta Capital was wholly-owned by
Mr. Zhu Xuejun (ࠏan Independent Third Party. To the Company’s best knowledge, the
sub-fund under Zeta Fund, namely LI Fund, that will participate in the Global Offering has one
investor, Mr. Y ang Xianjun (ࠏwho is an Independent Third Party.
Haidilao Singapore
Hai Di Lao Holdings Pte. Ltd. (“ Haidilao Singapore ”) is a private company limited by
shares incorporated in Singapore and a wholly-owned subsidiary of Haidilao International
Holding Ltd. (“ Haidilao ”), a company incorporated under the laws of the Cayman Islands with
its shares listed on the Hong Kong Stock Exchange (stock code: 6862). Haidilao and its
subsidiaries are principally engaged in hot pot restaurant business and other catering business.
CORNERSTONE INVESTORS
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The table below sets forth the details of the Cornerstone Placing, assuming there is no
other change made to the issued share capital of our Company between the Latest Practicable
Date and the Listing Date (or the date of exercise of Over-allotment Option (where
applicable)), based on the Offer Price of HK$7.04, being the maximum Offer Price:
Assuming the Over-allotment
Option is not exercised
Assuming the Over-allotment
Option is fully exercised
Cornerstone Investors
Approximate
total
Investment
Amount (1)
Number
of Offer
Shares (2)
Approximate
%o ft h e
Offer Shares
Approximate
%o fo u r
total issued
share capital
Approximate
%o ft h e
Offer Shares
Approximate
%o fo u r
total issued
share capital
(US$ in
million)
HHLRA /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185.0 5,521,000 5.67% 0.78% 5.40% 0.77%
Dream’ee Investors
GTINV /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182.6 2,838,000 2.91% 0.40% 2.78% 0.40%
Dream’ee HK Fund /H1118/H1118 2.4 2,683,000 2.76% 0.38% 2.62% 0.37%
Shengying Investment /H1118/H1118 5.0 5,521,000 5.67% 0.78% 5.40% 0.77%
Zeta Fund /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185.0 5,521,000 5.67% 0.78% 5.40% 0.77%
Haidilao Singapore /H1118/H1118/H1118/H11182.0 2,208,500 2.27% 0.31% 2.16% 0.31%
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111822.0 24,292,500 24.95% 3.42% 23.76% 3.39%
Notes:
(1) The investment amount excludes brokerage, SFC transaction levy, AFRC transaction levy and Stock Exchange
trading fee, and is calculated based on the exchange rate set out in the section headed “Information about this
Prospectus and the Global Offering — Exchange Rate Conversion” in this Prospectus.
(2) Rounded down to the nearest whole board lot of 500 H Shares, and is calculated based on the exchange rate
set out in the section headed “Information about this Prospectus and the Global Offering — Exchange Rate
Conversion” in this Prospectus.
(3) Each Cornerstone Investor (other than HHLRA and Haidilao Singapore) has agreed in its respective
Cornerstone Investment Agreement that the Sole Sponsor and the Sponsor-Overall Coordinator can adjust the
allocation of the number of Offer Shares in their sole and absolute discretion for the purpose of satisfying the
relevant requirements under the Listing Rules. As such, the investment amount made by the Cornerstone
Investors (other than HHLRA and Haidilao Singapore) may be adjusted downward at the sole and absolute
discretion of the Sole Sponsor and the Sponsor-Overall Coordinator for the purpose of satisfying the relevant
requirements under the Listing Rules. The final allocation of Offer Shares to the Cornerstone Investors will
be disclosed in the allotment results announcement of our Company to be published on or around December
4, 2025.
CLOSING CONDITIONS
The obligation of each of the Cornerstone Investors to subscribe for the Offer Shares
under their respective Cornerstone Investment Agreement is subject to, among other things, the
following closing conditions:
(i) the Hong Kong Underwriting Agreement and the International Underwriting
Agreement being entered into and having become effective and unconditional (in
accordance with their respective original terms or as subsequently waived or varied
CORNERSTONE INVESTORS
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by agreement of the parties thereto) by no later than the time and date as specified
in the Hong Kong Underwriting Agreement and the International Underwriting
Agreement, and neither the Hong Kong Underwriting Agreement nor the
International Underwriting Agreement having been terminated;
(ii) the Offer Price having been agreed upon between our Company and the Overall
Coordinators (for themselves and on behalf of the underwriters of the Global
Offering);
(iii) the Listing Committee having granted the approval for the listing of, and permission
to deal in, the H Shares (including the Shares under the Cornerstone Placing) as well
as other applicable waivers and approvals and such approval, permission or waiver
having not been revoked prior to the commencement of dealings in the Shares on the
Stock Exchange;
(iv) no laws having been enacted or promulgated by any governmental authority which
prohibits the consummation of the transactions contemplated in the Global Offering
or each Cornerstone Investment Agreement, and there being no orders or injunctions
from a court of competent jurisdiction in effect precluding or prohibiting
consummation of such transactions; and
(v) the respective representations, warranties, acknowledgements, undertakings, and
confirmations of the Cornerstone Investors under their respective Cornerstone
Investment Agreement are (as of the date of the respective Cornerstone Investment
Agreement) and will be (as of the Listing Date) accurate, true and complete in all
material respects and not misleading or deceptive and that there is no material
breach of the respective Cornerstone Investment Agreement on the part of the
relevant Cornerstone Investor.
RESTRICTIONS ON THE CORNERSTONE INVESTORS
Each Cornerstone Investor has agreed that without the prior written consent of our
Company, the Sole Sponsor and the Sole Sponsor-Overall Coordinator, it will not, whether
directly or indirectly, at any time during the period of six months after the Listing Date (the
“Lock-up Period ”), dispose of, in any way, any of the Offer Shares it has purchased, pursuant
to its respective Cornerstone Investment Agreement, save for certain limited circumstances,
such as transfers to any of its wholly-owned subsidiaries which will be bound by the same
obligations as the Cornerstone Investor, including the Lock-up Period restriction.
CORNERSTONE INVESTORS
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BEFORE THE GLOBAL OFFERING
As of the Latest Practicable Date, the registered share capital of our Company was
RMB12,266,496 comprising of 613,324,800 Unlisted Shares with a nominal value of RMB0.02
each.
UPON COMPLETION OF THE GLOBAL OFFERING
Immediately upon completion of the Global Offering and the Conversion of Unlisted
Shares into H Shares, assuming the Over-allotment Option is not exercised, the share capital
of our Company will be as follows:
Description of shares Number of Shares
Approximate
percentage of
issued share
capital after the
Global Offering
H Shares to be converted from Unlisted
Shares (Note) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118613,324,800 86.30%
H Shares to be issued pursuant to the Global
Offering (assuming the Over-allotment Option
is not exercised) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111897,364,500 13.70%
Shares in total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118710,689,300 100.00%
Immediately upon completion of the Global Offering and the Conversion of Unlisted
Shares into H Shares, assuming the Over-allotment Option is exercised in full, the share capital
of our Company will be as follows:
Description of shares Number of Shares
Approximate
percentage of
issued share
capital after the
Global Offering
H Shares to be converted from Unlisted
Shares (Note) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118613,324,800 85.71%
H Shares to be issued pursuant to the Global
Offering (assuming the Over-allotment Option
is exercised in full) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118102,232,500 14.29%
Shares in total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118715,557,300 100.00%
Note: Please refer to the section headed “History, Development and Corporate Structure — Shareholding of
our Company” in this prospectus for details of the identities of Shareholders whose Shares will be
converted into H Shares upon Listing.
SHARE CAPITAL
– 298 –


--- page 308 ---
UNLISTED SHARES AND H SHARES
Upon the completion of the Global Offering and the Conversion of Unlisted Shares into
H Shares, our Shares will only consist of H Shares. Unlisted Shares and H Shares are all
ordinary Shares in the share capital of our Company and are considered as one class of Shares.
Apart from certain qualified domestic institutional investors in the Chinese Mainland, the
qualified Chinese Mainland investors under the Shanghai-Hong Kong Stock Connect and the
Shenzhen-Hong Kong Stock Connect and other persons who are entitled to hold our H Shares
pursuant to relevant PRC Law or upon filing with any competent authorities, H Shares
generally cannot be subscribed for by or traded between legal or natural Chinese Mainland
persons.
Unlisted Shares and H Shares are regarded as one class of Shares under our Articles of
Association and shall rank pari passu with each other in all respects and, in particular, will rank
equally for dividends or distributions declared, paid or made. All dividends for H Shares will
be denominated and declared in Renminbi, and paid in Hong Kong dollars or Renminbi. Other
than cash, dividends could also be paid in the form of Shares.
CONVERSION OF UNLISTED SHARES INTO H SHARES
Pursuant to the regulations prescribed by the securities regulatory authorities of the State
Council and the Articles of Association, our Unlisted Shares may be converted into
overseas-listed Shares. Such converted Shares could be listed or traded on an overseas stock
exchange, provided that prior to the conversion and trading of such converted Shares, any
requisite internal approval process has been duly completed and all the filling procedures with
relevant Chinese Mainland regulatory authorities, including the CSRC are followed. In
addition, such conversion and trading shall comply with the regulations, requirements and
procedures prescribed by the relevant overseas stock exchange. If any of our Unlisted Shares
are to be converted, listed and traded as H Shares on the Stock Exchange, such conversion,
listing and trading will be undertaken upon completion of the filing procedures with the CSRC
and the approval of the Stock Exchange.
Filing with the CSRC for Full Circulation
In accordance with the Guidelines for Applying “Full Circulation” for Domestic Unlisted
Shares of H-share Listed Companies (H΅͡ሗ“ஷ”ˏ), the
Trial Administrative Measures and the relevant five guidelines announced by the CSRC,
H-share listed companies which apply for the conversion of domestic unlisted shares into H
shares for listing and circulation on the Stock Exchange shall conform to relevant regulations
promulgated by the CSRC, and authorize the company to file with the CSRC on their behalf.
Our Company applied for a “Full Circulation” with the CSRC on April 15, 2025, and
submitted the application reports, authorization documents of the Shareholders of Unlisted
Shares for which an H-share “Full Circulation” was applied, commitment about the compliance
of share acquisition and other documents in accordance with the requirements of the CSRC.
SHARE CAPITAL
– 299 –


--- page 309 ---
Our Company has received the reply from the CSRC dated October 13, 2025, pursuant to
which, a total of 613,324,800 Unlisted Shares (with a nominal value of RMB0.02 each) held
by eleven Shareholders (the “ Domestic Participating Shareholders ”) were approved to be
converted into H Shares, and the relevant Shares may be listed on the Stock Exchange upon
completion of the conversion. The aforesaid shall remain effective within twelve months from
the date of approval.
The Conversion of Unlisted Shares into H Shares will involve an aggregate of
613,324,800 Unlisted Shares held by the eleven existing Shareholders, representing 100.00%
of the total issued Shares of our Company as of the Latest Practicable Date and approximately
86.30% of the total issued Shares of our Company upon completion of the Global Offering
(assuming the Over-allotment Option is not exercised) and the Conversion of Unlisted Shares
into H Shares.
Listing Approval by the Stock Exchange
We have applied to the Stock Exchange for the granting of listing of, and permission to
deal in, our H Shares to be issued pursuant to the Global Offering (including any H Shares
which may be issued pursuant to the exercise of the Over-allotment Option) and the H Shares
to be converted from 613,324,800 Unlisted Shares, which is subject to the approval by the
Stock Exchange.
We will perform the following procedures for the Conversion of Unlisted Shares into H
Shares after receiving the approval of the Stock Exchange: (1) giving instructions to our H
Share Registrar regarding the relevant share certificates of the converted H Shares; and (2)
enabling the converted H Shares to be accepted as eligible securities by HKSCC for deposit,
clearance and settlement in the CCASS.
TRANSFER OF SHARES ISSUED PRIOR TO LISTING DATE
Pursuant to the PRC Company Law, the shares issued prior to any public offering of
shares by a company cannot be transferred within one year from the date on which such
publicly offered shares are listed and traded on the relevant stock exchange. As such, our
Shares issued prior to the Listing shall not be transferred within one year from the Listing Date.
REGISTRATION OF SHARES NOT LISTED ON AN OVERSEAS STOCK EXCHANGE
According to the Notice of Centralized Registration and Deposit of Non-overseas Listed
Shares of Companies Listed on an Overseas Stock Exchange (ٰ
ٝissued by the CSRC, an overseas listed company is required
to register its shares that are not listed on an overseas stock exchange with the China Securities
Depository and Clearing Corporation Limited within 15 business days upon listing and provide
a written report to the CSRC regarding the centralized registration and deposit of its
non-overseas listed shares as well as the current offering and listing of H shares.
SHARE CAPITAL
– 300 –


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CIRCUMSTANCES UNDER WHICH GENERAL MEETING IS REQUIRED
For details of circumstances under which our Shareholders’ general meeting are required,
see “Appendix V — Summary of Articles of Association.”
GENERAL MANDATE TO ISSUE SHARES
Upon completion of the Listing, our Directors have been granted a general unconditional
mandate to allot, issue and deal with Shares of not more than 20% of the number of Shares in
issue as of the Listing Date (excluding any Shares which may be issued pursuant to the exercise
of the Over-allotment Option).
This general mandate to issue Shares will expire at the earliest of:
(a) the conclusion of the next annual general meeting of our Company; or
(b) the date on which it is varied or revoked by an ordinary resolution of our
Shareholders in a general meeting.
SHARE CAPITAL
– 301 –


--- page 311 ---
You should read the following discussion and analysis in conjunction with our
historical financial information, including the notes thereto, included in the Accountants’
Report set out in Appendix I. Our historical financial information has been prepared in
accordance with IFRSs.
The following discussion and analysis contain forward-looking statements that
involve risks and uncertainties. These statements are based on our assumptions and
analysis in light of our experience and perception of historical trends, current conditions,
and expected future developments, as well as other factors that we believe are
appropriate under the circumstances. However , our actual results may differ significantly
from those projected in the forward-looking statements. Factors that might cause future
results to differ significantly from those projected in the forward-looking statements
include, but are not limited to, those discussed in “Risk Factors” and “Forward-Looking
Statements” and elsewhere in this prospectus.
For the purpose of this section, unless the context otherwise requires, references to
2022, 2023 and 2024 refer to our financial years ended December 31 of such years.
Unless the context otherwise requires, financial information described in this section is
described on a consolidated basis.
OVERVIEW
We are a modern Chinese noodle restaurants operator in China. We operate the Xiao
Noodles (༾Ԉʃᙢ) brand in the Chinese Mainland and Hong Kong SAR. Our restaurant
network encompassed 451 restaurants in 22 cities in the Chinese Mainland and 14 restaurants
in Hong Kong SAR as of the Latest Practicable Date. Leveraging our strong growth
momentum, we have 115 new restaurants in pre-opening preparation as of the Latest
Practicable Date. According to Frost & Sullivan, we were the largest Sichuan-Chongqing style
noodle restaurants operator and the fourth largest Chinese noodle restaurants operator in China
in terms of GMV in 2024. We have also achieved the highest CAGR of GMV from 2022 to
2024 among 2024’s top ten Chinese noodle restaurants operators in China.
During the Track Record Period, we primarily generated our revenue from self-operated
restaurant operations and franchise management. Revenue from self-operated restaurant
operations comprises mainly revenue from dine-in service and delivery business at our
self-operated restaurants. Revenue from franchise management comprises revenue from
royalty and franchising income and provision of service as well as sales of goods such as food
ingredients and restaurant supplies to franchisees and sales of equipment to franchisees. Our
success is evidenced by our strong financial track record. Our revenue increased from
RMB418.1 million in 2022 to RMB1,154.4 million in 2024 at a CAGR of 66.2%, primarily due
to the ongoing expansion of our restaurant network during the Track Record Period. Our
revenue further increased by 33.8% from RMB525.7 million for the six months ended June 30,
2024 to RMB703.2 million for the same period in 2025. Despite a net loss of RMB36.0 million
FINANCIAL INFORMATION
– 302 –


--- page 312 ---
recorded in 2022 due to the impact of COVID-19 pandemic, we turned to net profit position
in 2023 with profit for the year of RMB45.9 million, which further increased by 32.2% to
RMB60.7 million in 2024. Our net profit increased by 95.8% from RMB21.4 million for the
six months ended June 30, 2024 to RMB41.8 million for the same period in 2025.
SIGNIFICANT FACTORS AFFECTING OUR RESULTS OF OPERATIONS
Our results of operations are affected by general factors affecting the catering industry in
the Chinese Mainland, including but not limited to general economic and business conditions
in the Chinese Mainland, changes in consumer tastes and dining preferences, changes in the
regulatory, legal and public policy landscapes, and the outbreak of any food-borne illnesses.
Our results of operations are also affected by certain company-specific factors, including:
 our ability to expand our restaurant network;
 our ability to manage our existing restaurants; and
 our ability to control costs and expenses.
Our Ability to Expand Our Restaurant Network
Our revenue is largely affected by the number of our restaurants in operation, and our
future revenue growth depends on our ability to expand our restaurant network. The following
table sets forth the movement in the number of our restaurants for the periods indicated:
For the year ended December 31,
For the
Six Months
ended
June 30,
From
July 1,
2025 to the
Latest
Practicable
Date2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Number of restaurants
At the beginning of the
period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118133 170 252 360 417
Newly opened during the
period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111843 92 120 63 55
Closed during the
period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(6)(1) (10) (1) (12) (6) (7)
At the end of the
period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118170 252 360 417 465
FINANCIAL INFORMATION
– 303 –


--- page 313 ---
For the year ended December 31,
For the
Six Months
ended
June 30,
From
July 1,
2025 to the
Latest
Practicable
Date2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Number of
self-operated
restaurants
At the beginning of the
period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111882 111 183 279 331
Newly opened during the
period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111832 68 101 54 45
Converted from
franchised restaurants /H1118 –54–4
Closed during the
period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(3) (1) (9) (2) (5)
At the end of the
period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118111 183 279 331 375
Number of franchised
restaurants
At the beginning of the
period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111851 59 69 81 86
Newly opened during the
period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811 24 19 9 10
Converted to
self-operated
restaurants /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (5) (4) – (4)
Closed during the
period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(3)
(1) (9)(1) (3)(2) (4)(3) (2)(4)
At the end of the
period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111859 69 81 86 90
FINANCIAL INFORMATION
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Note:
(1) As of January 1, 2022 and 2023, we authorized an Independent Third Party to operate twelve and nine
restaurants, respectively. In 2022 and 2023, three and nine of such restaurants were closed, respectively.
For details of the background of our restaurants under authorized operation model, see “Business — Our
Franchisees.”
(2) Among the three franchised restaurants closed during the year ended December 31, 2024, two were
closed due to change of business plans on the part of the franchisee/landlord and one was closed due
to underperformance.
(3) Among the four franchised restaurants closed during the six months ended June 30, 2025, two were
closed due to change of business plans on the part of the franchisees and two were closed due to
underperformance.
(4) Among the two franchised restaurants closed during the period from July 1, 2025 to the Latest
Practicable Date, one was closed due to change of business plans on the part of the landlord and one
was closed due to underperformance.
As of the Latest Practicable Date, our restaurant network encompassed 451 Xiao Noodles
restaurants in 22 cities in the Chinese Mainland and 14 restaurants in Hong Kong SAR. The
success of our business stems from the continued healthy expansion of our restaurant network.
In 2022, 2023, 2024 and for the six months ended June 30, 2024 and 2025, revenue from our
self-operated restaurant operations amounted to RMB336.7 million, RMB671.9 million,
RMB1,001.0 million, RMB452.7 million and RMB626.1 million, representing 80.5%, 83.9%,
86.7%, 86.1% and 89.0% of our total revenue, respectively. Our restaurants are typically
located in transportation hubs, shopping centers, office areas, residential areas, campuses and
scenic spots. When selecting sites for our restaurants, our expansion department considers
relevant factors such as the number and nature of other restaurants in the vicinity, estimated
customer traffic and accessibility to public transportation, and age distribution and population
density of the local community. We have also implemented and will continue to employ
measures to prevent cannibalization among our existing and newly opened restaurants, such as
avoiding opening multiple restaurants in one shopping mall, residential area, or office area.
As for our franchise management business, our franchisees are required to operate their
franchised restaurants in the designated premises and areas and any selection of restaurant
locations and premises must be approved by us before the opening of additional franchised
restaurants. In 2022, 2023, 2024 and for the six months ended June 30, 2024 and 2025, revenue
from franchise management amounted to RMB80.5 million, RMB127.7 million, RMB152.5
million, RMB72.5 million and RMB76.7 million, representing 19.3%, 16.0%, 13.2%, 13.8%
and 10.9% of our total revenue, respectively.
Our management oversees the entire expansion process and, combined with conducting
regular post-investment reviews of new restaurants, adjusts our expansion strategy accordingly
if the performance of new restaurants is not satisfactory due to potential cannibalization. We
believe that there are a vast number of regions in the Chinese Mainland and Hong Kong SAR
with great business opportunities where we can grow our presence. We expect to continue to
expand our geographic coverage and deepen our market penetration in China and overseas. For
details on our expansion plan, see “Business — Our Business — Restaurant Network
Expansion Plan and Management.”
FINANCIAL INFORMATION
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Our Ability to Manage Our Existing Restaurants
Our revenue and profitability are affected in part by our ability to successfully grow
revenue from existing restaurants. By standardizing key aspects of restaurant operations,
applying digital systems, and providing comprehensive staff training on our standardized
processes, we have established a highly scalable business model that ensures staff are
well-equipped to deliver a consistently high-quality dining experience. We use the same store
sales as a key metric to assess the period-to-period operational performance of our restaurants
as it excludes the impact of revenue contribution from new restaurants by comparing the
operational and financial performance of existing restaurants. For further details, see “Business
— Our Restaurant Performance — Same Store Sales.” The following table sets forth details of
our same store sales in China during the Track Record Period:
For the year ended December 31,
For the six months ended
June 30,
2022 2023 2023 2024 2024 2025
Number of same
stores
Self-operated
restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118 59 96 155
Second-tier cities
and below /H1118/H1118/H1118/H1118/H111881 0 1 1
Total/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111867 106 166
Franchised
restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118 13 20 23
Second-tier cities
and below /H1118/H1118/H1118/H1118/H111816 19 25
Total/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111829 39 48
Same store sales (1)
(RMB’000)
Self-operated
restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118234,969 310,458 496,652 471,765 344,758 333,521
Second-tier cities
and below /H1118/H1118/H1118/H1118/H111827,569 35,669 44,397 45,621 24,250 24,013
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118262,538 346,127 541,049 517,386 369,008 357,534
FINANCIAL INFORMATION
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For the year ended December 31,
For the six months ended
June 30,
2022 2023 2023 2024 2024 2025
Franchised
restaurants
First-tier and new
first-tier cities /H1118/H1118/H111852,775 65,004 106,281 100,353 55,494 53,199
Second-tier cities
and below /H1118/H1118/H1118/H1118/H111866,488 80,146 93,048 91,297 55,312 54,355
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118119,263 145,150 199,330 191,651 110,806 107,554
Same store sales
growth (%)
Self-operated
restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118 32.1 (5.0) (3.3)
Second-tier cities
and below /H1118/H1118/H1118/H1118/H111829.4 2.8 (1.0)
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111831.8 (4.4) (3.1)
Franchised
restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118 23.2 (5.6) (4.1)
Second-tier cities
and below /H1118/H1118/H1118/H1118/H111820.5 (1.9) (1.7)
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111821.7 (3.9) (2.9)
Same store average
daily orders per
restaurant
(2)
Self-operated
restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118339 427 416 418 387 386
Second-tier cities
and below /H1118/H1118/H1118/H1118/H1118276 361 363 388 373 400
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118331 419 411 415 386 387
Franchised
restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118333 417 434 441 420 433
Second-tier cities
and below /H1118/H1118/H1118/H1118/H1118318 403 392 412 369 377
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118325 409 413 427 393 404
FINANCIAL INFORMATION
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For the year ended December 31,
For the six months ended
June 30,
2022 2023 2023 2024 2024 2025
Same store average
spending per
order
(3)
First-tier and new
first-tier cities /H1118/H1118/H111835.5 34.0 34.3 32.7 32.3 31.2
Second-tier cities
and below /H1118/H1118/H1118/H1118/H111836.0 33.9 33.5 32.2 32.5 30.3
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111835.5 33.9 34.2 32.6 32.3 31.2
Franchised
restaurants
First-tier and new
first-tier cities /H1118/H1118/H111835.5 33.1 33.8 31.5 32.0 30.2
Second-tier cities
and below /H1118/H1118/H1118/H1118/H111836.5 34.1 34.3 32.2 33.1 31.9
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111836.1 33.7 34.0 31.8 32.5 31.0
Same store seat
turnover rate (4)
Self-operated
restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118 3.2 4.0 4.0 4.2 3.8 3.6
Second-tier cities
and below /H1118/H1118/H1118/H1118/H11182.5 3.1 3.1 3.4 3.3 3.1
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183.1 3.9 3.9 4.1 3.7 3.6
Franchised
restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118 3.3 4.0 4.2 4.5 4.1 4.0
Second-tier cities
and below /H1118/H1118/H1118/H1118/H11182.8 3.3 3.2 3.6 3.2 3.0
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183.0 3.6 3.7 4.0 3.6 3.5
Notes:
(1) Same store sales refer to the total GMV generated from our same stores, including those generated from
dine-in and delivery orders.
(2) Same store average daily orders per restaurant is calculated by dividing (i) the total number of orders,
including orders placed by both dine-in customers and customers of our delivery services of these same
store restaurants, by (ii) the sum of restaurant operation days of each same store restaurant for the
period.
FINANCIAL INFORMATION
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--- page 318 ---
(3) Same store average spending per order is calculated by dividing (i) the total GMV generated from
restaurant operations and delivery business of same store restaurants by (ii) the total number of orders
from our same stores, including orders placed by both dine-in customers and customers of our delivery
services, for the period in the relevant regions.
(4) Same store seat turnover rate is calculated by dividing the aggregate number of orders placed by dine-in
customers during a specific period by the total number of available seats in that period, which is
determined by multiplying the restaurants’ seat count by their operation days.
Our same store average daily orders per restaurant increased in 2022 and 2023, 2023 and
2024, as well as the six months ended June 30, 2024 and 2025 primarily because we took the
initiative to reduce the prices of our menu items and provide customers with more affordable
dining experience in order to attract more customers and increase our overall sales. Benefited
from our price reduction initiative, we recorded an increase in same store seat turnover rate,
which mainly reflects the performance of our dine-in services, in 2022 and 2023 as well as
2023 and 2024. Our same store seat turnover rate decreased in the six months ended June 30,
2024 and 2025 primarily due to the intensified promotional activities on delivery platforms in
the first half of 2025, which prompted some of the customers from dining in to placing orders
on the delivery platforms.
Our same store sales increased in 2022 and 2023 primarily due to the rebound of
consumers’ spendings after the gradual phasing-out of the COVID-19 pandemic in 2023. We
recorded a decrease in same store sales in 2023 and 2024 primarily because of (i) the
normalization of consumer spending pattern in the catering market in the Chinese Mainland
following the rapid surge thereof during the first several months in 2023 following the gradual
phasing-out of the COVID-19 pandemic, which was in line with the spending patterns in other
consumer sectors according to Frost & Sullivan, and (ii) our initiative to reduce the prices of
our menu items in order to attract more customers and increase our overall sales as mentioned
above. We recorded a slight decrease in same store sales for the six months ended June 30,
2024 and 2025 primarily because we continued our price reduction initiative in order to provide
a more affordable dining experience for our customers and increase our overall sales, which
was reflected in the increase in our same store average daily orders per restaurant in the same
period.
As we continue to expand our restaurant network, our sustainable profitability will largely
depend on our ability to effectively managing and optimizing our restaurant operations. We
expect to maintain a high-quality dining experience and further develop our delivery business
to drive restaurant sales growth, thereby improving our financial performance in the long run.
FINANCIAL INFORMATION
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--- page 319 ---
Our Ability to Control Costs and Expenses
Raw materials and consumables
Raw material prices, especially food ingredient prices, have a direct impact on our cost
of raw materials and consumables, which in turn affects our profitability. In 2022, 2023, 2024
and for the six months ended June 30, 2024 and 2025, our cost of raw materials and
consumables used amounted to RMB160.1 million, RMB290.3 million, RMB395.7 million,
RMB187.3 million and RMB220.9 million, respectively, representing 38.3%, 36.3%, 34.3%,
35.6% and 31.4% of our revenue for the same periods.
We are exposed to risk arising from the increase in the cost of ingredients used in our
restaurants. See “Risk Factors — Increases in the cost of ingredients used in our restaurants
may lead to declines in our margins and operating results”. To manage these costs effectively,
we have established centralized purchase procedures that ensures all purchase orders are
managed by our headquarters to maintain unified control over purchasing costs and achieve
efficiency and consistency. Despite the initiatives we have taken, the price and supply of raw
materials, especially food ingredients, are subject to a number of factors that are beyond our
control, including but not limited to availability, change in market demand and inflation. For
further details, see “Our Business — Procurement — Price Management and Price Sensitivity
Analysis.”
The cost of raw materials and consumables is highly correlated with the sustainable
growth of our business. We expect the cost of raw materials and consumables to increase in
absolute amount as we further expand our restaurant network. We will continue to closely
monitor market price fluctuations and devote substantial efforts to effectively manage our cost
of raw materials and consumables.
Staff costs
Restaurant operations are highly labor intensive and therefore, our results of operation are
closely tied to our staff cost, the majority of which is salaries, wages and other benefits payable
to our restaurant level staff.
In 2022, 2023, 2024 and for the six months ended June 30, 2024 and 2025, our staff costs
amounted to RMB109.3 million, RMB175.2 million, RMB265.1 million, RMB121.8 million
and RMB158.8 million, respectively, representing 26.1%, 21.9%, 23.0%, 23.2% and 22.6% of
our total revenue for the same periods.
FINANCIAL INFORMATION
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--- page 320 ---
We expect our staff costs to rise in absolute amount as we further expand our
self-operated restaurant network which require additional staffing to support our daily
operations.
Depreciation of right-of-use assets and other rentals and related expenses
We lease properties primarily to operate our self-operated restaurants and headquarters.
Our leases generally have a term between four to six years. For further details, see “Business
— Our Business — Lease arrangement.” Depreciation charges for the leases for our
self-operated restaurants are recorded as depreciation of right-of-use assets. In 2022, 2023, and
2024, and for the six months ended June 30, 2024 and 2025, our depreciation of right-of-use
assets amounted to RMB94.6 million, RMB125.4 million, RMB188.8 million, RMB86.3
million and RMB109.7 million, respectively, accounting for 22.6%, 15.7%, 16.4%, 16.4% and
15.6% as a percentage of our total revenue for the same periods. Fixed payments of leases with
a term of twelve months or less and leases of low-value assets, and variable lease payments are
recorded as other rentals and related expenses. In 2022, 2023, 2024 and for the six months
ended June 30, 2024 and 2025, our other rentals and related expenses amounted to RMB4.5
million, RMB18.4 million and RMB21.6 million, RMB10.6 million and RMB16.5 million,
respectively, accounting for 1.1%, 2.3%, 1.9%, 2.0% and 2.3% of our total revenue for the
respective periods.
We expect our depreciation of right-of-use assets and other rentals and related expenses
to increase in absolute amount as we further expand our restaurant network which requires
additional leases, and our results of operation depends on our ability to manage our
depreciation of right-of-use assets and other rentals and related expenses effectively.
BASIS OF PRESENTATION
Our Company was incorporated as a limited liability company in the Chinese Mainland
on February 14, 2014 and is the holding company of our Group. Our Company was then
converted into a joint stock limited liability company on September 7, 2023.
Our historical financial information has been prepared in accordance with all applicable
IFRS Accounting Standards as issued by the International Accounting Standards Board
(“IASB ”). All IFRSs effective for the accounting period commencing from January 1, 2024,
together with the relevant transitional provisions and the related interpretations issued by the
IASB, have been consistently applied by the Group in the preparation of the historical financial
information throughout the Track Record Period.
Our historical financial information has been prepared on the historical cost basis except
for financial assets that are measured at fair value through other comprehensive income and
fair value through profit or loss (“ FVPL ”) at the end of each reporting period.
FINANCIAL INFORMATION
–3 1 1–


--- page 321 ---
MATERIAL ACCOUNTING POLICY INFORMATION, ESTIMATES AND
JUDGMENTS
We have identified certain accounting policies that are material to the preparation of our
consolidated financial statements. Some of our accounting policies require us to apply
estimates and assumptions as well as complex judgments related to accounting items. The
estimates and assumptions we use and the judgments we make in applying our accounting
policies have a significant impact on our financial position and results of operation. Our
management evaluates such estimates, assumptions and judgments based on past experience
and other factors, including industry practices and expectations of future events that are
deemed to be reasonable under the circumstances. There has not been any material deviation
from our management’s estimates or assumptions and actual results, and we have not made any
material changes to these estimates or assumptions during the Track Record Period. We do not
expect any material changes in these estimates and assumptions in the foreseeable future.
We set forth below those accounting policies that we believe are of critical importance to
us or involve the most significant estimates, assumptions and judgments used in the preparation
of our financial statements. For details of our material accounting policies, estimates,
assumptions and judgments, which are important for understanding our financial condition and
results of operations, see notes 2 and 3 to the Accountants’ Report in Appendix I.
Revenue and other income
We classify income as revenue when it arises from the sales of goods and the provision
of services.
(i) Revenue from contracts with customers
We are the principal for our revenue transactions and recognize revenue on a gross basis.
In determining whether we act as a principal or as an agent, we consider whether we obtain
control of the products before they are transferred to the customers. Control refers to the our
ability to direct the use of and obtain substantially all of the remaining benefits from the
products or services.
We recognize revenue when control over a product or service is transferred to the
customer at the amount of promised consideration to which our Group is expected to be
entitled, excluding those amounts collected on behalf of third parties such as value added tax
or other sales taxes.
Where the contract contains a financing component which provides a significant
financing benefit to the customer for more than twelve months, revenue is measured at the
present value of the amount receivable, discounted using the discount rate that would be
reflected in a separate financing transaction with the customer, and interest income is accrued
separately under the effective interest method. Where the contract contains a financing
component which provides a significant financing benefit to us, revenue recognized under that
FINANCIAL INFORMATION
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--- page 322 ---
contract includes the interest expense accreted on the contract liability under the effective
interest method. We take advantage of the practical expedient in paragraph 63 of IFRS 15 and
do not adjust the consideration for any effects of a significant financing component if the
period of financing is twelve months or less.
Further details of our revenue and other income recognition policies are as follows:
(a) Revenue from self-operated restaurant operations
Our self-operated restaurant operations included dine-in service and delivery business.
Revenue is recognized at a point in time when the related services have been rendered to
customers.
Our Group operates customer loyalty scheme for customers which enable customers to
earn loyalty points on their consumptions in our restaurants. Points are redeemable against any
future consumptions in the restaurants. Our Group allocates a portion of the consideration to
loyalty points based on the relative stand-alone selling prices. The amount allocated to the
loyalty points is deferred and recognized as revenue when loyalty points are redeemed or
expired.
(b) Revenue from franchise management
The revenue of franchise management mainly generated from royalty and franchising
income and provision of services as well as sales of food ingredients and restaurant supplies.
Our Group enters into a series of agreements with each franchisee, which mainly include
a license agreement and a sales agreement (collectively “ Franchise Agreements ”), whereby
the franchisees are licensed to operate the franchised restaurants.
The franchisees employ and manage their own staffs to operate the restaurants and serve
their customers (i.e. end consumers), and undertake the costs associated with the operations.
The franchisees sell the dishes based on the menu and recipe provided by our Group.
The franchisees are responsible for the placement, physical custody and condition of the
equipment and goods after the deliveries are accepted in restaurants. In general, our Group
does not have any obligation or historical practices to accept any return of unsold products,
except for rare cases such as a latent defect subject to product recall.
At the inception of the Franchise Agreements, franchisees are required to place a deposit
to our Group throughout the franchise period. The deposits are refundable upon the termination
of the Franchise Agreements, provided that the franchisees settled all outstanding balances
with our Group.
FINANCIAL INFORMATION
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Royalty and franchising income
Under the franchise agreements, franchisees pay a non-refundable upfront initial fee
including the pre-opening training services fee upon entering into franchise agreements and
monthly royalty fee. The non-refundable upfront initial fee is charged for pre-opening support
services provided to the franchisees, including market and location analysis, certain advisory
services like license application and pre-opening marketing, etc. As these services are highly
interrelated with the franchise right, they are not individually distinct from the ongoing
franchising arrangement with the franchisees. As a result, initial franchise fees, which are
considered as consideration for us to provide right to access our intellectual property, are
recognized on a straight-line basis over the expected franchise period, typically of 5 years.
Unrecognized non-refundable upfront initial fee is recognized as contract liabilities in the
consolidated statements of financial position.
Franchisees are also required to pay a monthly royalty fee, which is determined based on
a fixed percentage of the GMV generated by the franchised restaurants. Fixed amount royalty
fees are recognized monthly. For fixed percentage royalty fees, we apply “sales-based royalty”
under IFRS 15 “Revenue from Contracts with Customers” to recognize the royalty fees when
the sales to end customers occurred or the performance obligation (such as granting access to
our intellectual property and support services, including the provision of operational guidance
and training services to franchisees) to which some or all of the sales-based royalty has been
allocated has been satisfied (or partially satisfied), whichever is the later.
Provision of services
Our Group provide other services including system maintenance and support services to
franchisees. Revenue is recognized when these services are performed in the accounting period
in which the services are rendered.
Sales of food ingredients and restaurant supplies
Revenue from sales of food ingredients and restaurant supplies to franchisees is
recognized at the point in time when the franchisees accept the products and the control over
those products is transferred to the franchisees.
(ii) Dividends
Dividend income is recognized in profit or loss on the date we establish our right to
receive payment.
(iii) Interest income
Interest income is recognized using the effective interest method.
FINANCIAL INFORMATION
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--- page 324 ---
(iv) Government grants
We recognize government grants in the statements of financial position initially when
there is reasonable assurance that they will be received and that the Group will comply with
the conditions attaching to them.
Leased assets
At inception of a contract, we assess whether the contract is, or contains, a lease. This is
the case if the contract conveys the right to control the use of an identified asset for a period
of time in exchange for consideration. Control is conveyed where the customer has both the
right to direct the use of the identified asset and to obtain substantially all of the economic
benefits from that use.
(a) As a lessee
Where the contract contains lease component(s) and non-lease component(s), we have
elected not to separate non-lease components and accounts for each lease component and any
associated non-lease components as a single lease component for all leases.
At the lease commencement date, we recognize a right-of-use asset and a lease liability,
except for short-term leases that have a lease term of twelve months or less and leases of
low-value assets. When we enter into a lease in respect of a low-value asset, we decide whether
to capitalize the lease on a lease-by-lease basis. The lease payments associated with those
leases which are not capitalized are recognized in profit or loss on a systematic basis over the
lease term.
Where the lease is capitalized, the lease liability is initially recognized at the present
value of the lease payments payable over the lease term, discounted using the interest rate
implicit in the lease or, if that rate cannot be readily determined, using a relevant incremental
borrowing rate. After initial recognition, the lease liability is measured at amortized cost and
interest expense is recognized using the effective interest method. V ariable lease payments that
do not depend on an index or rate are not included in the measurement of the lease liability and
hence are charged to profit or loss in the accounting period in which they are incurred.
The right-of-use asset recognized when a lease is capitalized is initially measured at cost,
which comprises the initial amount of the lease liability adjusted for any lease payments made
at or before the commencement date, plus any initial direct costs incurred and an estimate of
costs to dismantle and remove the underlying asset or to restore the underlying asset or the site
on which it is located, less any lease incentives received. The right-of-use asset is subsequently
stated at cost less accumulated depreciation and impairment losses (see notes 2(f) and 2(i)(ii)
to the Accountants’ Report in Appendix I).
FINANCIAL INFORMATION
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Refundable rental deposits are accounted for separately from the right-of-use assets in
accordance with the accounting policy applicable to investments in non-equity securities
carried at amortized cost (see notes 2(e)(i) and 2(i)(i) to the Accountants’ Report in Appendix
I). Any excess of the nominal value over the initial fair value of the deposits is accounted for
as additional lease payments made and is included in the cost of right-of-use assets.
The lease liability is remeasured when there is a change in future lease payments arising
from a change in an index or rate, or there is a change in our estimate of the amount expected
to be payable under a residual value guarantee, or if we change its assessment of whether we
will exercise a purchase, extension or termination option. When the lease liability is
remeasured in this way, a corresponding adjustment is made to the carrying amount of the
right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset
has been reduced to zero.
The lease liability is also remeasured when there is a lease modification, which means a
change in the scope of a lease or the consideration for a lease that is not originally provided
for in the lease contract, if such modification is not accounted for as a separate lease. In this
case, the lease liability is remeasured based on the revised lease payments and lease term using
a revised discount rate at the effective date of the modification.
In the consolidated statement of financial position, the current portion of long-term lease
liabilities is determined as the present value of contractual payments that are due to be settled
within twelve months after the reporting period.
(b) As a lessor
We determine at lease inception whether each lease is a finance lease or an operating
lease. A lease is classified as a finance lease if it transfers substantially all the risks and rewards
incidental to the ownership of an underlying assets to the lessee. Otherwise, the lease is
classified as an operating lease.
When a contract contains lease and non-lease components, we allocate the consideration
in the contract to each component on a relative stand-alone selling price basis. The rental
income from operating leases is recognized in accordance with note 2(t) to the Accountants’
Report in Appendix I.
When we are an intermediate lessor, the sub-leases are classified as a finance lease or as
an operating lease with reference to the right-of-use asset arising from the head lease. If the
head lease is a short-term lease to which we apply the exemption described in note 2(h)(i) to
the Accountants’ Report in Appendix I, then we classify the sub-lease as an operating lease.
FINANCIAL INFORMATION
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Property, plant and equipment and right-of-use assets
Property, plant and equipment and right-of-use assets are stated at cost, less accumulated
depreciation and any accumulated impairment losses. See note 2(i)(ii) to the Accountants’
Report in Appendix I.
The cost of self-constructed items of property, plant and equipment includes the cost of
materials, direct labor, the initial estimate, where relevant, of the costs of dismantling and
removing the items and restoring the site on which they are located, and an appropriate
proportion of production overheads.
Any gain or loss on disposal of an item of property, plant and equipment is recognized
in profit or loss.
Depreciation is calculated to write off the cost of items of property, plant and equipment,
less their estimated residual values, if any, using the straight-line method over their estimated
useful lives, and is generally recognized in profit or loss. No depreciation is provided for in
respect of construction in progress until it is completed and ready for its intended use.
The estimated useful lives are as follows:
Right-of-use assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Over the lease term
Leasehold improvement /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Over the lease term
Kitchen equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182-5 years
Electronic equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182-5 years
Other equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184-5 years
Depreciation methods, useful lives and residual values are reviewed annually and
adjusted if appropriate.
Impairment of other non-current assets
At each reporting date, our Group reviews the carrying amounts of its non-financial assets
(other than inventories and deferred tax assets) to determine whether there is any indication of
impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For
impairment testing, assets are grouped together into the smallest group of assets that generates
cash inflows from continuing use that are largely independent of the cash inflows of other
assets or cash-generating units (“ CGU”s). The recoverable amount of an asset or CGU is the
greater of its value in use and its fair value less costs of disposal. V alue in use is based on the
estimated future cash flows, discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the
asset or CGU. An impairment loss is recognized if the carrying amount of an asset or CGU
exceeds its recoverable amount. Impairment losses are recognized in profit or loss. They are
FINANCIAL INFORMATION
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reduced the carrying amounts of the assets in the CGU on a pro rata basis. An impairment loss
is reversed only to the extent that the resulting carrying amount does not exceed the carrying
amount that would have been determined, net of depreciation or amortization, if no impairment
loss had been recognized.
IMPACT OF COVID-19 PANDEMIC
In 2022, our business and results of operations were affected by the COVID-19 pandemic
to a certain extent. Notably, our restaurants experienced reduced customer traffic, temporary
closures and reduced operating hours in 2022. We also experienced a slowdown in the
expansion of our restaurant network in 2022 in light of the resurgence of COVID-19 outbreaks.
As a result, we recorded a net loss of RMB36.0 million in 2022.
We have taken comprehensive measures to mitigate the negative impact of the COVID-19
pandemic, including (i) implementing more stringent cost controls, (ii) negotiating with our
landlords to obtain more favorable terms, (iii) proactively developing our delivery business by
designing, updating and diversifying our menu items for delivery scenarios and improving our
service capabilities to meet increasing consumer demand for food delivery services, and (iv)
remaining agile with pandemic control measures to resume restaurant operations by adopting
flexible working hours.
Following the ease of the COVID-19 pandemic in early 2023, our customer traffic and
operating days resumed and our financial performance exhibited a strong rebound with an
91.5% year-on-year increase in revenue and a net profit of RMB45.9 million in 2023. Notably,
our revenue from self-operated restaurant operations thrived with a 99.5% year-on-year
increase in the same year. Despite the challenges brought by the COVID-19 pandemic in 2022,
we believe that the COVID-19 pandemic will not continue to have any material adverse effect
on our business operations or financial performance. For details on related risks, see “Risk
Factors — We face risks related to instances of food-borne illnesses, health epidemics and
other outbreaks.”
FINANCIAL INFORMATION
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SUMMARY OF RESULTS OF OPERATIONS DURING THE TRACK RECORD
PERIOD
The following table sets forth a summary of our consolidated results of operations for the
respective periods indicated:
For the year ended December 31,
For the Six Months ended
June 30,
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Revenue /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118418,096 800,514 1,154,434 525,657 703,185
Raw materials and
consumables used /H1118/H1118/H1118/H1118(160,138) (290,270) (395,701) (187,250) (220,932)
Staff costs /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(109,264) (175,194) (265,062) (121,771) (158,797)
Depreciation of
right-of-use assets /H1118/H1118/H1118/H1118(94,620) (125,429) (188,845) (86,309) (109,726)
Depreciation and
amortization of
property, plant and
equipment and
intangible assets /H1118/H1118/H1118/H1118/H1118(21,828) (24,213) (37,649) (17,332) (26,028)
Utility expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118(14,119) (27,487) (44,543) (19,715) (28,102)
Other rentals and related
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(4,523) (18,365) (21,632) (10,645) (16,505)
Listing expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (1,112) – (11,164)
Advertising and
promotion expenses /H1118/H1118/H1118(6,150) (5,044) (13,339) (4,660) (9,525)
Travelling and related
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,929) (3,742) (5,672) (2,508) (2,577)
Other expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(34,595) (59,790) (88,721) (40,402) (53,698)
Other income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,504 14,143 8,967 4,879 4,500
Other net (losses)/gains /H1118 (177) 286 3,116 53 (1,867)
Finance costs /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(16,962) (19,333) (27,771) (12,697) (14,512)
Impairment losses of
property, plant and
equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(9,440) (8,938) (1,589) (846) (1,956)
Profit/(Loss) before
taxation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(48,145) 57,138 74,881 26,454 52,296
Income tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,172 (11,224) (14,181) (5,085) (10,462)
Profit/(Loss) for the
year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(35,973) 45,914 60,700 21,369 41,834
FINANCIAL INFORMATION
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Non-IFRS Measure
To supplement our consolidated financial statements which are presented in accordance
with IFRS, we also use the adjusted net profit/(loss) (a non-IFRS measure) and adjusted net
profit/(loss) margin (a non-IFRS measure) as additional financial measures, which are not
required by, or presented in accordance with, IFRS. We believe that such non-IFRS measure
facilitates comparisons of operating performance from period to period by eliminating
potential impacts of certain items. We believe that such measure provides useful information
to investors and others in understanding and evaluating our consolidated results of operations
in the same manner as it helps our management. However, our presentation of the adjusted net
profit/(loss) (a non-IFRS measure) and adjusted net profit/(loss) margin (a non-IFRS measure)
may not be comparable to similarly titled measures presented by other companies. The use of
such non-IFRS measure has limitations as an analytical tool, and you should not consider it in
isolation form, or as substitute for analysis of, our results of operations or financial condition
as reported under IFRS.
We define the adjusted net profit/(loss) (a non-IFRS measure) as profit/(loss) for the
year/period by eliminating (i) our equity-settled share-based payment expenses, (ii) listing
expenses, and (iii) tax effect of the above non-IFRS adjustments. Our management considers
that (1) equity-settled share-based payment expenses are non-cash in nature and do not result
in cash outflow and (2) listing expenses are expenses relating to the Global Offering. We define
the adjusted net profit/(loss) margin (a non-IFRS measure) as the adjusted net profit/(loss) (a
non-IFRS measure) for the year/period as percentages of the revenue for that year/period.
The following table reconciles our adjusted net profit (a non-IFRS measure) presented in
accordance with IFRS, namely profit/loss for the year:
Y ear Ended December 31,
Six Months ended
June 30,
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Profit/(loss) for the year /H1118 (35,973) 45,914 60,700 21,369 41,834
Equity-settled
share-based payment
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,337 1,419 3,139 1,551 2,624
Listing expense /H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 1,112 – 11,164
Tax effect of non-IFRS
adjustments /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(334) (355) (1,063) (388) (3,447)
Adjusted net
profit/(loss)
(a non-IFRS
measure) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(34,970) 46,978 63,888 22,532 52,175
Adjusted net
profit/(loss) margin
(%) (a non-IFRS
measure) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(8.4) 5.9 5.5 4.3 7.4
FINANCIAL INFORMATION
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DESCRIPTION OF KEY COMPONENTS OF OUR RESULTS OF OPERATIONS
Revenue
During the Track Record Period, we primarily generated our revenue from self-operated
restaurant operations and franchise management. Revenue from self-operated restaurant
operations mainly comprises revenue from dine-in service and delivery business at our
self-operated restaurants. Revenue from franchise management comprises revenue from
royalty and franchising income and provision of service as well as sales of goods such as food
ingredients and restaurant supplies to franchisees and sales of equipment to franchisees. Our
revenue increased from RMB418.1 million in 2022 to RMB800.5 million in 2023 and further
increased to RMB1,154.4 million in 2024, representing a CAGR of 66.2%. Our revenue
increased by 33.8% from RMB525.7 million for the six months ended June 30, 2024 to
RMB703.2 million for the six months ended June 30, 2025. Over 90% of our revenue are
generated in the Chinese Mainland.
The following table sets forth a breakdown of our revenue and percentage to total revenue
by business line for the periods indicated:
For the year ended December 31,
For the Six Months ended
June 30,
2022 2023 2024 2024 2025
RMB’000 % RMB’000 % RMB’000 % RMB’000 RMB’000
(Unaudited)
Self-operated restaurant
operations
– Dine-in service /H1118/H1118/H1118/H1118/H1118/H1118/H1118270,998 64.8 547,353 68.4 820,301 71.1 370,612 497,176
– Delivery business /H1118/H1118/H1118/H1118/H1118/H111865,738 15.7 124,587 15.5 180,709 15.6 82,128 128,898
Sub-total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118336,736 80.5 671,940 83.9 1,001,010 86.7 452,740 626,074
Franchise management
– Sales of food ingredients
and restaurant supplies /H1118/H111867,964 16.3 104,965 13.2 125,488 10.9 59,736 62,787
– Royalty and franchising
income and provision of
service /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,547 3.0 22,729 2.8 27,042 2.3 12,736 13,875
Sub-total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111880,511 19.3 127,694 16.0 152,530 13.2 72,472 76,662
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118849 0.2 880 0.1 894 0.1 445 449
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118418,096 100.0 800,514 100.0 1,154,434 100.0 525,657 703,185
FINANCIAL INFORMATION
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During the Track Record Period, the majority of our revenue was generated from our
self-operated restaurants. As of December 31, 2022, 2023 and 2024 and June 30, 2025, we had
111, 183, 279 and 331 self-operated restaurants under our Xiao Noodles brand. We provide
dine-in services at our self-operated restaurants. We also offer delivery services to customers.
Revenue from dine-in service amounted to RMB271.0 million, RMB547.4 million, RMB820.3
million, RMB370.6 million and RMB497.2 million in 2022, 2023, 2024 and for the six months
ended June 30, 2024 and 2025, respectively, accounting for 64.8%, 68.4%, 71.1%, 70.5% and
70.7% of our total revenue for the respective periods. Revenue from delivery business
amounted to RMB65.7 million, RMB124.6 million, RMB180.7 million, RMB82.1 million and
RMB128.9 million in 2022, 2023, 2024 and for the six months ended June 30, 2024 and 2025,
respectively, accounting for 15.7%, 15.5%, 15.6%, 15.6% and 18.3% of our total revenue for
the respective periods. Such increases were primarily due to the expansion of our self-operated
restaurant network, leading to the increases in total number of dine-in and delivery orders. For
detailed analysis, see “— Period to Period Comparison of Results of Operations.”
Revenue from royalty and franchising income and provision of service primarily derives
from our franchise model. We typically charge franchisees (i) an upfront initial fee in the
amount specified in the respective agreements and (ii) a monthly royalty fee, which is
calculated based on predetermined percentages of the GMV generated by the franchised
restaurants. For further details of our franchise agreements, see “Business — Our Franchisees
— Agreements with Franchisees.” In 2022, 2023, 2024 and for the six months ended June 30,
2024 and 2025, revenue from royalty and franchising income and provision of service
amounted to RMB12.5 million, RMB22.7 million, RMB27.0 million, RMB12.7 million and
RMB13.9 million, respectively, accounting for 3.0%, 2.8%, 2.3%, 2.4% and 2.0% of our total
revenue for the respective periods. Such growth was mainly attributable to the increase in the
number of our franchised restaurants from 50 as of December 31, 2022 to 69 as of December
31, 2023, further to 81 as of December 31, 2024, and further to 86 as of June 30, 2025. In
addition, we provide food ingredients, restaurant supplies and equipment to our franchisees. In
2022, 2023, 2024 and for the six months ended June 30, 2024 and 2025, revenue from sales
of food ingredients and restaurant supplies amounted to RMB68.0 million, RMB105.0 million,
RMB125.5 million, RMB59.7 million and RMB62.8 million, respectively, accounting for
16.3%, 13.2%, 10.9%, 11.4% and 8.9% of our total revenue for the respective periods.
Revenue from others represents sales of retail products under our Xiao Noodles brand on
e-commerce platforms. In 2022, 2023, 2024 and for the six months ended June 30, 2024 and
2025, revenue from others amounted to RMB0.8 million, RMB0.9 million, RMB0.9 million,
RMB0.4 million and RMB0.4 million, respectively, accounting for 0.2%, 0.1%, 0.1%, 0.1%
and 0.1% of our total revenue for the respective periods.
FINANCIAL INFORMATION
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Restaurant performance
The following table sets forth certain key performance indicators of our self-operated and
franchised Xiao Noodles restaurants (1) in China by region for the periods indicated.
For the year ended December 31,
For the Six Months ended
June 30,
2022 2023 2024 2024 2025
GMV(2) (RMB’000)
Self-operated
restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118/H1118/H1118340,086 668,021 944,708 433,913 544,954
Second-tier cities and
below /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111829,866 45,095 67,946 29,389 42,621
Hong Kong SAR /H1118/H1118/H1118/H1118/H1118– – 15,723 (3) 3,674 42,272
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118369,952 713,116 1,028,378 466,976 629,847
Franchised restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118/H1118/H111868,110 129,871 152,693 74,394 72,981
Second-tier cities and
below /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111873,146 117,081 167,351 76,353 96,122
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118141,257 246,952 320,044 150,747 169,104
Average daily sales per
restaurant
(4)
(RMB)
Self-operated
restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118/H1118/H111812,059 14,143 12,405 12,714 11,355
Second-tier cities and
below /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810,169 12,132 10,605 11,360 9,773
Hong Kong SAR /H1118/H1118/H1118/H1118/H1118– – 51,215 51,021 42,357
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,881 13,997 12,410 12,693 11,805
Franchised restaurants /H1118
First-tier and new
first-tier cities /H1118/H1118/H1118/H1118/H111811,802 14,234 12,688 12,904 11,880
Second-tier cities and
below /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,554 12,872 12,104 12,181 11,215
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,672 13,554 12,376 12,528 11,493
FINANCIAL INFORMATION
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For the year ended December 31,
For the Six Months ended
June 30,
2022 2023 2024 2024 2025
Total number of
orders
(5)
(thousands)
Self-operated
restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118/H1118/H11189,416 19,498 29,581 13,385 17,666
Second-tier cities and
below /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118817 1,349 2,176 924 1,428
Hong Kong SAR /H1118/H1118/H1118/H1118/H1118– – 260 57 699
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810,233 20,847 32,018 14,365 19,794
Franchised restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118/H1118/H11181,922 3,913 4,864 2,359 2,404
Second-tier cities and
below /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,004 3,459 5,212 2,336 3,061
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,927 7,372 10,076 4,695 5,465
Average spending per
order (6) (RMB)
Self-operated
restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118/H1118/H111836.1 34.3 31.9 32.4 30.8
Second-tier cities and
below /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111836.5 33.4 31.2 31.8 29.8
Hong Kong SAR /H1118/H1118/H1118/H1118/H1118– – 60.4 64.7 60.4
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111836.2 34.2 32.1 32.5 31.8
Franchised restaurants /H1118
First-tier and new
first-tier cities /H1118/H1118/H1118/H1118/H111835.4 33.2 31.4 31.5 30.4
Second-tier cities and
below /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111836.5 33.8 32.1 32.7 31.4
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111836.0 33.5 31.8 32.1 30.9
FINANCIAL INFORMATION
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For the year ended December 31,
For the Six Months ended
June 30,
2022 2023 2024 2024 2025
Average daily orders
per restaurant (7)
Self-operated
restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118/H1118334 413 388 392 368
Second-tier cities and
below /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118278 363 340 357 327
Hong Kong SAR /H1118/H1118/H1118/H1118/H1118– – 848 788 701
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118329 409 386 390 371
Franchised restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118/H1118/H1118333 429 404 409 391
Second-tier cities and
below /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118317 380 377 373 357
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118324 405 390 390 371
Seat turnover rate (8)
Self-operated
restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118/H1118/H11183.2 4.0 3.8 3.8 3.4
Second-tier cities and
below /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182.5 3.1 3.1 3.2 2.6
Hong Kong SAR /H1118/H1118/H1118/H1118/H1118– – 6.8 6.9 6.0
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183.1 3.9 3.8 3.8 3.4
Franchised restaurants
First-tier and new
first-tier cities /H1118/H1118/H1118/H1118/H11183.2 4.1 3.9 3.9 3.5
Second-tier cities and
below /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182.8 3.2 3.3 3.2 2.9
Overall /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183.0 3.6 3.6 3.6 3.1
FINANCIAL INFORMATION
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Notes:
(1) The above key performance indicators of our self-operated and franchised Xiao Noodles restaurants do
not include the restaurants that were authorized to be operated by an Independent Third Party in 2022
and 2023. For details of the background our restaurants under authorized operation model, see “Business
— Our Franchisees.” During the Track Record Period, there was no significant difference in the
performance of our self-operated and franchised restaurants.
(2) Representing the total sales value of food and beverage sold under the restaurant operations and delivery
business of restaurants under both our self-operated and franchise models over the period, after
deducting any fees or costs such as discounts or returns.
(3) In 2024, we operated three self-operated restaurants in Hong Kong SAR, which were opened in April,
November and December, 2024.
(4) Average daily sales per restaurant is calculated by dividing (i) the total GMV generated from restaurant
operations and delivery business of restaurants under both our self-operated and franchise models by (ii)
the total operation days of such restaurants for the period. The number of the total operation days of such
restaurants is the sum of the operation days of all Xiao Noodles restaurants in the relevant regions.
(5) Total number of orders include the number of orders placed by dine-in customers and customers of our
delivery services for the period in the relevant regions.
(6) Average spending per order is calculated by dividing (i) the total GMV generated from restaurant
operations and delivery services of restaurants under both our self-operated and franchise models by (ii)
the total number of orders, including orders placed by both dine-in customers and customers of our
delivery services, for the period in the relevant regions.
(7) Average daily orders per restaurant is calculated by dividing (i) the total number of orders, including
orders placed by both dine-in customers and customers of our delivery services, by (ii) the total
operation days of such restaurants for the period. The number of the total operation days is the sum of
the operation days of all Xiao Noodles restaurants in the relevant regions.
(8) Seat turnover rate is calculated by dividing the aggregate number of orders placed by dine-in customers
during a specific period by the total number of available seats in that period, which is determined by
multiplying the restaurants’ seat count by their operation days.
FINANCIAL INFORMATION
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Raw Materials and Consumables Used
Our raw materials and consumables used mainly consist of food ingredients, such as meat,
condiments, and packaging materials. For the years ended December 31, 2022, 2023 and 2024
and for the six months ended June 30, 2024 and 2025, our raw materials and consumables used
amounted to RMB160.1 million, RMB290.3 million, RMB395.7 million, RMB187.3 million
and RMB220.9 million, respectively, accounting for 38.3%, 36.3%, 34.3%, 35.6% and 31.4%
of our total revenue for the respective periods.
The following table sets out a breakdown of our raw materials and consumables used in
absolute amounts:
Y ear ended December 31,
Six Months ended
June 30,
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Food ingredients /H1118/H1118/H1118/H1118/H1118/H1118/H1118151,851 275,022 371,517 176,549 203,176
Packaging materials /H1118/H1118/H1118/H11188,287 15,248 24,184 10,701 17,756
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118160,138 290,270 395,701 187,250 220,932
Staff Costs
Our staff costs comprise (1) (i) salaries, wages and other benefits, (ii) contributions to
defined contribution retirement plan, (iii) equity-settled share-based payment expenses to our
employees, and (2) outsourced staff costs representing payments to third-party human resource
service providers in relation to our outsourced staff. For the years ended December 31, 2022,
2023, 2024 and for the six months ended June 30, 2024 and 2025, our staff costs amounted to
RMB109.3 million, RMB175.2 million, RMB265.1 million, RMB121.8 million and RMB158.8
million, respectively, accounting for 26.1%, 21.9%, 23.0%, 23.2% and 22.6% of our total
revenue for the respective periods.
FINANCIAL INFORMATION
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The following table sets forth a breakdown of our staff costs during the Track Record
Period:
For the year ended December 31,
For the Six Months ended
June 30,
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Salaries, wages and other
benefits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118103,667 158,135 145,456 69,388 79,416
Contributions to defined
contribution retirement
plans /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,260 6,829 10,238 4,812 6,256
Equity-settled
share-based payment
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,337 1,419 3,139 1,551 2,624
Outsourced staff costs /H1118/H1118 – 8,811 106,229 46,020 70,501
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118109,264 175,194 265,062 121,771 158,797
Depreciation of Right-of-Use Assets
Our depreciation of right-of-use assets represents depreciation charges for our leases for
our restaurants, warehouses and offices. For the years ended December 31, 2022, 2023, 2024,
and for the six months ended June 30, 2024 and 2025, our depreciation of right-of-use assets
amounted to RMB94.6 million, RMB125.4 million, RMB188.8 million, RMB86.3 million and
RMB109.7 million, respectively, accounting for 22.6%, 15.7%, 16.4%, 16.4% and 15.6% of
our total revenue for the respective periods.
Other Rentals and Related Expenses
Our other rentals and related expenses mainly represent (i) lease payments for leases of
low-value assets and leases that had a lease term of twelve months or less, and (ii) the variable
lease payments based on operation results of related restaurants. In 2022, 2023, 2024 and for
the six months ended June 30, 2024 and 2025, our other rentals and related expenses amounted
to RMB4.5 million, RMB18.4 million, RMB21.6 million, RMB10.6 million and RMB16.5
million, respectively, accounting for 1.1%, 2.3%, 1.9%, 2.0% and 2.3% of our total revenue for
the respective periods.
FINANCIAL INFORMATION
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Depreciation and Amortization of Property, Plant and Equipment and Intangible Assets
Our depreciation and amortization of property, plant and equipment and intangible assets
mainly represent depreciation and amortization charges for our capitalized renovation costs
and certain equipment in our restaurants. In 2022, 2023, 2024 and for the six months ended
June 30, 2024 and 2025, our depreciation and amortization of property, plant and equipment
and intangible assets amounted to RMB21.8 million, RMB24.2 million, RMB37.6 million,
RMB17.3 million and RMB26.0 million, respectively, accounting for 5.2%, 3.0%, 3.3%, 3.3%
and 3.7% of our total revenue for the respective periods.
Utility Expenses
Our utility expenses mainly represent expenses incurred for electricity and water utilities
by our self-operated restaurants. In 2022, 2023, 2024 and for the six months ended June 30,
2024 and 2025, our utility expenses amounted to RMB14.1 million, RMB27.5 million,
RMB44.5 million, RMB19.7 million and RMB28.1 million, respectively, accounting for 3.4%,
3.4%, 3.9%, 3.8% and 4.0% of our total revenue for the respective periods.
Listing Expenses
Our listing expenses mainly represent expenses relating to the Global Offering. We did
not incur any listing expenses in 2022, 2023 and for the six months ended June 30, 2024. We
incurred listing expenses of RMB1.1 million in 2024 and RMB11.2 million for the six months
ended June 30, 2025, accounting for 0.1% and 1.6% of our total revenue for the respective
periods.
Advertising and Promotion Expenses
Our advertising and promotion expenses mainly derive from restaurant-level and
headquarters-level marketing campaigns and our branding activities. In 2022, 2023, 2024 and
for the six months ended June 30, 2024 and 2025, our advertising and promotion expenses
amounted to RMB6.2 million, RMB5.0 million and RMB13.3 million, RMB4.7 million and
RMB9.5 million, respectively, accounting for 1.5%, 0.6%, 1.2%, 0.9% and 1.4% of our total
revenue for the respective periods.
Travelling and Related Expenses
Our travelling and related expenses mainly represent expenses on business trips of our
employees. In 2022, 2023, 2024 and for the six months ended June 30, 2024 and 2025, our
travelling and related expenses amounted to RMB1.9 million, RMB3.7 million, RMB5.7
million, RMB2.5 million and RMB2.6 million, respectively, accounting for 0.5%, 0.5%, 0.5%,
0.5% and 0.4% of our total revenue for the respective periods.
FINANCIAL INFORMATION
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Other Expenses
Our other expenses primarily comprise (i) service fee paid to third-party online food
delivery platforms, including both delivery service commissions and delivery fees, (ii)
materials for restaurant operation, which consist of restaurant supplies apart from food
ingredients and packaging materials, (iii) transportation expenses paid to logistics service
providers, (iv) maintenance expenses including cleansing service expenses and general
maintenance expenses, (v) software service fee for our informatization efforts, (vi) bank and
other charges, (vii) professional service fees such as performance assessment expenditures by
engaging mystery guest reviews and annual audit fees, (viii) business tax and surcharges, (ix)
office expenses, and (x) other miscellaneous expenses. The table below sets forth a breakdown
of our other expenses for the periods indicated:
For the year ended December 31,
For the Six Months ended
June 30,
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Service fee paid to
third-party online food
delivery platforms /H1118/H1118/H1118/H111814,930 28,800 42,275 19,176 30,516
Materials for restaurant
operation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,895 10,621 14,926 8,067 5,856
Transportation expenses /H1118 3,087 5,120 7,733 3,345 5,285
Maintenance expenses /H1118/H11181,895 2,917 4,750 1,759 2,460
Software service fee /H1118/H1118/H1118/H11181,974 2,452 4,086 1,299 1,606
Bank and other charges /H1118 917 1,667 3,607 1,651 2,816
Professional service fees /H1118 2,006 2,949 2,481 1,222 1,340
Business tax and
surcharges /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118519 1,328 2,146 683 781
Office expenses /H1118/H1118/H1118/H1118/H1118/H1118/H11181,429 1,477 2,113 1,159 1,178
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,943 2,459 4,604 2,041 1,860
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111834,595 59,790 88,721 40,402 53,698
In 2022, 2023, 2024 and for the six months ended June 30, 2024 and 2025, our other
expenses amounted to RMB34.6 million, RMB59.8 million, RMB88.7 million, RMB40.4
million and RMB53.7 million, respectively.
FINANCIAL INFORMATION
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--- page 340 ---
Other Income
Our other income primarily consists of (i) government grants, which mainly represent
unconditional cash awards granted by the government authorities in the Chinese Mainland,
relating to business stability subsidies, COVID-19 relief support for catering industries and
incentives for retail sales growth, (ii) interest income on bank deposits, rental deposits and
lease payment receivables, (iii) investment income from financial assets measured at FVPL,
which represents realized gains on our investments in structured deposits, and (iv) income from
value-added tax super deduction and exemption granted by the government authorities in the
Chinese Mainland. In 2022, 2023, 2024 and for the six months ended June 30, 2024 and 2025,
our other income amounted to RMB7.5 million, RMB14.1 million, RMB9.0 million, RMB4.9
million and RMB4.5 million, respectively.
The following table sets forth a breakdown of our other income for the periods indicated:
For the year ended December 31,
For the Six Months ended
June 30,
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Government grants /H1118/H1118/H1118/H1118/H11182,175 1,863 5,760 3,574 2,400
Interest income on:
Rental deposits /H1118/H1118/H1118/H1118/H1118/H1118986 1,308 1,889 865 1,155
Bank deposits /H1118/H1118/H1118/H1118/H1118/H1118/H1118470 1,070 573 182 482
Lease payment
receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118572 411 239 140 64
Investment income from
financial assets
measured at FVPL /H1118/H1118/H1118311 537 506 118 399
Income from value-added
tax super deduction
and exemption /H1118/H1118/H1118/H1118/H1118/H1118/H11182,990 8,95 4–––
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,504 14,143 8,967 4,879 4,500
FINANCIAL INFORMATION
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Other Net (Losses)/Gains
Our other net losses or gains primarily consist of (i) gains on early termination of leases,
(ii) net fair value changes of financial assets measured at FVPL, representing unrealized gains
on our investments in structured deposits, (iii) losses on restaurant closures, mainly arising
from loss on disposal of assets and loss on deposits of closed self-operated restaurants, and (iv)
donation for establishing a campus charity fund at the South China University of Technology
and expenses for the “Baobao Meal Charity Program”. In 2022, 2023, 2024 and for the six
months ended June 30, 2024 and 2025, our other net (losses)/gains amounted to RMB(0.2)
million, RMB0.3 million, RMB3.1 million, RMB53,000 and RMB(1.9) million, respectively.
The table below sets forth a breakdown of our other net losses or gains for the periods
indicated:
For the year ended December 31,
For the Six Months ended
June 30,
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Gains on early
termination of leases /H1118/H1118 130 1,482 4,142 39 453
Net fair value changes of
financial assets
measured at FVPL /H1118/H1118/H1118 9 63 261 130 18
Losses on restaurant
closures /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(855) (1,461) (515) (167) (1,703)
Donation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (88) (600) – (350)
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118539 290 (172) 51 (285)
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(177) 286 3,116 53 (1,867)
FINANCIAL INFORMATION
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Finance Costs
Our finance costs consist of interest on lease liabilities, interest on bank loans and unwind
of discount on provisions for reinstatement costs at the expiration of certain leases of our
self-operated restaurants. In 2022, 2023, 2024 and for the six months ended June 30, 2024 and
2025, our finance costs amounted to RMB17.0 million, RMB19.3 million, RMB27.8 million,
RMB12.7 million and RMB14.5 million, respectively. The table below sets forth a breakdown
of our finance costs for the periods indicated:
For the year ended December 31,
For the Six Months ended
June 30,
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Interest on lease
liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111816,600 19,074 27,083 12,555 14,329
Interest on bank
loans /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118208 45 381 – 7
Unwind of discount
on provisions /H1118/H1118/H1118/H1118/H1118154 214 307 142 176
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111816,962 19,333 27,771 12,697 14,512
Impairment Losses of Property, Plant and Equipment
Our impairment losses of property, plant and equipment are primarily generated from
impairment losses of assets of our underperforming restaurants. At each reporting year, we
perform impairment testing on property, plant and equipment and right-of-use assets of each
restaurant to identify whether there is any indication of impairment. In view of the unfavorable
future prospects of certain restaurants, our Group’s management estimated the recoverable
amount of each such restaurant in CGU with an indication of impairment. The recoverable
amount of each CGU is determined based on fair value less cost of disposal or the value-in-use
calculations by preparing cash flow projections of the relevant CGUs derived from the most
recent financial forecast approved by the management covering the remaining lease term,
which is higher. We recognized an impairment loss of RMB9.4 million, RMB8.9 million,
RMB1.6 million, RMB0.8 million and RMB2.0 million in 2022, 2023, 2024 and for the six
months ended June 30, 2024 and 2025, respectively. The impairment losses were allocated to
the assets in related restaurant including leasehold improvement and other property, plant and
equipment within CGU on a pro rata basis, was recognized in the consolidated statements of
profit or loss and other comprehensive income in the respective year. See note 11(b) to the
Accountants’ Report in Appendix I for further details.
FINANCIAL INFORMATION
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Income Tax
Taxable income for our Group’s Chinese Mainland subsidiaries are generally subject to
PRC income tax rate of 25% during the Track Record Period.
Certain subsidiaries met the criteria required for preferential income tax rate granted to
small and low profit-making enterprise in the Chinese Mainland, and were entitled to a
preferential income tax rate of 5% on taxable income during the Track Record Period.
Certain subsidiaries fell within the state encouraged industries in the specified western
regions and were entitled to a preferential income tax rate of 15% during the Track Record
Period.
Our Group has established subsidiaries in Hong Kong since 2023. Except for one
subsidiary of our Group which is a qualifying corporation under the two-tiered profit tax rate
regime for the year ended 31 December 2024 and the six months ended 30 June 2025, the
remaining subsidiaries did not have any other assessable profits for the year ended 31
December 2023 and were subject to profit tax rate of 16.5% on estimated assessable profits for
the year ended 31 December 2024 and the six months ended 30 June 2025. For this subsidiary,
the first HK$2 million of assessable profits are taxed at 8.25% and the remaining assessable
profits are taxed at 16.5%.
The provision for Hong Kong profit tax for 2024 and 2025 takes into account a reduction
granted by the Hong Kong SAR Government of 100% of the tax payable for the year of
assessment 2023/24 and 2024/25 subject to a maximum reduction of HK$3,000 and HK$1,500
for each business.
Our Group has established a subsidiary in Singapore in 2025 and did not have any
assessable profits for the six months ended 30 June 2025.
In 2022, we recorded income tax credit of RMB12.2 million. In 2023 and 2024, we
recorded income tax expenses of RMB11.2 million and RMB14.2 million, respectively. In the
first half of 2024 and 2025, we recorded income tax expenses of RMB5.1 million and RMB10.5
million, respectively. During the Track Record Period and as of the Latest Practicable Date, we
did not have any disputes or unresolved issues with the relevant tax authorities.
Profit/(Loss) for the Y ear/Period
We recorded loss for the year of RMB36.0 million in 2022. We recorded profit for the
year of RMB45.9 million and RMB60.7 million in 2023 and 2024, respectively. We recorded
profit for the period of RMB21.4 million and RMB41.8 million for the six months ended June
30, 2024 and 2025, respectively. Our net profit/(loss) margin amounted to (8.6)%, 5.7%, 5.3%,
4.1% and 5.9% in 2022, 2023, 2024, and for the six months ended June 30, 2024 and 2025,
respectively.
FINANCIAL INFORMATION
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--- page 344 ---
PERIOD TO PERIOD COMPARISON OF RESULTS OF OPERATIONS
Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024
Revenue
Our revenue increased by 33.8% from RMB525.7 million for the six months ended June
30, 2024 to RMB703.2 million for the same period in 2025, primarily due to increases in
revenue contribution from all business lines for the six months ended June 30, 2025.
Dine-in service
Revenue from dine-in service increased by 34.2% from RMB370.6 million for the six
months ended June 30, 2024 to RMB497.2 million for the same period in 2025, which was
primarily due to the increase in the number of our self-operated restaurants from 226 as of June
30, 2024 to 331 as of June 30, 2025. As a result, total number of orders served by our
restaurants increased from approximately 19.1 million for the six months ended June 30, 2024
to approximately 25.3 million for the same period in 2025, and the GMV of our self-operated
restaurants increased from approximately RMB467.0 million for the six months ended June 30,
2024 to approximately RMB629.8 million for the same period in 2025. Such increases were
partially offset by the decrease in average spending per order of our self-operated restaurants
from RMB32.5 for the six months ended June 30, 2024 to RMB31.8 for the same period in
2025, primarily because we continued our price reduction initiative in order to provide a more
affordable dining experience for our customers and increase our overall sales, which was in
line with the increase in our same store average daily orders per restaurant during the period.
Delivery business
Revenue from delivery business increased by 56.9% from RMB82.1 million for the six
months ended June 30, 2024 to RMB128.9 million for the same period in 2025, which was
primarily due to the expansion of our self-operated restaurant network, resulting in the increase
in number of delivery orders from approximately 3.7 million for the six months ended June 30,
2024 to approximately 6.2 million for the same period in 2025, primarily due to the intensified
promotional activities on the delivery platforms in the first half of 2025, which prompted more
customers to place orders on these platforms.
Royalty and franchising income and provision of service
Revenue from royalty and franchising income and provision of service increased by 8.9%
from RMB12.7 million for the six months ended June 30, 2024 to RMB13.9 million for the
same period in 2025, which was primarily due to the increase in the number of our franchised
restaurants from 75 as of June 30, 2024 to 86 as of June 30, 2025.
FINANCIAL INFORMATION
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Sales of food ingredients and restaurant supplies
Revenue from sales of food ingredients and restaurant supplies increased slightly by 5.1%
from RMB59.7 million for the six months ended June 30, 2024 to RMB62.8 million for the
same period in 2025 following our business expansion.
Others
Revenue from others remained stable at RMB0.4 million for both the six months ended
June 30, 2024 and 2025.
Raw materials and consumables used
Our raw materials and consumables used increased by 18.0% from RMB187.3 million for
the six months ended June 30, 2024 to RMB220.9 million for the same period in 2025,
primarily due to the increased consumption of food ingredients and packaging materials in line
with our restaurant network expansion. Our raw materials and consumables used as a
percentage of our revenue decreased from 35.6% for the six months ended June 30, 2024 to
31.4% for the same period in 2025 as we continued the expansion of our self-operated
restaurants, cost of raw materials and consumables of which accounted for a lower proportion
of their corresponding revenue as compared with our franchised restaurants. The percentage of
the cost of raw materials and consumables over the revenue attributable to our self-operated
restaurants, decreased from 29.4% for the six months ended June 30, 2024 to 26.9% for the
same period in 2025, primarily due to (i) our continuous effort in managing our procurement
costs as we had benefited from economies of scale following the expansion of our self-operated
restaurant network, and (ii) the growing contribution from restaurants in Hong Kong which had
higher operating profit margins.
Staff costs
Our staff costs increased by 30.4% from RMB121.8 million for the six months ended June
30, 2024 to RMB158.8 million for the same period in 2025, which was primarily due to (i) the
increase in salaries, wages and other benefits and outsourced staff costs attributable to the
increase in the number of our staff at restaurant level following the expansion of our
self-operated restaurant network and (ii) the increase in the number of our employees at
headquarters level which is in line with the expansion of our restaurant network. Our staff costs
as a percentage of our revenue decreased slightly from 23.2% for the six months ended June
30, 2024 to 22.6% for the same period in 2025 as a result of the dilution of our staff costs at
the headquarters following the expansion of our restaurant network.
Depreciation of right-of-use assets
Our depreciation of right-of-use assets increased by 27.1% from RMB86.3 million for the
six months ended June 30, 2024 to RMB109.7 million for the same period in 2025, primarily
due to the increase in the number of our self-operated restaurants from 226 as of June 30, 2024
to 331 as of June 30, 2025, leading to an increase in the number of our leases.
FINANCIAL INFORMATION
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Other rentals and related expenses
Our other rentals and related expenses increased by 55.0% from RMB10.6 million for the
six months ended June 30, 2024 to RMB16.5 million for the same period in 2025, primarily due
to the increase in variable lease payments of our restaurants as a result of the increased number
of self-operated restaurants with variable rent arrangements and the enhanced performance of
these restaurants.
Depreciation and amortization of property, plant and equipment and intangible assets
Our depreciation and amortization of property, plant and equipment and intangible assets
increased by 50.2% from RMB17.3 million for the six months ended June 30, 2024 to
RMB26.0 million for the same period in 2025, primarily due to the increase in depreciation of
restaurant renovations and equipment attributable to our increased number of self-operated
restaurants. As a result, our depreciation and amortization of property, plant and equipment and
intangible assets as a percentage of our revenue increased slightly from 3.3% for the six months
ended June 30, 2024 to 3.7% for the same period in 2025 respectively.
Utility expenses
Our utility expenses increased by 42.5% from RMB19.7 million for the six months ended
June 30, 2024 to RMB28.1 million for the same period in 2025, primarily due to an increase
in the number of our self-operated restaurants. Our utility expenses as a percentage of our
revenue remained relatively stable at 3.8% and 4.0% for the six months ended June 30, 2024
and for the same period in 2025, respectively.
Listing expenses
Our listing expenses increased from nil for the six months ended June 30, 2024 to
RMB11.2 million for the same period in 2025 due to the preparation for the Global Offering.
Advertising and promotion expenses
Our advertising and promotion expenses increased by 104.4% from RMB4.7 million for
the six months ended June 30, 2024 to RMB9.5 million for the same period in 2025, primarily
due to (i) the increased expenses for restaurant promotion charged by the property owners of
our leased properties along with our restaurant network expansion, (ii) the increased expenses
for the promotion of our delivery services on third-party online food delivery platforms, and
(iii) the increased promotion of our brand on social media platforms such as Douyin (ࠪand
RedNote (ࣣߎAs a result, our advertising and promotion expenses as a percentage of our
revenue increased slightly from 0.9% for the six months ended June 30, 2024 to 1.4% for the
same period in 2025.
FINANCIAL INFORMATION
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Travelling and related expenses
Our travelling and related expenses increased by 2.8% from RMB2.5 million for the six
months ended June 30, 2024 to RMB2.6 million for the same period in 2025, primarily due to
increased business trips driven by our ongoing restaurant network expansion and regular store
inspections conducted by our headquarters following the expansion of our restaurant network.
Other expenses
Our other expenses increased by 32.9% from RMB40.4 million for the six months ended
June 30, 2024 to RMB53.7 million for the same period in 2025, primarily due to (i) an increase
in service fee paid to third-party online food delivery platforms of RMB11.3 million as a result
of the increase in delivery service commission and delivery fees paid to delivery platforms in
line with the increase in scale of our delivery business.
Other income
Our other income decreased by 7.8% from RMB4.9 million for the six months ended June
30, 2024 to RMB4.5 million for the same period in 2025, primarily due to a decrease in
government grants received.
Other net (losses)/gains
For the six months ended June 30, 2024, we recorded other net gains of RMB53,000,
while for the six months ended June 30, 2025, we recorded other net losses of RMB1.9 million.
The turnaround from other net gains for the six months ended June 30, 2024 to other net losses
for the six months ended June 30, 2025 was primarily due to an increase in losses on restaurant
closures of RMB1.5 million.
Finance costs
Our finance costs increased by 14.3% from RMB12.7 million for the six months ended
June 30, 2024 to RMB14.5 million for the same period in 2025, primarily due to an increase
in interest on lease liabilities of RMB1.8 million associated with the increase in the number of
our leases driven by the expansion of our self-operated restaurant network.
Impairment losses of property, plant and equipment
Our impairment losses of property, plant and equipment increased by 131.2% from
RMB0.8 million for the six months ended June 30, 2024 to RMB2.0 million for the same period
in 2025, primarily due to the impairment of assets of underperforming restaurants, mainly
including restaurant renovation and restaurant equipment.
FINANCIAL INFORMATION
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Income tax expense
Our income tax expense increased by 105.7% from RMB5.1 million for the six months
ended June 30, 2024 to RMB10.5 million for the same period in 2025, primarily due to our
increased taxable income.
Profit for the period
As a result of the foregoing, our profit for the period increased by 95.8% from RMB21.4
million for the six months ended June 30, 2024 to RMB41.8 million for the same period in
2025.
Y ear Ended December 31, 2024 Compared to Y ear Ended December 31, 2023
Revenue
Our total revenue increased by 44.2% from RMB800.5 million in 2023 to RMB1,154.4
million in 2024, primarily due to the increases in revenue contribution from all business lines
in 2024.
Dine-in service
Revenue from dine-in service increased by 49.9% from RMB547.4 million in 2023 to
RMB820.3 million in 2024, which was primarily due to the increase in the number of our
self-operated restaurants from 183 as of December 31, 2023 to 279 as of December 31, 2024.
As a result, total number of orders served by our restaurants increased significantly from
approximately 28.2 million in 2023 to approximately 42.1 million in 2024, and our GMV
increased from approximately RMB960.1 million in 2023 to approximately RMB1,348.4
million in 2024. Such increases were partially offset by the decrease in average spending per
order of our restaurants from RMB34.0 in 2023 to RMB32.0 in 2024, primarily because we
took the initiative to reduce the prices of our menu items and provide customers with a more
affordable dining experience in order to attract more customers, which was evidenced by the
substantial increase in the number of dine-in orders in 2024.
Delivery business
Revenue from delivery business increased by 45.0% from RMB124.6 million in 2023 to
RMB180.7 million in 2024, which was primarily due to the expansion of our self-operated
restaurant network, resulting in the increase in number of delivery orders from approximately
5.9 million in 2023 to approximately 8.2 million in 2024.
FINANCIAL INFORMATION
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Royalty and franchising income and provision of service
Revenue from royalty and franchising income and provision of service increased by
19.0% from RMB22.7 million in 2023 to RMB27.0 million in 2024, which was primarily due
to the increase in the number of our franchised restaurants from 69 as of December 31, 2023
to 81 as of December 31, 2024.
Sales of food ingredients and restaurant supplies
Revenue from sales of food ingredients and restaurant supplies increased by 19.6% from
RMB105.0 million in 2023 to RMB125.5 million in 2024, which was primarily due to the
increased sales of food ingredients, which were in line with the increase in the number of our
franchised restaurants.
Others
Revenue from others remained stable at RMB0.9 million in both 2023 and 2024.
Raw materials and consumables used
Our raw materials and consumables used increased by 36.3% from RMB290.3 million in
2023 to RMB395.7 million in 2024, primarily due to the increased consumption of food
ingredients and packaging materials in line with our restaurant network expansion. Our raw
materials and consumables used as a percentage of our revenue decreased from 36.3% in 2023
to 34.3% in 2024, primarily due to a structural shift in our cost structure following the
proportional increase in the number of our self-operated restaurants, cost of raw materials and
consumables of which accounted for a lower proportion of their corresponding revenue as
compared with our franchised restaurants. The percentage of the cost of raw materials and
consumables over the revenue attributable to our self-operated restaurants, decreased from
29.0% in 2023 to 28.4% in 2024, as we have benefited from the economies of scale following
the expansion of our restaurant network and our continuous effort in managing our
procurement prices, and the year-on-year decrease in the market prices of key food ingredients
such as beef and chicken in the Chinese Mainland during the relevant period, according to
Frost & Sullivan.
FINANCIAL INFORMATION
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Staff costs
Our staff costs increased by 51.3% from RMB175.2 million in 2023 to RMB265.1 million
in 2024, which was primarily due to (i) the increase in salaries, wages and other benefits and
outsourced staff costs attributable to the increase in the number of our staff at restaurant level
following the expansion of our self-operated restaurant network and (ii) the increase in the
number of our employees at headquarters level which is in line with the expansion of our
restaurant network and our recruitment of talents for future development. Our staff costs as a
percentage of our revenue increased from 21.9% in 2023 to 23.0% in 2024, primarily due to
the increase in revenue from our self-operated restaurants as a percentage of total revenue as
we did not incur staff costs at restaurant level for franchise management business.
Depreciation of right-of-use assets
Our depreciation of right-of-use assets increased by 50.6% from RMB125.4 million in
2023 to RMB188.8 million in 2024, primarily due to the increase in the number of our
self-operated restaurants from 183 as of December 31, 2023 to 279 as of December 31, 2024,
leading to an increase in the number of our leases.
Other rentals and related expenses
Our other rentals and related expenses increased by 17.8% from RMB18.4 million in 2023
to RMB21.6 million in 2024, primarily due to the increase in variable lease payments of our
restaurants as a result of the increased number of self-operated restaurants with variable rent
arrangements and the enhanced performance of these restaurants.
Depreciation and amortization of property, plant and equipment and intangible assets
Our depreciation and amortization of property, plant and equipment and intangible assets
increased by 55.5% from RMB24.2 million in 2023 to RMB37.6 million in 2024, primarily due
to the increase in depreciation and amortization of restaurant renovations and equipment
attributable to our increased number of self-operated restaurants. Our depreciation and
amortization of property, plant and equipment and intangible assets as a percentage of our
revenue remained relatively stable at 3.0% in 2023 and 3.3% in 2024 respectively.
Utility expenses
Our utility expenses increased by 62.1% from RMB27.5 million in 2023 to RMB44.5
million in 2024, primarily due to an increase in the number of our self-operated restaurants.
Our utility expenses as a percentage of our revenue increased slightly from 3.4% in 2023 to
3.9% in 2024.
FINANCIAL INFORMATION
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Listing expenses
Our listing expenses increased from nil in 2023 to RMB1.1 million in 2024 due to the
preparation for the Global Offering.
Advertising and promotion expenses
Our advertising and promotion expenses increased by 164.5% from RMB5.0 million in
2023 to RMB13.3 million in 2024, primarily due to (i) the increased expenses for restaurant
promotion charged by the property owners of our leased properties along with our restaurant
network expansion, (ii) the increased regular advertising expenses related to our branding
efforts on social media platforms, and (iii) the increased expenses for our promotion of new
menu items. As a result, our advertising and promotion expenses as a percentage of our revenue
increased slightly from 0.6% in 2023 to 1.2% in 2024.
Travelling and related expenses
Our travelling and related expenses increased by 51.6% from RMB3.7 million in 2023 to
RMB5.7 million in 2024, primarily due to increased business trips driven by our ongoing
restaurant network expansion and regular store inspections conducted by our headquarters
following the expansion of our restaurant network. Our travelling and related expenses as a
percentage of our revenue remained stable at 0.5% in both 2023 and 2024, respectively.
Other expenses
Our other expenses increased by 48.4% from RMB59.8 million in 2023 to RMB88.7
million in 2024, primarily due to (i) an increase in service fee paid to third-party online food
delivery platforms of RMB13.5 million as a result of the increase in delivery service
commission and delivery fees paid to delivery platforms in line with the increase in scale of
our delivery business, (ii) an increase in materials for restaurant operation of RMB4.3 million
as a result of regular purchases and replacements of supplies and tableware for our restaurants
operations, in line with our restaurant network expansion, and (iii) an increase in transportation
expenses of RMB2.6 million mainly arising from the delivery of food ingredients and
restaurant supplies to our self-operated restaurants in line with our business expansion. Our
other expenses as a percentage of our revenue remained stable at 7.5% and 7.7% in 2023 and
2024, respectively.
FINANCIAL INFORMATION
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Other income
Our other income decreased by 36.6% from RMB14.1 million in 2023 to RMB9.0 million
in 2024, primarily due to a decrease in income from value-added tax super deduction and
exemption of RMB9.0 million, as the Additional V A T Credit Policy for Production and Living
Service Industry Enterprises expired in December 2023.
Other net gains
Our other net gains increased significantly by 989.5% from RMB0.3 million in 2023 to
RMB3.1 million in 2024, primarily due to an increase in gains on early termination of leases
of RMB2.7 million in 2024.
Finance costs
Our finance costs increased by 43.6% from RMB19.3 million in 2023 to RMB27.8 million
in 2024, primarily due to an increase in interest on lease liabilities of RMB8.0 million
associated with the increase in the number of our leases driven by the expansion of our
self-operated restaurant network.
Impairment losses of property, plant and equipment
Our impairment losses of property, plant and equipment decreased by 82.2% from
RMB8.9 million in 2023 to RMB1.6 million in 2024, primarily due to the fall in the number
of new under-performing self-operated restaurants in 2024.
Income tax expense
Our income tax expense increased by 26.3% from RMB11.2 million in 2023 to RMB14.2
million in 2024, primarily due to our increased taxable income.
Profit for the year
As a result of the foregoing, our profit for the year increased by 32.2% from RMB45.9
million in 2023 to RMB60.7 million in 2024.
FINANCIAL INFORMATION
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Y ear Ended December 31, 2023 Compared to Y ear Ended December 31, 2022
Revenue
Our total revenue increased by 91.5% from RMB418.1 million in 2022 to RMB800.5
million in 2023, primarily due to the increases in revenue contribution from all business lines
in 2023.
Dine-in service
Revenue from dine-in service increased by 102.0% from RMB271.0 million in 2022 to
RMB547.4 million in 2023, primarily due to the increase in the number of our self-operated
restaurants from 111 as of December 31, 2022 to 183 as of December 31, 2023. Following our
restaurant network expansion as well as the ease of the COVID-19 pandemic, total number of
orders served by our self-operated restaurants increased notably from approximately 14.2
million in 2022 to approximately 28.2 million in 2023, and the overall seat turnover rate of our
self-operated restaurants increased from 3.1 in 2022 to 3.8 in 2023. Such increases were
partially offset by the decrease in average spending per order of our restaurants from RMB36.1
in 2022 to RMB34.0 in 2023, primarily because we provided customers with a more affordable
dining experience in order to attract more customers.
Delivery business
Revenue from delivery business increased by 89.5% from RMB65.7 million in 2022 to
RMB124.6 million in 2023, which was primarily due to the increase in number of delivery
orders from approximately 2.9 million in 2022 to approximately 5.9 million in 2023, as a result
of the expansion of our self-operated restaurant network and the strong rebound of our
performance following the ease of the COVID-19 pandemic.
Royalty and franchising income and provision of service
Revenue from royalty and franchising income and provision of service increased by
81.2% from RMB12.5 million in 2022 to RMB22.7 million in 2023, primarily due to the
rebound of the performance of our franchised restaurants following the ease of the COVID-19
pandemic and the increase in the number of our franchised restaurants from 50 as of December
31, 2022 to 69 as of December 31, 2023.
FINANCIAL INFORMATION
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Sales of food ingredients and restaurant supplies
Revenue from sales of food ingredients and restaurant supplies increased by 54.4% from
RMB68.0 million in 2022 to RMB105.0 million in 2023, which was primarily due to the
increase in sales of food ingredients, restaurant supplies and equipment to franchisees
alongside the increased number of our franchised restaurants and the rebound of the
performance of our franchised restaurants following the ease of the COVID-19 pandemic.
Others
Revenue from others remained relatively stable at RMB0.8 million in 2022 and RMB0.9
million in 2023.
Raw materials and consumables used
Our raw materials and consumables used increased by 81.3% from RMB160.1 million in
2022 to RMB290.3 million in 2023 generally in line with our revenue growth and restaurant
network expansion. Our raw materials and consumables used as a percentage of our revenue
decreased from 38.3% in 2022 to 36.3% in 2023, primarily due to the increase in the number
of our self-operated restaurants, cost of raw materials and consumables of which accounted for
a lower proportion of the corresponding revenue as compared with our franchised restaurants,
as a result of our structural shift in our cost structure following the proportional increase in the
number of our self-operated restaurants, and the percentage of the cost of raw materials and
consumables over the revenue attributable to our self-operated restaurants, remained stable
from 29.1% in 2022 to 29.0% in 2023.
Staff costs
Our staff costs increased by 60.3% from RMB109.3 million in 2022 to RMB175.2 million
in 2023, which was primarily due to an increase in the number of our staff at restaurant level,
as a result of the expansion of our self-operated restaurant network. Our staff costs as a
percentage of our revenue decreased from 26.1% in 2022 to 21.9% in 2023, primarily due to
the strong rebound of our revenue following the ease of the COVID-19 pandemic in early 2023.
Depreciation of right-of-use assets
Our depreciation of right-of-use assets increased by 32.6% from RMB94.6 million in
2022 to RMB125.4 million in 2023, primarily due to the increase in the number of our
self-operated restaurants from 111 as of December 31, 2022 to 183 as of December 31, 2023,
leading to an increase in the number of leases.
FINANCIAL INFORMATION
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Other rentals and related expenses
Our other rentals and related expenses increased significantly by 306.0% from RMB4.5
million in 2022 to RMB18.4 million in 2023, primarily due to the increase in variable lease
payments of our restaurants as a result of the strong rebound of our revenue following the ease
of the COVID-19 pandemic in early 2023.
Depreciation and amortization of property, plant and equipment and intangible assets
Our depreciation and amortization of property, plant and equipment and intangible assets
increased by 10.9% from RMB21.8 million in 2022 to RMB24.2 million in 2023, primarily due
to the increase in depreciation and amortization of restaurant renovations and equipment in line
with our increased number of self-operated restaurants. Our depreciation and amortization of
property, plant and equipment and intangible assets as a percentage of our revenue decreased
from 5.2% in 2022 to 3.0% in 2023, primarily due to the strong rebound of our revenue
following the ease of the COVID-19 pandemic in early 2023.
Utility expenses
Our utility expenses increased by 94.7% from RMB14.1 million in 2022 to RMB27.5
million in 2023, primarily due to an increase in the number of our self-operated restaurants.
Our utility expenses as a percentage of our revenue remained relatively stable at 3.4% in both
2022 and 2023, respectively.
Advertising and promotion expenses
Our advertising and promotion expenses decreased by 18.0% from RMB6.2 million in
2022 to RMB5.0 million in 2023, primarily because we adjusted our marketing strategy in 2023
as the rebound of our revenue following the ease of the COVID-19 pandemic leading to a
reduced need to devote substantial resources on our brand promotion. As a result, our
advertising and promotion expenses as a percentage of our revenue decreased from 1.5% in
2022 to 0.6% in 2023.
Travelling and related expenses
Our travelling and related expenses increased by 94.0% from RMB1.9 million in 2022 to
RMB3.7 million in 2023, which was primarily due to the increased business trips driven by the
expansion of our restaurant network. Our travelling and related expenses as a percentage of our
revenue remained relatively stable at 0.5% in both 2022 and 2023, respectively.
FINANCIAL INFORMATION
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Other expenses
Our other expenses increased by 72.8% from RMB34.6 million in 2022 to RMB59.8
million in 2023, primarily due to (i) an increase in service fee paid to third-party online food
delivery platforms of RMB13.9 million as a result of the increase in commission and delivery
fees paid to delivery platforms in line with our growing delivery orders, (ii) an increase in
materials for restaurant operation of RMB4.7 million attributable to regular purchases and
replacements of supplies and tableware for our restaurant operations, (iii) an increase in
transportation expenses of RMB2.0 million mainly arising from the delivery of food
ingredients and restaurant supplies to our self-operated restaurants in line with our business
expansion, and (iv) an increase in maintenance expenses of RMB1.0 million. Our other
expenses as a percentage of our revenue were 8.3% in 2022 and 7.5% in 2023, respectively.
Other income
Our other income increased by 88.5% from RMB7.5 million in 2022 to RMB14.1 million
in 2023, primarily due to an increase in income from value-added tax super deduction and
exemption of RMB6.0 million, as a result of the rebound of the revenue of our self-operated
restaurants following the ease of the COVID-19 pandemic and the expansion of our
self-operated restaurant network.
Other net (losses)/gains
In 2022, we recorded other net loss of RMB0.2 million. In 2023, we recorded other net
gains RMB0.3 million. The turnaround from other net loss in 2022 to other net gains in 2023
was primarily due an increase in gains on early termination of leases of RMB1.4 million,
partially offset by the increase in losses on restaurant closures of RMB0.6 million.
Finance costs
Our finance costs increased by 14.0% from RMB17.0 million in 2022 to RMB19.3 million
in 2023, primarily due to an increase in interest on lease liabilities of RMB2.5 million
associated with the increase in the number of our leases driven by the expansion of
self-operated restaurant network.
Impairment losses of property, plant and equipment
Our impairment losses of property, plant and equipment decreased by 5.3% from RMB9.4
million in 2022 to RMB8.9 million in 2023, which was primarily due to the impairment of
assets of underperforming restaurants, mainly including restaurant renovation and restaurant
equipment.
FINANCIAL INFORMATION
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Income tax credit/(expense)
In 2022, we recorded income tax credit of RMB12.2 million primarily due to a pre-tax
loss of RMB48.1 million. In 2023, we recorded income tax expense of RMB11.2 million
primarily due to a pre-tax profit of RMB57.1 million.
Profit/(Loss) for the year
As a result of the foregoing, we incurred loss for the year of RMB36.0 million in 2022
while we recorded profit for the year of RMB45.9 million in 2023.
SELECTED KEY ITEMS OF CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
Non-current Assets and Liabilities
The following table sets forth our non-current assets and liabilities as of the dates
indicated:
As of December 31,
As of
June 30,
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Non-current assets
Right-of-use assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118380,155 527,124 683,200 706,811
Property, plant and
equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111860,619 85,020 148,045 173,776
Rental deposits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111828,471 39,824 47,728 49,441
Deferred tax assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111824,648 23,250 27,168 27,871
Intangible assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,328 3,417 4,152 3,937
Lease payment receivables /H1118/H1118 7,786 3,781 1,206 764
Financial assets measured at
FVOCI /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–5 05 05 0
Other non-current assets /H1118/H1118/H1118/H11185,872 3,512 1,948 1,379
Total non-current assets /H1118/H1118/H1118510,879 685,978 913,497 964,029
Non-current liabilities
Contract liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,875 3,564 4,564 4,553
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118330,157 435,234 540,196 547,916
Provisions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,310 6,631 8,735 9,510
Total non-current liabilities /H1118 336,342 445,429 553,495 561,979
FINANCIAL INFORMATION
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Property, plant and equipment
Our property, plant and equipment comprise leasehold improvement, kitchen equipment,
electronic equipment, other equipment and construction in progress. Our property, plant and
equipment increased from RMB60.6 million as of December 31, 2022 to RMB85.0 million as
of December 31, 2023, increased to RMB148.0 million as of December 31, 2024, and further
increased to RMB173.8 million as of June 30, 2025, primarily due to the expansion of our
self-operated restaurant network.
Right-of-use assets
Our right-of-use assets primarily represent the leases for our self-operated restaurants.
Our right-of-use assets increased from RMB380.2 million as of December 31, 2022 to
RMB527.1 million as of December 31, 2023, and further increased to RMB683.2 million as of
December 31, 2024, primarily due to increase in number of leases for our self-operated
restaurants, from 111 as of December 31, 2022 to 183 as of December 31, 2023, and further
to 279 as of December 31, 2024. Our right-of-use assets further increased to RMB706.8 million
as of June 30, 2025 following the continued expansion of our self-operated restaurant network.
Rental deposits
Our rental deposits represent rental deposits for our self-operated restaurants. Our rental
deposits increased from RMB28.5 million as of December 31, 2022 to RMB39.8 million as of
December 31, 2023, increased to RMB47.7 million as of December 31, 2024, and further
increased to RMB49.4 million as of June 30, 2025, primarily due to the expansion of our
self-operated restaurant network.
FINANCIAL INFORMATION
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Current Assets and Liabilities
The following table sets forth our current assets and liabilities as of the dates indicated:
As of December 31,
As of
June 30,
As of
September 30,
2022 2023 2024 2025 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Current assets
Trade and other
receivables /H1118/H1118/H1118/H1118/H111830,137 54,879 80,468 102,519 109,937
Financial assets
measured at
FVPL /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,009 25,063 70,261 25,018 31,003
Cash and cash
equivalents /H1118/H1118/H1118/H1118/H111836,519 26,764 42,190 50,032 70,438
Restricted bank
deposits /H1118/H1118/H1118/H1118/H1118/H1118/H111812,107 21,139 31,324 44,435 51,507
Inventories /H1118/H1118/H1118/H1118/H1118/H111816,639 27,098 22,666 22,205 35,293
Income tax
recoverable /H1118/H1118/H1118/H1118114 1,576 727 668 –
Total current
assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118102,525 156,519 247,636 244,877 298,178
Current liabilities
Lease liabilities /H1118/H1118/H1118108,548 141,318 194,423 214,308 235,053
Trade and other
payables /H1118/H1118/H1118/H1118/H1118/H1118/H111850,904 93,205 110,351 120,331 134,912
Contract liabilities /H1118 36,650 60,142 82,628 110,938 126,351
Short-term
borrowings /H1118/H1118/H1118/H1118/H11189,982 – 50,000 – –
Redemption
liabilities /H1118/H1118/H1118/H1118/H1118/H111845,000 45,000 45,000 45,000 45,000
Current taxation /H1118/H1118/H1118 6 3,610 7,459 9,260 15,649
Total current
liabilities /H1118/H1118/H1118/H1118/H1118/H1118251,090 343,275 489,861 499,837 556,965
Net current
liabilities /H1118/H1118/H1118/H1118/H1118/H1118(148,565) (186,756) (242,225) (254,960) (258,787)
FINANCIAL INFORMATION
– 350 –


--- page 360 ---
We had net current liabilities during the Track Record Period. As of December 31, 2022,
2023 and 2024, June 30, 2025 and September 30, 2025, our net current liabilities amounted to
RMB148.6 million, RMB186.8 million, RMB242.2 million, RMB255.0 million and RMB258.8
million, respectively. Our net current liabilities position was primarily because (i) we financed
the expansion of our self-operated restaurant network with our current assets, especially cash
and cash equivalents, for non-current items such as property, plant and equipment for
restaurant decorations and purchases of equipment, (ii) a portion of our lease liabilities has
been recorded as current liabilities while the corresponding balance of right-of-use assets has
been recorded as non-current assets according to IFRS 16, and (iii) there was a redemption
liability which will be reclassified from current liabilities to equity upon Listing.
Our net current liabilities remained relatively stable at RMB242.2 million as of
December 31, 2024, RMB255.0 million as of June 30, 2025 and RMB258.8 million as of
September 30, 2025, respectively.
Our net current liabilities increased by 29.7% from RMB186.8 million as of
December 31, 2023 to RMB242.2 million as of December 31, 2024, primarily due to (i) an
increase in current lease liabilities of RMB53.1 million mainly attributable to our increased
lease properties for the expansion of our self-operated restaurant network, (ii) an increase in
short-term borrowings of RMB50.0 million and (iii) an increase in contract liabilities of
RMB22.5 million in line with our business expansion, partially offset by (iv) an increase in
financial assets measured at FVPL of RMB45.2 million representing our investments in
structured deposits and (v) an increase in trade and other receivables of RMB25.6 million in
line with our business expansion.
Our net current liabilities increased by 25.7% from RMB148.6 million as of
December 31, 2022 to RMB186.8 million as of December 31, 2023, primarily due to (i) an
increase in trade and other payables of RMB42.3 million mainly attributable to the growing
procurement from suppliers, (ii) an increase in current lease liabilities of RMB32.8 million
mainly attributable to the increased lease properties for the expansion of our self-operated
restaurant network, and (iii) an increase in contract liabilities of RMB23.5 million in line with
our business expansion, partially offset (iv) an increase in trade and other receivables of
RMB24.7 million in line with our business expansion and (v) an increase in financial assets
measured at FVPL of RMB18.1 million.
We will continue to expand our restaurant network in the future which may further
increase our current lease liabilities. On the other hand, we expect our operating cash inflows
to scale up following our business expansion once the newly opened restaurants begin to
generate profit. The net proceeds from the Global Offering will also bolster our working
capital. Furthermore, as the franchised restaurants account for a higher proportion of our total
restaurants, our need for expenditures for restaurant openings will decrease, which is expected
to improve our net current liabilities position. We will also closely monitor our liquidity
positions by way of regular review of our cash flows, to ensure that our liquidity positions are
in line with our business operations and expansion needs. To further tighten our cash
management regime, we have instituted a weekly review mechanism. This periodic assessment
FINANCIAL INFORMATION
– 351 –


--- page 361 ---
aids in making informed decisions about cash allocation, capital structure optimization, and
addressing immediate and future working capital needs. We will maintain sound relationships
with banks and other financial institutions to obtain financial facilities to support our business
operations as required.
As of the Latest Practicable Date, we had banking facilities of RMB475.0 million, all of
which remained unutilized.
Inventories
Our inventories primarily consist of food ingredients and other materials. The following
table sets forth the balance of our inventories as of the dates indicated:
As of December 31,
As of
June 30,
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Food ingredients /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111816,299 26,652 22,037 21,636
Other materials /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118340 446 629 569
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111816,639 27,098 22,666 22,205
Our inventories increased from RMB16.6 million as of December 31, 2022 to RMB27.1
million as of December 31, 2023 primarily because the number of our self-operated restaurants
increased from 111 as of December 31, 2022 to 183 as of December 31, 2023, requiring us to
procure more food inventories and other materials for the operation of our new self-operated
restaurants. Our inventories decreased by 16.4% from RMB27.1 million as of December 31,
2023 to RMB22.7 million as of December 31, 2024, primarily because of our enhancement in
inventory management efficiency. Our inventories remained relatively stable at RMB22.7
million as of December 31, 2024 and RMB22.2 million as of June 30, 2025, respectively.
During the Track Record Period, the aging of our inventories is typically within 60 days.
FINANCIAL INFORMATION
– 352 –


--- page 362 ---
The following table sets forth our inventory turnover days for the periods indicated:
For the year ended December 31,
For the
six Months
ended
June 30,
2022 2023 2024 2025
Inventory turnover days /H1118/H1118/H1118/H1118/H111841 27 23 18
Note: Inventory turnover days are calculated using the average of the beginning and ending inventories for the
year/period divided by raw materials and consumables used for the same year/period and multiplied by
365/180 days (as the case may be).
Our inventory turnover days decreased from 41 days in 2022 to 27 days in 2023, primarily
due to (i) the impact of store closures due to COVID-19 in 2022 and (ii) our enhanced
inventory management efforts. Our inventory turnover days then decreased to 23 days in 2024,
and 18 days for the six months ended June 30, 2025, primarily due to our enhancement in
inventory management efficiency.
As of September 30, 2025, RMB22.2 million, or 100.0% of our inventories as of June 30,
2025 had been used, consumed or sold subsequently.
Trade and other receivables
Our trade and other receivables primarily consist of (i) input value-added tax recoverable,
(ii) deposits, mainly comprising rental deposits and other deposits in relation to our ordinary
business operations, (iii) trade debtors, net of loss allowance, mainly including amounts due
from third-party payment service providers and delivery platforms, which are generally settled
within one month, and amounts due from franchisees representing franchise and royalty fees
receivable from franchisees as well as receivables derived from sales of food ingredients and
restaurant supplies to them, (iv) prepayments to vendors, mainly representing prepaid rent and
service fees, (v) lease payment receivables relating to subleasing, (vi) other receivables, mainly
comprising petty cash of our restaurants, and (vii) the current portion of long-term receivables
which represents the amount due from six franchisees at longer payment terms for their upfront
expenses for opening franchised restaurants to us as part of our strategy to nurture franchisees
with potential, with repayment periods ranging from one to five years. Such extended
repayment terms were typically granted to franchisees in recognition of their exceptional
performance in our unified performance evaluation system.
FINANCIAL INFORMATION
– 353 –


--- page 363 ---
The following table sets forth the breakdown of our trade and other receivables as of the
dates indicated:
As of December 31,
As of
June 30,
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Input value-added tax
recoverable /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,631 13,263 28,576 34,514
Deposits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,099 13,665 19,903 26,468
Trade debtors, net of loss
allowance /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,486 16,045 18,790 23,813
Prepayments to vendors /H1118/H1118/H1118/H1118/H11184,799 6,105 8,882 9,929
Lease payment receivables /H1118/H1118 4,052 4,005 2,425 1,578
Other receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,844 1,113 1,338 2,134
Current portion of long-term
receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,226 683 431 319
Prepayment for listing
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 123 3,764
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111830,137 54,879 80,468 102,519
Our trade and other receivables increased from RMB30.1 million as of December 31,
2022 to RMB54.9 million as of December 31, 2023, primarily due to the increase in trade
debtors, net of loss allowance, deposits and input value-added tax recoverable of RMB8.6
million, RMB9.6 million and RMB6.6 million, respectively, in line with our business
expansion. Our trade and other receivables further increased to RMB80.5 million as of
December 31, 2024, primarily due to the increases in input value-added tax recoverable and
deposits of RMB15.3 million and RMB6.2 million, respectively, in line with our business
expansion. Our trade and other receivables increased from RMB80.5 million as of December
31, 2024 to RMB102.5 million as of June 30, 2025, primarily due to the increases in input
value-added tax, deposits, trade debtors of RMB5.9 million, RMB6.6 million and RMB5.0
million respectively along with our revenue growth.
FINANCIAL INFORMATION
– 354 –


--- page 364 ---
As of December 31, 2022, 2023 and 2024 and June 30, 2025, the aging analysis of trade
debtors (which are included in trade and other receivables), based on the revenue recognition
date, is as follows:
Y ear ended December 31,
Six Months
ended
June 30,
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Within 1 month /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,486 13,440 17,643 21,016
More than 1 month but
within 3 months /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 2,605 1,147 2,797
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,486 16,045 18,790 23,813
The following table sets forth our trade debtors turnover days for the periods indicated:
For the year ended December 31,
For the
six Months
ended
June 30,
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Trade debtor turnover days /H1118/H1118 6565
Note: Trade debtor turnover days are calculated using the average of opening balance and closing balance of
trade debtors for a year/period divided by revenue for the relevant year/period and multiplied by
365/180 days (as the case may be).
Our trade debtor turnover days remained stable at 6, 5, 6 and 5 days in 2022, 2023, 2024
and the six months ended June 30, 2025, primarily because our settlement arrangements with
the relevant third-party payment service providers and delivery platforms remained stable.
All of the trade receivables are expected to be recovered or recognized as expense within
one year or are recovered on demand.
As of September 30, 2025, RMB23.8 million, or 99.8%, of our trade receivables as of
June 30, 2025 had been settled subsequently. As of September 30, 2025, RMB7.0 million, or
100.0% of our trade receivables due from franchisees as of June 30, 2025 had been settled
subsequently. Trade receivables due from franchisees are normally on credit terms of one
month.
FINANCIAL INFORMATION
– 355 –


--- page 365 ---
Financial assets measured at FVPL
Our financial assets measured at FVPL during the Track Record Period consisted of
investments in wealth management products, all of which were liquid structured deposits
issued by reputable commercial banks in China with guaranteed principal and variable returns
tied to the performance of certain underlying financial assets. There are no fixed or
determinable returns of these structured deposits. Our financial assets measured at FVPL
amounted to RMB7.0 million, RMB25.1 million, RMB70.3 million and RMB25.0 million as of
December 31, 2022, 2023, 2024 and June 30, 2025, respectively.
We have adopted a comprehensive set of internal policies and guidelines to monitor and
control risks associated with our investment in wealth management products. Our investment
strategy aims to optimize the efficiency of idle funds, generate investment returns for our
Shareholders, and minimize investment and financial risks. We make investment decisions
related to wealth management products on a case-by-case basis after thoroughly considering a
number of factors, including but not limited to macro-economic environment, general market
conditions, risk control and credit of issuing banks, our own working capital conditions, and
the expected profit or potential loss of the investment. Specifically, we are only allowed by our
internal policies and guidelines to invest in wealth management products that carry low risk
labels and transact with qualified financial institutions, and shall prioritize the cooperation
with reputable commercial banks. We primarily invest in highly liquid and essentially risk-free
financial products with maturity less than three months. With the authorization of the Board,
our finance department proposes, analyses and evaluates potential investment in wealth
management products based on recommendations of our relationship and account managers at
banks in China. Prior to making any material investments in wealth management products or
modifying our existing investment portfolio, the proposal shall be approved by our chief
executive officer and/or his designated senior member of our management.
In the future, we may continue to invest in structured deposits and other low-risk financial
products that are in our Group’s interest upon thorough evaluations and analysis, and we will
ensure that all such investments comply with the applicable laws and regulations, including the
relevant requirements under Chapter 14 of the Listing Rules after the Listing.
Restricted bank deposits
Our restricted bank deposits mainly consist of restricted bank deposits reserved for
balances in our stored value membership accounts in accordance with relevant regulations
issued by Ministry of Commerce of PRC. Our restricted bank deposits increased from
RMB12.1 million as of December 31, 2022 to RMB21.1 million as of December 31, 2023,
increased to RMB31.3 million as of December 31, 2024, and further increased to RMB44.4
million as of June 30, 2025, primarily due to the increase in the balances in stored value
membership accounts, which was generally in line with the increase in the number of our stored
value members alongside the expansion of our restaurant network.
FINANCIAL INFORMATION
– 356 –


--- page 366 ---
Cash and cash equivalents
Our cash and cash equivalents comprise cash at bank and on hand. Our cash and cash
equivalents amounted to RMB36.5 million, RMB26.8 million, RMB42.2 million and RMB50.0
million as of December 31, 2022, 2023, 2024 and June 30, 2025, respectively. For further
details, see “— Liquidity and Capital Resources.”
Trade and other payables
Our trade and other payables consist of (i) trade payables, mainly arising from
procurement of raw materials and consumables for our restaurant operations from suppliers,
(ii) staff cost payable, (iii) other payables including amounts received from third-party
platforms such as Meituan (ྠ) to be settled with franchisees, (iv) payables for purchase of
property, plant and equipment, (v) deposits received from franchisees and suppliers, (vi) other
taxes payables and (vii) dividends payable. The following table sets forth the breakdown of our
trade and other payables as of the dates indicated:
As of December 31,
As of
June 30,
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Trade payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111824,198 47,645 49,828 56,872
Staff cost payable /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11188,208 19,293 22,919 24,707
Other payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,770 10,669 13,516 14,715
Payables for purchase of
property,
plant and equipment /H1118/H1118/H1118/H1118/H1118/H11187,271 5,920 13,170 13,295
Deposits received from
franchisees and suppliers /H1118/H1118 6,334 8,475 9,643 9,301
Other taxes payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118123 809 1,275 1,441
Dividends payable /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 3 9 4––
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111850,904 93,205 110,351 120,331
FINANCIAL INFORMATION
– 357 –


--- page 367 ---
Our trade and other payables increased from RMB50.9 million as of December 31, 2022
to RMB93.2 million as of December 31, 2023, primarily due to (i) an increase in trade payables
of RMB23.4 million in line with the increase amount of purchase from our suppliers as a result
of our expansion of our restaurant network and (ii) an increase in staff cost payable of
RMB11.1 million as a result of increased number of staff at restaurant level in line with our
expansion of our restaurant network, and (iii) an increase in other payables of RMB5.9 million
in line with the increase in the number of our franchised restaurants. Our trade and other
payables further increased to RMB110.4 million as of December 31, 2024, primarily due to an
increase in payables for purchase of property, plant and equipment of RMB7.3 million as
affected by the progress of our restaurant opening preparations and an increase in staff cost
payable of RMB3.6 million as a result of increased number of staff at restaurant level in line
with our expansion of our restaurant network. Our trade and other payables further increased
from RMB110.4 million as of December 31, 2024 to RMB120.3 million as of June 30, 2025,
primarily due to (i) an increase in trade payables of RMB7.0 million in line with our business
expansion, (ii) an increase in staff cost payable of RMB1.8 million as a result of increased
number of staff at restaurant level in line with the expansion of our restaurant network, and (iii)
an increase in other payables of RMB1.2 million as a result of the increased utilities expenses
payable in line with the expansion of our restaurant network.
As of December 31, 2022, 2023, 2024 and June 30, 2025, the aging analysis of trade
payables, based on the invoice date, is as follows:
As of December 31,
As of
June 30,
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Within one year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111824,198 47,645 49,828 56,872
The following table sets forth our trade payables turnover days for the respective periods
indicated:
For the year ended December 31,
For the
six months
ended
June 30,
2022 2023 2024 2025
Trade payable turnover days /H1118 52 45 45 43
Note: Trade payable turnover days are calculated using the average of opening balance and closing balance
of trade payables for a year/period divided by raw materials and consumables used for the relevant
year/period and multiplied by 365/180 days (as the case may be).
FINANCIAL INFORMATION
– 358 –


--- page 368 ---
Our trade payables turnover days decreased from 52 days in 2022 to 45 days in 2023,
primarily due to our accelerated payment to suppliers for more favourable terms of our
procurement. Our trade payables turnover days then remained relatively stable at 45 days in
2024 and 43 days for the six months ended June 30, 2025, respectively.
Our trade payables are expected to be settled within one year or are repayable on demand.
As of September 30, 2025, RMB60.4 million, or 100.0%, of our trade payables as of June 30,
2025 had been settled subsequently.
Redemption liabilities
Our redemption liabilities relate to the repurchase obligation of our Company towards the
Shares issued under Series B capital increase agreement. Our Company has recognized a
liability of RMB45.0 million. Our redemption liabilities remained stable at RMB45.0 million
as of December 31, 2022, 2023, 2024 and June 30, 2025, respectively.
Contract liabilities
Our contract liabilities primarily consist of the receipt of advance payment of franchising
income from our franchisees, balances in stored value membership accounts and issued
vouchers and contract liabilities of our customer loyalty scheme. Our contract liabilities
increased from RMB36.7 million as of December 31, 2022 to RMB60.1 million as of
December 31, 2023, increased to RMB82.6 million as of December 31, 2024, and further
increased to RMB110.9 million as of June 30, 2025, primarily due to (i) the increase in the
number of our stored value members and the increase in the balances in stored value
membership accounts in line with our business expansion, and (ii) the increase in upfront initial
fees paid by franchisees as a result of the expansion of our franchise management business
network.
As of September 30, 2025, RMB29.7 million, or 25.7% of our contract liabilities as of
June 30, 2025 had been recognized as revenue subsequently.
LIQUIDITY AND CAPITAL RESOURCES
During the Track Record Period, we funded our cash requirements principally from cash
generated from operations and bank borrowings. As of December 31, 2022, 2023, 2024 and
June 30, 2025, we had cash and cash equivalents of RMB36.5 million, RMB26.8 million,
RMB42.2 million and RMB50.0 million, respectively, which were denominated in Renminbi
and Hong Kong Dollars. We monitor our cash flows and cash balance on a regular basis and
strive to maintain an optimum liquidity that can meet our working capital needs while
supporting continuing business expansion. We expect that our liquidity requirements in the
future will be satisfied by using a combination of cash generated from operations, bank
borrowings and net proceeds from the Global Offering.
FINANCIAL INFORMATION
– 359 –


--- page 369 ---
The following table sets forth a summary of our cash flows for the periods indicated:
For the year ended December 31,
For the Six Months ended
June 30,
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Net cash generated from
operating activities /H1118/H1118/H1118104,773 245,126 313,546 145,699 202,051
Net cash used in
investing activities /H1118/H1118/H1118(36,001) (78,007) (143,093) (18,848) (7,601)
Net cash used in
financing activities /H1118/H1118/H1118(75,761) (176,874) (155,059) (98,094) (186,549)
Net increase/(decrease)
in cash and cash
equivalents /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(6,989) (9,755) 15,394 28,757 7,901
Cash and cash
equivalents at
beginning of the
year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111843,508 36,519 26,764 26,764 42,190
Effect of foreign
exchange rate changes /H1118 – – 32 – (59)
Cash and cash
equivalents at end
of year/period /H1118/H1118/H1118/H1118/H1118/H111836,519 26,764 42,190 55,521 50,032
Net Cash Generated from Operating Activities
For the six months ended June 30, 2025, our net cash generated from operating activities
of RMB202.1 million was primarily attributable to profit before taxation of RMB52.3 million,
as adjusted by non-cash and non-operational items totaling RMB152.2 million, changes in
working capital and income tax paid of RMB2.9 million. Changes in working capital mainly
consisted of (i) an increase in contract liabilities of RMB28.3 million, (ii) an increase in trade
and other receivables and rental deposits of RMB18.7 million, and (iii) an increase in restricted
bank deposits of RMB13.1 million.
For the six months ended June 30, 2024, our net cash generated from operating activities
of RMB145.7 million was primarily attributable to profit before taxation of RMB26.5 million,
as adjusted by non-cash and non-operational items totaling RMB117.4 million, changes in
working capital and income tax paid of RMB0.4 million. Changes in working capital mainly
consisted of (i) an increase in contract liabilities of RMB17.2 million, (ii) an increase in
restricted bank deposits of RMB8.9 million, and (iii) an increase in trade and other receivables
and rental deposits of RMB7.0 million.
FINANCIAL INFORMATION
– 360 –


--- page 370 ---
In 2024, our net cash generated from operating activities of RMB313.5 million was
primarily attributable to profit before taxation of RMB74.9 million, as adjusted by non-cash
and non-operational items totaling RMB251.5 million, changes in working capital and income
tax paid of RMB12.9 million. Changes in working capital mainly consisted of (i) an increase
in trade and other receivables and rental deposits of RMB30.0 million, (ii) an increase in
contract liabilities of RMB23.5 million, and (iii) an increase in restricted bank deposits of
RMB10.2 million.
In 2023, our net cash generated from operating activities of RMB245.1 million was
primarily attributable to profit before taxation of RMB57.1 million, as adjusted by non-cash
and non-operational items totaling RMB174.7 million, changes in working capital and income
tax paid of RMB13.3 million. Changes in working capital mainly consisted of (i) an increase
in trade and other payables and accruals of RMB43.3 million, (ii) an increase in trade and other
receivables and rental deposits of RMB32.0 million, and (iii) an increase in contract liabilities
of RMB25.2 million.
In 2022, our net cash generated from operating activities of RMB104.8 million was
primarily attributable to loss before taxation of RMB48.1 million, as adjusted by non-cash and
non-operational items totaling RMB142.1 million, changes in working capital and income tax
paid of RMB10.8 million. Changes in working capital mainly consisted of (i) an increase in
contract liabilities of RMB17.7 million, (ii) an increase in restricted bank deposits of RMB6.1
million and (iii) an increase in trade and other receivables and rental deposits of RMB6.0
million.
See “— Selected Key Items of Consolidated Statement of Financial Position” for primary
reasons relating to the underlying causes for our operating cash flow changes.
Net Cash Used in Investing Activities
For the six months ended June 30, 2025, our net cash used in investing activities
amounted to RMB7.6 million, which was primarily attributable to (i) payment for purchases of
financial assets measured at FVPL of RMB135.0 million and (ii) payment for purchases of
property, plant and equipment, and right-of-use assets of RMB52.7 million, partially offset by
(iii) proceeds from maturity of financial assets measured at FVPL of RMB180.3 million.
For the six months ended June 30, 2024, our net cash used in investing activities
amounted to RMB18.8 million, which was primarily attributable to (i) payment for purchases
of financial assets measured at FVPL of RMB105.0 million and (ii) payment for purchases of
property, plant and equipment, and right-of-use assets of RMB43.7 million, partially offset by
(iii) proceeds from maturity of financial assets measured at FVPL of RMB130.2 million.
FINANCIAL INFORMATION
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In 2024, our net cash used in investing activities amounted to RMB143.1 million, which
was primarily attributable to (i) payment for purchases of financial assets measured at FVPL
of RMB436.0 million and (ii) payment for purchases of property, plant and equipment, and
right-of-use assets of RMB97.3 million, partially offset by (iii) proceeds from maturity of
financial assets measured at FVPL of RMB391.1 million.
In 2023, our net cash used in investing activities amounted to RMB78.0 million, which
was primarily attributable to (i) payment for purchases of financial assets measured at FVPL
of RMB345.0 million and (ii) payment for purchases of property, plant and equipment, and
right-of-use assets of RMB60.7 million, partially offset by (iii) proceeds from maturity of
financial assets measured at FVPL of RMB327.0 million.
In 2022, our net cash used in investing activities amounted to RMB36.0 million, which
was primarily attributable to (i) payment for purchases of financial assets measured at FVPL
of RMB142.0 million and (ii) payment for purchases of property, plant and equipment, and
right-of-use assets of RMB30.8 million, partially offset by (iii) proceeds from maturity of
financial assets measured at FVPL of RMB135.0 million.
Net Cash Used in Financing Activities
For the six months ended June 30, 2025, our net cash used in financing activities
amounted to RMB186.5 million, which was primarily attributable to (i) payment of capital
element of lease liabilities of RMB104.2 million, (ii) repayment of bank loans of RMB50.0
million, and (iii) dividends paid to equity shareholders of the Company of RMB14.7 million.
For the six months ended June 30, 2024, our net cash used in financing activities
amounted to RMB98.1 million, which was primarily attributable to (i) payment of capital
element of lease liabilities of RMB85.1 million and (ii) payment of interest element of lease
liabilities of RMB12.6 million.
In 2024, our net cash used in financing activities amounted to RMB155.1 million, which
was primarily attributable to (i) payment of capital element of lease liabilities of RMB177.1
million and (ii) payment of interest element of lease liabilities of RMB27.1 million, partially
offset by (iii) proceeds from bank loans of RMB50.0 million.
In 2023, our net cash used in financing activities amounted to RMB176.9 million, which
was primarily attributable to (i) payment of capital element of lease liabilities of RMB128.6
million, (ii) repayment of bank loans of RMB35.1 million, (iii) dividends paid to equity
shareholders of the Company of RMB19.2 million and (iv) payment of interest element of lease
liabilities of RMB19.1 million, partially offset by (v) proceeds from bank loans of RMB25.1
million.
FINANCIAL INFORMATION
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In 2022, our net cash used in financing activities amounted to RMB75.8 million, which
was primarily attributable to (i) payment of capital element of lease liabilities of RMB68.9
million, (ii) repayment of bank loans of RMB25.4 million and (iii) payment of interest element
of lease liabilities of RMB16.6 million, partially offset by (iii) proceeds from bank loans of
RMB35.4 million.
INDEBTEDNESS
The table below sets out the details of our indebtedness as of the dates indicated:
As of December 31,
As of
June 30,
As of
September 30,
2022 2023 2024 2025 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Current
Lease liabilities /H1118/H1118/H1118108,548 141,318 194,423 214,308 235,053
Short-term
borrowings /H1118/H1118/H1118/H1118/H11189,982 – 50,000 – –
118,530 141,318 244,423 214,308 235,053
Non-current
Lease liabilities /H1118/H1118/H1118330,157 435,234 540,196 547,916 631,032
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118448,687 576,552 784,619 762,224 866,085
Lease Liabilities
Our lease liabilities primarily relate to properties leased for our self-operated restaurants,
office premises, and other operational facilities. As of December 31, 2022, 2023, 2024, June
30, 2025 and September 30, 2025, our lease liabilities, including current and non-current
portions, amounted to RMB438.7 million, RMB576.6 million, RMB734.6 million, RMB762.2
million and RMB866.1 million, respectively. These lease liabilities primarily represent
obligations under leases for our restaurant properties. The increase in our lease liabilities
throughout the Track Record Period was primarily due to the increase in the number of our
self-operated restaurants, which resulted in the increased number of leased properties.
FINANCIAL INFORMATION
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The following table shows the remaining contractual maturities of our lease liabilities as
of the dates indicated:
For the year ended/As of December 31,
As of
June 30,
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Within one year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118124,151 162,441 219,473 239,105
After one year but within
two years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118113,769 155,967 190,136 200,629
After two years but within
five years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118186,601 259,496 328,853 330,098
After five years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111862,186 57,927 63,265 56,728
486,707 635,831 801,727 826,560
Less: total future interest
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111848,002 59,279 67,108 64,336
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118438,705 576,552 734,619 762,224
Short-term Borrowings
As of December 31, 2022, 2023 and 2024, June 30, 2025 and September 30, 2025, our
outstanding short-term borrowings, representing our bank loans, amounted to RMB10.0
million, nil, RMB50.0 million, nil and nil, respectively. All of our bank loans were repayable
within one year or on demand and were guaranteed by our related parties, Mr. Song, Mr. Su
and Ms. Luo. These guarantees were non-trade in nature. For further details, see “— Related
party transactions” in this section.
Our bank loan agreements contain standard terms and conditions that are customary for
commercial bank loans and there had been no material covenant on any of our outstanding bank
loans. Our Directors confirm that there was no default in payments of our liabilities, difficulty
in obtaining bank loans or other borrowings, and/or material breach of covenants during the
Track Record Period and up to the Latest Practicable Date.
As of the Latest Practicable Date, we had banking facilities of RMB475.0 million, all of
which remained unutilized.
FINANCIAL INFORMATION
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No Other Outstanding Indebtedness
Save as disclosed above, we did not have any outstanding indebtedness or any loan capital
issued and outstanding or agreed to be issued, bank overdrafts, loans or similar indebtedness,
liabilities under acceptances (other than normal trade bills), acceptance credits, debentures,
mortgages, charges, finance leases or hire purchase commitments, guarantees or other
contingent liabilities or any covenant in connection therewith as of September 30, 2025, being
our indebtedness statement date. After due and careful consideration, our Directors confirm
that, as of the date of this prospectus, there has been no material change in our indebtedness
since September 30, 2025.
CONTINGENT LIABILITIES
During the Track Record Period and up to the Latest Practicable Date, we did not have
any contingent liabilities that would have a material impact on our financial position or results
of operations.
RELATED PARTY TRANSACTIONS
We enter into transactions with our related parties from time to time. As of December 31,
2023, our balance with related parties, i.e. dividends payable, amounted to approximately
RMB394.0 thousand, which was non-trade in nature. Such balance was settled as of December
31, 2024. See note 30(c) to the Accountants’ Report in Appendix I for further details. As of
December 31, 2022, 2023, 2024 and June 30, 2025, bank loans of approximately RMB10.0
million, nil, RMB50.0 million and nil were guaranteed by Mr. Song, Mr. Su and Ms. Luo. Mr.
Song and Mr. Su are our Controlling Shareholders, and Ms. Luo is the spouse of Mr. Song.
These guarantees were non-trade in nature. Our Directors confirm that all guarantees provided
by our Controlling Shareholders and their respective close associates are being procured to be
and would be fully repaid or released before the Listing. For details, see “Relationship with our
Controlling Shareholders” and note 30 to the Accountants’ Report in Appendix I. Our Directors
confirm that the related party transactions were conducted in the ordinary and usual course of
business and on an arm’s length basis, and they did not distort our results of operations or make
our historical results not reflective of our future performance.
FINANCIAL INFORMATION
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COMMITMENTS
Capital commitments of our Group outstanding as of December 31, 2022, 2023, 2024 and
June 30, 2025 not provided for in the financial statements were as follows:
As of December 31,
As of
June 30,
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Contracted for acquisition of
property, plant and
equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,019 5,236 6,846 9,173
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,019 5,236 6,846 9,173
During the Track Record Period, our Group entered into certain new leases whose term
would commence in the following year. See note 29 to the Accountants’ Report in Appendix
I.
CAPITAL EXPENDITURES
Our capital expenditures consist of (i) payment for purchases of items of property, plant
and equipment, and right-of-use assets, primarily used to open new restaurants, procure
equipment for new restaurants and renovate existing restaurants, and (ii) payment for purchases
of intangible assets, which mainly comprise computer software licenses to support our
day-to-day operation and management. Our capital expenditures amounted to RMB32.5
million, RMB62.0 million, RMB99.9 million, RMB44.7 million and RMB53.7 million in 2022,
2023, 2024 and for the six months ended June 30, 2024 and 2025, respectively. The following
table sets forth a breakdown of our capital expenditures for the periods indicated:
For the year ended December 31,
For the Six Months ended
June 30,
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Payment for purchases of
property, plant and
equipment, and
right-of-use assets /H1118/H1118/H1118/H111830,795 60,746 97,324 43,656 52,658
Payment for purchases of
intangible assets /H1118/H1118/H1118/H1118/H11181,722 1,256 2,607 1,084 1,004
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111832,517 62,002 99,931 44,740 53,662
FINANCIAL INFORMATION
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During the Track Record Period, we mainly funded our capital expenditure requirements
with net cash generated from operating activities and bank borrowings. We intend to fund our
future capital expenditures with a combination of cash generated from operations, bank
borrowings and net proceeds from the Global Offering. For further details of our planned
capital expenditure, see “Future Plans and Use of Proceeds — Use of Proceeds.” We may
reallocate the funds to be utilized on capital expenditures based on our ongoing business needs.
KEY FINANCIAL RATIOS
The following table sets forth the key financial ratios for the periods/as of the dates
indicated:
For the year ended/As of December 31,
For the year
ended/As of
June 30,
2022 2023 2024 2025
Revenue growth rate (%) /H1118/H1118/H1118/H1118N/A 91.5 44.2 33.8
Current ratio (1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11180.4 0.5 0.5 0.5
Debt ratio (2) (%) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181.6 – 4.3 –
Notes:
(1) Calculated using current assets dividend by current liabilities as of the respective date.
(2) Calculated using total interest bearing borrowings divided by total assets and multiplied by 100%.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT FINANCIAL RISKS
We are exposed to financial risks including credit, liquidity, interest rate and currency
risks in the normal course of our business. Our overall risk management focuses on the
unpredictability of financial markets and seeks to minimize potential adverse effects on our
financial performance. Our risk management is carried out under policies approved by our
Board. The discussion below provides a summary of our market risks. See note 28 to the
Accountants’ Report in Appendix I for further details.
Credit Risk
Our credit risk is primarily attributable to trade and other receivables, lease payment
receivables and long-term receivables. The credit risk arising from cash and cash equivalents
and restricted deposits is limited because our counterparties are banks and financial institutions
with high credit quality, for which we consider to have low credit risk. Our exposure to credit
risk arising from refundable rental deposits is also considered to be low, taking into account
of the landlord’s credit rating, the remaining lease term and the period covered by the rental
deposits. No expected credit losses allowance for other receivables, lease payment receivables
FINANCIAL INFORMATION
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and long-term receivables have been recognized at the years ended December 31, 2022, 2023,
2024 and the six months ended June 30, 2025. Our expected credit loss rate is minimal. In
addition, we do not provide any guarantee that would expose us to credit risk.
Liquidity Risk
Our objective is to maintain sufficient reserves of cash to meet our liquidity requirements
in the short and longer term. We regularly monitor our liquidity requirements to manage our
liquidity risk. For details of the maturity profile of our financial liabilities, see note 28(b) to
the Accountants’ Report in Appendix I.
Interest Rate Risk
Our exposure to the interest rate risk is not significant since we do not hold any financial
instrument of which the fair value or future cash flows will fluctuate due to changes in market
interest rates.
Currency Risk
We are not exposed to significant foreign currency risk since financial assets and
liabilities denominated in currencies other than the functional currencies of our Group are not
significant.
DIVIDENDS
In 2023 and the six months ended June 30, 2025, we declared dividends attributable to
equity shareholders of our Company of RMB19.5 million and RMB14.7 million which had
been fully paid subsequently, respectively. No other dividend was declared or paid by our
Company or other entities comprising our Group during the Track Record Period.
On October 27, 2025, the Company passed a Board resolution and Shareholders
resolution, declaring a dividend of RMB34,365,000 based on the Company’s retained profits
as of June 30, 2025 to our existing Shareholders whose names appeared in the register of
members of the Company on October 27, 2025 (the “ Dividend ”). As of September 30, 2025,
the total amount of our Company’s cash and cash equivalents was RMB41.1 million. The
Dividend was fully settled in November 2025 with our internal resources.
We do not currently have a formal dividend policy or any predetermined dividend payout
ratio. PRC Law require that dividends be paid only out of our distributable profits.
Distributable profits are our after-tax profits, less appropriations to statutory and other reserves
that we are required to make. Any future declarations and payments of dividends will be at the
absolute discretion of our Directors and will depend on our actual and expected results of
operations, cash flow and financial position, general business conditions and business
strategies, expected working capital requirements and future expansion plans, legal, regulatory
and other contractual restrictions, and other factors which our Directors consider relevant at
FINANCIAL INFORMATION
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such time. We may declare and pay dividends mainly by cash or by stock that we consider
appropriate. Our ability to distribute dividends in the future also depends on whether we can
receive dividends from our subsidiaries. Any declaration and payment as well as the amount
of dividends will be subject to our constitutional documents, applicable PRC Law and approval
by our Shareholders.
According to the PRC Company Law, a PRC incorporated company is required to set
aside at least 10% of its after-tax profits each year, after making up for previous years’
accumulated losses, if any, to contribute to certain statutory reserve funds until the aggregate
amount contributed to such funds reaches 50% of its registered capital. Our Company may pay
dividends out of after-tax profits after making up for accumulated losses and contributing to
statutory reserve funds as mentioned above.
WORKING CAPITAL SUFFICIENCY
Taking into account the financial resources available to us, including our cash and cash
equivalents and financial assets measured at FVPL on hand, available bank loans and facilities
and the estimated net proceeds from the Global Offering, our Directors are of the view that we
have sufficient working capital to meet our present needs and for the next twelve months from
the date of this prospectus. On the basis of the independent due diligence undertaken, the Sole
Sponsor concurs with the aforementioned views of our Directors. Our Directors confirm that
we had no material defaults on trade and non-trade payables and borrowings, nor did we breach
any covenants during the Track Record Period and up to the date of this prospectus.
DISTRIBUTABLE RESERVES
As of June 30, 2025, retained profits of our Company amounted to RMB36.1 million.
Such retained earnings represent our distributable reserves as of the same date.
LISTING EXPENSES
Based on an Offer Price HK$6.34 per H Share, being the mid-point of the indicative Offer
Price range, and assuming the Over-allotment Option is not exercised, listing expenses to be
borne by us are estimated to be approximately HK$65.7 million or 10.6% of the gross proceeds
of the Global Offering, which consist of (i) underwriting commission of approximately
HK$27.0 million, and (ii) non-underwriting related expenses of approximately HK$38.7
million including (a) fees and expenses of legal advisors and the Reporting Accountants of
approximately HK$19.3 million and (b) other fees and expenses of approximately HK$19.4
million. During the Track Record Period, we incurred accumulated listing expenses of
HK$13.3 million recognized in the consolidated statements of profit or loss and other
comprehensive income. Subsequent to the Track Record Period, we expect to further incur
listing expenses of HK$52.4 million prior to and upon completion of the Global Offering, of
which (i) HK$21.2 million is expected to be recognized as expenses in our consolidated
statements of profit or loss and other comprehensive income, and (ii) HK$31.2 million is
expected to be accounted for as a deduction from equity upon Listing.
FINANCIAL INFORMATION
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OFF-BALANCE SHEET ARRANGEMENTS
As of the Latest Practicable Date, we had not entered into any off-balance sheet
arrangements. We also have not entered into any financial guarantees or other commitments to
guarantee the payment obligations of third parties. In addition, we have not entered into any
derivative contracts that are indexed to our equity interests and classified as owners’ equity.
Furthermore, we do not have any retained or contingent interest in assets transferred to an
unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We
do not have any variable interest in any unconsolidated entity that provides financing, liquidity,
market risk or credit support to us or that engages in leasing, hedging or research and
development services with us.
UNAUDITED PRO FORMA ADJUSTED NET TANGIBLE ASSETS
For details, see the section headed “Unaudited Pro Forma Financial Information” in
Appendix II.
NO MATERIAL ADVERSE CHANGE
Our Directors have confirmed that up to the date of this prospectus there has been no
material adverse change in our financial or trading position or prospects since June 30, 2025,
being the end of the Track Record Period as reported in the Accountants’ Report in Appendix
I, and there has been no event since June 30, 2025 which would materially affect the
information shown in the Accountants’ Report in Appendix I.
DISCLOSURE REQUIRED UNDER THE LISTING RULES
Our Directors confirm that, as of the Latest Practicable Date, there were no circumstances
that would give rise to a disclosure requirement under Rules 13.13 to 13.19 of the Listing
Rules.
FINANCIAL INFORMATION
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FUTURE PLANS
See “Business — Development Strategies” for a detailed description of our future plans.
USE OF PROCEEDS
We estimate that we will receive net proceeds from the Global Offering of approximately
HK$551.6 million, after deducting underwriting fees and commissions and other estimated
expenses paid and payable by us in relation to the Global Offering, assuming an Offer Price
of HK$6.34 per H Share, being the mid-point of the Offer Price range from HK$5.64 to
HK$7.04 per H Share, and that the Over-allotment Option is not exercised.
In line with our strategies, we intend to use the proceeds from the Global Offering for the
purposes and in the amounts set forth below:
(i) approximately 60.0% of the net proceeds, or approximately HK$331.0 million, for
expanding our restaurant network, broadening our geographical coverage and
deepening our market penetration.
According to Frost & Sullivan, the total GMV of the Chinese noodle restaurant
market in China had expanded from RMB183.3 billion in 2020 to RMB296.2 billion
in 2024, at a CAGR of 12.7%. Looking forward, the growth of the Chinese noodle
restaurant market is expected to accelerate further to reach the total GMV of
RMB510.0 billion by 2029, at a CAGR of 10.9% from 2025 to 2029, based on
further urbanization, increase in disposable income and increase in the proportion of
consumers dining out in China. These favorable trends present substantial
opportunities for us to capitalize on market expansion and strengthen our
competitive position.
To seize these opportunities, we plan to leverage our highly standardized operations
and advanced digital capabilities to further expand our network of self-operated and
franchised restaurants.
We plan to open approximately 150 to 180, 170 to 200 and 200 to 230 self-operated
and franchised new restaurants in the Chinese Mainland, Hong Kong SAR and
overseas in 2026, 2027 and 2028, respectively. In particular, within each of the
years, approximately 20% to 30% of the total number of restaurants we plan to open
are expected to be franchised restaurants, respectively. For details, see “—
Development Strategies — Strategically expand our self-operated and franchised
restaurant network to deliver sustainable growth.” Based on historical investment
records, we estimate that the investment cost for opening a new self-operated
restaurant to be between RMB0.7 million and RMB0.9 million. We expect the
forecast revenue, initial breakeven period, and cash investment payback period for
new restaurants in the Chinese Mainland will generally align with the historical
performances of our existing restaurants during the Track Record Period. See
“Business — Our Restaurant Performance — Initial Breakeven Period and
Investment Payback Period.”
FUTURE PLANS AND USE OF PROCEEDS
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When opening restaurants in new cities, we consider factors such as average
spending per capita in such region, target customer demographics and the local
competitive landscape to determine the expected level of market demand. For
specific new markets such as Singapore, we may focus on achieving broader brand
recognition over profitability or investment returns.
The following table sets forth the proportion of Xiao Noodles restaurants we expect
to open by region in 2026, 2027 and 2028.
Region Y ear ending December 31,
2026 2027 2028
(%) (%) (%)
Chinese Mainland
First-tier and new first-tier cities /H1118/H1118 51 43 34
Second-tier cities and below /H1118/H1118/H1118/H1118/H111831 38 42
Hong Kong SAR and overseas /H1118/H1118 18 20 24
In line with our restaurant network expansion, we plan to recruit approximately
twelve personnel for each new restaurant. The following table sets forth the
positions and corresponding salaries for each new self-operated restaurant.
Position
No. of
personnel Estimated monthly salary
Restaurant manager /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182
approximately
RMB5,500-10,000
Restaurant frontline staff /H1118/H1118/H1118/H1118 10
approximately
RMB3,500-8,000
We believe that there is no significant adverse operational and financial impact on
us as a result of our restaurant expansion and we will be able to mitigate the risk of
over-expansion for our restaurants.
Supported by a highly standardized business model and a holistic restaurant
expansion planning system, we maintain a prudent expansion strategy for Xiao
Noodles restaurants, conducting thorough market research, analyzing potential
commercial districts and consumer demand, and evaluating our brand’s market
position to ensure that each new Xiao Noodles restaurant aligns with our strategic
objectives and profitability targets. In particular, the Xiao Noodles restaurant
expansion process is governed by standardized procedures covering matters such as
restaurant networking planning, site selection, commercial negotiations, design,
construction and renovation, legal compliance, staff training, and marketing
activities. Our headquarters oversees the expansion of our restaurant network to
ensure a standardized approach to restaurant expansion.
FUTURE PLANS AND USE OF PROCEEDS
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This strategic restaurant network expansion is expected to strengthen our brand
presence, improve market penetration, and increase customer accessibility. By
strategically selecting high-potential locations and maintaining operational
efficiency, we aim to drive sustainable growth and profitability while enhancing the
overall customer experience.
(ii) approximately 10.0% of the net proceeds, or approximately HK$55.2 million, for
advancing our information technology capabilities through upgrading the
technology and digital systems across our restaurant network, among which:
 approximately 6.0% of the net proceeds, or approximately HK$33.1 million, is
expected to be used to further adopt AI technologies, IoT systems and big data
analytics in the iteration of our existing technology infrastructure to support
our growing operation scale. We plan to refine our AI-empowered system for
more precise estimation of sales of our restaurants, which is expected to
increase the accuracy of our restaurants’ procurement of ingredients,
equipment setup and staffing arrangement. We also plan to upgrade the visual
recognition technologies of our current AI-empowered visual recognition
system to expand its coverage over all menu items and operational activities in
our restaurants;
 approximately 2.0% of the net proceeds, or approximately HK$11.0 million, is
expected to be used to upgrade our technology infrastructure to further
digitalize and automate our operations and reduce our costs of labour. In
particular, we plan to upgrade key software systems such as financial
accounting, human resource management and kitchen operation management.
We will continuously iterate and fine-tune our self-developed digital systems
for the business and financial analyses of our restaurants, procurement,
inventory and supply chain management, as well as human resource, employee
training and evaluation; and
 approximately 2.0% of the net proceeds, or approximately HK$11.0 million, is
expected to be used to optimize and consolidate our existing technology
infrastructure into a one-stop system, which is expected to further increase our
operation efficiency. For instance, we plan to consolidate various sub-systems
in our restaurant operations, including cashiering, ordering, scheduling, energy
management and staff training, into a single interface. We plan to interlink
digitally each stage of our operational value chain, so as to integrate the
front-end restaurant operations and customer feedback, the middle-end data
processing and centralization, and the back-end supporting functions such as
marketing, menu development, supply chain management, financial
management, and human resources management, with the ultimate goal of
constructing a comprehensive and closed-loop digitalized industry chain
system.
FUTURE PLANS AND USE OF PROCEEDS
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(iii) approximately 10.0% of the net proceeds, or approximately HK$55.2 million, for
brand building and further strengthening customer loyalty, among which:
 approximately 4.0% of the net proceeds, or approximately HK$22.1 million, is
expected to be used to enhance our brand through comprehensive upgrade of
our restaurant image. This initiative includes optimizing interior design,
standardizing signage, and enhancing the dining environment to create a
distinctive and highly recognizable brand identity for the purpose of attracting
more customers and driving foot traffic to our restaurants.
 approximately 1.5% of the net proceeds, or approximately HK$8.3 million, is
expected to be used to collaborate with local lifestyle platforms and food
influencers. We plan to make use of such external sources of traffic and launch
online and offline promotional campaigns to attract new customers and
enhance brand reputation. In particular, we plan to invest in traffic promotion
and live streaming on online platforms. For example, we plan to collaborate
with key opinion leaders for restaurant visit campaigns and fan-themed offline
events in connection with our brand enrichment initiatives.
 approximately 1.5% of the net proceeds, or approximately HK$8.3 million, is
expected to be used to form cross-industry partnerships with well-known
brands in various sectors. For example, we plan to collaborate with popular
films and blind box brands for joint promotions in combination with our
quarterly marketing activities. These collaborations will integrate Sichuan-
Chongqing culture into diverse scenarios, expanding our brand’s influence
across different consumer segments and deepening consumers’ understanding
of the Sichuan and Chongqing culinary culture that our brand represents.
 approximately 1.5% of the net proceeds, or approximately HK$8.3 million, is
expected to be used to further enriching our brand through crafting compelling
brand stories and developing merchandise. These initiatives will enrich our
brand’s cultural depth and strengthen emotional connections with consumers.
 approximately 1.5% of the net proceeds, or approximately HK$8.3 million, is
expected to be used to further expanding our membership base. We plan to
engage third-party customer data platforms (CDPs) to obtain data-driven
insights about consumer trends and preferences. We also plan to attract traffic
to our membership system through precision marketing, private domain traffic
attraction, promotional discounts, captivating more customers in existing and
new geographical markets.
(iv) approximately 10.0% of the net proceeds, or approximately HK$55.2 million, for
strategic investment in potential companies in the upstream food processing industry
in the Chinese Mainland. To fuel our future strategic development, we plan to invest
in three to five suppliers of our major ingredients such as meat, noodles and
FUTURE PLANS AND USE OF PROCEEDS
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condiments with an annual revenue of approximately RMB50.0 million to
RMB100.0 million to enhance our economies of scale, ensure stability and quality
in the supply of food ingredients by allowing direct oversight over supplier
processes, and integrate our resources through the co-development of products that
better suit our specific needs. We expect to invest approximately HK$10.0 million
to HK$20.0 million for each investment target. As of the Latest Practicable Date, we
had not identified or pursued any investment target. According to Frost & Sullivan,
in 2024, there were over 5,000 target companies in the Chinese Mainland that fulfill
our selection criteria above. Accordingly, our Directors believe there is considerable
presence of potential investment targets in the Chinese Mainland; and
(v) approximately 10.0% of the net proceeds, or approximately HK$55.2 million, for
general corporate purposes and working capital.
The above allocation of the proceeds as set out above will be adjusted on a pro rata basis
in the event that the Offer Price is fixed below or above the midpoint of the indicative price
range.
If the Offer Price is fixed at HK$7.04 per H Share (being the high end of the Offer Price
range stated in this prospectus), we will receive additional net proceeds of approximately
HK$65.4 million, assuming the Over-allotment Option is not exercised.
If the Offer Price is fixed at HK$5.64 per H Share (being the low end of the Offer Price
range stated in this prospectus), the net proceeds we receive will be reduced by approximately
HK$65.4 million, assuming the Over-allotment Option is not exercised.
In the event that the Over-allotment Option is exercised in full, the additional net
proceeds that we would receive would be HK$29.6 million assuming an Offer Price of
HK$6.34 per H Share, being the mid-point of the Offer Price range stated in this prospectus,
after deduction of underwriting fees and commissions and other estimated expenses paid and
payable by us in relation to the Global Offering. Additional net proceeds received due to the
exercise of any Over-allotment Option will be used for the above purposes accordingly on a
pro-rata basis if the Over-allotment Option is exercised.
If any part of our development plan does not proceed as planned for reasons such as
changes in government policies that would render the development of any of our projects not
viable, or the occurrence of force majeure events, we will carefully evaluate the situation and
may reallocate the net proceeds from the Global Offering.
To the extent that the net proceeds of the Global Offering are not immediately used for
the above purposes, we will only deposit those net proceeds into short-term interest-bearing
accounts at licensed commercial banks and/or other authorized financial institutions (as
defined under the SFO or applicable laws and regulations in other jurisdictions).
FUTURE PLANS AND USE OF PROCEEDS
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IMPLEMENTATION PLAN
The following table sets forth the implementation plan for each purposes. In case the
allocated amount of net proceeds is insufficient to cover the required capital expenditure, we
will utilize cash generated from operating activities and cash and cash equivalents as
alternative sources of additional funding.
Estimated investments for the year ending December 31,
Purposes
Allocation
proportion 2026 2027 2028
Total
amount of
net proceeds
to be used
(%) (HK$ millions)
Expanding our restaurant network,
broadening our geographical
coverage and deepening our
market penetration /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111860.0 91.7 100.9 138.4 331.0
Advancing our information
technology capabilities through
upgrading the technology and
digital systems across our
restaurant network /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810.0 19.3 19.5 16.4 55.2
Brand building and further
strengthening customer loyalty /H1118/H1118/H1118 10.0 18.6 18.6 17.9 55.2
Strategic investment in potential
companies in the upstream food
processing industry /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810.0 18.4 18.4 18.4 55.2
General corporate purposes and
working capital /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810.0 18.4 18.4 18.4 55.2
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118100.0 166.4 175.8 209.5 551.6
FUTURE PLANS AND USE OF PROCEEDS
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HONG KONG UNDERWRITERS
CMB International Capital Limited
CLSA Limited
SDIC Securities (Hong Kong) Limited
Futu Securities International (Hong Kong) Limited
China Galaxy International Securities (Hong Kong) Co., Limited
BOCI Asia Limited
Shenwan Hongyuan Securities (H.K.) Limited
Zhongtai International Securities Limited
Livermore Holdings Limited
ABCI Securities Company Limited
Tiger Brokers (HK) Global Limited
UNDERWRITING ARRANGEMENTS AND EXPENSES
Hong Kong Public Offering
Hong Kong Underwriting Agreement
Pursuant to the Hong Kong Underwriting Agreement, our Company is offering 9,736,500
Hong Kong Offer Shares (subject to re-allocation described below) for subscription by the
public in Hong Kong on, and subject to, the terms and conditions set out in this prospectus and
the Hong Kong Underwriting Agreement at the Offer Price.
Subject to:
(a) the Listing Committee granting the listing of, and permission to deal in, our Shares
in issue and to be issued as mentioned in this prospectus and such listing and
permission not subsequently having been revoked prior to the commencement of
dealings in the Shares on the Stock Exchange; and
(b) certain other conditions set out in the Hong Kong Underwriting Agreement
(including but not limited to the Offer Price being agreed upon between, among
others, us and the Sole Sponsor-Overall Coordinator (for itself and on behalf of the
Underwriters)), the Hong Kong Underwriters have agreed severally, and not jointly,
to subscribe for, or procure subscribers for, the Hong Kong Offer Shares which are
being offered but are not taken up under the Hong Kong Public Offering, on the
terms and conditions set out in this prospectus and the Hong Kong Underwriting
Agreement. If, for any reason, the Offer Price is not agreed between, among others,
us and the Sole Sponsor-Overall Coordinator (for itself and on behalf of the
Underwriters), the Global Offering will not proceed and will lapse.
The Hong Kong Underwriting Agreement is conditional upon and subject to the
International Underwriting Agreement having been entered into and becoming unconditional
and not having been terminated.
UNDERWRITING
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Grounds for termination
The respective obligations of the Hong Kong Underwriters to subscribe for, or procure
subscribers for, the Hong Kong Offer Shares under the Hong Kong Underwriting Agreement
are subject to termination. The Sole Sponsor and the Sole Sponsor-Overall Coordinator (for
itself and on behalf of the Hong Kong Underwriters) may in its sole and absolute discretion,
by notice in writing to the Company, terminate the Hong Kong Underwriting Agreement with
immediate effect if, at any time at or prior to 8:00 a.m. on the Listing Date:
(a) there develops, occurs, exists or comes into effect:
(i) any event, circumstance, or series of events, in the nature of force majeure
(including, without limitation, any acts of government, declaration of a
national or international emergency or war, calamity, crisis, epidemic,
pandemic, adverse mutation or aggravation of infectious diseases,
comprehensive sanctions, strikes, lock-outs, other industrial actions, fire,
explosion, flooding, earthquake, tsunami, volcanic eruption, civil commotion,
riots, rebellion, public disorder, acts of war, outbreak or escalation of
hostilities (whether or not war is declared), acts of God, acts of terrorism
(whether or not responsibility has been claimed), paralysis in government
operations) or other state of emergency in whatever form, in or affecting,
directly or indirectly the PRC, Hong Kong, the United States, the United
Kingdom, the European Union (or any member thereof) or any other
jurisdiction relevant to our Group (each a “ Relevant Jurisdiction ” and
collectively, the “ Relevant Jurisdictions ”); or
(ii) any change or development involving a prospective change or development, or
any event, circumstance or series of events likely to result in a change or
development involving a prospective change, in local, national, regional or
international financial, economic, political, military, industrial, fiscal, legal,
regulatory, currency, credit or market matters or conditions, equity securities or
exchange control or any monetary or trading settlement system or other
financial markets (including, without limitation, conditions in the stock and
bond markets, money and foreign exchange markets, the interbank markets and
credit markets), in or affecting any Relevant Jurisdictions; or
(iii) any moratorium, suspension or restriction in or on trading in securities
generally on the Hong Kong Stock Exchange, the New Y ork Stock Exchange,
the NASDAQ Global Market, the London Stock Exchange, the Shenzhen Stock
Exchange and the Shanghai Stock Exchange; or
(iv) any general moratorium on commercial banking activities in any Relevant
Jurisdictions (declared by any relevant competent authority) or any disruption
in commercial banking or foreign exchange trading or securities settlement or
clearing services, procedures or matters in or affecting any of the Relevant
Jurisdictions; or
UNDERWRITING
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--- page 388 ---
(v) the commencement by any governmental authority or other regulatory or
political body or organization of any public action or investigation against any
Group company or a director, supervisor or senior management member of any
Group company in his/her capacity as such or announcing an intention to take
any such action; or
(vi) any new law, or any change or a development involving a prospective change
in (or in the interpretation or application by any court or other competent
authority of) existing laws, in each case, in or affecting any of the Relevant
Jurisdictions; or
(vii) the imposition of sanctions or export controls in whatever form, directly or
indirectly, on any Group company or any of the Controlling Shareholders or by
or on any Relevant Jurisdiction, or the withdrawal of trading privileges which
existed on the date of the Hong Kong Underwriting Agreement, in whatever
form, directly or indirectly, by, or for, any of the Relevant Jurisdictions; or
(viii) any valid demand by creditors for repayment of indebtedness of any Group
company or in respect of which any Group company is liable prior to its stated
maturity; or
(ix) any non-compliance of this prospectus (or any other documents used in
connection with the contemplated offering, allotment, issue, subscription or
sale of any of the Offer Shares), the CSRC Filings or any aspect of the Global
Offering with the Listing Rules or any other applicable laws; or
(x) any change or development involving a prospective change or amendment in
or affecting taxes or exchange control, currency exchange rates or foreign
investment regulations (including, without limitation, a material devaluation of
the RMB, Hong Kong dollar or the USD against any foreign currencies, a
change in the system under which the value of the Hong Kong dollar is linked
to that of the USD), or the implementation of any exchange control, in any of
the Relevant Jurisdictions or affecting an investment in the Offer Shares; or
(xi) any litigation, dispute, legal action, claim, or regulatory or administrative
investigation or legal proceeding or action being threatened or instigated or
announced against any Group company, any executive Director, any
Supervisor, any member of the senior management of the Company as named
in this prospectus or any Controlling Shareholders; or
(xii) any contravention by any Group company or any executive Director or any
Supervisor or any member of the senior management of the Company as named
in this prospectus or any Controlling Shareholders of any applicable laws
including the Listing Rules; or
UNDERWRITING
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--- page 389 ---
(xiii) that the Chairman of the Board, any Director, any Supervisor, the chief
executive officer, the chief financial officer, or any member of senior
management of the Company named in this prospectus seeks to retire, or is
removed from office or vacating his/her office; or
(xiv) any executive Director or any Supervisor or any member of senior management
of the Company named in this prospectus is being charged with an indictable
offense or prohibited by operation of law or otherwise disqualified from taking
part in the management or taking directorship of a company; or
(xv) any change or prospective change or development, or any materialization of
any of the risks set out in the section headed “Risk Factors” in this prospectus;
or
(xvi) other than with the prior written consent of the Sole Sponsor and the Sole
Sponsor-Overall Coordinator, the issue or requirement to issue by the
Company of a supplement or amendment to this prospectus or other documents
in connection with the offer and sale of the Offer Shares pursuant to the
Companies (Winding Up and Miscellaneous Provisions) Ordinance or the
Listing Rules or upon any requirement or request of the Stock Exchange and/or
the SFC; or
which, individually or in the aggregate, in the sole and absolute opinion of the Sole
Sponsor and the Sole Sponsor-Overall Coordinator (for itself and on behalf of the
Hong Kong Underwriters):
(a) have or will have or may have any material adverse change or effect, or any
development involving a prospective material adverse change or effect, in or
affecting (1) the assets, liabilities, business, properties, management,
prospects, shareholders’ equity, profits, losses, results of operations, position
or condition (financial or operational) or performance of our Group taken as a
whole, and (2) the ability of the Company to perform its obligations under the
Hong Kong Underwriting Agreement and the International Underwriting
Agreement, including the issuance and sale of the Offer Shares, or to
consummate the transactions contemplated under this prospectus (“ Material
Adverse Change ”); or
(b) has or will have or may have a material adverse effect on the success of the
Global Offering or the level of applications under the Hong Kong Public
Offering or the level of interest under the International Offering; or
(c) makes or will make or may make it inadvisable or inexpedient or impracticable
for the Global Offering to proceed or to market the Global Offering or the
delivery or distribution of the Offer Shares on the terms and in the manner
contemplated by the Offer Related Documents (as defined below); or
UNDERWRITING
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--- page 390 ---
(d) has or will have or may have the effect of making any part of the Hong Kong
Underwriting Agreement (including underwriting) incapable of performance in
accordance with its terms or preventing or delaying the processing of
applications and/or payments pursuant to the Global Offering or pursuant to
the underwriting thereof; or
(b) any of the Sole Sponsor and the Sole Sponsor-Overall Coordinator (for itself and on
behalf of the Hong Kong Underwriters and the Capital Market Intermediaries) shall
become aware of the fact that, or have reasonable cause to believe that:
(i) any material statement contained in any of the offering documents, the CSRC
filings and/or in any notices, announcements, advertisements, communications
or other documents (including any announcement, circular, document or other
communication pursuant to the Hong Kong Underwriting Agreement) in
connection with the Global Offering (including any supplement or amendment
thereto) (the “ Offer Related Documents ”) was, when it was issued, or has
become, untrue, incorrect, incomplete, misleading or deceptive in any material
respect, or that any material forecast, estimate, expression of opinion, intention
or expectation contained in any such documents is not fair and honest and
based on reasonable assumptions or reasonable grounds, when taken as a
whole; or
(ii) any matter has arisen or has been discovered which would, had it arisen or been
discovered immediately before the date of this prospectus, constitute a material
omission from, or material misstatement in, any of Offer Related Documents
(including any supplement or amendment thereto); or
(iii) any breach of, or any event or circumstance rendering untrue or incorrect,
incomplete or misleading in any respect, any of the warranties; or
(iv) any event, act or omission which gives rise or is likely to give rise to any
liability of any of the indemnifying parties pursuant to the Hong Kong
Underwriting Agreement; or
(v) any breach of any of the obligations or undertakings imposed upon any party
to the Hong Kong Underwriting Agreement or the International Underwriting
Agreement (other than upon any of the Hong Kong Underwriters or the
International Underwriters); or
(vi) any Material Adverse Change; or
(vii) the approval by the Listing Committee of the Stock Exchange of the listing of,
and permission to deal in, the H Shares to be issued or sold (including any
additional H Shares that may be issued or sold pursuant to the exercise of the
Over-allotment Option) under the Global Offering is refused or not granted
UNDERWRITING
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--- page 391 ---
(other than subject to customary conditions), on or before the date of the
Listing, or if granted, the approval is subsequently withdrawn, cancelled,
qualified (other than by customary conditions), revoked or withheld; or
(viii) the CSRC filings, the notice of acceptance of the CSRC filings issued by the
CSRC and/or the published filing results in respect of the CSRC filings on its
website have been revoked, withdrawn, rejected or terminated; or
(ix) other than with the prior written consent of the Sole Sponsor and the Sole
Sponsor-Overall Coordinator, the issue or requirement to issue by the
Company of a supplement or amendment to the CSRC filings pursuant to the
CSRC Rules or upon any requirement or request of the CSRC; or
(x) the Company withdraws this prospectus (and/or any other Offer Related
Documents) or the Global Offering; or
(xi) any expert has withdrawn its consent to the issue of this prospectus with the
inclusion of its report, letters, and/or opinions (as the case may be) and
references to its name included in the form and context in which it respectively
appears; or
(xii) any prohibition on the Company for whatever reason from offering, allotting,
issuing or selling any of the Offer Shares (including pursuant to any exercise
of the Over-allotment Option) pursuant to the terms of the Global Offering; or
(xiii) any person (other than the Sole Sponsor) has withdrawn or sought to withdraw
its consent to the issue of this prospectus with the inclusion of its reports,
letters and/or legal opinions (as the case may be) and references to its name
included in the form and context in which it respectively appears; or
(xiv) an order or petition is presented for the winding-up of any Group company, or
any composition or arrangement made by any Group company with its
creditors or a scheme of arrangement entered into by any Group company or
any resolution for the winding-up of any Group company or the appointment
of a provisional liquidator, receiver or manager over all or a material part of
the material assets or undertaking of any Group company or anything
analogous thereto occurs in respect of any Group company; or
(xv) a material portion of the orders placed or confirmed in the book-building
process has been withdrawn, terminated or cancelled.
UNDERWRITING
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Undertakings given to the Stock Exchange pursuant to the Listing Rules
By our Company
In accordance with Rule 10.08 of the Listing Rules, we have undertaken to the Stock
Exchange that within six months from the Listing Date, no further Shares or securities
convertible into equity securities of our Company (whether or not of a class already listed)
shall be issued by our Company or form the subject of any agreement to such an issue (whether
or not such issue of Shares or securities of our Company will be completed within six months
from the Listing Date), except for the Offer Shares to be issued pursuant to the Global Offering
and any Shares which may be issued pursuant to the H Share Full Circulation or under any of
the circumstances provided under Rule 10.08 of the Listing Rules.
By our Controlling Shareholders
In accordance with Rule 10.07(1) of the Listing Rules, each of our Controlling
Shareholders has, irrevocably and unconditionally, undertaken to the Stock Exchange and our
Company that, except pursuant to the Global Offering (including pursuant to the Over-
Allotment Option) and the Shares to be issued under the H Share Full Circulation, he/she/it
shall not, and shall procure his/her/its close associates or companies controlled by he/she/it or
any of his/her/its associates, nominees or trustees (as the case may be) who is/are the registered
holder(s) as referred in paragraph (a) below shall not:
(a) in the period commencing on the date by reference to which disclosure of his/her/its
shareholding is made in this prospectus and ending on the date which is six months
from the Listing Date, dispose of, nor enter into any agreement to dispose of or
otherwise create any options, rights, interests or encumbrances (save as pursuant to
a pledge or charge as security in favor of an authorized institution (as defined in the
Banking Ordinance (Chapter 155 of the Laws of Hong Kong) for a bona fide
commercial loan) in respect of, any of the Shares that he/she/it is shown to
beneficially own in this prospectus; or
(b) in the period of a further six months commencing on the date on which the period
referred to in paragraph (a) above expires, dispose of, nor enter into any agreement
to dispose of or otherwise create any options, rights, interests or encumbrances in
respect of, any of the Shares referred to in paragraph (a) above if, immediately
following such disposal or upon the exercise or enforcement of such options, rights,
interests or encumbrances (save as pursuant to a pledge or charge as security in favor
of an authorized institution (as defined in the Banking Ordinance (Chapter 155 of
the Laws of Hong Kong) for a bona fide commercial loan), he/she/it would cease to
be a controlling shareholder (as defined in the Listing Rules) of our Company or
would together with the other Controlling Shareholders cease to be, or regarded as,
a group of controlling shareholders (as defined in the Listing Rules) of our
Company.
UNDERWRITING
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In accordance with Note 3 to Rule 10.07(2) of the Listing Rules, each of our Controlling
Shareholders has also irrevocably and unconditionally undertaken to the Stock Exchange and
our Company that within the period commencing on the date by reference to which disclosure
of his/her/its shareholding in our Company is made in this prospectus and ending on the date
which is 12 months from the Listing Date, he/she/it shall:
(a) when he/she/it pledges or charges any securities in our Company beneficially owned
by him/her/its in favor of an authorized institution (as defined in the Banking
Ordinance (Chapter 155 of the Laws of Hong Kong) for a bona fide commercial
loan) pursuant to Note (2) to Rule 10.07(2) of the Listing Rules, immediately inform
us in writing of such pledge or charge together with the number of our securities so
pledged or charged; and
(b) when he/she/it receives indications, either verbal or written, from the pledgee or
chargee that any of our pledged or charged securities beneficially owned by
him/her/its will be disposed of, immediately inform us in writing of such
indications.
We will also inform the Stock Exchange as soon as we have been informed of the matters
referred to in paragraphs (a) and (b) above by any of our Controlling Shareholders and make
a public disclosure in relation to such information by way of an announcement in accordance
with the Listing Rules.
Undertakings given to the Hong Kong Underwriters
Undertakings by our Company
Our Company has undertaken to each of the Sole Sponsor, the Sole Sponsor-Overall
Coordinator, the Joint Overall Coordinators, the Joint Global Coordinators, the Joint
Bookrunners, the Joint Lead Managers, the Hong Kong Underwriters and the Capital Market
Intermediaries not to (except as disclosed in this prospectus, including but without limitation,
for the offer, allotment and issue of the Offer Shares pursuant to the Global Offering, including
any exercise of the Over-allotment Option and the Shares to be issued under the H Share Full
Circulation, or in certain circumstances prescribed by Rule 10.08 of the Listing Rules
(including any additional Shares that may be issued pursuant to the Pre-IPO Employee
Incentive Scheme, as defined in this prospectus)), at any time during the period commencing
on the date of the Hong Kong Underwriting Agreement and ending on, and including, the date
that is six months after the Listing Date (the “ First Six-Month Period ”), without the prior
written consent of the Sole Sponsor and the Sole Sponsor-Overall Coordinator (for itself and
on behalf of the Hong Kong Underwriters) and unless in compliance with the requirements of
the Listing Rules (including pursuant to the exceptions set out in Rule 10.08 of the Listing
Rules):
UNDERWRITING
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--- page 394 ---
(i) allot, issue, sell, accept subscription for, offer to allot, issue or sell, contract or agree
to allot, issue or sell, assign, mortgage, charge, pledge, hypothecate, lend, grant or
sell any option, warrant, contract or right to subscribe for or purchase, grant or
purchase any option, warrant, contract or right to allot, issue or sell, or otherwise
transfer or dispose of or create any Encumbrance over, or agree to transfer or dispose
of or create an Encumbrance over, either directly or indirectly, conditionally or
unconditionally, any H Shares or any other equity securities of the Company, or any
interest in any of the foregoing (including, without limitation, any equity securities
convertible into or exchangeable or exercisable for or that represent the right to
receive, or any warrants or other rights to purchase, any H Shares), or deposit any
Shares or other equity securities of the Company, as applicable, with a depositary in
connection with the issue of depositary receipts; or
(ii) enter into any swap or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership of H Shares or any other
equity securities of the Company, or any interest in any of the foregoing (including,
without limitation, any equity securities convertible into or exchangeable or
exercisable for or that represent the right to receive, or any warrants or other rights
to purchase, any H Shares);
(iii) enter into any transaction with the same economic effect as any transaction specified
in paragraph (i) or (ii) above; or
(iv) offer to or agree to or announce any intention to effect any transaction specified in
paragraph (i), (ii) or (iii) above,
in each case, whether any of the transactions specified in paragraph (i), (ii) or (iii) above is to
be settled by delivery of H Shares or such other equity securities of the Company, or in cash
or otherwise (whether or not the issue of H Shares or such other securities will be completed
within the First Six-Month Period).
In the event that, during the period of six months commencing on the date on which the First
Six-Month Period expires (the “ Second Six-Month Period ”), the Company enters into any of
the transactions specified in paragraph (i), (ii) or (iii) above or offers to or agrees to or
announces any intention to effect any such transaction, the Company shall take all reasonable
steps to ensure that it will not create a disorderly or false market in the securities of the
Company.
Each of the Controlling Shareholders undertakes to procure the Company to comply with the
undertakings in the Hong Kong Underwriting Agreement.
UNDERWRITING
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--- page 395 ---
By our Controlling Shareholders
Each of our Controlling Shareholders has undertaken to each of our Company, the Sole
Sponsor, the Sole Sponsor-Overall Coordinator, the Joint Overall Coordinators, the Joint
Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Hong Kong
Underwriters and the Capital Market Intermediaries that, (except for the offer, allotment and
issue of the Offer Shares pursuant to the Global Offering, including any exercise of the
Over-allotment Option and the Shares to be issued under the H Share Full Circulation) without
the prior written consent of and unless permitted by the Sole Sponsor and the Sole
Sponsor-Overall Coordinator (for itself and on behalf of the Hong Kong Underwriters and the
Capital Market Intermediaries) and unless permitted by and in compliance with the
requirements of the Listing Rules:
(i) he/it will not, and will procure that the relevant registered holder(s) will not, at any
time during the First Six-Month Period, (a) sell, offer to sell, contract or agree to
sell, mortgage, charge, pledge, hypothecate, lend, grant or sell any option, warrant,
contract or right to purchase, grant or purchase any option, warrant, contract or right
to sell, or otherwise transfer or dispose of or create an Encumbrance over, or agree
to transfer or dispose of or create an Encumbrance over, either directly or indirectly,
conditionally or unconditionally, any Shares or any other securities of the Company
or any interest therein (including, without limitation, any securities convertible into
or exchangeable or exercisable for or that represent the right to receive, or any
warrants or other rights to purchase, any Shares, or any such other securities or any
interest in any of the foregoing, as applicable) beneficially owned by him/it as at the
date hereof (the “ Relevant Shares ”); or (b) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of Shares or any other securities of the Company or any
interest therein (including, without limitation, any securities convertible into or
exchangeable or exercisable for or that represent the right to receive, or any warrants
or other rights to purchase, any Shares); or (c) enter into any transaction with the
same economic effect as any transaction specified in (a) or (b) above; or (d) offer
to or agree to or announce any intention to effect any transaction specified in (a), (b)
or (c) above, in each case, whether any of the transactions specified in (a), (b) or (c)
above is to be settled by delivery of Shares or such other securities of the Company
or shares or other securities of such other member of our Group, as applicable, or
in cash or otherwise (whether or not the issue of Shares or such other securities will
be completed within the aforesaid period);
(ii) he/it will not, and will procure that the relevant registered holder(s) will not, during
the Second Six-Month Period, enter into any of the transactions specified in
paragraph (i)(a), (b) or (c) above or offer to or agree to or announce any intention
to effect any such transaction if, immediately following any sale, transfer or disposal
or upon the exercise or enforcement of any option, right, interest or Encumbrance
pursuant to such transaction, he/it will cease to be a “controlling shareholder” (as
the term is defined in the Listing Rules) of the Company; and
UNDERWRITING
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(iii) until the expiry of the Second Six-Month Period, in the event that he/it enters into
any of the transactions specified in paragraph (i)(a), (b) or (c) above or offers to or
agrees to or announces any intention to effect any such transaction, he/it will take
all reasonable steps to ensure that he/she/it will not create a disorderly or false
market in the securities of the Company.
Each of our Controlling Shareholders has further undertaken to each of our Company, the
Sole Sponsor, the Sole Sponsor-Overall Coordinator, the Joint Overall Coordinators, the Joint
Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Hong Kong
Underwriters and the Capital Market Intermediaries that, within the period commencing on the
date of this prospectus and ending on the date which is twelve months after the Listing Date,
he/it will immediately inform the Company, the Sole Sponsor and the Sole Sponsor-Overall
Coordinator of:
(i) any pledges or charges of any Relevant Shares, together with the number of
Relevant Shares so pledged or charged and the purpose for which such pledge or
charge is to be created; and
(ii) any indication received by he/it, either verbal or written, from the pledgee or
chargee of any Relevant Shares that such Relevant Shares will be disposed of.
Underwriters’ interests in our Group
Save for their respective obligations under the Hong Kong Underwriting Agreement and
the International Underwriting Agreement or as otherwise disclosed in this prospectus, as of
the Latest Practicable Date, none of the Underwriters was interested directly or indirectly in
any of our Shares or securities or any shares or securities of any other member of our Group
or had any right or option (whether legally enforceable or not) to subscribe for, or to nominate
persons to subscribe for, any of our Shares or securities or any shares or securities of any other
member of our Group.
Following the completion of the Global Offering, the Underwriters and their affiliated
companies may hold a certain portion of our Shares as a result of fulfilling their respective
obligations under the Hong Kong Underwriting Agreement and International Underwriting
Agreement.
The Sole Sponsor’s Independence
The Sole Sponsor satisfies the independence criteria applicable to sponsors set out in Rule
3A.07 of the Listing Rules.
UNDERWRITING
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The International Offering
International Offering
In connection with the International Offering, we expect to enter into the International
Underwriting Agreement on the Price Determination Date with the International Underwriters.
Under the International Underwriting Agreement, the International Underwriters would,
subject to certain conditions, severally and not jointly, agree to purchase the International
Offering Shares or procure purchasers for the International Offering Shares initially being
offered pursuant to the International Offering. See “Structure of the Global Offering — The
International Offering” in this prospectus.
Under the International Underwriting Agreement, we intend to grant to the International
Underwriters the Over-Allotment Option, exercisable in whole or in part at one or more times,
at the sole and absolute discretion of the Sole Sponsor-Overall Coordinator (for itself and on
behalf of the International Underwriters) from the Listing Date until 30 days from the last day
for the lodging of applications under the Hong Kong Public Offering to require us to issue and
allot up to an aggregate of 4,868,000 additional Offer Shares, representing approximately
5.00% of the Offer Shares initially available under the Global Offering and at the Offer Price,
to cover, among other things, any over-allocations in the International Offering, if any.
Total Commission and Expenses
The Underwriters involved in the Global Offering (including all Underwriters) will
receive an underwriting commission of 3% of the aggregate Offer Price of the Offer Shares
(including any Offer Shares to be issued pursuant to the exercise of the Over-Allotment
Option) (“ Fixed Fees ”). In addition, we will pay to the Underwriters an incentive fee of up to
1% of the aggregate Offer Price of the Offer Shares (including any Offer Shares to be issued
pursuant to the exercise of the Over-Allotment Option) (“ Incentive Fees ”).
As of the date of this Prospectus, the allocation of a portion of the Fixed Fees remains
subject to the Company’s discretion. According to the Listing Rules, any unallocated portion
of the Fixed Fees will be regarded as discretionary fees. Accordingly, assuming the Incentive
Fees will be paid in full, the ratio of the Fixed Fees and Incentive Fees (as classified under and
for the purpose of Rule 3A.34 of the Listing Rules) payable by the Company to all
Underwriters (both before and after the exercise of the Over-allotment Option, if any) is
expected to be approximately 42.9:57.1.
Assuming the Over-Allotment Option is not exercised and based on an Offer Price of
HK$6.34 (being the mid-point of the stated range of the Offer Price between HK$5.64 and
HK$7.04), the aggregate commissions and estimated expenses, together with the Stock
Exchange listing fee, SFC transaction levy, AFRC transaction levy, Stock Exchange trading
fee, legal and other professional fees, printing and other fees and expenses relating to the
Global Offering, are estimated to amount to approximately HK$65.7 million in total.
UNDERWRITING
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Indemnity
Each of our Company, our Controlling Shareholders and our executive Directors has
jointly and severally undertaken to indemnify and keep indemnified on demand (on an after-tax
basis) and hold harmless each of the Sole Sponsor, the Joint Overall Coordinators, the Joint
Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Hong Kong
Underwriters and the Capital Market Intermediaries (for themselves and on trust for its
directors, officers, employees, agents, assignees and affiliates) from and against certain losses
which they may suffer, including losses arising from their performance of their obligations
under the Hong Kong Underwriting Agreement and any breach by us or any of the other
Warrantors of the Hong Kong Underwriting Agreement.
Restrictions on the Offer Shares
No action has been taken to permit a public offer of the Offer Shares, other than in Hong
Kong, or the distribution of this prospectus in any jurisdiction other than Hong Kong.
Accordingly, this prospectus may not be used for the purpose of, and does not constitute, an
offer or invitation in any jurisdiction or in any circumstances in which such an offer or
invitation is not authorized or to any person to whom it is unlawful to make such an offer or
invitation.
Over-Allotment
Details of the arrangements relating to the Over-Allotment Option, if any, are set forth in
the section headed “Structure of the Global Offering — Over-Allotment Option”.
ACTIVITIES BY SYNDICATE MEMBERS
The underwriters of the Hong Kong Public Offering and the International Offering and the
Capital Market Intermediaries (together, the “ Syndicate Members ”) and their affiliates may
each individually undertake a variety of activities (as further described below) which do not
form part of the underwriting or stabilizing process.
The Syndicate Members and their affiliates are diversified financial institutions with
relationships in countries around the world. These entities engage in a wide range of
commercial and investment banking, brokerage, funds management, trading, hedging,
investing and other activities for their own account and for the account of others. In the
ordinary course of their various business activities, the Syndicate Members and their respective
affiliates may purchase, sell or hold a broad array of investments and actively trade securities,
derivatives, loans, commodities, currencies, credit default swaps and other financial
instruments for their own account and for the accounts of their customers. Such investment and
trading activities may involve or relate to assets, securities and/or instruments our Company
and/or persons and entities with relationships with our Company and may also include swaps
and other financial instruments entered into for hedging purposes in connection with our
Group’s loans and other debt.
UNDERWRITING
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In relation to the Shares, the activities of the Syndicate Members and their affiliates could
include acting as agent for buyers and sellers of the Shares, entering into transactions with
those buyers and sellers in a principal capacity, including as a lender to initial purchasers of
the Shares (which financing may be secured by the Shares) in the Global Offering, proprietary
trading in the Shares, and entering into over the counter or listed derivative transactions or
listed or unlisted securities transactions (including issuing securities such as derivative
warrants listed on a stock exchange) which have as their underlying assets, assets including the
Shares. Such transactions may be carried out as bilateral agreements or trades with selected
counterparties. Those activities may require hedging activity by those entities involving,
directly or indirectly, the buying and selling of the Shares, which may have a negative impact
on the trading price of the Shares. All such activities could occur in Hong Kong and elsewhere
in the world and may result in the Syndicate Members and their affiliates holding long and/or
short positions in the Shares, in baskets of securities or indices including the Shares, in units
of funds that may purchase the Shares, or in derivatives related to any of the foregoing.
In relation to issues by Syndicate Members or their affiliates of any listed securities
having the Shares as their underlying securities, whether on the Stock Exchange or on any
other stock exchange, the relevant rules of the exchange may require the issuer of those
securities (or one of its affiliates or agents) to act as a market maker or liquidity provider in
the security, and this will also result in hedging activity in the Shares in most cases.
All such activities may occur both during and after the end of the stabilizing period
described in the section headed “Structure of the Global Offering” in this prospectus. Such
activities may affect the market price or value of the Shares, the liquidity or trading volume
in the Shares and the volatility of the price of the Shares, and the extent to which this occurs
from day to day cannot be estimated.
It should be noted that when engaging in any of these activities, the Syndicate Members
will be subject to certain restrictions, including the following:
(a) the Syndicate Members (other than the Stabilizing Manager or any person acting for
it) must not, in connection with the distribution of the Offer Shares, effect any
transactions (including issuing or entering into any option or other derivative
transactions relating to the Offer Shares) whether in the open market or otherwise,
with a view to stabilizing or maintaining the market price of any of the Offer Shares
at levels other than those which might otherwise prevail in the open market;
(b) the Syndicate Members must comply with all applicable laws and regulations,
including the market misconduct provisions of the SFO, including the provisions
prohibiting insider dealing, false trading, price rigging and stock market
manipulation; and
(c) Certain of the Syndicate Members or their respective affiliates have provided from
time to time, and expect to provide in the future, investment banking and other
services to our Company and its affiliates for which such Syndicate Members or
their respective affiliates have received or will receive customary fees and
commissions.
UNDERWRITING
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THE GLOBAL OFFERING
This prospectus is published in connection with the Hong Kong Public Offering as part
of the Global Offering. The Global Offering comprises:
 the Hong Kong Public Offering of initially 9,736,500 Offer Shares (subject to
reallocation as mentioned below) in Hong Kong as described below in the paragraph
headed “— The Hong Kong Public Offering”; and
 the International Offering of initially 87,628,000 Offer Shares (subject to
reallocation and the Over-Allotment Option as described below) outside the United
States (including to professional, institutional and corporate investors and other
investors anticipated to have a sizeable demand for the Offer Shares in Hong Kong)
in offshore transactions in reliance on Regulation S and the applicable laws of the
jurisdiction where those offers and sales occur.
Investors may either:
 apply for the Hong Kong Offer Shares under the Hong Kong Public Offering; or
 apply for or indicate an interest for the International Offering Shares under the
International Offering,
but may not do both.
The 97,364,500 Offer Shares in the Global Offering will represent approximately 13.70%
of our enlarged share capital immediately after the completion of the Global Offering and the
Conversion of Unlisted Shares into H Shares, without taking into account the exercise of the
Over-Allotment Option. If the Over-Allotment Option is exercised in full, the Offer Shares will
represent approximately 14.29% of our enlarged share capital immediately following the
completion of the Global Offering and the Conversion of Unlisted Shares into H Shares.
References to applications, application monies or procedure for applications relate solely
to the Hong Kong Public Offering.
THE HONG KONG PUBLIC OFFERING
Number of Offer Shares initially offered
We are initially offering for subscription by the public in Hong Kong 9,736,500 Offer
Shares, representing approximately 10.00% of the total number of Offer Shares initially
available under the Global Offering. Subject to the reallocation of Offer Shares between the
International Offering and the Hong Kong Public Offering, the number of Offer Shares offered
STRUCTURE OF THE GLOBAL OFFERING
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under the Hong Kong Public Offering will represent approximately 1.37% of our enlarged
issued share capital immediately after completion of the Global Offering and the H Share Full
Circulation, assuming the Over-Allotment Option is not exercised.
The Hong Kong Public Offering is open to members of the public in Hong Kong as well
as to institutional and professional investors. Professional investors generally include brokers,
dealers, companies (including fund managers) whose ordinary business involves dealing in
shares and other securities and corporate entities that regularly invest in shares and other
securities.
Completion of the Hong Kong Public Offering is subject to the conditions as set forth
below in “Conditions of the Global Offering” in this section.
Allocation
Allocation of Hong Kong Offer Shares to investors under the Hong Kong Public Offering
will be based on the level of valid applications received under the Hong Kong Public Offering.
The basis of allocation may vary depending on the number of Hong Kong Offer Shares validly
applied for by applicants. We may, if necessary, allocate the Hong Kong Offer Shares on the
basis of balloting, which would mean that some applicants may receive a higher allocation than
others who have applied for the same number of Hong Kong Offer Shares and those applicants
who are not successful in the ballot may not receive any Hong Kong Offer Shares.
For allocation purposes only, the total number of Offer Shares available under the Hong
Kong Public Offering is to be divided equally into two pools (with any odd lots being allocated
to pool A):
 Pool A : The Hong Kong Offer Shares in pool A will be allocated on an equitable
basis to valid applicants who have applied for the Hong Kong Offer Shares with an
aggregate subscription price of HK$5 million or less (excluding brokerage, SFC
transaction levy, AFRC transaction levy and Stock Exchange trading fee payable);
and
 Pool B : The Hong Kong Offer Shares in pool B will be allocated on an equitable
basis to valid applicants who have applied for the Hong Kong Offer Shares with an
aggregate subscription price of more than HK$5 million and up to the total value of
pool B (excluding brokerage, SFC transaction levy, AFRC transaction levy and
Stock Exchange trading fee payable).
Investors should be aware that applications in pool A and applications in pool B may
receive different allocation ratios. If the Hong Kong Offer Shares in one (but not both) of the
pools are under-subscribed, the surplus Hong Kong Offer Shares will be transferred to the other
pool to satisfy demand in the pool and be allocated accordingly. For the purpose of this
subsection only, the “subscription price” for the Hong Kong Offer Shares means the price
payable on application therefor (without regard to the Offer Price as finally determined).
STRUCTURE OF THE GLOBAL OFFERING
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Applicants can only receive an allocation of Hong Kong Offer Shares from either pool A or
pool B but not from both pools. Multiple or suspected multiple applications under the Hong
Kong Public Offering and any application for more than 4,868,000 Hong Kong Offer Shares
will be rejected.
Reallocation
The Offer Shares to be offered in the Hong Kong Public Offering and the International
Offering may, in certain circumstances, be reallocated as between these offerings at the
discretion of the Sole Sponsor-Overall Coordinator, in accordance with Chapter 4.14 of the
Guide for New Listing Applicants, following below mechanism:
(a) where the Hong Kong Offer Shares are fully subscribed or oversubscribed
irrespective of the number of times, and the International Offer Shares are fully
subscribed or oversubscribed or undersubscribed, then up to 4,868,000 Offer Shares
may be reallocated from the International Offering to the Hong Kong Public
Offering, so that the total number of Offer Shares available for subscription under
the Hong Kong Public Offering will increase up to 14,604,500 Offer Shares,
representing approximately 15% of the number of Offer Shares initially available
under the Global Offering (before any exercise of the Over-allotment Option); and
(b) where the Hong Kong Offer Shares are undersubscribed:
(i) if the International Offering Shares are fully subscribed or oversubscribed, the
Sole Sponsor-Overall Coordinator has the authority to reallocate all or any
unsubscribed Hong Kong Offer Shares to the International Offering, in such
proportions as the Sole Sponsor-Overall Coordinator deems appropriate; and
(ii) if the International Offering Shares are undersubscribed, the Global Offering
will not proceed unless the Underwriters would subscribe for or procure
subscribers for their respective applicable proportions of the Offer Shares
being offered which are not taken up under the Global Offering on the terms
and conditions of this prospectus and the Underwriting Agreements.
Given the initial allocation of the Offer Shares to the Hong Kong Public Offering and the
International Offering follows Mechanism B set out under paragraph 2 of Chapter 4.14 of the
Guide for New Listing Applicants and the provision of paragraph 4.2(b) of Practice Note 18
of the Listing Rules, no mandatory clawback or reallocation mechanism is required to increase
the number of Offer Shares under the Hong Kong Public Offering to a certain percentage of the
total number of Offer Shares offered under the Global Offering.
STRUCTURE OF THE GLOBAL OFFERING
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Applications
Each applicant under the Hong Kong Public Offering will be required to give an
undertaking and confirmation in the application submitted by him that he and any person(s) for
whose benefit he is making the application has not applied for or taken up, or indicated an
interest for, and will not apply for or take up, or indicate an interest for, any International
Offering Shares under the International Offering, and such applicant’s application under the
International Offering is liable to be rejected if the said undertaking and/or confirmation is
breached and/or untrue (as the case may be).
Applicants under the Hong Kong Public Offering may be required to pay, on application
(subject to application channels), maximum price of HK$7.04 per Offer Share in addition to
brokerage of 1.0%, SFC transaction levy of 0.0027%, AFRC transaction levy of 0.00015% and
Stock Exchange trading fee of 0.00565% on each Offer Share, amounting to a total of
HK$3,555.51 for one board lot of 500 Shares. If the Offer Price, as finally determined on the
Price Determination Date in the manner as described below in the paragraph headed “—
Pricing and Allocation”, is less than the maximum price of HK$7.04 per Offer Share,
appropriate refund payments (including brokerage, SFC transaction levy, AFRC transaction
levy and Stock Exchange trading fee attributable to the surplus application monies) will be
made to successful applicants (subject to application channels), without interest. For further
details, see “How to Apply for Hong Kong Offer Shares” in this prospectus.
THE INTERNATIONAL OFFERING
Number of Offer Shares Initially Offered
We will be initially offering for subscription under the International Offering 87,628,000
Offer Shares, representing approximately 90.00% of the Offer Shares under the Global
Offering. Subject to the reallocation of Offer Shares between the International Offering and the
Hong Kong Public Offering, the number of Offer Shares offered under the International
Offering will represent approximately 12.33% of our enlarged issued share capital immediately
after completion of the Global Offering and the Conversion of Unlisted Shares into H Shares,
assuming the Over-Allotment Option is not exercised.
Allocation
The International Offering Shares will conditionally be offered to selected professional,
institutional and corporate investors and other investors anticipated to have a sizeable demand
for our Offer Shares in Hong Kong and other jurisdictions outside the United States in offshore
transactions in reliance on Regulation S. Professional investors generally include brokers,
dealers, companies (including fund managers) whose ordinary business involves dealing in
shares and other securities and corporate entities which regularly invest in shares and other
securities. Prospective professional, institutional and other investors will be required to specify
STRUCTURE OF THE GLOBAL OFFERING
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--- page 404 ---
the number of the International Offering Shares under the International Offering they would be
prepared to acquire either at different prices or at a particular price. This process, known as
“book-building,” is expected to continue up to the Price Determination Date.
Allocation of the International Offering Shares pursuant to the International Offering will
be determined by the Sole Sponsor-Overall Coordinator and will be based on a number of
factors including the level and timing of demand, total size of the relevant investor’s invested
assets or equity assets in the relevant sector and whether or not it is expected that the relevant
investor is likely to buy further, and/or hold or sell its Shares, after the listing of the Shares
on the Stock Exchange. Such allocation is intended to result in a distribution of the
International Offering Shares on a basis which would lead to the establishment of a solid
professional and institutional shareholder base to the benefit of our Company and our
Shareholders as a whole.
The Sole Sponsor-Overall Coordinator (for itself and on behalf of the Underwriters) may
require any investor who has been offered Offer Shares under the International Offering and
who has made an application under the Hong Kong Public Offering to provide sufficient
information to the Joint Overall Coordinators and the Joint Global Coordinators so as to allow
them to identify the relevant applications under the Hong Kong Public Offering and to ensure
that they are excluded from any allocation of Offer Shares under the International Offering.
Reallocation
The total number of Offer Shares to be issued pursuant to the International Offering may
change as a result of the Over-Allotment Option in whole or in part and/or any reallocation of
unsubscribed Offer Shares originally included in the Hong Kong Public Offering.
OVER-ALLOTMENT OPTION
In connection with the Global Offering, it is expected that we will grant the Over-
Allotment Option to the International Underwriters.
Pursuant to the Over-Allotment Option, the International Underwriters will have the right,
exercisable by the Sole Sponsor-Overall Coordinator (for itself and on behalf of the
International Underwriters) at any time from the Listing Date until 30 days after the last day
for lodging applications under the Hong Kong Public Offering, to require our Company to issue
up to 4,868,000 Shares, representing approximately 5.00% of the Offer Shares initially
available under the Global Offering, at the Offer Price under the International Offering to,
among other things, cover over-allocations in the International Offering, if any.
If the Over-Allotment Option is exercised in full, the additional H Shares to be issued
pursuant thereto will represent approximately 0.68% of our enlarged issued share capital
immediately following the completion of the Global Offering and the Conversion of Unlisted
Shares into H Shares. In the event that the Over-Allotment Option is exercised, an
announcement will be made.
STRUCTURE OF THE GLOBAL OFFERING
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STABILIZATION
Stabilization is a practice used by underwriters in some markets to facilitate the
distribution of securities. To stabilize, the underwriters may bid for, or purchase, the securities
in the secondary market, during a specified period of time, to retard and, if possible, prevent
a decline in the initial public market price of the securities below the offer price. Such
transactions may be effected in all jurisdictions where it is permissible to do so, in each case
in compliance with all applicable laws and regulatory requirements, including those of Hong
Kong. In Hong Kong, the price at which stabilization is effected is not permitted to exceed the
offer price.
In connection with the Global Offering, the Stabilizing Manager, or any person acting for
it, on behalf of the Underwriters, may over-allocate or effect transactions with a view to
stabilizing or supporting the market price of our Shares at a level higher than that which might
otherwise prevail in the open market for a limited period after the Listing Date. However, there
is no obligation on the Stabilizing Manager or any persons acting for it to conduct any such
stabilizing action. Such stabilizing action, if taken, will be conducted at the absolute discretion
of the Stabilizing Manager or any person acting for it and may be discontinued at any time, and
is required to be brought to an end on the 30th day after the last day for lodging applications
under the Hong Kong Public Offering.
Stabilization action permitted in Hong Kong under the Securities and Futures (Price
Stabilizing) Rules of the SFO includes (i) over-allocating for the purpose of preventing or
minimizing any reduction in the market price of our Shares, (ii) selling or agreeing to sell our
Shares so as to establish a short position in them for the purpose of preventing or minimizing
any reduction in the market price of our Shares, (iii) purchasing, or agreeing to purchase, our
Shares pursuant to the Over-Allotment Option in order to close out any position established
under (i) or (ii) above, (iv) purchasing, or agreeing to purchase, any of our Shares for the sole
purpose of preventing or minimizing any reduction in the market price of our Shares, (v)
selling or agreeing to sell any Shares in order to liquidate any position established as a result
of those purchases, and (vi) offering or attempting to do anything as described in (ii), (iii), (iv)
or (v) above.
Stabilization actions by the Stabilizing Manager, or any person acting for it shall be
entered into in accordance with the laws, rules and regulations in place in Hong Kong on
stabilization.
STRUCTURE OF THE GLOBAL OFFERING
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Specifically, prospective applicants for and investors in the Shares should note that:
 the Stabilizing Manager (or any person acting for it) may, in connection with the
stabilizing action, maintain a long position in the Shares;
 there is no certainty as to the extent to which and the time or period for which the
Stabilizing Manager (or any person acting for it) will maintain such a long position;
 liquidation of any such long position by the Stabilizing Manager (or any person
acting for it) and selling in the open market may have an adverse impact on the
market price of the Shares;
 no stabilizing action can be taken to support the price of the Shares for longer than
the stabilizing period which will begin on the Listing Date and is expected to end
on Thursday, January 1, 2026, being the 30th day after the last day for lodging
applications under the Hong Kong Public Offering. After this date, when no further
action may be taken to support the price of the Shares, demand for the Shares, and
therefore the price of the Shares, could fall;
 the price of the Shares cannot be assured to stay at or above the Offer Price by the
taking of any stabilizing action; and
 stabilizing bids or transactions effected in the course of the stabilizing action may
be made at any price at or below the Offer Price, which means that stabilizing bids
or transactions effected may be made at a price below the price paid by applicants
for, or investors in, the Offer Shares.
Our Company will ensure or procure that an announcement in compliance with the
Securities and Futures (Price Stabilizing) Rules of the SFO will be made within seven days of
the expiration of the stabilization period.
OVER-ALLOCATION
Following any over-allocation of Shares in connection with the Global Offering, the
Stabilizing Manager (or any person acting for it) may cover such over-allocations by (among
other methods) exercising the Over-allotment Option in full or in part, using Shares purchased
by the Stabilizing Manager (or any person acting for it) in the secondary market at prices that
do not exceed the Offer Price, or through the stock borrowing arrangement as detailed below
or a combination of these means.
STRUCTURE OF THE GLOBAL OFFERING
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PRICING AND ALLOCATION
The Offer Price will be determined and the Price Determination Agreement will be
entered into between, among others, our Company and the Sole Sponsor-Overall Coordinator
(for itself and on behalf of the Underwriters) on the Price Determination Date, when market
demand for the Offer Shares will be determined. The Price Determination Date is expected to
be on or around Wednesday, December 3, 2025, and in any event, not later than 12:00 noon on
Wednesday, December 3, 2025.
The Offer Price will not be more than HK$7.04 per Offer Share and is expected to be not
less than HK$5.64 per Offer Share, unless otherwise announced, as further explained below. If
you apply for the Offer Shares under the Hong Kong Public Offering, you may be required to
pay the maximum price of HK$7.04 per Offer Share (subject to application channels), plus
brokerage of 1.0%, SFC transaction levy of 0.0027%, AFRC transaction levy of 0.00015% and
Stock Exchange trading fee of 0.00565%, amounting to a total of HK$3,555.51 for one board
lot of 500 Shares.
If the Offer Price, as finally determined in the manner described below, is lower than
HK$7.04, we will refund the respective difference (subject to application channels), including
brokerage, SFC transaction levy, AFRC transaction levy and Stock Exchange trading fee
attributable to the surplus application monies. We will not pay interest on any refunded
amounts. For more details, see “How to Apply for Hong Kong Offer Shares” in this prospectus.
The International Underwriters will be soliciting from prospective investors indications
of interest in acquiring Offer Shares in the International Offering. Prospective professional and
institutional investors will be required to specify the number of Offer Shares under the
International Offering they would be prepared to acquire either at different prices or at a
particular price. This process, known as “book-building”, is expected to continue up to, and to
cease on or around, the last day for lodging applications under the Hong Kong Public Offering.
The Sole Sponsor-Overall Coordinator (for itself and on behalf of the Underwriters) may,
where considered appropriate, based on the level of interest expressed by prospective
professional, institutional and other investors during the book-building process, and with the
consent of our Company, reduce the number of Offer Shares and/or the Offer Price Range
below that stated in this prospectus at any time prior to the morning of the last day for lodging
applications under the Hong Kong Public Offering. In such a case, we will as soon as
practicable following the decision to make such reduction and in any event not later than the
morning of the last day for lodging applications under the Hong Kong Public Offering publish
a notice on the website of the Stock Exchange at www.hkexnews.hk and our website at
www.xiaonoodles.com (the contents of the website do not form a part of this prospectus). The
Company will also, as soon as practicable following the decision to make such a change, issue
a supplemental prospectus updating investors of the change in the number of Offer Shares
being offered under the Global Offering and/or the Offer Price. The Global Offering must first
be canceled and subsequently relaunched on FINI pursuant to the supplemental prospectus.
STRUCTURE OF THE GLOBAL OFFERING
– 398 –


--- page 408 ---
Before submitting applications for the Hong Kong Offer Shares, applicants should have
regard to the possibility that any announcement of a reduction in the number of Offer Shares
and/or the Offer Price Range may not be made until the day which is the last day for lodging
applications under the Hong Kong Public Offering. Such notice will also confirm or revise, as
appropriate, the working capital statement, the Global Offering statistics as currently set out in
“Summary” in this prospectus, and any other financial information which may change as a
result of such reduction. In the absence of any such notice so published, the Offer Price, if
agreed between, among others, our Company and the Sole Sponsor-Overall Coordinator (for
itself and on behalf of the Underwriters) will under no circumstances be set outside the Offer
Price Range as stated in this prospectus. However, if the number of Offer Shares and/or the
Offer Price is reduced, the Company will issue a supplemental prospectus updating investors
of the change in the number of Offer Shares being offered under the Global Offering and/or the
Offer Price. The Global Offering must first be canceled and subsequently relaunched on FINI
pursuant to the supplemental prospectus.
If you have already submitted an application for the Hong Kong Offer Shares before the
last day for lodging applications under the Hong Kong Public Offering, you will not be allowed
to subsequently withdraw your application. If there is any change to the offer size due to
change in the number of Offer Shares initially offered in the Global Offering (other than
pursuant to the exercise of the Over-allotment Option and/or reallocation mechanism as
disclosed in this prospectus), or change to the Offer Price which leads to the resulting price
falling outside the indicative Offer Price Range as stated in this prospectus, or if the Company
becomes aware that there has been a significant change affecting any matter contained in this
prospectus or a significant new matter has arisen, the inclusion of information in respect of
which would have been required to be in this prospectus if it had arisen before this prospectus
was issued, after the issue of this prospectus and before the commencement of dealings in our
Shares as prescribed under Rule 11.13 of the Listing Rules, we are required to cancel the
Global Offering and relaunch the offer and issue a supplemental prospectus or a new
prospectus and complete the requisite associated settlement processes on the FINI platform
afresh.
In the event of a reduction in the number of Offer Shares, the Sole Sponsor-Overall
Coordinator may, at its discretion, reallocate the number of Offer Shares to be offered in the
Hong Kong Public Offering and the International Offering, provided that the number of Offer
Shares comprised in the Hong Kong Public Offering shall not be less than 10% of the total
number of Offer Shares available under the Global Offering (assuming the Over-Allotment
Option is not exercised).
The final Offer Price, the level of indications of interest in the International Offering, the
basis of allocation of Hong Kong Offer Shares and the identification document numbers of
successful applicants under the Hong Kong Public Offering are expected to be made available
in a variety of channels in the manner described in “How to Apply for Hong Kong Offer Shares
— B. Publication of Results” in this prospectus.
STRUCTURE OF THE GLOBAL OFFERING
– 399 –


--- page 409 ---
CONDITIONS OF THE GLOBAL OFFERING
Acceptance of all applications for Offer Shares is conditional on, among other things:
 the Listing Committee granting approval for the listing of, and permission to deal in,
our Shares in issue and to be issued as described in this prospectus (including any
additional Shares that may be issued or sold pursuant to the exercise of the
Over-Allotment Option) under the Global Offering and the H Share Full Circulation;
 the Offer Price having been agreed between us and the Sole Sponsor-Overall
Coordinator (for themselves and on behalf the Underwriters);
 the execution and delivery of the International Underwriting Agreement on or before
the Price Determination Date; and
 the obligations of the Hong Kong Underwriters under the Hong Kong Underwriting
Agreement and the obligations of the International Underwriters under the
International Underwriting Agreement becoming unconditional and not having been
terminated in accordance with the terms of the respective agreements,
in each case on or before the dates and times specified in the Hong Kong Underwriting
Agreement and/or the International Underwriting Agreement, as the case may be (unless and
to the extent such conditions are validly waived on or before such dates and times) and in any
event not later than Saturday, December 27, 2025, being the 30th date after the date of this
prospectus.
If, for any reason, the Offer Price is not agreed between us and the Sole Sponsor-Overall
Coordinator (for itself and on behalf of the Underwriters) on or before 12:00 noon on
Wednesday, December 3, 2025, the Global Offering will not proceed and will lapse.
The consummation of each of the Hong Kong Public Offering and the International
Offering is conditional upon, among other things, each other offering becoming unconditional
and not having been terminated in accordance with its respective terms. If the above conditions
are not fulfilled or waived prior to the times and dates specified, the Global Offering will lapse
and the Stock Exchange will be notified immediately. Notice of the lapse of the Hong Kong
Public Offering will be published by our Company on the website of the Stock Exchange at
www.hkexnews.hk and our website at www.xiaonoodles.com on the next day following such
lapse. In such an event, all application monies will be returned, without interest (subject to
application channels), on the terms set out in “How to Apply for Hong Kong Offer Shares —
D. Despatch/Collection of H Share Certificate and Refund of Application Monies” in this
prospectus. In the meantime, all application monies will be held in separate bank account(s)
with the receiving banks or other bank(s) in Hong Kong licensed under the Banking Ordinance
(Chapter 155 of the Laws of Hong Kong).
STRUCTURE OF THE GLOBAL OFFERING
– 400 –


--- page 410 ---
UNDERWRITING AGREEMENTS
The Hong Kong Public Offering is fully underwritten by the Hong Kong Underwriters
under the terms of the Hong Kong Underwriting Agreement and is subject to, among other
conditions, the Offer Price being agreed between, among others, us and the Sole Sponsor-
Overall Coordinator (for itself and on behalf of the Underwriters) on the Price Determination
Date.
We expect to enter into the International Underwriting Agreement relating to the
International Offering on the Price Determination Date.
Certain terms of the underwriting arrangements, the Hong Kong Underwriting Agreement
and the International Underwriting Agreement, are summarized in the section headed
“Underwriting” in this prospectus.
DEALING ARRANGEMENTS
Assuming that the Hong Kong Public Offering becomes unconditional at or before 8:00
a.m. in Hong Kong on Friday, December 5, 2025, it is expected that dealings in our Shares on
the Stock Exchange will commence at 9:00 a.m. on Friday, December 5, 2025.
The Shares will be traded in board lots of 500 Shares each.
STRUCTURE OF THE GLOBAL OFFERING
– 401 –


--- page 411 ---
IMPORTANT NOTICE TO INVESTORS
OF HONG KONG OFFER SHARES
FULLY ELECTRONIC APPLICATION PROCESS
We have adopted a fully electronic application process for the Hong Kong
Public Offering. Below are the procedures for application.
This prospectus is available at the website of the Stock Exchange at
www.hkexnews.hk under the “HKEXnews > New Listings > New Listing
Information” section, and our website at www.xiaonoodles.com.
The contents of this prospectus are identical to the prospectus as registered with the
Registrar of Companies in Hong Kong pursuant to Section 342C of the Companies
(Winding Up and Miscellaneous Provisions) Ordinance.
A. APPLICATION FOR HONG KONG OFFER SHARES
1. Who Can Apply
Y ou can apply for Hong Kong Offer Shares if you or the person(s) for whose benefit you
are applying for:
 are 18 years of age or older;
 have a Hong Kong address (for the HK eIPO White Form service only) ; and
 are outside the United States, and are not a U.S. Person (as defined in Regulation S).
Unless permitted by the Listing Rules or a waiver and/or consent has been granted by the
Stock Exchange to us, you cannot apply for any Hong Kong Offer Shares if you or the
person(s) for whose benefit you are applying for:
 are an existing Shareholder or close associates (as defined in the Listing Rules); or
 are a Director or any of his/her close associates.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 412 ---
2. Application Channels
The Hong Kong Public Offering period will begin at 9:00 a.m. on Thursday, November
27, 2025 and end at 12:00 noon on Tuesday, December 2, 2025 (Hong Kong time).
To apply for Hong Kong Offer Shares, you may use one of the following application
channels:
Application Channel Platform Target Investors Application Time
HK eIPO White
Form service /H1118/H1118/H1118/H1118
www.hkeipo.hk Investors who would like to
receive a physical H Share
certificate. Hong Kong Offer
Shares successfully applied for
will be allotted and issued in
your own name.
From 9:00 a.m. on
Thursday, November
27, 2025 to 11:30 a.m.
on Tuesday, December
2, 2025, Hong Kong
time.
The latest time for
completing full payment
of application monies
will be 12:00 noon on
Tuesday, December 2,
2025, Hong Kong time.
HKSCC EIPO
channel /H1118/H1118/H1118/H1118/H1118/H1118/H1118
Y our broker or
custodian who is a
HKSCC Participant
will submit an EIPO
application on your
behalf through
HKSCC’s FINI system
in accordance with
your instruction.
Investors who would not like to
receive a physical H Share
certificate. Hong Kong Offer
Shares successfully applied for
will be allotted and issued in
the name of HKSCC
Nominees, deposited directly
into CCASS and credited to
your designated HKSCC
Participant’s stock account.
Contact your broker or
custodian for the
earliest and latest time
for giving such
instructions, as this may
vary by broker or
custodian .
The HK eIPO White Form service and the HKSCC EIPO channel are facilities subject
to capacity limitations and potential service interruptions and you are advised not to wait until
the last day of the application period to apply for Hong Kong Offer Shares.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 403 –


--- page 413 ---
For those applying through the HK eIPO White Form service, once you complete
payment in respect of any application instructions given by you or for your benefit through the
HK eIPO White Form service to make an application for Hong Kong Offer Shares, an actual
application shall be deemed to have been made. If you are a person for whose benefit the
electronic application instructions are given, you shall be deemed to have declared that only
one set of electronic application instructions has been given for your benefit. If you are an
agent for another person, you shall be deemed to have declared that you have only given one
set of electronic application instructions for the benefit of the person for whom you are an
agent and that you are duly authorized to give those instructions as an agent.
For the avoidance of doubt, giving an application instruction under the HK eIPO White
Form service more than once and obtaining different payment reference numbers without
effecting full payment in respect of a particular reference number will not constitute an actual
application.
If you apply through the HK eIPO White Form service, you are deemed to have
authorized the HK eIPO White Form Service Provider to apply on the terms and conditions
in this prospectus, as supplemented and amended by the terms and conditions of the HK eIPO
White Form service.
By instructing your broker or custodian to apply for the Hong Kong Offer Shares on
your behalf through the HKSCC EIPO channel, you (and, if you are joint applicants, each of
you jointly and severally) are deemed to have instructed and authorized HKSCC to cause
HKSCC Nominees (acting as nominee for the relevant HKSCC Participants) to apply for Hong
Kong Offer Shares on your behalf and to do on your behalf all the things stated in this
prospectus and any supplement to it.
For those applying through HKSCC EIPO channel, an actual application will be deemed
to have been made for any application instructions given by you or for your benefit to HKSCC
(in which case an application will be made by HKSCC Nominees on your behalf) provided such
application instruction has not been withdrawn or otherwise invalidated before the closing time
of the Hong Kong Public Offering.
HKSCC Nominees will only be acting as a nominee for you and neither HKSCC nor
HKSCC Nominees shall be liable to you or any other person in respect of any actions taken by
HKSCC or HKSCC Nominees on your behalf to apply for Hong Kong Offer Shares or for any
breach of the terms and conditions of this prospectus.
If you apply for Hong Kong Offer Shares, then you may not apply for or indicate an
interest for International Offering Shares.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 404 –


--- page 414 ---
3. Information Required to Apply
Y ou must provide the following information with your application:
For Individual Applicants For Corporate Applicants
 Full name(s) 2 as shown on your
identity document
 Identity document’s issuing country
or jurisdiction
 Identity document type, with order
of priority:
i. Hong Kong identity (“ HKID ”)
card; or
ii. National identification
document; or
iii. Passport; and
 Identity document number
 Full name(s) 2 as shown on your
identity document
 Identity document’s issuing country
or jurisdiction
 Identity document type, with order
of priority:
i. Legal entity identifier (“ LEI”)
registration document; or
ii. Certificate of incorporation; or
iii. Business registration certificate;
or
iv. Other equivalent document; and
 Identity document number
Notes:
1. If you are applying through the HK eIPO White Form service, you are required to provide a valid
e-mail address, a contact telephone number and a Hong Kong address. Y ou are also required to declare
that the identity information provided by you follows the requirements as described in Note 2 below. In
particular, where you cannot provide a HKID number, you must confirm that you do not hold a HKID
card. The number of joint applicants may not exceed four. If you are a firm, the applicant must be in
the individual members’ names.
2. The applicant’s full name as shown on their identity document must be used and the surname, given
name, middle and other names (if any) must be input in the same order as shown on the identity
document. If an applicant’s identity document contains both an English and Chinese name, both English
and Chinese names must be used. Otherwise, either English or Chinese names will be accepted. The
order of priority of the applicant’s identity document type must be strictly followed and where an
individual applicant has a valid HKID card (including both Hong Kong Residents and Hong Kong
Permanent Residents), the HKID number must be used when making an application to subscribe for
shares in a public offer. Similarly for corporate applicants, a LEI number must be used if an entity has
a LEI certificate.
3. If the applicant is a trustee, the client identification data (“ CID”) of the trustee, as set out above, will
be required. If the applicant is an investment fund (i.e. a collective investment scheme, or CIS), the CID
of the asset management company or the individual fund, as appropriate, which has opened a trading
account with the broker will be required, as above.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 405 –


--- page 415 ---
4. The maximum number of joint account holders on FINI is capped at four 1 in accordance with market
practice.
5. If you are applying as a nominee, you must provide: (i) the full name (as shown on the identity
document), the identity document’s issuing country or jurisdiction, the identity document type; and (ii),
the identity document number, for each of the beneficial owners or, in the case(s) of joint beneficial
owners, for each joint beneficial owner. If you do not include this information, the application will be
treated as being made for your benefit.
6. If you are applying as an unlisted company and (i) the principal business of that company is dealing in
securities; and (ii) you exercise statutory control over that company, then the application will be treated
as being for your benefit and you should provide the required information in your application as stated
above.
“Unlisted company” means a company with no equity securities listed on the Stock Exchange or any
other stock exchange.
“Statutory control” means you:
 control the composition of the board of directors of the company;
 control more than half of the voting power of the company; or
 hold more than half of the issued share capital of the company (not counting any part of it which
carries no right to participate beyond a specified amount in a distribution of either profits or
capital).
For those applying through HKSCC EIPO channel, and making an application under a
power of attorney, we and the Joint Overall Coordinators, as our agent, have discretion to
consider whether to accept it on any conditions we think fit, including evidence of the
attorney’s authority.
Failing to provide any required information may result in your application being rejected.
1 Subject to change, if the Company’s Articles and applicable company law prescribe a lower cap.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 406 –


--- page 416 ---
4. Permitted Number of Hong Kong Offer Shares for Application
Board lot size /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118: 500
Permitted number of
Hong Kong Offer
Shares for application
and amount payable on
application/successful
allotment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
: Hong Kong Offer Shares are available for application
in specified board lot sizes only. Please refer to the
amount payable associated with each specified board
lot size in the table below.
The maximum Offer Price is HK$7.04 per Share.
If you are applying through the HKSCC EIPO
channel, your broker or custodian may require you to
pre-fund your application, in such amount as
determined by the broker or custodian, based on the
applicable laws and regulations in Hong Kong. Y ou
are responsible for complying with any such pre-
funding requirement imposed by your broker or
custodian with respect to the Hong Kong Public Offer
Shares you applied for.
By instructing your broker or custodian to apply for
the Hong Kong Offer Shares on your behalf through
the HKSCC EIPO Channel, you (and, if you are joint
applicants, each of you jointly and severally) are
deemed to have instructed and authorized HKSCC to
cause HKSCC Nominees (acting as nominee for the
relevant HKSCC Participants) to arrange payment of
the final Offer Price, brokerage, SFC transaction
levy, the Stock Exchange trading fee and the AFRC
transaction levy by debiting the relevant nominee
bank account at the Designated Bank for your broker
or custodian.
If you are applying through the HK eIPO White
Form service, you may refer to the table below for
the amount payable for the number of Shares you
have selected. Y ou must pay the respective maximum
amount payable on application in full upon
application for Hong Kong Offer Shares.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 407 –


--- page 417 ---
The Hong Kong Public Offering
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
HK$ HK$ HK$ HK$
500 3,555.51 7,000 49,776.98 50,000 355,549.92 700,000 4,977,698.88
1,000 7,111.00 8,000 56,887.98 60,000 426,659.90 800,000 5,688,798.72
1,500 10,666.51 9,000 63,998.99 70,000 497,769.89 900,000 6,399,898.55
2,000 14,222.00 10,000 71,109.99 80,000 568,879.87 1,000,000 7,110,998.40
2,500 17,777.50 15,000 106,664.98 90,000 639,989.86 2,000,000 14,221,996.80
3,000 21,332.99 20,000 142,219.97 100,000 711,099.85 3,000,000 21,332,995.20
3,500 24,888.50 25,000 177,774.95 200,000 1,422,199.68 4,000,000 28,443,993.60
4,000 28,443.99 30,000 213,329.95 300,000 2,133,299.52 4,868,000
(1) 34,616,340.22
4,500 31,999.50 35,000 248,884.94 400,000 2,844,399.35
5,000 35,554.99 40,000 284,439.93 500,000 3,555,499.20
6,000 42,665.99 45,000 319,994.93 600,000 4,266,599.05
Notes:
(1) Maximum number of Hong Kong Offer Shares you may apply for and this is approximately 50% of the Hong
Kong Offer Shares initially offered.
(2) The amount payable is inclusive of brokerage, SFC transaction levy, the Stock Exchange trading fee and AFRC
transaction levy. If your application is successful, brokerage will be paid to the Exchange Participants (as
defined in the Listing Rules) or to the HK eIPO White Form Service Provider (for applications made through
the application channel of the HK eIPO White Form service) while the SFC transaction levy, the Stock
Exchange trading fee and the AFRC transaction levy will be paid to the SFC, the Stock Exchange and the
AFRC, respectively.
5. Multiple Applications Prohibited
Y ou or your joint applicant(s) shall not make more than one application for your own
benefit, except where you are a nominee and provide the information of the underlying investor
in your application as required under the paragraph headed “ — A. Applications for Hong Kong
Offer Shares — 3. Information Required to Apply ” in this section. If you are suspected of
submitting or cause to submit more than one application, all of your applications will be
rejected.
Multiple applications made either through (i) the HK eIPO White Form service, (ii)
HKSCC EIPO channel, or (iii) both channels concurrently are prohibited and will be rejected.
If you have made an application through the HK eIPO White Form service or HKSCC EIPO
channel, you or the person(s) for whose benefit you have made the application shall not apply
further for any Offer Shares in the Global Offering.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 408 –


--- page 418 ---
The H Share Registrar would record all applications into its system and identify suspected
multiple applications with identical names and identification document numbers according to
the Best Practice Note on Treatment of Multiple/Suspected Multiple Applications (“ Best
Practice Note ”) issued by the Federation of Share Registrars Limited.
Since applications are subject to personal information collection statements,
identification document numbers displayed are redacted.
6. Terms and Conditions of An Application
By applying for Hong Kong Offer Shares through the HK eIPO White Form service or
HKSCC EIPO channel, you (or as the case may be, HKSCC Nominees will do the following
things on your behalf):
(i) undertake to execute all relevant documents and instruct and authorize us and/or the
Joint Overall Coordinators, as our agents, to execute any documents for you and to
do on your behalf all things necessary to register any Hong Kong Offer Shares
allocated to you in your name or in the name of HKSCC Nominees as required by
the Articles of Association, and (if you are applying through the HKSCC EIPO
channel) to deposit the allotted Hong Kong Offer Shares directly into CCASS for the
credit of your designated HKSCC Participant’s stock account on your behalf;
(ii) confirm that you have read and understand the terms and conditions and application
procedures set out in this prospectus and the designated website of the HK eIPO
White Form service (or as the case may be, the agreement you entered into with
your broker or custodian), and agree to be bound by them;
(iii) (if you are applying through the HKSCC EIPO channel) agree to the arrangements,
undertakings and warranties under the participant agreement between your broker or
custodian and HKSCC and observe the General Rules of HKSCC and HKSCC
Operational Procedures for giving application instructions to apply for Hong Kong
Offer Shares;
(iv) confirm that you are aware of the restrictions on offers and sales of shares set out
in this prospectus and they do not apply to you, or the person(s) for whose benefit
you have made the application;
(v) confirm that you have read this prospectus and any supplement to it and have relied
only on the information and representations contained therein in making your
application (or as the case may be, causing your application to be made) and will not
rely on any other information or representations;
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 409 –


--- page 419 ---
(vi) agree that the Relevant Persons 2, the H Share Registrar and HKSCC will not be
liable for any information and representations not in this prospectus and any
supplement to it;
(vii) agree to disclose the details of your application and your personal data and any other
personal data which may be required about you and the person(s) for whose benefit
you have made the application to us, the Relevant Persons, the H Share Registrar,
HKSCC, HKSCC Nominees, the Stock Exchange, the SFC and any other statutory
regulatory or governmental bodies or otherwise as required by laws, rules or
regulations, for the purposes under the paragraph headed “ — G. Personal Data —
3. Purposes and 4. Transfer of personal data ” in this section;
(viii) agree (without prejudice to any other rights which you may have once your
application (or as the case may be, HKSCC Nominees’ application) has been
accepted) that you will not rescind it because of an innocent misrepresentation;
(ix) agree that subject to Section 44A(6) of the Companies (Winding Up and
Miscellaneous Provisions) Ordinance, any application made by you or HKSCC
Nominees on your behalf cannot be revoked once it is accepted, which will be
evidenced by the notification of the result of the ballot by the H Share Registrar by
way of publication of the results at the time and in the manner as specified in the
paragraph headed “— B. Publication of Results” in this section;
(x) confirm that you are aware of the situations specified in the paragraph headed “ —
C. Circumstances In Which You Will Not Be Allocated Hong Kong Offer Shares ”i n
this section;
(xi) agree that your application or HKSCC Nominees’ application, any acceptance of it
and the resulting contract will be governed by and construed in accordance with the
laws of Hong Kong;
(xii) agree to comply with the Companies Ordinance, the Companies (Winding Up and
Miscellaneous Provisions) Ordinance, the Articles of Association and laws of any
place outside Hong Kong that apply to your application and that neither we nor the
Relevant Persons nor any of their respective officers or advisers will breach any law
inside and/or outside Hong Kong as a result of the acceptance of your offer to
purchase, or any action arising from your rights and obligations under the terms and
conditions contained in this prospectus;
2 As defined in the Prospectus, Relevant Persons would include the Sole Sponsor, the Joint Overall
Coordinators, the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the
Underwriters, any of their or the Company’s respective directors, officers, employees, partners, agents,
advisers and any other parties involved in the Global Offering.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 410 –


--- page 420 ---
(xiii) confirm that (a) your application or HKSCC Nominees’ application on your behalf
is not financed directly or indirectly by the Company, any of the directors, chief
executives, substantial Shareholder(s) or existing shareholder(s) of the Company or
any of its subsidiaries or any of their respective close associates; and (b) you are not
accustomed or will not be accustomed to taking instructions from the Company, any
of the directors, chief executives, substantial shareholder(s) or existing
shareholder(s) of the Company or any of its subsidiaries or any of their respective
close associates in relation to the acquisition, disposal, voting or other disposition
of the Shares registered in your name or otherwise held by you;
(xiv) warrant that the information you have provided is true and accurate;
(xv) represent, warrant and undertake that the Offer Shares have not been and will not be
registered under the U.S. Securities Act and you and any person for whose benefit
you are applying for the Offer Shares are located outside the United States at the
time the offer for such Offer Shares was made and when the buy order for such Offer
Shares was originated and have not purchased such Offer Shares for the account or
benefit of any person in the United States or entered into any arrangement for the
transfer of such Offer Shares or any economic interest therein to any person in the
United States;
(xvi) confirm that you understand that we and the Joint Overall Coordinators will rely on
your declarations and representations in deciding whether or not to allocate any
Hong Kong Offer Shares to you and that you may be prosecuted for making a false
declaration;
(xvii) agree to accept Hong Kong Offer Shares applied for or any lesser number allocated
to you under the application;
(xviii) declare and represent that this is the only application made and the only application
intended by you to be made to benefit you or the person for whose benefit you are
applying;
(xix) (if the application is made for your own benefit) warrant that no other application
has been or will be made for your benefit by giving electronic application
instructions to HKSCC directly or indirectly or through the application channel of
the HK eIPO White Form service or by any one as your agent or by any other
person; and
(xx) (if you are making the application as an agent for the benefit of another person)
warrant that (1) no other application has been or will be made by you as agent for
or for the benefit of that person or by that person or by any other person as agent
for that person by giving electronic application instructions to HKSCC and the
HK eIPO White Form Service Provider and (2) you have due authority to give
electronic application instructions on behalf of that other person as its agent.
HOW TO APPLY FOR HONG KONG OFFER SHARES
–4 1 1–


--- page 421 ---
B. PUBLICATION OF RESULTS
Results of Allocation
Y ou can check whether you are successfully allocated any Hong Kong Offer Shares
through:
Platform Date/Time
Applying through the HK eIPO White Form service, or
HKSCC EIPO channel service:
Website /H1118/H1118/H1118/H1118From the “Allotment Results” page at
www.tricor.com.hk/ipo/result or
www.hkeipo.hk/IPOResult with a
“search by ID” function.
The full list of (i) wholly or partially
successful applicants using the HK eIPO
White Form service and HKSCC EIPO
channel, and (ii) the number of Hong
Kong Offer Shares conditionally allotted
to them, among other things, will be
displayed at www.hkeipo.hk/IPOResult or
www.tricor.com.hk/ipo/result .
24 hours, from 11:00
p.m. on Thursday,
December 4, 2025 to
12:00 midnight on
Wednesday, December
10, 2025 (Hong Kong
time)
The Stock Exchange’s website at
www.hkexnews.hk and our website at
www.xiaonoodles.com which will provide
links to the abovementioned websites of
the H Share Registrar.
No later than 11:00 p.m.
on Thursday,
December 4, 2025
(Hong Kong time)
Telephone /H1118/H1118+852 3691 8488 — the allocation results
telephone enquiry line provided by the
H Share Registrar
between 9:00 a.m. and
6:00 p.m., from
Friday, December 5,
2025 to Wednesday,
December 10, 2025
(Hong Kong time) on
a business day
For those applying through HKSCC EIPO channel, you may also check with your
broker or custodian from 6:00 p.m. on Wednesday, December 3, 2025 (Hong Kong time).
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 412 –


--- page 422 ---
HKSCC Participants can log into FINI and review the allotment result from 6:00 p.m. on
Wednesday, December 3, 2025 (Hong Kong time) on a 24-hour basis and should report any
discrepancies on allotments to HKSCC as soon as practicable.
Allocation Announcement
We expect to announce the final Offer Price, the level of indications of interest in the
International Offering, the level of applications in the Hong Kong Public Offering and the basis
of allocation of Hong Kong Offer Shares on the Stock Exchange’s website at
www.hkexnews.hk and our website at www.xiaonoodles.com by no later than 11:00 p.m. on
Thursday, December 4, 2025 (Hong Kong time).
C. CIRCUMSTANCES IN WHICH YOU WILL NOT BE ALLOCATED HONG KONG
OFFER SHARES
Y ou should note the following situations in which Hong Kong Offer Shares will not be
allocated to you or the person(s) for whose benefit you are applying for:
1. If your application is revoked:
Y our application or the application made by HKSCC Nominees on your behalf may be
revoked pursuant to Section 44A(6) of the Companies (Winding Up and Miscellaneous
Provisions) Ordinance.
2. If we or our agents exercise our discretion to reject your application:
We, the Joint Overall Coordinators, the H Share Registrar and their respective agents and
nominees have full discretion to reject or accept any application, or to accept only part of any
application, without giving any reasons.
3. If the allocation of Hong Kong Offer Shares is void:
The allocation of Hong Kong Offer Shares will be void if the Stock Exchange does not
grant permission to list the Shares either:
 within three weeks from the closing date of the application lists; or
 within a longer period of up to six weeks if the Stock Exchange notifies us of that
longer period within three weeks of the closing date of the application lists.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 413 –


--- page 423 ---
4. If:
 you make multiple applications or suspected multiple applications. Y ou may refer to
the paragraph headed “ — A. Applications for Hong Kong Offer Shares — 5. Multiple
Applications Prohibited ” in this section on what constitutes multiple applications;
 your application instruction is incomplete;
 your payment (or confirmation of funds, as the case may be) is not made correctly;
 the Underwriting Agreements do not become unconditional or are terminated;
 we or the Joint Overall Coordinators believe that by accepting your application, it
or we would violate applicable securities or other laws, rules or regulations.
5. If there is money settlement failure for allotted Offer Shares:
Based on the arrangements between HKSCC Participants and HKSCC, HKSCC
Participants will be required to hold sufficient application funds on deposit with their
Designated Bank before balloting. After balloting of Hong Kong Offer Shares, the Receiving
Bank will collect the portion of these funds required to settle each HKSCC Participant’s actual
Hong Kong Offer Shares allotment from their Designated Bank.
There is a risk of money settlement failure. In the extreme event of money settlement
failure by a HKSCC Participant (or its Designated Bank), who is acting on your behalf in
settling payment for your allotted shares, HKSCC will contact the defaulting HKSCC
Participant and its Designated Bank to determine the cause of failure and request such
defaulting HKSCC Participant to rectify or procure to rectify the failure.
However, if it is determined that such settlement obligation cannot be met, the affected
Hong Kong Offer Shares will be reallocated to the Global Offering. Hong Kong Offer Shares
applied for by you through the broker or custodian may be affected to the extent of the
settlement failure. In the extreme case, you will not be allocated any Hong Kong Offer Shares
due to the money settlement failure by such HKSCC Participant. None of us, the Relevant
Persons, the H Share Registrar and HKSCC is or will be liable if Hong Kong Offer Shares are
not allocated to you due to the money settlement failure.
D. DESPATCH/COLLECTION OF H SHARE CERTIFICATES AND REFUND OF
APPLICATION MONIES
Y ou will receive one H Share certificate for all Hong Kong Offer Shares allotted to you
under the Hong Kong Public Offering (except pursuant to applications made through the
HKSCC EIPO channel where the H Share certificates will be deposited into CCASS as
described below).
No temporary document of title will be issued in respect of the H Shares. No receipt will
be issued for sums paid on application.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 414 –


--- page 424 ---
H Share certificates will only become valid evidence of title at 8:00 a.m. on Friday,
December 5, 2025 (Hong Kong time), provided that the Global Offering has become
unconditional and the right of termination described in the section headed “Underwriting” has
not been exercised. Investors who trade H Shares prior to the receipt of H Share certificates
or the H Share certificates becoming valid do so entirely at their own risk.
The right is reserved to retain any H Share certificate(s) and (if applicable) any surplus
application monies pending clearance of application monies.
The following sets out the relevant procedures and time:
HK eIPO White Form service HKSCC EIPO channel
Despatch/collection of H Share certificate (1)
For application of
1,000,000 Hong
Kong Offer Shares
or more /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Collection in person at the
H Share Registrar, Tricor
Investor Services Limited, at
17/F, Far East Finance Centre,
16 Harcourt Road,
Hong Kong
Time: 9:00 a.m. to 1:00 p.m. on
Friday, December 5, 2025 (Hong
Kong time)
If you are an individual, you must
not authorize any other person
to collect for you. If you are a
corporate applicant, your
authorized representative must
bear a letter of authorization
from your corporation stamped
with your corporation’s chop.
Both individuals and authorized
representatives must produce, at
the time of collection, evidence
of identity acceptable to the
H Share Registrar.
H Share certificate(s) will
be issued in the name
of HKSCC Nominees,
deposited into CCASS
and credited to your
designated HKSCC
Participant’s stock
account. No action by
you is required.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 415 –


--- page 425 ---
HK eIPO White Form service HKSCC EIPO channel
Note: If you do not collect your H
Share certificate(s) personally
within the time above, it/they
will be sent to the address
specified in your application
instructions by ordinary post at
your own risk.
For application
of less than
1,000,000 Hong
Kong Offer Shares /H1118
Y our H Share certificate(s) will be
sent to the address specified in
your application instructions by
ordinary post at your own risk
Date: Thursday, December 4, 2025
Refund mechanism for surplus application monies paid by you
Date /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Friday, December 5, 2025 Subject to the
arrangement between
you and your broker
or custodian
Responsible party /H1118/H1118/H1118H Share Registrar Y our broker or
custodian
Application monies
paid through single
bank account /H1118/H1118/H1118/H1118/H1118
e-Auto Refund payment
instructions to your designated
bank account
Y our broker or
custodian will arrange
refund to your
designated bank
account subject to the
arrangement paid
between you and it
Application monies
paid through
multiple bank
accounts /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Refund check(s) will be
despatched to the address as
specified in your application
instructions by ordinary post at
your own risk
Note:
(1) Except in the event of a tropical cyclone warning signal number 8 or above, a black rainstorm warning
and/or an “extreme conditions” announcement issued after a super typhoon in force in Hong Kong in
the morning on Thursday, December 4, 2025 rendering it impossible for the relevant H Share certificates
to be dispatched to HKSCC in a timely manner, the Company shall procure the H Share Registrar to
arrange for delivery of the supporting documents and H Share certificates in accordance with the
contingency arrangements as agreed between them. Y ou may refer to “ — E. Severe Weather
Arrangements ” in this section.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 416 –


--- page 426 ---
E. SEVERE WEATHER ARRANGEMENTS
The Opening and Closing of the Application Lists
The application lists will not open or close on Tuesday, December 2, 2025 if, there is:
 a tropical cyclone warning signal number 8 or above;
 a black rainstorm warning; and/or
 an extreme conditions, (collectively, “ Severe Weather Signals ”),
in force in Hong Kong at any time between 9:00 a.m. and 12:00 noon on Tuesday, December
2, 2025.
Instead they will open between 11:45 a.m. and 12:00 noon and/or close at 12:00 noon on
the next business day which does not have Severe Weather Signals in force at any time between
9:00 a.m. and 12:00 noon.
Prospective investors should be aware that a postponement of the opening/closing of the
application lists may result in a delay in the listing date. Should there be any changes to the
dates mentioned in the section headed “Expected Timetable” in this prospectus, an
announcement will be made and published on the Stock Exchange’s website at
www.hkexnews.hk and our website at www.xiaonoodles.com of the revised timetable.
If a Severe Weather Signal is hoisted on Thursday, December 4, 2025, the H Share
Registrar will make appropriate arrangements for the delivery of the H Share certificates to the
CCASS Depository’s service counter so that they would be available for trading on Friday,
December 5, 2025.
If a Severe Weather Signal is hoisted on Thursday, December 4, 2025, for application of
less than 1,000,000 Offer Shares, the despatch of H Share certificate(s) will be made by
ordinary post when the post office re-opens after the Severe Weather Signal is lowered or
canceled (e.g. in the afternoon of Thursday, December 4, 2025 or on Friday, December 5,
2025).
If a Severe Weather Signal is hoisted on Friday, December 5, 2025, for application of
1,000,000 Offer Shares or more, the H Share certificate(s) will be available for collection in
person at the H Share Registrar’s office after the Severe Weather Signal is lowered or canceled
(e.g. in the afternoon of Friday, December 5, 2025 or on Monday, December 8, 2025).
Prospective investors should be aware that if they choose to receive physical H Share
certificates issued in their own name, there may be a delay in receiving the H Share
certificates.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 417 –


--- page 427 ---
F. ADMISSION OF THE SHARES INTO CCASS
If the Stock Exchange grants the listing of, and permission to deal in, the Shares on the
Stock Exchange and we comply with the stock admission requirements of HKSCC, the Shares
will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in
CCASS with effect from the date of commencement of dealings in the Shares or any other date
HKSCC chooses. Settlement of transactions between Exchange Participants is required to take
place in CCASS on the second settlement Day after any trading day.
All activities under CCASS are subject to the General Rules of HKSCC and HKSCC
Operational Procedures in effect from time to time.
All necessary arrangements have been made enabling the Shares to be admitted into
CCASS.
Y ou should seek the advice of your broker or other professional advisor for details of the
settlement arrangement as such arrangements may affect your rights and interests.
G. PERSONAL DATA
The following Personal Information Collection Statement applies to any personal data
collected and held by the Company, the H Share Registrar, the receiving banks and the
Relevant Persons about you in the same way as it applies to personal data about applicants
other than HKSCC Nominees. This personal data may include client identifier(s) and your
identification information. By giving application instructions to HKSCC, you acknowledge
that you have read, understood and agree to all of the terms of the Personal Information
Collection Statement below.
1. Personal Information Collection Statement
This Personal Information Collection Statement informs the applicant for, and holder of,
Hong Kong Offer Shares, of the policies and practices of the Company and the H Share
Registrar in relation to personal data and the Personal Data (Privacy) Ordinance (Chapter 486
of the Laws of Hong Kong).
2. Reasons for the collection of your personal data
It is necessary for applicants and registered holders of Hong Kong Offer Shares to ensure
that personal data supplied to the Company or its agents and the H Share Registrar is accurate
and up-to-date when applying for Hong Kong Offer Shares or transferring Hong Kong Offer
Shares into or out of their names or in procuring the services of the H Share Registrar.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 418 –


--- page 428 ---
Failure to supply the requested data or supplying inaccurate data may result in your
application for Hong Kong Offer Shares being rejected, or in the delay or the inability of the
Company or the H Share Registrar to effect transfers or otherwise render their services. It may
also prevent or delay registration or transfers of Hong Kong Offer Shares which you have
successfully applied for and/or the despatch of Share certificate(s) to which you are entitled.
It is important that applicants for and holders of Hong Kong Offer Shares inform the Company
and the H Share Registrar immediately of any inaccuracies in the personal data supplied.
3. Purposes
Y our personal data may be used, held, processed, and/or stored (by whatever means) for
the following purposes:
 processing your application and refund check, HK eIPO White Form e-Auto
Refund payment instruction(s), verification of compliance with the terms and
application procedures set out in this prospectus and announcing results of
allocation of Hong Kong Offer Shares;
 compliance with applicable laws and regulations in Hong Kong and elsewhere;
 registering new issues or transfers into or out of the names of the holders of the
Shares including, where applicable, HKSCC Nominees;
 maintaining or updating the register of members of the Company;
 verifying identities of applicants for and holders of the Shares and identifying any
duplicate applications for the Shares;
 facilitating Hong Kong Offer Shares balloting;
 establishing benefit entitlements of holders of the Shares, such as dividends, rights
issues, bonus issues, etc.;
 distributing communications from the Company and its subsidiaries;
 compiling statistical information and profiles of the holder of the Shares;
 disclosing relevant information to facilitate claims on entitlements; and
 any other incidental or associated purposes relating to the above and/or to enable the
Company and the H Share Registrar to discharge their obligations to applicants and
holders of the Shares and/or regulators and/or any other purposes to which
applicants and holders of the Shares may from time to time agree.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 419 –


--- page 429 ---
4. Transfer of personal data
Personal data held by the Company and the H Share Registrar relating to the applicants
for and holders of Hong Kong Offer Shares will be kept confidential but the Company and the
H Share Registrar may, to the extent necessary for achieving any of the above purposes,
disclose, obtain or transfer (whether within or outside Hong Kong) the personal data to, from
or with any of the following:
 the Company’s appointed agents such as financial advisers, receiving banks and
overseas principal share registrar;
 HKSCC or HKSCC Nominees, who will use the personal data and may transfer the
personal data to the H Share Registrar, in each case for the purposes of providing its
services or facilities or performing its functions in accordance with its rules or
procedures and operating FINI and CCASS (including where applicants for the
Hong Kong Offer Shares request a deposit into CCASS);
 any agents, contractors or third-party service providers who offer administrative,
telecommunications, computer, payment or other services to the Company or the H
Share Registrar in connection with their respective business operation;
 the Stock Exchange, the SFC and any other statutory regulatory or governmental
bodies or otherwise as required by laws, rules or regulations, including for the
purpose of the Stock Exchange’s administration of the Listing Rules and the SFC’s
performance of its statutory functions; and
 any persons or institutions with which the holders of Hong Kong Offer Shares have
or propose to have dealings, such as their bankers, solicitors, accountants or brokers
etc.
5. Retention of personal data
The Company and the H Share Registrar will keep the personal data of the applicants and
holders of Hong Kong Offer Shares for as long as necessary to fulfill the purposes for which
the personal data were collected. Personal data which is no longer required will be destroyed
or dealt with in accordance with the Personal Data (Privacy) Ordinance (Chapter 486 of the
Laws of Hong Kong).
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 420 –


--- page 430 ---
6. Access to and correction of personal data
Applicants for and holders of Hong Kong Offer Shares have the right to ascertain whether
the Company or the H Share Registrar hold their personal data, to obtain a copy of that data,
and to correct any data that is inaccurate. The Company and the H Share Registrar have the
right to charge a reasonable fee for the processing of such requests. All requests for access to
data or correction of data should be addressed to the Company and the H Share Registrar, at
their registered address disclosed in the section headed “Corporate Information” in this
prospectus or as notified from time to time, for the attention of the company secretary, or the
H Share Registrar for the attention of the privacy compliance officer.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 421 –


--- page 431 ---
The following is the text of a report set out on pages I-1 to I-76, received from the
Company’ s reporting accountants, KPMG, Certified Public Accountants, Hong Kong, for the
purpose of incorporation in this prospectus.
ACCOUNTANTS’ REPORT ON HISTORICAL FINANCIAL INFORMATION TO THE
DIRECTORS OF GUANGZHOU XIAO NOODLES CATERING MANAGEMENT CO.,
LTD. AND CMB INTERNATIONAL CAPITAL LIMITED
Introduction
We report on the historical financial information of Guangzhou Xiao Noodles Catering
Management Co., Ltd. (the “Company”) and its subsidiaries (together, the “Group”) set out on
pages I-4 to I-76, which comprises the consolidated statements of financial position of the
Group and the statements of financial position of the Company as at 31 December 2022, 2023
and 2024 and 30 June 2025, and the consolidated statements of profit or loss and other
comprehensive income, the consolidated statements of changes in equity and the consolidated
statements of cash flows for each of the years ended 31 December 2022, 2023 and 2024 and
the six months ended 30 June 2025 (the “Track Record Period”), and material accounting
policy information and other explanatory information (together, the “Historical Financial
Information”). The Historical Financial Information set out on pages I-4 to I-76 forms an
integral part of this report, which has been prepared for inclusion in the prospectus of the
Company dated 27 November 2025 (the “Prospectus”) in connection with the initial listing of
shares of the Company on the Main Board of The Stock Exchange of Hong Kong Limited.
Directors’ responsibility for the Historical Financial Information
The directors of the Company are responsible for the preparation of the Historical
Financial Information that gives a true and fair view in accordance with the basis of preparation
and presentation set out in note 1 to the Historical Financial Information, and for such internal
control as the directors of the Company determine is necessary to enable the preparation of the
Historical Financial Information that is free from material misstatement, whether due to fraud
or error.
Reporting accountants’ responsibility
Our responsibility is to express an opinion on the Historical Financial Information and to
report our opinion to you. We conducted our work in accordance with Hong Kong Standard on
Investment Circular Reporting Engagements 200 “Accountants’ Reports on Historical
Financial Information in Investment Circulars” issued by the Hong Kong Institute of Certified
Public Accountants (the “HKICPA”). This standard requires that we comply with ethical
standards and plan and perform our work to obtain reasonable assurance about whether the
Historical Financial Information is free from material misstatement.
APPENDIX I ACCOUNTANTS’ REPORT
– I-1 –


--- page 432 ---
Our work involved performing procedures to obtain evidence about the amounts and
disclosures in the Historical Financial Information. The procedures selected depend on the
reporting accountants’ judgement, including the assessment of risks of material misstatement
of the Historical Financial Information, whether due to fraud or error. In making those risk
assessments, the reporting accountants consider internal control relevant to the entity’s
preparation of the Historical Financial Information that gives a true and fair view in accordance
with the basis of preparation and presentation set out in note 1 to the Historical Financial
Information in order to design procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Our
work also included evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the directors, as well as evaluating the overall
presentation of the Historical Financial Information.
We believe that the evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Opinion
In our opinion, the Historical Financial Information gives, for the purpose of the
accountants’ report, a true and fair view of the Company’s and the Group’s financial position
as at 31 December 2022, 2023 and 2024 and 30 June 2025 and of the Group’s financial
performance and cash flows for the Track Record Period in accordance with the basis of
preparation and presentation set out in note 1 to the Historical Financial Information.
Review of stub period corresponding financial information
We have reviewed the stub period corresponding financial information of the Group
which comprises the consolidated statement of profit or loss and other comprehensive income,
the consolidated statement of changes in equity and the consolidated statement of cash flows
for the six months ended 30 June 2024 and other explanatory information (the “Stub Period
Corresponding Financial Information”). The directors of the Company are responsible for the
preparation and presentation of the Stub Period Corresponding Financial Information in
accordance with the basis of preparation and presentation set out in note 1 to the Historical
Financial Information. Our responsibility is to express a conclusion on the Stub Period
Corresponding Financial Information based on our review. We conducted our review in
accordance with Hong Kong Standard on Review Engagements 2410 “Review of Interim
Financial Information Performed by the Independent Auditor of the Entity” as issued by the
HKICPA. A review consists of making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with Hong Kong Standards
on Auditing and consequently does not enable us to obtain assurance that we would become
aware of all significant matters that might be identified in an audit. Accordingly, we do not
express an audit opinion. Based on our review, nothing has come to our attention that causes
us to believe that the Stub Period Corresponding Financial Information, for the purpose of the
accountants’ report, is not prepared, in all material respects, in accordance with the basis of
preparation and presentation set out in note 1 to the Historical Financial Information.
APPENDIX I ACCOUNTANTS’ REPORT
– I-2 –


--- page 433 ---
Report on matters under the Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited and the Companies (Winding Up and Miscellaneous
Provisions) Ordinance
Adjustments
In preparing the Historical Financial Information, no adjustments to the Underlying
Financial Statements as defined on page I-4 have been made.
Dividends
We refer to note 27(b) to the Historical Financial Information which contains information
about the dividends paid by the Company in respect of the Track Record Period.
KPMG
Certified Public Accountants
8th Floor, Prince’s Building
10 Chater Road
Central, Hong Kong
27 November 2025
APPENDIX I ACCOUNTANTS’ REPORT
– I-3 –


--- page 434 ---
HISTORICAL FINANCIAL INFORMATION
Set out below is the Historical Financial Information which forms an integral part of this
accountants’ report.
The consolidated financial statements of the Group for the Track Record Period, on which
the Historical Financial Information is based, were audited byה(ࣿ
౷ஷΥྫ)הKPMG Huazhen LLP Guangzhou Branch in accordance with Hong Kong
Standards on Auditing issued by the HKICPA (the “Underlying Financial Statements”).
APPENDIX I ACCOUNTANTS’ REPORT
– I-4 –


--- page 435 ---
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
(Expressed in Renminbi)
Y ears ended 31 December
Six months
ended 30 June
Note 2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Revenue /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184 418,096 800,514 1,154,434 525,657 703,185
Raw materials and consumables
used /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(160,138) (290,270) (395,701) (187,250) (220,932)
Staff costs /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186(b) (109,264) (175,194) (265,062) (121,771) (158,797)
Depreciation of right-of-use
assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186(e) (94,620) (125,429) (188,845) (86,309) (109,726)
Depreciation and amortisation of
property, plant and equipment
and intangible assets /H1118/H1118/H1118/H1118/H1118/H11186(e) (21,828) (24,213) (37,649) (17,332) (26,028)
Utility expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(14,119) (27,487) (44,543) (19,715) (28,102)
Other rentals and related
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(4,523) (18,365) (21,632) (10,645) (16,505)
Listing expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186(d) – – (1,112) – (11,164)
Advertising and promotion
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(6,150) (5,044) (13,339) (4,660) (9,525)
Travelling and related expenses /H1118 (1,929) (3,742) (5,672) (2,508) (2,577)
Other expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186(d) (34,595) (59,790) (88,721) (40,402) (53,698)
Other income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185 7,504 14,143 8,967 4,879 4,500
Other net (losses)/gains /H1118/H1118/H1118/H1118/H1118/H11186(c) (177) 286 3,116 53 (1,867)
Finance costs /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186(a) (16,962) (19,333) (27,771) (12,697) (14,512)
Impairment losses of property,
plant and equipment /H1118/H1118/H1118/H1118/H1118/H111811(a) (9,440) (8,938) (1,589) (846) (1,956)
(Loss)/profit before taxation /H1118/H11186 (48,145) 57,138 74,881 26,454 52,296
Income tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187 12,172 (11,224) (14,181) (5,085) (10,462)
(Loss)/profit for the
year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(35,973) 45,914 60,700 21,369 41,834
(Loss)/earnings per share 10
Basic (expressed in RMB cents
per share) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(6.02) 7.67 10.11 3.56 6.95
Diluted (expressed in RMB
cents per share) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(6.22) 7.60 9.96 3.52 6.90
Other comprehensive income
for the year/period
Exchange differences on
translation of financial
statements of subsidiaries /H1118/H1118/H1118 – – 113 21 (418)
Total comprehensive income
for the year/period
attributable to equity
shareholders of the
Company /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(35,973) 45,914 60,813 21,390 41,416
The accompanying notes form part of the Historical Financial Information.
APPENDIX I ACCOUNTANTS’ REPORT
– I-5 –


--- page 436 ---
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Expressed in Renminbi)
As at 31 December As at 30 June
Note 2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Non-current assets
Property, plant and equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811 60,619 85,020 148,045 173,776
Right-of-use assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811 380,155 527,124 683,200 706,811
Intangible assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812 3,328 3,417 4,152 3,937
Financial assets measured at fair value
through other comprehensive income
(“FVOCI”) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111828(e) –5 05 05 0
Deferred tax assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111825(b) 24,648 23,250 27,168 27,871
Rental deposits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111828,471 39,824 47,728 49,441
Lease payment receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814 7,786 3,781 1,206 764
Other non-current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111816 5,872 3,512 1,948 1,379
510,879 685,978 913,497 964,029------- ------- ------- -------
Current assets
Inventories /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111817 16,639 27,098 22,666 22,205
Trade and other receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818 30,137 54,879 80,468 102,519
Income tax recoverable /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111825(a) 114 1,576 727 668
Financial assets measured at fair value
through profit or loss (“FVPL”) /H1118/H1118/H1118/H1118/H1118/H111815 7,009 25,063 70,261 25,018
Restricted bank deposits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111819(a) 12,107 21,139 31,324 44,435
Cash and cash equivalents /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111819(a) 36,519 26,764 42,190 50,032
102,525 156,519 247,636 244,877
Current liabilities
Trade and other payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820(a) 50,904 93,205 110,351 120,331
Redemption liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820(b) 45,000 45,000 45,000 45,000
Contract liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111821 36,650 60,142 82,628 110,938
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111822 108,548 141,318 194,423 214,308
Short-term borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111824 9,982 – 50,000 –
Current taxation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111825(a) 6 3,610 7,459 9,260
251,090 343,275 489,861 499,837-------
------ ------ ------
Net current liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(148,565) (186,756) (242,225) (254,960)------- ------ ------ ------
Non-current liabilities
Contract liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111821 1,875 3,564 4,564 4,553
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111822 330,157 435,234 540,196 547,916
Provisions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111823 4,310 6,631 8,735 9,510
336,342 445,429 553,495 561,979------- ------ ------ ------
NET ASSETS /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111825,972 53,793 117,777 147,090
CAPITAL AND RESERVES
Paid-in capital/share capital /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111827(c) 12,266 12,266 12,266 12,266
Reserves /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111827(d) 13,706 41,527 105,511 134,824
TOTAL EQUITY /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111825,972 53,793 117,777 147,090
The accompanying notes form part of the Historical Financial Information.
APPENDIX I ACCOUNTANTS’ REPORT
– I-6 –


--- page 437 ---
STATEMENTS OF FINANCIAL POSITION OF THE COMPANY
(Expressed in Renminbi)
As at 31 December As at 30 June
Note 2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Non-current assets
Property, plant and equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811 18,951 16,519 15,208 14,652
Right-of-use assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811 119,922 133,252 98,365 90,879
Intangible assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812 1 1 26 11 2 –
Investments in subsidiaries /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111813 3,000 13,000 17,590 40,283
Deferred tax assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111825(b) 8,188 8,127 8,231 6,884
Rental deposits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810,430 12,841 12,326 8,197
160,603 183,800 151,732 160,895------ ------ ------ ------
Current assets
Inventories /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111817 782 1,158 1,177 1,134
Trade and other receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818 157,045 122,021 187,636 151,549
Income tax recoverable /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111825(a) 21 628 – –
Financial assets measured at FVPL /H1118/H1118/H1118/H1118/H111815 7,009 25,063 15,009 25,018
Restricted bank deposits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111819(a) 12,107 20,012 30,197 44,435
Cash and cash equivalents /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111819(a) 16,302 12,616 28,880 7,974
193,266 181,498 262,899 230,110------ ------ ------ ------
Current liabilities
Trade and other payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820(a) 50,275 37,198 58,656 18,988
Redemption liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820(b) 45,000 45,000 45,000 45,000
Contract liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111821 34,445 55,947 78,823 106,159
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111822 38,699 40,280 39,956 33,823
Short-term borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111824 9,85 9–––
Current taxation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111825(a) – – 825 702
178,278 178,425 223,260 204,672------ ------ ------ ------
Net current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814,988 3,073 39,639 25,438------ ------ ------ ------
Non-current liabilities
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111822 100,741 107,093 67,373 62,402
Provisions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111823 1,363 1,549 1,680 1,688
102,104 108,642 69,053 64,090------ ------ ------ ------
NET ASSETS /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111873,487 78,231 122,318 122,243
CAPITAL AND RESERVES
Paid-in capital/share capital /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111827(c) 12,266 12,266 12,266 12,266
Reserves /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111827(d) 61,221 65,965 110,052 109,977
TOTAL EQUITY /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111873,487 78,231 122,318 122,243
The accompanying notes form part of the Historical Financial Information.
APPENDIX I ACCOUNTANTS’ REPORT
– I-7 –


--- page 438 ---
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Expressed in Renminbi)
Attributable to equity shareholders of the Company
Note
Paid-in
Capital
Capital
reserve
Other
reserve
Share-based
payments
reserve
Statutory
reserve
Shares held for
the share-based
incentive scheme
Accumulated
losses Total equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
note 27(c) note 27(d)(i) note 27(d)(iv) note 27(d)(ii) note 27(d)(iii) note 26
Balance at 1 January 2022 /H1118/H1118/H1118/H1118/H1118 12,266 129,898 (45,000) 1,924 983 (327) (39,170) 60,574------ ------- ------ ----- ----- ---- ------ ------
Changes in equity for 2022:
Loss and other comprehensive
income for the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––– – – (35,973) (35,973)
Equity-settled share-based
transactions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111826 – – – 1,337 – – – 1,337
Shares vested under the share-
based incentive scheme /H1118/H1118/H1118/H1118/H1118/H111826&27(d) – 1,171 – (1,171) – 34 – 34
Appropriation to statutory reserve /H111827(d)(iii) –––– 5 0 – (50) –------ ------ ------ ----- ----- ---- ------ ------
Balance at 31 December 2022 /H1118/H1118/H1118 12,266 131,069 (45,000) 2,090 1,033 (293) (75,193) 25,972
APPENDIX I ACCOUNTANTS’ REPORT
– I-8 –


--- page 439 ---
Attributable to equity shareholders of the Company
Note
Paid-in
Capital
Share
capital
Share
premium
Capital
reserve
Other
reserve
Share-based
payments
reserve
Statutory
reserve
Shares held for
the share-based
incentive scheme
Accumulated
losses Total equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
note 27(c) note 27(c) note 27(d)(i) note 27(d)(i)
note
27(d)(iv) note 27(d)(ii)
note
27(d)(iii) note 26
Balance at 31 December 2022
and 1 January 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H111812,266 – – 131,069 (45,000) 2,090 1,033 (293) (75,193) 25,972----- ----- ------ ------ ----- ----- - - - - - - - ----- -----
Changes in equity for 2023:
Profit and other comprehensive
income for the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118 ––––– –– – 45,914 45,914
Conversion into a joint stock
limited liability company /H1118/H1118/H1118/H1118/H111827(c) (12,266) 12,266 108,706 (131,069) – (2,369) (145) – 24,877 –
Equity-settled share-based
transactions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111826 ––––– 1,419 – – – 1,419
Shares vested under the share-
based incentive scheme /H1118/H1118/H1118/H1118/H1118/H111826&27(d) – – 726 – – (726) – 34 – 34
Dividend declared /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111827(b) ––––– –– – (19,546) (19,546)
Appropriation to statutory reserve /H111827(d)(iii) ––––– – 2,189 – (2,189) –----- ----- ------ ------ ----- ----- ---- --- ----- -----
Balance at 31 December 2023 /H1118/H1118 – 12,266 109,432 – (45,000) 414 3,077 (259) (26,137) 53,793
APPENDIX I ACCOUNTANTS’ REPORT
– I-9 –


--- page 440 ---
Attributable to equity shareholders of the Company
Note
Share
capital
Share
premium
Other
reserve
Share-based
payments
reserve
Statutory
reserve
Exchange
reserve
Shares held for
the share-based
incentive scheme
(Accumulated
losses)/
retained
profits Total equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
note 27(c) note 27(d)(i) note 27(d)(iv) note 27(d)(ii) note 27(d)(iii) note 27(d)(v) note 26
Balance at 31 December 2023
and 1 January 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,266 109,432 (45,000) 414 3,077 – (259) (26,137) 53,793----- ------ ------ ---- ----- --- ---- -- ---- ------
Changes in equity for 2024:
Profit for the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––––– – 60,700 60,700
Other comprehensive income /H1118/H1118/H1118/H1118 ––––– 1 1 3 – – 1 1 3
Total comprehensive income /H1118/H1118/H1118/H1118 ––––– 1 1 3 – 60,700 60,813
Equity-settled share-based
transactions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111826 – – – 3,139 – – – – 3,139
Shares vested under the
share-based incentive scheme /H1118/H1118/H111826&27(d) – 1,418 – (1,418) – – 32 – 32
Appropriation to statutory reserve /H111827(d)(iii) –––– 7,620 – – (7,620) –----- ------ ----- ---- ----- --- --- ------ ------
Balance at 31 December 2024 /H1118/H1118/H1118 12,266 110,850 (45,000) 2,135 10,697 113 (227) 26,943 117,777
APPENDIX I ACCOUNTANTS’ REPORT
– I-10 –


--- page 441 ---
Attributable to equity shareholders of the Company
Note
Share
capital
Share
premium
Other
reserve
Share-based
payments
reserve
Statutory
reserve
Exchange
reserve
Shares held for
the share-based
incentive scheme
Retained
profits Total equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
note 27(c) note 27(d)(i) note 27(d)(iv) note 27(d)(ii) note 27(d)(iii) note 27(d)(v) note 26
Balance at 31 December 2024 and
1 January 2025 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,266 110,850 (45,000) 2,135 10,697 113 (227) 26,943 117,777----- ------ ------ ---- ----- --- ---- -- ---- ------
Changes in equity for six months
ended 30 June 2025:
Profit for the period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––––– – 41,834 41,834
Other comprehensive income /H1118/H1118/H1118/H1118 ––––– (418) – – (418)
Total comprehensive income /H1118/H1118/H1118/H1118 ––––– (418) – 41,834 41,416
Equity-settled share-based
transactions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111826 – – – 2,624 – – – – 2,624
Shares vested under the share-
based incentive scheme /H1118/H1118/H1118/H1118/H1118/H111826&27(d) – 16 – (17) – – 1 – –
Dividend declared /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111827(b) –––––– – (14,727) (14,727)----- ------ ----- ---- ----- --- --- ------ ------
Balance at 30 June 2025 /H1118/H1118/H1118/H1118/H1118/H111812,266 110,866 (45,000) 4,742 10,697 (305) (226) 54,050 147,090
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 442 ---
(unaudited)
Attributable to equity shareholders of the Company
Note
Share
capital
Share
premium
Other
reserve
Share-based
payments
reserve
Statutory
reserve
Exchange
reserve
Shares held for
the share-based
incentive scheme
(Accumulated
losses)/
retained
profits Total equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
note 27(c) note 27(d)(i) note 27(d)(iv) note 27(d)(ii) note 27(d)(iii) note 27(d)(v) note 26
Balance at 31 December 2023 and
1 January 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,266 109,432 (45,000) 414 3,077 – (259) (26,137) 53,793----- ------ ------ ---- ---- -- ---- -- ---- ------
Changes in equity for six months
ended 30 June 2024:
Profit for the period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––––– – 21,369 21,369
Other comprehensive income /H1118/H1118/H1118/H1118 ––––– 2 1 – – 2 1
Total comprehensive income /H1118/H1118/H1118/H1118 ––––– 2 1 – 21,369 21,390
Equity-settled share-based
transactions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111826 – – – 1,551 – – – – 1,551----- ------ ----- ---- ---- -- --- ------ ------
Balance at 30 June 2024 /H1118/H1118/H1118/H1118/H1118/H111812,266 109,432 (45,000) 1,965 3,077 21 (259) (4,768) 76,734
The accompanying notes form part of the Historical Financial Information.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 443 ---
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in Renminbi)
Y ears ended 31 December Six months ended 30 June
Note 2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Operating activities
Cash generated from operations /H1118 19(b) 104,940 252,810 326,947 152,426 211,356
Income tax paid /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111825(a) (167) (7,684) (13,401) (6,727) (9,305)
Net cash generated from
operating activities /H1118/H1118/H1118/H1118/H1118/H1118/H1118104,773 245,126 313,546 145,699 202,051------- ------- ------- ------- -------Investing activities
Payment for purchases of
property, plant and equipment,
and right-of-use assets /H1118/H1118/H1118/H1118/H1118 (30,795) (60,746) (97,324) (43,656) (52,658)
Payment for purchases of
intangible assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,722) (1,256) (2,607) (1,084) (1,004)
Payment for purchases of
financial assets measured at
FVPL /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(142,000) (345,000) (436,000) (105,000) (135,000)
Proceeds from maturity of
financial assets measured at
FVPL /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118135,000 327,009 391,063 130,193 180,261
Proceeds from disposal of
property, plant and equipment,
and right-of-use assets /H1118/H1118/H1118/H1118/H1118 2,292 18 811 359 303
Investment income and interest
received /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,353 2,018 1,318 440 945
Payment for purchases of
financial assets measured at
FVOCI /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (50) – – –
Payment for restoration costs /H1118/H111823 (129) – (354) (100) (448)
Net cash used in investing
activities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(36,001) (78,007) (143,093) (18,848) (7,601)------- ------- ------- ------- -------Financing activities
Proceeds from exercise of share
options /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––– 2 9 4
Proceeds from bank loans /H1118/H1118/H1118/H1118/H111819(c) 35,394 25,115 50,000 – –
Repayment of bank loans /H1118/H1118/H1118/H1118/H111819(c) (25,412) (35,097) – – (50,000)
Payment of capital element of
lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111819(c) (68,945) (128,611) (177,078) (85,145) (104,166)
Payment of interest element of
lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111819(c) (16,600) (19,074) (27,083) (12,555) (14,329)
Interest of bank loans paid /H1118/H1118/H1118/H111819(c) (198) (55) (381) – (7)
Payment for listing expenses /H1118/H1118/H1118 – – (123) – (3,614)
Dividends paid to equity
shareholders of the Company /H1118 19(c) – (19,152) (394) (394) (14,727)
Net cash used in financing
activities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(75,761) (176,874) (155,059) (98,094) (186,549)-------
------ ------ ------ ------Net (decrease)/increase in cash
and cash equivalents /H1118/H1118/H1118/H1118/H1118/H1118 (6,989) (9,755) 15,394 28,757 7,901
Cash and cash equivalents at
1 January /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111819(a) 43,508 36,519 26,764 26,764 42,190
Effect of foreign exchange rate
changes /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 32 – (59)
Cash and cash equivalents at
31 December/30 June /H1118/H1118/H1118/H1118/H111819(a) 36,519 26,764 42,190 55,521 50,032
The accompanying notes form part of the Historical Financial Information.
APPENDIX I ACCOUNTANTS’ REPORT
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NOTES TO THE HISTORICAL FINANCIAL INFORMATION
(Expressed in Renminbi unless otherwise indicated)
1 BASIS OF PREPARATION AND PRESENTATION OF HISTORICAL FINANCIAL INFORMATION
Guangzhou Xiao Noodles Catering Management Co., Ltd. (formerly known as Guangzhou Meet Xiaomian
Catering Management Co., Ltd.) (the “Company”) was incorporated in the People’s Republic of China (the “PRC”)
on 14 February 2014 as a limited liability company under the Companies laws of the PRC. The Company was
converted into a joint stock limited liability company on 7 September 2023.
The Company and its subsidiaries (together, the “Group”) are principally engaged in self-operated restaurant
operations and franchise management in the PRC. Details of the Group’s principal subsidiaries are set out in note 13.
As at 30 June 2025, the Group had net current liabilities amounting to RMB254,960,000. Based on the
projection of the Group’s profit and cash inflows from operations and the unused banking loan facilities of
RMB250,000,000 as at 30 June 2025, the directors are of the opinion that the Group has sufficient financial resources
to continue as a going concern for the next twelve months from the date of this report and there are no material
uncertainties related to events or conditions which, individually or collectively, may cast significant doubt on the
Group’s ability to continue as a going concern.
The Historical Financial Information has been prepared in accordance with all applicable IFRS Accounting
Standards as issued by the International Accounting Standards Board (“IASB”). Further details of the material
accounting policy information are set out in note 2.
The IASB has issued a number of new and revised IFRS Accounting Standards. For the purpose of preparing
the Historical Financial Information, the Group has adopted all applicable new and revised IFRS Accounting
Standards to the Track Record Period, except for any new standards or interpretations that are not yet effective for
the accounting period beginning on 1 January 2025. The revised and new accounting standards and interpretations
issued but not yet effective for the accounting year beginning on 1 January 2025 are set out in note 32.
The Historical Financial Information also complies with the applicable disclosure provisions of the Rules
Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.
The accounting policies set out below have been applied consistently to all periods presented in the Historical
Financial Information.
The Stub Period Corresponding Financial Information has been prepared in accordance with the same basis of
preparation and presentation adopted in respect of the Historical Financial Information.
The Historical Financial Information and the Stub Period Corresponding Financial Information are presented
in Renminbi (“RMB”) and all values are rounded to the nearest thousand (RMB’000) except when otherwise
indicated.
2 MATERIAL ACCOUNTING POLICY INFORMATION
(a) Basis of measurement
The measurement basis used in the preparation of the Historical Financial Information is the historical cost
basis except that the financial assets measure at FVOCI and financial assets measure at FVPL are stated at their fair
value as explained note 2(e).
(b) Use of estimates and judgements
The preparation of Historical Financial Information in conformity with IFRS Accounting Standards requires
management to make judgements, estimates and assumptions that affect the application of policies and reported
amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be reasonable under the circumstances, the results of which
form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in
the period of the revision and future periods if the revision affects both current and future periods.
Judgements made by management in the application of IFRS Accounting Standards that have significant effect
on the Historical Financial Information and major sources of estimation uncertainty are discussed in note 3.
APPENDIX I ACCOUNTANTS’ REPORT
– I-14 –


--- page 445 ---
(c) Subsidiaries and non-controlling interests
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has
rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its
power over the entity. The financial statements of subsidiaries are included in the Historical Financial Information
from the date on which control commences until the date on which control ceases.
Intra-group balances and transactions, and any unrealised income and expenses (except for foreign currency
transaction gains or losses) arising from intra-group transactions are eliminated. Unrealised losses resulting from
intra-group transactions are eliminated in the same way as unrealised gains, but only to the extent that there is no
evidence of impairment.
When the Group loses control of a subsidiary, it derecognises the assets and liabilities of the subsidiary. Any
resulting gain or loss is recognised in profit or loss. Any interest retained in that former subsidiary is measured at
fair value when control is lost.
In the Company’s statements of financial position, an investment in a subsidiary is stated at cost less
impairment losses (see note 2(i)(ii), unless it is classified as held for sale (or included in a disposal group classified
as held for sale).
(d) Associate
An associate is an entity in which the Group or Company has significant influence, but not control or joint
control, over the financial and operating policies.
An investment in an associate is accounted for using the equity method, unless it is classified as held for sale
(or included in a disposal group classified as held for sale). They are initially recognised at cost, which includes
transaction costs. Subsequently, the consolidated financial statements include the Group’s share of the profit or loss
and other comprehensive income (“OCI”) of those investees, until the date on which significant influence ceases.
When the Group’s share of losses exceeds its interest in the associate, the Group’s interest is reduced to nil
and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive
obligations or made payments on behalf of the investee. For this purpose, the Group’s interest is the carrying amount
of the investment under the equity method, together with any other long-term interests that in substance form part
of the Group’s net investment in the associate, after applying the ECL model to such other long-term interests where
applicable (see note 2(i)(i)).
Unrealised gains arising from transactions with equity-accounted investees are eliminated against the
investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as
unrealised gains, but only to the extent there is no evidence of impairment.
(e) Other investments in securities
The Group’s policies for investments in securities, other than investments in subsidiaries, are set out below.
Investments in securities are recognised/derecognised on the date the Group commits to purchase/sell the
investment. The investments are initially stated at fair value plus directly attributable transaction costs, except for
those investments measured at FVPL for which transaction costs are recognised directly in profit or loss. For an
explanation of how the Group determines fair value of financial instruments, see note 28(e). These investments are
subsequently accounted for as follows, depending on their classification.
(i) Non-equity investments
Non-equity investments are classified into one of the following measurement categories:
– amortised cost, if the investment is held for the collection of contractual cash flows which represent
solely payments of principal and interest. Expected credit losses, interest income calculated using the
effective interest method (see note 2(t)(iii)), foreign exchange gains and losses are recognised in profit
and loss. Any gain or loss on derecognition is recognised in profit or loss.
– FVPL if the investment does not meet the criteria for being measured at amortised cost or FVOCI
(recycling). Changes in the fair value of the investment (including interest) are recognised in profit or
loss.
APPENDIX I ACCOUNTANTS’ REPORT
– I-15 –


--- page 446 ---
(ii) Equity investments
An investment in equity securities is classified as FVPL, unless the investment is not held for trading purposes
and on initial recognition the Group makes an irrevocable election to designate the investment at FVOCI
(non-recycling) such that subsequent changes in fair value are recognised in OCI. Such elections are made on an
instrument-by-instrument basis, but may only be made if the investment meets the definition of equity from the
issuer’s perspective. If such election is made for a particular investment, at the time of disposal, the amount
accumulated in the fair value reserve (non-recycling) is transferred to retained earnings and not recycled through
profit or loss. Dividends from an investment in equity securities, irrespective of whether classified as at FVPL or
FVOCI, are recognised in profit or loss as other income (see note 2(t)(ii)).
(f) Property, plant and equipment and right-of-use assets
Property, plant and equipment and right-of-use assets are stated at cost, less accumulated depreciation and any
accumulated impairment losses (see note 2(i)(ii)).
The cost of self-constructed items of property, plant and equipment includes the cost of materials, direct labor,
the initial estimate, where relevant, of the costs of dismantling and removing the items and restoring the site on which
they are located, and an appropriate proportion of production overheads.
Any gain or loss on disposal of an item of property, plant and equipment is recognised in profit or loss.
Depreciation is calculated to write off the cost of items of property, plant and equipment, less their estimated
residual values, if any, using the straight-line method over their estimated useful lives, and is generally recognised
in profit or loss. No depreciation is provided for in respect of construction in progress until it is completed and ready
for its intended use.
The estimated useful lives are as follows:
Right-of-use assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Over the lease term
Leasehold improvement /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Over the lease term
Kitchen equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182-5 years
Electronic equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182-5 years
Other equipments /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184-5 years
Depreciation methods, useful lives and residual values are reviewed annually and adjusted if appropriate.
(g) Intangible assets
Research and development costs comprise all costs that are directly attributable to research and development
activities or that can be allocated on a reasonable basis to such activities. Because of the nature of the Group’s
research and development activities, the criteria for the recognition of such costs as an asset are generally not met
until late in the development stage of the project when the remaining development costs are immaterial. Hence both
research costs and development costs are generally recognised as expenses in the period in which they are incurred.
Other intangible assets that are acquired by the Group and have finite useful lives are measured at cost less
accumulated amortisation and any accumulated impairment losses (see note 2(i)(ii)).
Amortisation is calculated to write off the cost of intangible assets less their estimated residual values using
the straight-line method over their useful lives, if any, and is generally recognised in profit or loss.
The estimated useful lives are as follows:
Software /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185 years
Amortisation methods, useful lives and residual values are reviewed annually and adjusted if appropriate.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 447 ---
(h) Leased assets
At inception of a contract, the Group assesses whether the contract is, or contains, a lease. This is the case if
the contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration. Control is conveyed where the customer has both the right to direct the use of the identified asset and
to obtain substantially all of the economic benefits from that use.
(i) As a lessee
Where the contract contains lease component(s) and non-lease component(s), the Group has elected not to
separate non-lease components and accounts for each lease component and any associated non-lease components as
a single lease component for all leases.
At the lease commencement date, the Group recognises a right-of-use asset and a lease liability, except for
leases that have a short lease term of 12 months or less and leases of low-value items. When the Group enters into
a lease in respect of a low-value item, the Group decides whether to capitalise the lease on a lease-by-lease basis.
If not capitalised, the associated lease payments are recognised in profit or loss on a systematic basis over the lease
term.
Where the lease is capitalised, the lease liability is initially recognised at the present value of the lease
payments payable over the lease term, discounted using the interest rate implicit in the lease or, if that rate cannot
be readily determined, using a relevant incremental borrowing rate. After initial recognition, the lease liability is
measured at amortised cost and interest expense is recognised using the effective interest method. V ariable lease
payments that do not depend on an index or rate are not included in the measurement of the lease liability, and are
charged to profit or loss as incurred.
The right-of-use asset recognised when a lease is capitalised is initially measured at cost, which comprises the
initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus
any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore
the underlying asset or the site on which it is located, less any lease incentives received. The right-of-use asset is
subsequently stated at cost less accumulated depreciation and impairment losses (see notes 2(f) and 2(i)(ii)).
Refundable rental deposits are accounted for separately from the right-of-use assets in accordance with the
accounting policy applicable to investments in non-equity securities carried at amortised cost (see notes 2(e)(i) and
2(i)(i)). Any excess of the nominal value over the initial fair value of the deposits is accounted for as additional lease
payments made and is included in the cost of right-of-use assets.
The lease liability is remeasured when there is a change in future lease payments arising from a change in an
index or rate, if there is a change in the Group’s estimate of the amount expected to be payable under a residual value
guarantee, or if the Group changes its assessment of whether it will exercise a purchase, extension or termination
option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount
of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been
reduced to zero.
The lease liability is also remeasured when there is a lease modification, which means a change in the scope
of a lease or the consideration for a lease that is not originally provided for in the lease contract, if such modification
is not accounted for as a separate lease. In this case, the lease liability is remeasured based on the revised lease
payments and lease term using a revised discount rate at the effective date of the modification.
In the consolidated statements of financial position, the current portion of long-term lease liabilities is
determined as the present value of contractual payments that are due to be settled within twelve months after the
reporting period.
(ii) As a lessor
The Group determines at lease inception whether each lease is a finance lease or an operating lease. A lease
is classified as a finance lease if it transfers substantially all the risks and rewards incidental to the ownership of an
underlying assets to the lessee. Otherwise, the lease is classified as an operating lease.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 448 ---
When a contract contains lease and non-lease components, the Group allocates the consideration in the contract
to each component on a relative stand-alone selling price basis. The rental income from operating leases is recognised
in accordance with note 2(t).
When the Group is an intermediate lessor, the sub-leases are classified as a finance lease or as an operating
lease with reference to the right-of-use asset arising from the head lease. If the head lease is a short-term lease to
which the Group applies the exemption described in note 2(h)(i), then the Group classifies the sub-lease as an
operating lease.
(i) Credit losses and impairment of assets
(i) Credit losses from financial instruments and lease receivables
The Group recognises a loss allowance for expected credit losses (“ECL”s) on:
– financial assets measured at amortised cost (including cash and cash equivalents, restricted bank
deposits, trade and other receivables, rental deposits); and
– lease receivables.
Measurement of ECLs
ECLs are a probability-weighted estimate of credit losses. Generally, credit losses are measured as the
present value of all expected cash shortfalls between the contractual and expected amounts.
The expected cash shortfalls are discounted using the following rates if the effect is material:
– fixed-rate financial assets and trade and other receivables: effective interest rate determined at
initial recognition or an approximation thereof;
– lease receivables: discount rate used in the measurement of the lease receivable.
The maximum period considered when estimating ECLs is the maximum contractual period over which
the Group is exposed to credit risk.
ECLs are measured on either of the following bases:
– 12-month ECLs: these are the portion of ECLs that result from default events that are possible
within the 12 months after the reporting date (or a shorter period if the expected life of the
instrument is less than 12 months); and
– lifetime ECLs: these are the ECLs that result from all possible default events over the expected
lives of the items to which the ECL model applies.
The Group measures loss allowances at an amount equal to lifetime ECLs, except for the following,
which are measured at 12-months ECLs:
– financial instruments that are determined to have low credit risk at each reporting date; and
– other financial instruments for which credit risk (i.e. the risk of default occurring over the
expected life of the financial instrument) has not increased significantly since initial recognition.
Loss allowances for trade receivables are always measured at an amount equal to lifetime ECLs.
Significant increases in credit risk
When determining whether the credit risk of a financial instrument has increased significantly since
initial recognition and when measuring ECLs, the Group considers reasonable and supportable information that
is relevant and available without undue cost or effort. This includes both quantitative and qualitative
information and analysis, based on the Group’s historical experience and informed credit assessment, that
includes forward-looking information.
APPENDIX I ACCOUNTANTS’ REPORT
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The Group assumes that the credit risk on a financial asset has increased significantly if it is more than
30 days past due.
The Group considers a financial asset to be in default when:
– the debtor is unlikely to pay its credit obligations to the Group in full, without recourse by the
Group to actions such as realising security (if any is held); or
– the financial asset is 90 days past due.
ECLs are remeasured at each reporting date to reflect changes in the financial instrument’s credit risk
since initial recognition. Any change in the ECL amount is recognised as an impairment gain or loss in profit
or loss. The Group recognises an impairment gain or loss for all financial instruments with a corresponding
adjustment to their carrying amount through a loss allowance account.
Credit-impaired financial assets
At each reporting date, the Group assesses whether a financial asset is credit-impaired. A financial asset
is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows
of the financial asset have occurred.
Evidence that a financial asset is credit-impaired includes the following observable events:
– significant financial difficulties of the debtor;
– a breach of contract, such as a default or past due event;
– the restructuring of a loan or advance by the Group on terms that the Group would not consider
otherwise;
– it is probable that the debtor will enter bankruptcy or other financial reorganisation; or
– the disappearance of an active market for a security because of financial difficulties of the issuer.
Write-off policy
The gross carrying amount of a financial asset or lease receivable is written off to the extent that there
is no realistic prospect of recovery. This is generally the case when the Group otherwise determines that the
debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts
subject to the write-off.
Subsequent recoveries of an asset that was previously written off are recognised as a reversal of
impairment in profit or loss in the period in which the recovery occurs.
(ii) Impairment of other non-current assets
At each reporting date, the Group reviews the carrying amounts of its non-financial assets (other than
inventories and deferred tax assets) to determine whether there is any indication of impairment. If any such indication
exists, then the asset’s recoverable amount is estimated.
For impairment testing, assets are grouped together into the smallest group of assets that generates cash
inflows from continuing use that are largely independent of the cash inflows of other assets or cash-generating units
(“CGU”s).
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs of
disposal. V alue in use is based on the estimated future cash flows, discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the asset
or CGU.
An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount.
APPENDIX I ACCOUNTANTS’ REPORT
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Impairment losses are recognised in profit or loss. They are reduced the carrying amounts of the assets in the
CGU on a pro rata basis.
An impairment loss is reversed only to the extent that the resulting carrying amount does not exceed the
carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been
recognised.
(j) Inventories
Inventories are measured at the lower of cost and net realisable value.
Cost is calculated using the weighted average cost formula and comprises all costs of purchase, costs of
conversion and other costs incurred in bringing the inventories to their present location and condition.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs
of completion and the estimated costs necessary to make the sale.
(k) Contract liabilities
A contract liability is recognised when the customer pays non-refundable consideration before the Group
recognises the related revenue (see note 2(t)). A contract liability is also recognised if the Group has an unconditional
right to receive non-refundable consideration before the Group recognises the related revenue. In such latter cases,
a corresponding receivable would also be recognised (see note 2(l)).
When the contract includes a significant financing component, the contract balance includes interest accrued
under the effective interest method (see note 2(t)).
(l) Trade and other receivables
A receivable is recognised when the Group has an unconditional right to receive consideration and only the
passage of time is required before payment of that consideration is due.
Trade receivables that do not contain a significant financing component are initially measured at their
transaction price. Trade receivables that contain a significant financing component and other receivables are initially
measured at fair value plus transaction costs. All receivables are subsequently stated at amortised cost (see note
2(i)(i)).
(m) Software-as-a-service (SaaS) arrangement costs
A SaaS arrangement is a service arrangement where the Group has a right to access to the supplier’s application
software running on the supplier’s cloud infrastructure during the term of the arrangement, but not control over the
underlying software asset.
Costs to implement a SaaS arrangement, including those incurred in configuring or customising the access to
the supplier’s application software, are evaluated to determine if they give rise to a separate asset that the Group
controls. Any resulting asset is recognised and accounted for in accordance with the policy for intangible assets as
set out in note 2(g). Implementation costs that do not give rise to an asset are recognised in profit or loss as incurred,
which may be over the period the configuration or customisation services are received to the extent that such services
are distinct from the SaaS, or over the term of the SaaS arrangement to the extent the configuration or customisation
services are not distinct from the SaaS.
Payment made in advance of receiving the related services is recognised as prepayment.
(n) Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and on hand, demand deposits with banks and other financial
institutions and other short-term, highly liquid investments that are readily convertible into known amounts of cash
and which are subject to an insignificant risk of changes in value, having been within three months of maturity at
acquisition. Cash and cash equivalents are assessed for ECL (see note 2(i)(i)).
APPENDIX I ACCOUNTANTS’ REPORT
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(o) Trade and other payables
Trade and other payables are initially recognised at fair value. Subsequent to initial recognition, trade and other
payables are stated at amortised cost unless the effect of discounting would be immaterial, in which case they are
stated at invoice amounts.
(p) Interest-bearing borrowings
Interest-bearing borrowings are measured initially at fair value less transaction costs. Subsequently, these
borrowings are stated at amortised cost using the effective interest method. Interest expense is recognised in
accordance with note 2(u).
(q) Employee benefits
(i) Short term employee benefits and contributions to defined contribution retirement plans
Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the
amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a result
of past service provided by the employee and the obligation can be estimated reliably.
Pursuant to the relevant laws and regulations of the PRC, the Group participates in a defined contribution basic
pension insurance in the social insurance system established and managed by government organisations. The Group
makes contributions to basic pension insurance plans based on the applicable benchmarks and rates stipulated by the
government. The local government authorities are responsible for the pension obligations payable to the retired
employees covered under the defined contribution basic pension insurance. There are no forfeited contributions for
the defined contribution basic pension insurance in the PRC social insurance system as the contributions are fully
vested to the employees upon payment to the scheme.
Obligations for contributions to defined contribution retirement plans are recognised as part of the cost of
assets or expensed as the related service is provided.
(ii) Share-based payments
The grant-date fair value of equity-settled share-based payments granted to employees is measured using the
binomial lattice model, taking into account any transfer restriction imposed on the vested equity instruments, and
based on the most likely outcome of the performance condition where there are mutually exclusive vesting
alternatives.
The amount is generally recognised as an expense, with a corresponding increase in equity, over the vesting
period of the awards determined based on the most likely vesting alternative where there are mutually exclusive
vesting alternatives. The amount recognised as an expense is adjusted to reflect the number of awards for which the
related vesting conditions are expected to be met, such that the amount ultimately recognised is based on the number
of awards that meet the related vesting conditions at the vesting date. The equity amount is recognised in the
share-based payments reserve until the awards are vested (when it is transferred to capital reserve/share premium).
For a share-based payment transaction in which the terms of the arrangement provide the Group with the
choice of whether to settle in cash or in equity instruments, the Group determines whether it has a present obligation
to settle in cash and account for the share-based payment transaction accordingly. The Group has a present obligation
to settle in cash if the choice of settlement in equity instruments has no commercial substance, or the entity has a
past practice or a stated policy of settling in cash, or generally settles in cash whenever the counterparty asks for cash
settlement. The exercise price received from the grantees, which is refundable when the awards are forfeited, is
recognised as a deposit liability until the share-based payments vests.
(iii) Termination benefits
Termination benefits are expensed at the earlier of when the Group can no longer withdraw the offer of those
benefits and when the Group recognises costs for a restructuring.
APPENDIX I ACCOUNTANTS’ REPORT
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(r) Income tax
Income tax expense comprises current tax and deferred tax. It is recognised in profit or loss except to the extent
that it relates to a business combination.
Current tax comprises the estimated tax payable or receivable on the taxable income or loss for the year and
any adjustments to the tax payable or receivable in respect of previous years. The amount of current tax payable or
receivable is the best estimate of the tax amount expected to be paid or received that reflects any uncertainty related
to income taxes. It is measured using tax rates enacted or substantively enacted at the reporting date. Current tax also
includes any tax arising from dividends.
Current tax assets and liabilities are offset only if certain criteria are met.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised
for:
– temporary differences on the initial recognition of assets or liabilities in a transaction that is not a
business combination and that affects neither accounting nor taxable profit or loss and does not give rise
to equal taxable and deductible temporary differences;
– temporary differences related to investment in subsidiaries, associates and joint venture to the extent
that the Group is able to control the timing of the reversal of the temporary differences and it is probable
that they will not reverse in the foreseeable future; and
– those related to the income taxes arising from tax laws enacted or substantively enacted to implement
the Pillar Two model rules published by the Organisation for Economic Co-operation and Development.
The Group recognised deferred tax assets and deferred tax liabilities separately in relation to its lease
liabilities, provisions and right-of-use assets.
Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary
differences to the extent that it is probable that future taxable profits will be available against which they can be used.
Future taxable profits are determined based on the reversal of relevant taxable temporary differences. If the amount
of taxable temporary differences is insufficient to recognise a deferred tax asset in full, then future taxable profits,
adjusted for reversals of existing temporary differences, are considered, based on the business plans for individual
subsidiaries in the Group. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that
it is no longer probable that the related tax benefit will be realised; such reductions are reversed when the probability
of future taxable profits improves.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which
the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset only if certain criteria are met.
(s) Provisions and contingent liabilities
Generally provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects
current market assessment of the time value of money and the risks specific to the liability.
Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be
estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic
benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence
of one or more future events are also disclosed as contingent liabilities unless the probability of outflow of economic
benefits is remote.
Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another
party, a separate asset is recognised for any expected reimbursement that would be virtually certain. The amount
recognised for the reimbursement is limited to the carrying amount of the provision.
APPENDIX I ACCOUNTANTS’ REPORT
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(t) Revenue and other income
Income is classified by the Group as revenue when it arises from the sale of goods and the provision of
services.
Further details of the Group’s revenue and other income recognition are as follows:
(i) Revenue from contracts with customers
The Group is the principal for its revenue transactions and recognises revenue on a gross basis. In determining
whether the Group acts as a principal or as an agent, it considers whether it obtains control of the products before
they are transferred to the customers. Control refers to the Group’s ability to direct the use of and obtain substantially
all of the remaining benefits from the products or services.
Revenue is recognised when control over a product or service is transferred to the customer at the amount of
promised consideration to which the Group is expected to be entitled, excluding those amounts collected on behalf
of third parties such as value added tax or other sales taxes.
Where the contract contains a financing component which provides a significant financing benefit to the
customer for more than 12 months, revenue is measured at the present value of the amount receivable, discounted
using the discount rate that would be reflected in a separate financing transaction with the customer, and interest
income is accrued separately under the effective interest method. Where the contract contains a financing component
which provides a significant financing benefit to the Group, revenue recognised under that contract includes the
interest expense accreted on the contract liability under the effective interest method. The Group takes advantage of
the practical expedient in paragraph 63 of IFRS 15 and does not adjust the consideration for any effects of a
significant financing component if the period of financing is 12 months or less.
(a) Revenue from self-operated restaurant operations
The self-operated restaurant operations included dine-in service and delivery business. Revenue is
recognised at a point in time when the related services have been rendered to customers.
The Group operates customer loyalty scheme for customers which enable customers to earn loyalty
points on their consumptions in the restaurants. Points are redeemable against any future consumptions in the
restaurants. The Group allocates a portion of the consideration to loyalty points based on the relative
stand-alone selling prices. The amount allocated to the loyalty points is deferred and recognised as revenue
when loyalty points are redeemed or expire.
(b) Revenue from franchise management
The revenue of franchise management mainly generated from royalty and franchising income and
provision of services as well as sales of food ingredients and restaurant supplies.
The Group enters into a series of agreements with each franchisee, which mainly include a license
agreement and a sales agreement (collectively “Franchise Agreements”), whereby the franchisees are licensed
to operate the franchised restaurants.
The franchisees employ and manage their own staffs to operate the restaurants and serve their customers
(i.e. end consumers), and undertake the costs associated with the operations. The franchisees sell the dishes
based on the menu and recipe provided by the Group.
The franchisees are responsible for the placement, physical custody and condition of the equipment and
goods after the deliveries are accepted in restaurants. In general, the Group does not have any obligation or
historical practices to accept any return of unsold products, except for rare cases such as a latent defect subject
to product recall.
At inception of the Franchise Agreements, franchisees are required to place a deposit to the Group
throughout the franchise period. The deposits are refundable upon the termination of the Franchise
Agreements, provided that the franchisees settled all outstanding balances with the Group.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 454 ---
Royalty and franchising income
Under the Franchise Agreements, franchisees pay a non-refundable upfront initial fee including the
pre-opening training services fee upon entering into Franchise Agreements and monthly royalty fee. The
non-refundable upfront initial fee is charged for pre-opening support services provided to the franchisees,
including market and location analysis, certain advisory services like license application and pre-opening
marketing, etc. As these services are highly interrelated with the franchise right, they are not individually
distinct from the ongoing franchising arrangement with the franchisees. As a result, initial franchise fees,
which are considered as consideration for the Group to provide right to access the Group’s intellectual
property, are recognised on a straight-line basis over the expected franchise period, typically of 5 years.
Unrecognised non-refundable upfront initial fee is recognised as contract liabilities in the consolidated
statements of financial position.
Franchisees are also required to pay a monthly royalty fee, which is determined based on a fixed
percentage of the gross merchandise value generated by the franchised restaurant. Fixed amount royalty fees
are recognised monthly. For fixed percentage royalty fees, the Group applies “sales-based royalty” under IFRS
15 “Revenue from Contracts with Customers” to recognise the royalty fees when the sales to end customers
occurred or the performance obligation to which some or all of the sales-based royalty has been allocated has
been satisfied (or partially satisfied), whichever is the later.
Provision of services
The Group provides other services including system maintenance and support services to franchisees.
Revenue are recognised when these services are performed in the accounting period in which the services are
rendered.
Sales of food ingredients and restaurant supplies
Revenue from sales of food ingredients and restaurant supplies to franchisees is recognised at the point
in time when the franchisees accept the products and the control over those products is transferred to the
franchisees.
(ii) Dividends
Dividend income is recognised in profit or loss on the date on which the Group’s right to receive payment is
established.
(iii) Interest income
Interest income is recognised using the effective interest method. The “effective interest rate” is the rate that
exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying
amount of the financial asset. In calculating interest income, the effective interest rate is applied to the gross carrying
amount of the asset (when the asset is not credit-impaired). However, for financial assets that have become
credit-impaired subsequent to initial recognition, interest income is calculated by applying the effective interest rate
to the amortised cost of the financial asset. If the asset is no longer credit-impaired, then the calculation of interest
income reverts to the gross basis.
(iv) Government grants
Government grants are recognised in the statements of financial position initially when there is reasonable
assurance that they will be received and that the Group will comply with the conditions attaching to them.
Grants that compensate the Group for expenses incurred are recognised as income in profit or loss on a
systematic basis in the same periods in which the expenses are incurred.
(u) Borrowing costs
Borrowing costs that are directly attributable to the acquisition, construction or production of an asset which
necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the
cost of that asset. Other borrowing costs are expensed in the period in which they are incurred.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 455 ---
(v) Related parties
(a) A person, or a close member of that person’s family, is related to the Group if that person:
(i) has control or joint control over the Group;
(ii) has significant influence over the Group; or
(iii) is a member of the key management personnel of the Group or the Group’s parent.
(b) An entity is related to the Group if any of the following conditions applies:
(i) The entity and the Group are members of the same group (which means that each parent,
subsidiary and fellow subsidiary is related to the others).
(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of
a member of a group of which the other entity is a member).
(iii) Both entities are joint ventures of the same third party.
(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity.
(v) The entity is a post-employment benefit plan for the benefit of employees of either the Group or
an entity related to the Group.
(vi) The entity is controlled or jointly controlled by a person identified in (a).
(vii) A person identified in (a)(i) has significant influence over the entity or is a member of the key
management personnel of the entity (or of a parent of the entity).
(viii) The entity, or any member of a group of which it is a part, provides key management personnel
services to the Group or to the Group’s parent.
Close members of the family of a person are those family members who may be expected to influence, or be
influenced by, that person in their dealings with the entity.
(w) Redemption liabilities
A contract that contains an obligation for the Company to purchase its own equity instruments for cash or
another financial asset gives rise to a financial liability even if the Company’s obligation to purchase is conditional
on the counterparty exercising its right to redeem. The redemption liability is measured at the present value of the
redemption amount and the changes in the carrying amount arising from the remeasurement of the present value of
the redemption amount, is recognised in profit or loss.
(x) Segment reporting
Operating segments, and the amounts of each segment item reported in the financial statements, are identified
from the financial information provided regularly to the Group’s most senior executive management for the purposes
of allocating resources to, and assessing the performance of, the Group’s various lines of business and geographical
locations.
Individually material operating segments are not aggregated for financial reporting purposes unless the
segments have similar economic characteristics and are similar in respect of the nature of products and services, the
nature of production processes, the type or class of customers, the methods used to distribute the products or provide
the services, and the nature of the regulatory environment. Operating segments which are not individually material
may be aggregated if they share a majority of these criteria.
APPENDIX I ACCOUNTANTS’ REPORT
– I-25 –


--- page 456 ---
3 ACCOUNTING JUDGEMENTS AND ESTIMATES
Notes 2(q)(ii), 26 and 28 contain information about the assumptions and their risk factors relating to fair value
of share option granted and financial instruments. Other significant sources of estimation uncertainty are as follows:
(a) Impairment of property, plant and equipment and right-of-use assets
Internal and external sources of information are reviewed at the end of each reporting period to assess whether
there is any indication that property, plant and equipment and right-of-use assets may be impaired. If any such
indication exists, the recoverable amount of the property, plant and equipment and right-of-use assets is estimated.
Changes in facts and circumstances may result in revisions to the conclusion of whether an indication of impairment
exists and revised estimates of recoverable amounts, which would affect profit or loss in future periods.
(b) Depreciation of property, plant and equipment and right-of-use assets
Property, plant and equipment, and right-of-use assets, are depreciated on a straight-line basis over the
estimated useful lives of the assets. The Group reviews the estimated useful lives of the assets regularly in order to
determine the amount of depreciation expense to be recorded during any reporting period. The useful lives are based
on the Group’s historical experience with similar assets. The depreciation expense for future periods is adjusted if
there are material changes from previous estimates.
(c) Provision for restoration costs
As explained in note 23, the Group makes provision for restoration costs based on the best estimate of the
expected costs to be incurred upon expiry of the respective rental agreements, which are subject to uncertainty and
might differ from the actual costs incurred. Any increase or decrease in the provision would affect profit or loss in
future periods.
(d) Determining the lease term
As explained in policy note 2(h), the lease liability is initially recognised at the present value of the lease
payments payable over the lease term. In determining the lease term at the commencement date for leases that include
renewal options exercisable by the Group, the Group evaluates the likelihood of exercising the renewal options taking
into account all relevant facts and circumstances that create an economic incentive for the Group to exercise the
option, including favourable terms, leasehold improvements undertaken and the importance of that underlying asset
to the Group’s operation. The lease term is reassessed when there is a significant event or significant change in
circumstance that is within the Group’s control. Any increase or decrease in the lease term would affect the amount
of lease liabilities and right-of-use assets recognised in future years.
4 REVENUE AND SEGMENT REPORTING
(a) Revenue
The principal activities of the Group are self-operated restaurant operations and franchise management.
(i) Disaggregation of revenue
Disaggregation of revenue from contracts with customers by major service lines is as follows:
Y ears ended 31 December Six months ended 30 June
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Revenue from contracts with
customers within the scope of
IFRS 15:
Self-operated restaurant operations
– Dine-in service /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118270,998 547,353 820,301 370,612 497,176
– Delivery business /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111865,738 124,587 180,709 82,128 128,898
APPENDIX I ACCOUNTANTS’ REPORT
– I-26 –


--- page 457 ---
Y ears ended 31 December Six months ended 30 June
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Franchise management
– Royalty and franchising income and
provision of service /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,547 22,729 27,042 12,736 13,875
– Sales of food ingredients and
restaurant supplies /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111867,964 104,965 125,488 59,736 62,787
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118849 880 894 445 449
418,096 800,514 1,154,434 525,657 703,185
----- ----- ------ ----- -----
Disaggregated by timing of revenue
recognition
– Point in time /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118405,549 777,785 1,127,392 512,921 689,310
– Over time /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,547 22,729 27,042 12,736 13,875
418,096 800,514 1,154,434 525,657 703,185
Others includes sales of retail products on e-commerce platforms.
No revenue from individual customer contributing over 10% of total revenue of the Group for the years ended
31 December 2022, 2023 and 2024 and the six months ended 30 June 2024 (unaudited) and 2025.
(ii) Revenue expected to be recognised in the future arising from contracts in existence at the reporting date
Contracts within the scope of IFRS 15
As at 31 December 2022, 2023 and 2024 and 30 June 2025, the aggregated amount of the transaction
price allocated to the remaining performance obligations under the Group’s existing contracts is
RMB1,875,000, RMB3,564,000, RMB4,564,000 and RMB4,553,000. This amount represents revenue
expected to be recognised in the future from Franchise Agreements. The Group will recognise the expected
revenue in future over the remaining contract period, which is expected to occur over the next 12-60 months.
(b) Segment reporting
The directors of the Company have been identified as the Group’s most senior executive management. The
Group manages its businesses as a whole by the most senior executive management for the purposes of resource
allocation and performance assessment. Therefore, the Group has one operating segment. The Group’s most senior
executive management reviews the Group’s consolidated results of operations in assessing performance of and
making decisions about allocations to this segment. Accordingly, no reportable segment information is presented.
Analysis of the Group’s revenue from external customers as well as analysis of the Group’s carrying amount
of non-current assets by geographical market has not been presented as over 90% of the Group’s revenue and
non-current assets are generated and located in the Chinese Mainland.
5 OTHER INCOME
Y ears ended 31 December Six months ended 30 June
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Interest income on:
– bank deposits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118470 1,070 573 182 482
– rental deposits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118986 1,308 1,889 865 1,155
– lease payment receivables /H1118/H1118/H1118/H1118/H1118/H1118572 411 239 140 64
2,028 2,789 2,701 1,187 1,701
Income from value-added tax super
deduction and exemption (note (i)) /H1118 2,990 8,95 4–––
Government grants (note (ii)) /H1118/H1118/H1118/H1118/H11182,175 1,863 5,760 3,574 2,400
Investment income from financial
assets measured at FVPL /H1118/H1118/H1118/H1118/H1118/H1118311 537 506 118 399
7,504 14,143 8,967 4,879 4,500
APPENDIX I ACCOUNTANTS’ REPORT
– I-27 –


--- page 458 ---
Note:
(i) Income from value-added tax super deduction and exemption represented the super deduction and
exemption on value-added tax granted by the government authorities in the PRC. Such policy was
expired on 31 December 2023.
(ii) Government grants mainly represented unconditional cash awards granted by the government authorities
in the PRC.
6 (LOSS)/PROFIT BEFORE TAXATION
(Loss)/profit before taxation is arrived at after charging/(crediting):
(a) Finance costs
Y ears ended 31 December Six months ended 30 June
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Interest on bank loans (note 19(c)) /H1118/H1118 208 45 381 – 7
Interest on lease liabilities (note
19(c)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111816,600 19,074 27,083 12,555 14,329
Unwind of discount on provisions
(note 23) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118154 214 307 142 176
16,962 19,333 27,771 12,697 14,512
(b) Staff costs (including directors’ emoluments)
Y ears ended 31 December Six months ended 30 June
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Salaries, wages and other benefits /H1118/H1118/H1118103,667 158,135 145,456 69,388 79,416
Contributions to defined contribution
retirement plans /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,260 6,829 10,238 4,812 6,256
Equity-settled share-based payment
expenses (note 26) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,337 1,419 3,139 1,551 2,624
109,264 166,383 158,833 75,751 88,296----- ----- ----- ----- -----
Outsourced staff costs /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 8,811 106,229 46,020 70,501----- ----- ----- ----- -----
109,264 175,194 265,062 121,771 158,797
(c) Other net (losses)/gains
Y ears ended 31 December Six months ended 30 June
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Losses on restaurant closures /H1118/H1118/H1118/H1118/H1118(855) (1,461) (515) (167) (1,703)
Gains on early termination of leases /H1118 130 1,482 4,142 39 453
Donation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (88) (600) – (350)
Net fair value changes of financial
assets measured at FVPL /H1118/H1118/H1118/H1118/H1118/H11189 63 261 130 18
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118539 290 (172) 51 (285)
(177) 286 3,116 53 (1,867)
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 459 ---
(d) Other expenses and listing expense
Y ears ended 31 December Six months ended 30 June
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Service fee paid to third-party online
food delivery platforms /H1118/H1118/H1118/H1118/H1118/H1118/H111814,930 28,800 42,275 19,176 30,516
Materials for restaurant operation /H1118/H1118/H1118 5,895 10,621 14,926 8,067 5,856
Transportation expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,087 5,120 7,733 3,345 5,285
Maintenance expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,895 2,917 4,750 1,759 2,460
Software service fee /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,974 2,452 4,086 1,299 1,606
Bank and other charges /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118917 1,667 3,607 1,651 2,816
Professional service fees /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,006 2,949 2,481 1,222 1,340
Business tax and surcharges /H1118/H1118/H1118/H1118/H1118/H1118519 1,328 2,146 683 781
Office expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,429 1,477 2,113 1,159 1,178
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,943 2,459 4,604 2,041 1,860
34,595 59,790 88,721 40,402 53,698
Listing expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 1,112 – 11,164
(e) Depreciation and amortisation
Y ears ended 31 December Six months ended 30 June
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Amortisation of intangible assets
(note 12) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118853 1,167 1,872 780 1,219
Depreciation (note 11)
– property, plant and equipment /H1118/H1118/H1118/H111820,975 23,046 35,777 16,552 24,809
– right-of-use assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111894,620 125,429 188,845 86,309 109,726
115,595 148,475 224,622 102,861 134,535
7 INCOME TAX IN THE CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
(a) Taxation in the consolidated statements of profit or loss and other comprehensive income represents:
Y ears ended 31 December Six months ended 30 June
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Current tax
Provision for the year/period
– PRC income tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189 9,826 17,936 7,720 10,039
– Hong Kong Profits Tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 163 25 1,126
9 9,826 18,099 7,745 11,165----- ---- ---- ---- ----
Deferred tax
Origination and reversal of temporary
differences (note 25(b)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118(12,181) 1,398 (3,918) (2,660) (703)
(12,172) 11,224 14,181 5,085 10,462
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 460 ---
(b) Reconciliation between tax expense and accounting profit at applicable tax rates:
Y ears ended 31 December Six months ended 30 June
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
(Loss)/profit before taxation /H1118/H1118/H1118/H1118/H1118/H1118(48,145) 57,138 74,881 26,454 52,296
Notional tax on profit before taxation /H1118 (12,037) 14,285 18,720 6,612 12,473
Effect of preferential income tax rates
of certain subsidiaries (i) /H1118/H1118/H1118/H1118/H1118/H1118675 (1,258) (2,893) (577) (1,435)
Effect of non-deductible expenses /H1118/H1118/H1118 44 46 253 46 65
Tax concessions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(854) (1,849) (1,899) (996) (641)
Actual tax (credit)/expense /H1118/H1118/H1118/H1118/H1118/H1118/H1118(12,172) 11,224 14,181 5,085 10,462
Notes:
(i) Taxable income for the Group’s subsidiaries in the Chinese Mainland are subject to PRC income tax rate
of 25% for the years ended 31 December 2022, 2023 and 2024 and the six months ended 30 June 2024
and 2025, unless otherwise specified below.
Certain subsidiaries met the criteria required for preferential income tax rate granted to small and low
profit-making enterprise in the Chinese Mainland, and were entitled to a preferential income tax rate of
5% on taxable income for the years ended 31 December 2022, 2023 and 2024 and the six months ended
30 June 2024 and 2025.
Certain subsidiaries fell within the state encouraged industries in the specified western regions and were
entitled to a preferential income tax rate of 15% for the years ended 31 December 2022, 2023 and 2024
and the six months ended 30 June 2024 and 2025.
(ii) The Group’s Hong Kong subsidiaries were established since 2023 and did not have any other assessable
profits for the year ended 31 December 2023. The provision for Hong Kong Profits Tax for the year
ended 31 December 2024 and the six months ended 30 June 2024 and 2025 is calculated at 16.5% of
the estimated assessable profits for the period, except for one subsidiary of the Group which is a
qualifying corporation under the two-tiered Profits Tax rate regime for the year ended 31 December
2024 and the six months ended 30 June 2024 and 2025. For this subsidiary, the first HK$2 million of
assessable profits are taxed at 8.25% and the remaining assessable profits are taxed at 16.5%.
The provision for Hong Kong Profits Tax for the year ended 31 December 2024 and the six months
ended 30 June 2024 and 2025 takes into account a reduction granted by the Hong Kong SAR
Government of 100% of the tax payable for the year of assessment 2023/24 and 2024/25 subject to a
maximum reduction of HK$3,000 and HK$1,500 for each business.
(iii) The Group’s Singapore subsidiary was established in 2025 and did not have any assessable profits for
the six months ended 30 June 2025.
APPENDIX I ACCOUNTANTS’ REPORT
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8 DIRECTORS’ EMOLUMENTS
Directors’ emoluments as recorded in the Historical Financial Information are set out below:
Y ear ended 31 December 2022
Salaries,
allowances
and other
benefits
Discretionary
bonuses
Retirement
scheme
contributions Sub-Total
Share-based
payments
(note (a)) Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Executive directors
Mr. Song Qi (“Mr. Song”) /H1118/H1118/H1118774 – 8 782 – 782
Mr. Su Xuxiang (“Mr. Su”) /H1118/H1118 602 – 8 610 – 610
Non-executive director
Mr. Wang Xiaolong /H1118/H1118/H1118/H1118/H1118/H1118/H1118––––––
Supervisor
Ms. Zhang Qi /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118137 – 8 145 – 145
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,513 – 24 1,537 – 1,537
Y ear ended 31 December 2023
Salaries,
allowances
and other
benefits
Discretionary
bonuses
Retirement
scheme
contributions Sub-Total
Share-based
payments
(note (a)) Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Executive directors
Mr. Song /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118960 80 8 1,048 – 1,048
Mr. Su /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118730 60 8 798 – 798
Mr. Xu Zhi (appointed on
7 September 2023) /H1118/H1118/H1118/H1118/H1118/H1118238 20 3 261 101 362
Mr. Pan Rujun (appointed on
7 September 2023) /H1118/H1118/H1118/H1118/H1118/H111882 20 3 105 – 105
Non-executive director
Mr. Wang Xiaolong /H1118/H1118/H1118/H1118/H1118/H1118/H1118––––––
Supervisors
Ms. Zhang Qi /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118166 13 8 187 21 208
Ms. Qin Y an (appointed on
7 September 2023) /H1118/H1118/H1118/H1118/H1118/H111892 23 3 118 – 118
Mr. Peng Y ue (appointed on
7 September 2023) /H1118/H1118/H1118/H1118/H1118/H1118190 47 3 240 – 240
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,458 263 36 2,757 122 2,879
Y ear ended 31 December 2024
Salaries,
allowances
and other
benefits
Discretionary
bonuses
Retirement
scheme
contributions Sub-Total
Share-based
payments
(note (a)) Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Executive directors
Mr. Song /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,018 84 10 1,112 – 1,112
Mr. Su /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118804 67 10 881 – 881
Mr. Xu Zhi /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118804 67 10 881 218 1,099
Mr. Pan Rujun /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118254 21 10 285 – 285
Non-executive director
Mr. Wang Xiaolong /H1118/H1118/H1118/H1118/H1118/H1118/H1118––––––
Supervisors
Ms. Zhang Qi /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118185 15 10 210 24 234
Ms. Qin Y an /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118289 24 10 323 24 347
Mr. Peng Y ue /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118643 53 10 706 – 706
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,997 331 70 4,398 266 4,664
APPENDIX I ACCOUNTANTS’ REPORT
– I-31 –


--- page 462 ---
Six months ended 30 June 2024 (unaudited)
Salaries,
allowances
and other
benefits
Discretionary
bonuses
Retirement
scheme
contributions Sub-Total
Share-based
payments
(note (a)) Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Executive directors
Mr. Song /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118497 42 5 544 – 544
Mr. Su /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118381 33 5 419 – 419
Mr. Xu Zhi /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118381 33 5 419 114 533
Mr. Pan Rujun /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118128 11 5 144 – 144
Non-executive director
Mr. Wang Xiaolong /H1118/H1118/H1118/H1118/H1118/H1118/H1118––––––
Supervisors
Ms. Zhang Qi /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111893 8 5 106 12 118
Ms. Qin Y an /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118144 12 5 161 8 169
Mr. Peng Y ue /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118294 27 5 326 – 326
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,918 166 35 2,119 134 2,253
Six months ended 30 June 2025
Directors’
fees
Salaries,
allowances
and other
benefits
Discretionary
bonuses
Retirement
scheme
contributions Sub-Total
Share-
based
payments
(note (a)) Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Executive directors
Mr. Song /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 561 48 5 614 16 630
Mr. Su /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 429 37 5 471 – 471
Mr. Xu Zhi (resigned on
1 April 2025) /H1118/H1118/H1118/H1118/H1118/H1118/H1118– 199 18 3 220 143 363
Mr. Pan Rujun (resigned
on 1 April 2025) /H1118/H1118/H1118/H1118–6 1 5 36 9 –6 9
Ms. Luo Y anling
(appointed on 1 April
2025) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 219 18 3 240 – 240
Non-executive director
Mr. Wang Xiaolong /H1118/H1118/H1118/H1118/H1118–– – ––––
Independent non-
executive directors
Mr. Xu Lei (appointed on
1 April 2025) /H1118/H1118/H1118/H1118/H1118/H1118/H111869 – – – 69 – 69
Mr. Chen Guobin
(appointed on 1 April
2025) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111869 – – – 69 – 69
Mr. Zhong Jiesheng
(appointed on 1 April
2025) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111869 – – – 69 – 69
Supervisors
Ms. Zhang Qi /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 102 9 5 116 48 164
Ms. Qin Y an /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 153 13 5 171 16 187
Mr. Peng Y ue /H1118/H1118/H1118/H1118/H1118/H1118/H1118– 330 28 5 363 – 363
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118207 2,054 176 34 2,471 223 2,694
APPENDIX I ACCOUNTANTS’ REPORT
– I-32 –


--- page 463 ---
Notes:
(a) These represent the estimated value of share options granted to the directors and supervisors under the
Company’s share-based incentive scheme. The value of these share options is measured according to the
Group’s accounting policies for share-based payment transactions as set out in note 2(q)(ii) and, in
accordance with that policy, includes adjustments to reverse amounts accrued in previous years where
grants of equity instruments are forfeited prior to vesting.
The details of these benefits in kind, including the principal terms and number of option granted, are
disclosed in note 26.
(b) For the years ended 31 December 2022, 2023 and 2024 and the six months ended 30 June 2024 and
2025, there were no amounts paid or payable by the Group to the directors, supervisors or any of the
highest paid individuals set out in note 9 below as an inducement to join or upon joining the Group or
as a compensation for loss of office. There was no arrangement under which a director or a supervisor
waived or agreed to waive any remuneration for the years ended 31 December 2022, 2023 and 2024 and
the six months ended 30 June 2024 and 2025.
9 INDIVIDUALS WITH HIGHEST EMOLUMENTS
For the years ended 31 December 2022, 2023 and 2024 and the six months ended 30 June 2024, of the six
individuals (joint-fifth highest) with the highest emoluments, 2, 3, 3, and 3 (unaudited) are directors whose
emoluments are disclosed in note 8. For the six months ended 30 June 2025, of the five individuals with the highest
emoluments, 1 is a director whose emoluments is disclosed in note 8.
The aggregate of the emoluments in respect of the other 4, 3, 3, 3 (unaudited) and 4 individuals are as follows:
Y ears ended 31 December Six months ended 30 June
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Salaries and other emoluments /H1118/H1118/H1118/H11181,961 1,807 2,048 1,004 1,394
Discretionary bonuses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 145 170 85 63
Share-based payments /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118926 474 659 330 1,057
Retirement scheme contributions /H1118/H1118/H1118 29 25 29 14 21
2,916 2,451 2,906 1,433 2,535
The emoluments of the 4, 3, 3, 3 (unaudited) and 4 individuals with the highest emoluments are within the
following bands:
Y ears ended 31 December Six months ended 30 June
2022 2023 2024 2024 2025
Number of
individuals
Number of
individuals
Number of
individuals
Number of
individuals
Number of
individuals
(unaudited)
Nil – HKD1,000,000 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111833134
HKD1,000,001 – HKD1,500,000 /H1118/H1118/H1118 1–2––
APPENDIX I ACCOUNTANTS’ REPORT
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10 (LOSS)/EARNINGS PER SHARE
(a) Basic (loss)/earnings per share
The calculation of basic loss/earnings per share during the Track Record Period is based on the loss/profit
attributable to ordinary equity shareholders of the Company and the weighted average number of ordinary shares in
issue or deemed to be in issue for the respective year.
As set out in note 27(c), the Company was converted from a limited liability company into a joint stock limited
liability company on 7 September 2023. The Company’s paid-in capital of RMB12,266,000 was converted into
613,324,800 shares with the par value of RMB0.02 each accordingly. For the purpose of determining basic
loss/earnings per share, the weighted average number of ordinary shares were deemed to be in issue before the
Company’s conversion into a joint stock limited liability company as if the above conversion had occurred on 1
January 2022 at the exchange ratio established on 7 September 2023.
(i) (Loss)/profit attributable to ordinary equity shareholders of the Company
Y ears ended 31 December Six months ended 30 June
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
(Loss)/profit for the year/period
attributable to all equity
shareholders of the Company /H1118/H1118/H1118/H1118(35,973) 45,914 60,700 21,369 41,834
Allocation of loss/(profit) for the
year/period attributable to
Restricted Shares held for share-
based incentive scheme (note 26) /H1118 – – (1) – (4)
Allocation of loss/(profit) for the
year/period attributable to
redemption liabilities
(note 20(b)/27(d)(iv)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,429 (1,824) (2,411) (867) (1,693)
(Loss)/profit for the year/period
attributable to ordinary equity
shareholders of the Company /H1118/H1118/H1118/H1118(34,544) 44,090 58,288 20,502 40,137
(ii) Weighted average number of ordinary shares
Y ears ended 31 December Six months ended 30 June
2022 2023 2024 2024 2025
’000 ’000 ’000 ’000 ’000
(unaudited)
Ordinary shares (deemed to be) in
issue at 1 January /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118613,325 613,325 613,325 613,325 613,325
Effect of unvested shares held for
share-based incentive scheme
(note 26) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(15,582) (13,873) (12,333) (12,585) (11,215)
Effect of redemption liabilities
(note 20(b)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(24,363) (24,363) (24,363) (24,363) (24,363)
Weighted average number of ordinary
shares (deemed to be) at 31
December/30 June /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118573,380 575,089 576,629 576,377 577,747
APPENDIX I ACCOUNTANTS’ REPORT
– I-34 –


--- page 465 ---
(b) Diluted (loss)/earnings per share
Diluted loss/earnings per share is calculated by adjusting the weighted average number of ordinary shares
outstanding to assume conversion of all dilutive potential ordinary shares. For the years ended 31 December 2022,
2023 and 2024 and the six months ended 30 June 2024 and 2025, the Group’s potential ordinary shares are from
redemption liabilities (note 20(b)) and share-based incentive scheme (note 26).
(i) (Loss)/profit attributable to ordinary equity shareholders of the Company (diluted):
Y ears ended 31 December Six months ended 30 June
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
(Loss)/profit for the year/period
attributable to ordinary equity
shareholders of the Company /H1118/H1118/H1118/H1118(34,544) 44,090 58,288 20,502 40,137
Effect of allocation of loss for the
year/period attributable to
redemption liabilities (note 20(b)) /H1118 1,42 9––––
(Loss)/profit for the year/period
attributable to ordinary equity
shareholders of the Company
(diluted) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(35,973) 44,090 58,288 20,502 40,137
(ii) Weighted average number of ordinary shares (diluted):
Y ears ended 31 December Six months ended 30 June
2022 2023 2024 2024 2025
’000 ’000 ’000 ’000 ’000
(unaudited)
Weighted average number of ordinary
shares (deemed to be) at 31
December /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118573,380 575,089 576,629 576,377 577,747
Effect of unvested shares held for
share-based incentive scheme after
vested /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 4,684 8,461 5,781 4,308
Effect of redemption liabilities after
conversion to share capital /H1118/H1118/H1118/H1118/H11185,23 0––––
Weighted average number of ordinary
shares (deemed to be) (diluted) at
31 December/30 June /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118578,610 579,773 585,090 582,158 582,055
Ordinary shares with redemption option (note 20(b)) were not included in the calculation of diluted earnings
per share for the years ended 31 December 2023 and 2024 and the six months ended 30 June 2024 and 2025 because
their effect would have been anti-dilutive.
The effects of unvested ordinary shares held for under the share-based incentive scheme with employees have
not been included in the calculation of diluted loss per share for the year ended 31 December 2022 because their
effect would be anti-dilutive.
APPENDIX I ACCOUNTANTS’ REPORT
– I-35 –


--- page 466 ---
11 PROPERTY, PLANT AND EQUIPMENT AND RIGHT-OF-USE ASSETS
(a) Reconciliation of carrying amount
The Group
Leasehold
improvement
Kitchen
equipment
Electronic
equipment
Other
equipments
Construction
in progress Subtotal
Property –
Right-of-use
assets Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Cost:
At 1 January 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H111871,010 13,495 2,424 3,020 6,142 96,091 482,188 578,279
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 4,211 502 1,060 28,332 34,105 120,179 154,284
Transfer from construction
in progress /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111831,249 – – – (31,249) – – –
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(6,905) (3,192) (719) (1,757) – (12,573) (6,484) (19,057)
At 31 December 2022 and
1 January 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H111895,354 14,514 2,207 2,323 3,225 117,623 595,883 713,506
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 9,927 876 2,082 43,771 56,656 280,678 337,334
Transfer from construction
in progress /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111841,984 – – – (41,984) – – –
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(2,857) (490) (208) (7) – (3,562) (10,343) (13,905)
At 31 December 2023 and
1 January 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118134,481 23,951 2,875 4,398 5,012 170,717 866,218 1,036,935
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 12,937 1,454 6,432 80,527 101,350 380,744 482,094
Transfer from construction
in progress /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111880,769 – – – (80,769) – – –
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(6,950) (4,052) (374) (128) – (11,504) (84,325) (95,829)
At 31 December 2024 and
1 January 2025 /H1118/H1118/H1118/H1118/H1118/H1118/H1118208,300 32,836 3,955 10,702 4,770 260,563 1,162,637 1,423,200
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 6,407 435 1,688 44,207 52,737 140,596 193,333
Transfer from construction in
progress /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111845,222 – – – (45,222) – – –
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,905) (515) (60) (61) – (2,541) (11,050) (13,591)
At 30 June 2025 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118251,617 38,728 4,330 12,329 3,755 310,759 1,292,183 1,602,942---- - - - - --- - - - - ---- ---- ----- -----
Accumulated depreciation:
At 1 January 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H111822,552 3,976 959 1,195 – 28,682 122,814 151,496
Charge for the year /H1118/H1118/H1118/H1118/H1118/H1118/H111818,258 2,100 325 292 – 20,975 94,620 115,595
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(4,128) (1,579) (403) (1,164) – (7,274) (1,706) (8,980)
At 31 December 2022 and
1 January 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H111836,682 4,497 881 323 – 42,383 215,728 258,111
Charge for the year /H1118/H1118/H1118/H1118/H1118/H1118/H111819,704 2,555 338 449 – 23,046 125,429 148,475
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(356) (367) (162) (1) – (886) (2,063) (2,949)
At 31 December 2023 and
1 January 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H111856,030 6,685 1,057 771 – 64,543 339,094 403,637
Charge for the year /H1118/H1118/H1118/H1118/H1118/H1118/H111830,016 3,679 514 1,568 – 35,777 188,845 224,622
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(4,687) (1,458) (179) (17) – (6,341) (48,502) (54,843)
At 31 December 2024 and
1 January 2025 /H1118/H1118/H1118/H1118/H1118/H1118/H111881,359 8,906 1,392 2,322 – 93,979 479,437 573,416
Charge for the period /H1118/H1118/H1118/H1118/H1118/H111820,515 2,904 348 1,042 – 24,809 109,726 134,535
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(99) (321) (38) (11) – (469) (3,791) (4,260)
At 30 June 2025 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118101,775 11,489 1,702 3,353 – 118,319 585,372 703,691---- - - - - --- - - - - ---- ---- ----- -----
APPENDIX I ACCOUNTANTS’ REPORT
– I-36 –


--- page 467 ---
Leasehold
improvement
Kitchen
equipment
Electronic
equipment
Other
equipments
Construction
in progress Subtotal
Property –
Right-of-use
assets Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Impairment:
At 1 January 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H11186,658 964 102 28 – 7,752 – 7,752
Addition /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,654 1,419 125 242 – 9,440 – 9,440
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(2,366) (160) (26) (19) – (2,571) – (2,571)
At 31 December 2022 and
1 January 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H111811,946 2,223 201 251 – 14,621 – 14,621
Addition /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,706 2,564 204 464 – 8,938 – 8,938
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(2,351) (40) (8) (6) – (2,405) – (2,405)
At 31 December 2023 and
1 January 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H111815,301 4,747 397 709 – 21,154 – 21,154
Addition /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,126 309 31 123 – 1,589 – 1,589
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,788) (2,287) (129) – – (4,204) – (4,204)
At 31 December 2024 and
1 January 2025 /H1118/H1118/H1118/H1118/H1118/H1118/H111814,639 2,769 299 832 – 18,539 – 18,539
Addition /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,525 295 25 111 – 1,956 – 1,956
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,806) (24) (1) – – (1,831) – (1,831)
At 30 June 2025 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814,358 3,040 323 943 – 18,664 – 18,664
Net Book Value:
At 30 June 2025 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118135,484 24,199 2,305 8,033 3,755 173,776 706,811 880,587
At 31 December 2024 /H1118/H1118/H1118/H1118/H1118/H1118112,302 21,161 2,264 7,548 4,770 148,045 683,200 831,245
At 31 December 2023 /H1118/H1118/H1118/H1118/H1118/H111863,150 12,519 1,421 2,918 5,012 85,020 527,124 612,144
At 31 December 2022 /H1118/H1118/H1118/H1118/H1118/H111846,726 7,794 1,125 1,749 3,225 60,619 380,155 440,774
The Company
Leasehold
improvement
Kitchen
equipment
Electronic
equipment
Other
equipments
Construction
in progress Subtotal
Property –
Right-of-use
assets Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Cost:
At 1 January 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H111830,440 6,195 1,488 2,254 883 41,260 178,644 219,904
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 613 129 132 6,083 6,957 35,388 42,345
Transfer from construction
in progress /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,96 6––– (6,966) – – –
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(4,016) (2,241) (542) (1,308) – (8,107) – (8,107)
At 31 December 2022 and
1 January 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H111833,390 4,567 1,075 1,078 – 40,110 214,032 254,142
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 777 166 101 4,542 5,586 52,300 57,886
Transfer from construction
in progress /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184 , 1 1 4––– (4,114) – – –
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (233) (173) – – (406) – (406)
At 31 December 2023 and
1 January 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H111837,504 5,111 1,068 1,179 428 45,290 266,332 311,622---- - - - - - - - - - ---- ---- - - - - - - - -
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 822 185 205 4,179 5,391 32,497 37,888
Transfer from construction
in progress /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,22 6––– (4,226) – – –
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,215) (972) (73) (24) – (2,284) (43,726) (46,010)
At 31 December 2024 and
1 January 2025 /H1118/H1118/H1118/H1118/H1118/H1118/H111840,515 4,961 1,180 1,360 381 48,397 255,103 303,500
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 279 – – 2,727 3,006 12,427 15,433
Transfer from construction
in progress /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,46 8––– (2,468) – – –
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,346) (216) (38) (55) – (1,655) (129) (1,784)
At 30 June 2025 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111841,637 5,024 1,142 1,305 640 49,748 267,401 317,149---- - - - - - - - - - ---- ---- - - - - - - - -
APPENDIX I ACCOUNTANTS’ REPORT
– I-37 –


--- page 468 ---
Leasehold
improvement
Kitchen
equipment
Electronic
equipment
Other
equipments
Construction
in progress Subtotal
Property –
Right-of-use
assets Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Accumulated depreciation:
At 1 January 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H111812,108 2,485 724 992 – 16,309 61,812 78,121
Charge for the year /H1118/H1118/H1118/H1118/H1118/H1118/H11186,289 732 162 191 – 7,374 32,298 39,672
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(3,865) (1,414) (373) (971) – (6,623) – (6,623)
At 31 December 2022 and
1 January 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H111814,532 1,803 513 212 – 17,060 94,110 111,170
Charge for the year /H1118/H1118/H1118/H1118/H1118/H1118/H11185,228 679 164 184 – 6,255 38,970 45,225
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (191) (140) – – (331) – (331)
At 31 December 2023 and
1 January 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H111819,760 2,291 537 396 – 22,984 133,080 156,064---- - - - - - - - - - - - ---- - - - - - - - -
Charge for the year /H1118/H1118/H1118/H1118/H1118/H1118/H11185,497 654 170 234 – 6,555 46,585 53,140
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,215) (581) (57) (3) – (1,856) (22,927) (24,783)
At 31 December 2024 and
1 January 2025 /H1118/H1118/H1118/H1118/H1118/H1118/H111824,042 2,364 650 627 – 27,683 156,738 184,421
Charge for the period /H1118/H1118/H1118/H1118/H1118/H11182,908 360 85 123 – 3,476 19,913 23,389
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(90) (158) (30) (9) – (287) (129) (416)
At 30 June 2025 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111826,860 2,566 705 741 – 30,872 176,522 207,394---- - - - - - - - - - - - ---- - - - - - - - -
Leasehold
improvement
Kitchen
equipment
Electronic
equipment
Other
equipments
Construction
in progress Subtotal
Property –
Right-of-use
assets Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Impairment:
At 1 January 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H11181,946 222 29 19 – 2,216 – 2,216
Addition /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,751 172 22 4 – 1,949 – 1,949
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (49) (8) (9) – (66) – (66)
At 31 December 2022 and
1 January 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H11183,697 345 43 14 – 4,099 – 4,099
Addition /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,288 337 33 36 – 1,694 – 1,694
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (6) – – – (6) – (6)
At 31 December 2023 and
1 January 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H11184,985 676 76 50 – 5,787 – 5,787
Addition /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 2 7––– 2 7– 2 7
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (298) (10) – – (308) – (308)
At 31 December 2024 and
1 January 2025 /H1118/H1118/H1118/H1118/H1118/H1118/H11184,985 405 66 50 – 5,506 – 5,506
Addition /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––––––––
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,256) (24) (2) – – (1,282) – (1,282)
At 30 June 2025 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,729 381 64 50 – 4,224 – 4,224
Net Book Value:
At 30 June 2025 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,048 2,077 373 514 640 14,652 90,879 105,531
At 31 December 2024 /H1118/H1118/H1118/H1118/H1118/H111811,488 2,192 464 683 381 15,208 98,365 113,573
At 31 December 2023 /H1118/H1118/H1118/H1118/H1118/H111812,759 2,144 455 733 428 16,519 133,252 149,771
At 31 December 2022 /H1118/H1118/H1118/H1118/H1118/H111815,161 2,419 519 852 – 18,951 119,922 138,873
APPENDIX I ACCOUNTANTS’ REPORT
– I-38 –


--- page 469 ---
Impairment losses
As at 31 December 2022, 2023 and 2024 and 30 June 2025, in view of the unfavorable future prospects of
certain restaurants, the Group’s management estimated the recoverable amount of each such restaurant (cash-
generating unit (“CGU”)) with an indication of impairment. The recoverable amount of each CGU is determined
based on fair value less cost of disposal or the value-in-use calculations by preparing cash flow projections of the
relevant CGUs derived from the most recent financial forecast approved by the management covering the remaining
lease term, which is higher.
The cash flows are discounted using a discount rate of 19.67%, 18.25% and 18.17% and 17.86% as at 31
December 2022, 2023 and 2024 and 30 June 2025, respectively. The discount rate used is pre-tax and reflects specific
risks relating to the relevant CGU.
In addition, the recoverable amount of certain CGU is determined based on fair value less cost of disposal,
using direct comparison approach by assuming each of the stores is assigned in its current condition with vacant
possession. Significant unobservable inputs used in the fair value measurement include market rentals, by making
reference to lease transactions of comparable properties in close proximity as available in the relevant market,
adjusted for any difference in factors such as location and property size. The fair value on which the recoverable
amount is based on its categorised as level 3 measurement.
For the years ended 31 December 2022, 2023 and 2024 and the six months ended 30 June 2024 and 2025, an
impairment loss of RMB9,440,000, RMB8,938,000, RMB1,589,000, RMB846,000 (unaudited) and RMB1,956,000
was recognised, respectively, as the carrying amount of certain CGUs exceeded their recoverable amount. Impairment
losses were allocated to the assets in related restaurant including leasehold improvement and other property, plant and
equipment within CGU on a pro rata basis, was recognised in the consolidated statements of profit or loss and other
comprehensive income in the respective year.
(b) Right-of-use assets
The analysis of the net book value of right-of-use assets by class of underlying asset is as follows:
The Group
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Property – Right-of-use assets,
carried at depreciated cost
(note (i)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118380,155 527,124 683,200 706,811
The Company
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Property – Right-of-use assets,
carried at depreciated cost /H1118/H1118/H1118/H1118/H1118119,922 133,252 98,365 90,879
APPENDIX I ACCOUNTANTS’ REPORT
– I-39 –


--- page 470 ---
The analysis of expense items in relation to leases recognised in profit or loss is as follows:
Y ears ended 31 December Six months ended 30 June
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Depreciation charge of right-of-use
assets by class of underlying asset:
Property – Right-of-use assets /H1118/H1118/H1118/H1118/H111894,620 125,429 188,845 86,309 109,726
Interest on lease liabilities
(note 6(a)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111816,600 19,074 27,083 12,555 14,329
Expense relating to short-term leases /H1118 –––– 8 4 8
Expense relating to leases of low-
value assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,109 2,175 2,586 1,257 1,084
V ariable lease payments not included
in the measurement of lease
liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,414 16,190 19,046 9,388 14,573
For the years ended 31 December 2022, 2023 and 2024 and the six months ended 30 June 2025, additions to
right-of-use assets were RMB120,179,000, RMB280,678,000, RMB380,744,000 and RMB140,596,000, respectively.
These amounts primarily related to the capitalised lease payments payable under new tenancy agreements.
Details of total cash outflow for leases and the maturity analysis of lease liabilities are set out in notes 19(d)
and 22, respectively.
Notes:
(i) Property – Right-of-use assets
The Group has obtained the right to use properties as its restaurants through tenancy agreements. The
leases run for an initial period of 2 to 14 years.
The Group leased a number of restaurants which contain variable lease payment terms that are based on
sales generated from the restaurants and minimum annual lease payment terms that are fixed. These
payment terms are common in restaurants in the PRC where the Group principally operates.
The amount of fixed and variable lease payments associated with right-of-use assets for each reporting
period is summarised below:
Y ears ended 31 December Six months ended 30 June
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Fixed payments /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111885,545 147,685 204,161 97,700 118,495
Rental expense related to
variable payments /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,414 16,190 19,046 9,388 14,573
Total payments /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111888,959 163,875 223,207 107,088 133,068
APPENDIX I ACCOUNTANTS’ REPORT
– I-40 –


--- page 471 ---
12 INTANGIBLE ASSETS
The Group
Software
RMB’000
Cost:
At 1 January 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,956
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,722
At 31 December 2022 and 1 January 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,678
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,256
At 31 December 2023 and 1 January 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,934
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,607
At 31 December 2024 and 1 January 2025 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11188,541
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,004
At 30 June 2025 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189,545----
Accumulated amortisation:
At 1 January 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118497
Charge for the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118853
At 31 December 2022 and 1 January 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,350
Charge for the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,167
At 31 December 2023 and 1 January 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,517
Charge for the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,872
At 31 December 2024 and 1 January 2025 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,389
Charge for the period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,219
At 30 June 2025 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,608----
Net book value:
At 30 June 2025 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,937
At 31 December 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,152
At 31 December 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,417
At 31 December 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,328
The amortisation charge for the years ended 31 December 2022, 2023 and 2024 and the six months ended
30 June 2025 is included in “depreciation and amortisation of other assets” in the consolidated statements of profit
or loss and other comprehensive income.
APPENDIX I ACCOUNTANTS’ REPORT
– I-41 –


--- page 472 ---
The Company
Software
RMB’000
Cost:
At 1 January 2022 and 31 December 2022 and 1 January 2023 and
31 December 2023 and 1 January 2024 and 31 December 2024 and 1 January
2025 and 30 June 2025 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118281---
Accumulated amortisation:
At 1 January 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118127
Charge for the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111842
At 31 December 2022 and 1 January 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118169
Charge for the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111851
At 31 December 2023 and 1 January 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118220
Charge for the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111849
At 31 December 2024 and 1 January 2025 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118269
Charge for the period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812
At 30 June 2025 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118281---
Net book value:
At 30 June 2025 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–
At 31 December 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812
At 31 December 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111861
At 31 December 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118112
13 INVESTMENT IN SUBSIDIARIES
The Company
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Investments in subsidiaries /H1118/H1118/H1118/H1118/H1118/H11183,000 13,000 17,590 40,283
The financial statements of the Company for the years ended 31 December 2022, 2023 and 2024 were prepared
in accordance with the Accounting Standards for Business Enterprises applicable to the enterprises in the PRC (“PRC
GAAP”) and audited by Guangzhou Huazhongpu Accounting Service Partnership Enterprise (General Partnership)
(ה(౷ஷΥྫ)), Guangdong Wanjia Certified Public Accountants (General Partnership) (؇
ה(౷ஷΥྫ)) and Zhiye (Guangzhou) Certified Public Accountants (General Partnership) (ุ(ᄿψ)
ה(౷ஷΥྫ)), respectively.
APPENDIX I ACCOUNTANTS’ REPORT
– I-42 –


--- page 473 ---
The following list contains only the particulars of subsidiaries which principally and significantly affected the
results, assets or liabilities of the Group for the years ended 31 December 2022, 2023 and 2024 and the six months
ended 30 June 2025 and as at the date of this report. The class of shares held is ordinary unless otherwise stated.
Company name
Place of
incorporation
and operation
Particulars of
issued capital
Particulars of
paid-up capital
Proportion of
ownership
interest
Principal business
activities
ʮ̡ (Beijing
Y ujian Xiaomian Catering Management
Co., Ltd.) (i) (ii) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Chinese
Mainland
RMB5,000,000 RMB1,000,000 100% Catering
management
ʮ̡
(Guangzhou Y ujian Haowu Supply
Chain Management Co., Ltd.) (i) (ii) /H1118/H1118
Chinese
Mainland
RMB1,000,000 RMB1,000,000 100% Supply chain
management
ʮ̡ (Shenzhen
Y ujian Xiaomian Catering Management
Co., Ltd.) (i) (ii) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Chinese
Mainland
RMB10,000,000 RMB10,000,000 100% Catering
management
ʮ̡
(Huai’an Xujian Haowu Supply Chain
Management Co., Ltd.) (i) (iv) /H1118/H1118/H1118/H1118/H1118/H1118
Chinese
Mainland
RMB10,000,000 RMB10,000,000 100% Supply chain
management
ʮ̡ (Wuhan
Y ujian Xiaomian Catering Management
Co., Ltd.) (i) (v) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Chinese
Mainland
RMB1,000,000 RMB1,000,000 100% Catering
management
ʮ̡ (Sichuan
Y ujian Haowan Information Technology
Co., Ltd.) (i) (v) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Chinese
Mainland
RMB1,000,000 RMB1,000,000 100% Provision of
information
technology
services
ʮ̡
(Guangzhou Y ujian Haowan Information
Technology Service Co., Ltd.) (i) (vi) /H1118/H1118
Chinese
Mainland
RMB5,000,000 RMB5,000,000 100% Provision of
information
technology
services
ʮ̡
(Guangzhou Y ujian Xiaomian Catering
Service Co., Ltd.) (i) (iii) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Chinese
Mainland
RMB10,000,000 RMB10,000,000 100% Catering
management
ʮ̡
(Suqian Y ujian Haopin Supply Chain
Management Co., Ltd.) (i) (vii) /H1118/H1118/H1118/H1118/H1118
Chinese
Mainland
RMB10,000,000 RMB10,000,000 100% Supply chain
management
APPENDIX I ACCOUNTANTS’ REPORT
– I-43 –


--- page 474 ---
Notes:
(i) These entities are PRC limited liability companies. The official names of these entities are in Chinese. The
English translation of the names is for reference only.
(ii) The financial statements of these entities for the years ended 31 December 2022, 2023 and 2024 were prepared
in accordance with the PRC GAAP and audited by Guangzhou Huazhongpu Accounting Service Partnership
Enterprise (General Partnership) (ה(౷ஷΥྫ)), Guangdong Wanjia Certified Public
Accountants (General Partnership) (ה(౷ஷΥྫ)) and Xiamen Zhonglianxing Certified
Public Accountants Co., Ltd (ʮ̡), respectively.
(iii) The financial statements of the entity for the years ended 31 December 2022, 2023 and 2024 were prepared
in accordance with the PRC GAAP and audited by Guangdong Wanjia Certified Public Accountants (General
Partnership) (ה(౷ஷΥྫ)), Guangdong Wanjia Certified Public Accountants (General
Partnership) (ה(౷ஷΥྫ)) and Xiamen Zhonglianxing Certified Public Accountants Co.,
Ltd (ʮ̡), respectively.
(iv) No financial statements have been prepared for the entity in 2022 as it was newly incorporated in 2023. The
financial statements of the entity for the year ended 31 December 2023 and 2024 were prepared in accordance
with the PRC GAAP and audited by Guangdong Wanjia Certified Public Accountants (General Partnership) ( ᄿ
ה(౷ஷΥྫ)) and Xiamen Zhonglianxing Certified Public Accountants Co., Ltd (ʕᑌጳ
ʮ̡), respectively.
(v) No financial statements have been prepared for these entities for the years ended 31 December 2022, 2023 and
2024 in accordance with the PRC GAAP .
(vi) The financial statements of the entity for the years ended 31 December 2022 and 2023 were prepared in
accordance with the PRC GAAP and audited by Guangzhou Huazhongpu Accounting Service Partnership
Enterprise (General Partnership) (ה(౷ஷΥྫ)) and Guangdong Wanjia Certified
Public Accountants (General Partnership) (ה(౷ஷΥྫ)), respectively.
No financial statements have been prepared for the entity for the year ended 31 December 2024 in accordance
with the PRC GAAP .
(vii) No financial statements have been prepared for the entity in 2022 and 2023 as it was newly incorporated in
2024. No financial statements have been prepared for the entity for the year ended 31 December 2024 in
accordance with the PRC GAAP .
All subsidiaries have adopted December 31 as their financial year end date.
APPENDIX I ACCOUNTANTS’ REPORT
– I-44 –


--- page 475 ---
14 LEASE PAYMENT RECEIV ABLES
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Within 1 year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,462 4,245 2,529 1,642
After 1 year but within 2 years /H1118/H1118/H1118/H11184,245 2,529 640 437
After 2 years but within 5 years /H1118/H1118/H1118 3,851 1,410 621 359
After 5 years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11188 9–––
12,647 8,184 3,790 2,438
Less: total future interest income /H1118/H1118 809 398 159 96
Present value of lease payment
receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,838 7,786 3,631 2,342
Lease payment receivables included
in the consolidated statements of
financial position
– Within 1 year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,052 4,005 2,425 1,578
– After 1 year but within 2 years /H1118/H1118 4,006 2,426 599 410
– After 2 years but within 5 years /H1118/H1118 3,691 1,355 607 354
– After 5 years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11188 9–––
7,786 3,781 1,206 764-----
---- ---- ----
11,838 7,786 3,631 2,342
The Group, as the intermediate lessor, entered into restaurants sublease agreements with certain franchisees,
which were classified as finance leases. The cost of lease assets is capitalised at the present value of the lease
payments and presented as a receivable at an amount equal to the net investment in the lease.
15 FINANCIAL ASSETS MEASURED AT FVPL
The Group
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Financial assets measured at FVPL
– Unlisted structured deposits /H1118/H1118/H1118/H1118/H11187,009 25,063 70,261 25,018
The Company
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Financial assets measured at FVPL
– Unlisted structured deposits /H1118/H1118/H1118/H1118/H11187,009 25,063 15,009 25,018
The amount represents investments in structured deposits issued by financial institutions in the PRC. There are
no fixed or determinable returns of these structured deposits.
APPENDIX I ACCOUNTANTS’ REPORT
– I-45 –


--- page 476 ---
16 OTHER NON-CURRENT ASSETS
The Group
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Prepayment for leasehold
improvement /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111851 439 180 160
Long-term receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,821 3,073 1,768 1,219
5,872 3,512 1,948 1,379
17 INVENTORIES
(a) Inventories in the consolidated statements of financial position comprise:
The Group
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Food ingredients /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111816,299 26,652 22,037 21,636
Other materials /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118340 446 629 569
16,639 27,098 22,666 22,205
The Company
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Food ingredients /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118616 990 985 1,057
Other materials /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118166 168 192 77
782 1,158 1,177 1,134
(b) The analysis of the amount of inventories recognised as an expense and included in profit or loss is as
follows:
Y ears ended 31 December Six months ended 30 June
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Carrying amount of
inventories sold /H1118/H1118/H1118/H1118/H1118/H1118160,138 290,270 395,701 187,250 220,932
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 477 ---
18 TRADE AND OTHER RECEIV ABLES
The Group
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Trade debtors, net of loss allowance /H1118 7,486 16,045 18,790 23,813
Input value-added tax recoverable /H1118/H1118 6,631 13,263 28,576 34,514
Deposits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,099 13,665 19,903 26,468
Other receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,844 1,113 1,338 2,134
Current portion of long-term
receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,226 683 431 319
Prepayments to vendors /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,799 6,105 8,882 9,929
Prepayment for listing expense /H1118/H1118/H1118/H1118 – – 123 3,764
Lease payment receivables /H1118/H1118/H1118/H1118/H1118/H11184,052 4,005 2,425 1,578
30,137 54,879 80,468 102,519
The Company
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Trade debtors /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,555 1,875 2,990 3,109
Input value-added tax recoverable /H1118/H1118 3,566 3,919 5,741 5,791
Deposits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,432 8,910 5,831 9,747
Other receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118716 695 792 145
Dividend receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 21,500 55,500 63,500
Prepayments to vendors /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,163 2,764 5,084 5,734
Prepayment for listing expense /H1118/H1118/H1118/H1118 – – 123 3,764
Amount due from subsidiaries /H1118/H1118/H1118/H1118147,613 82,358 111,575 59,759
157,045 122,021 187,636 151,549
All of the trade and other receivables is expected to be recovered or recognised as expense within one year
or are recovered on demand.
Ageing analysis:
As at 31 December 2022, 2023 and 2024 and 30 June 2025, the ageing analysis of trade debtors (which are
included in trade and other receivables), based on the revenue recognition date, is as follows:
The Group
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Within 1 month /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,486 13,440 17,643 21,016
More than 1 month but within
3 months /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 2,605 1,147 2,797
7,486 16,045 18,790 23,813
APPENDIX I ACCOUNTANTS’ REPORT
– I-47 –


--- page 478 ---
The Company
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Within 1 month /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,555 1,875 2,990 3,109
Further details on the Group’s accounting policies for credit losses form financial instruments and the Group’s
credit risk are set out in note 2(i)(i) and note 28(a).
19 CASH AND CASH EQUIV ALENTS AND OTHER CASH FLOW INFORMATION
(a) Cash and cash equivalents comprise:
The Group
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Cash on hand /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118202 214 167 115
Cash at bank /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111848,424 47,689 73,347 94,352
Less: restricted bank deposits
(note (i)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(12,107) (21,139) (31,324) (44,435)
Cash and cash equivalents in the
consolidated statements of
financial position and the
consolidated cash flow statements /H1118 36,519 26,764 42,190 50,032
The Company
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Cash on hand /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118202 214 167 115
Cash at bank /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111828,207 32,414 58,910 52,294
Less: restricted bank deposits
(note (i)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(12,107) (20,012) (30,197) (44,435)
Cash and cash equivalents in the
statements of financial position of
the Company /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111816,302 12,616 28,880 7,974
(i) As at 31 December 2022, 2023 and 2024 and 30 June 2025, restricted bank deposits mainly was reserved
for receipts in advance of stored value membership accounts in accordance with relevant regulations
issued by Ministry of Commerce of PRC.
APPENDIX I ACCOUNTANTS’ REPORT
– I-48 –


--- page 479 ---
(b) Reconciliation of (loss)/profit before taxation to cash generated from operations:
Y ears ended 31 December Six months ended 30 June
Note 2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
(Loss)/profit before
taxation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(48,145) 57,138 74,881 26,454 52,296
Adjustments for:
Interest income and
investment income /H1118 5 (2,339) (3,326) (3,207) (1,305) (2,100)
Depreciation /H1118/H1118/H1118/H1118/H1118/H11186(e) 115,595 148,475 224,622 102,861 134,535
Amortisation of
intangible assets /H1118/H1118/H11186(e) 853 1,167 1,872 780 1,219
Finance costs /H1118/H1118/H1118/H1118/H1118/H11186(a) 16,962 19,333 27,771 12,697 14,512
Losses/(gains) on
disposal of property,
plant and equipment
and right-of-use
assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118306 (1,229) (3,994) 107 (515)
Impairment losses on
property, plant and
equipment /H1118/H1118/H1118/H1118/H1118/H111811(a) 9,440 8,938 1,589 846 1,956
Equity-settled share-
based payment
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H11186(b) 1,337 1,419 3,139 1,551 2,624
Net fair value changes
of financial assets
measured at FVPL /H1118 6(c) (9) (63) (261) (130) (18)
Changes in working
capital:
Increase in lease
payment receivables 4,052 4,005 2,426 1,438 442
Decrease/(increase) in
inventories /H1118/H1118/H1118/H1118/H1118/H1118 2,972 (10,459) 4,432 6,624 461
Increase in trade and
other receivables
and rental deposits /H1118 (6,045) (32,006) (29,994) (6,998) (18,740)
(Decrease)/increase in
trade and other
payables and
accruals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,601) 43,269 10,370 (740) 9,496
Increase in contract
liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H111817,680 25,181 23,486 17,167 28,299
Increase in restricted
bank deposits /H1118/H1118/H1118/H1118 (6,118) (9,032) (10,185) (8,926) (13,111)
Cash generated from
operations /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118104,940 252,810 326,947 152,426 211,356
APPENDIX I ACCOUNTANTS’ REPORT
– I-49 –


--- page 480 ---
(c) Reconciliation of liabilities arising from financing activities:
The table below details changes in the Group’s liabilities from financing activities, including both cash and
non-cash changes. Liabilities arising from financing activities are liabilities for which cash flows were, or future cash
flows will be, classified in the Group’s consolidated cash flow statements as cash flows from financing activities.
Bank loans
Finance costs
payable Lease liabilities Total
RMB’000 RMB’000 RMB’000 RMB’000
note 24 note 22
At 1 January 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 394,634 394,634
Changes from financing cash
flows:
Proceeds from bank loans /H1118/H1118/H1118/H1118/H1118/H1118/H111835,394 – – 35,394
Repayment of bank loans /H1118/H1118/H1118/H1118/H1118/H1118/H1118(25,412) – – (25,412)
Interest of bank loans paid /H1118/H1118/H1118/H1118/H1118/H1118– (198) – (198)
Payment of capital element of lease
liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (68,945) (68,945)
Payment of interest element of lease
liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (16,600) (16,600)
Total changes from financing cash
flows /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189,982 (198) (85,545) (75,761)------ ---- ------ ------
Other changes:
Interest expenses (note 6(a)) /H1118/H1118/H1118/H1118/H1118 – 208 16,600 16,808
Increase in lease liabilities from
entering into new leases during
the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 117,924 117,924
Decrease in lease liabilities from
terminating leases during the year /H1118 – – (4,908) (4,908)
Total other changes /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 208 129,616 129,824------ ---- ------ ------
At 31 December 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189,982 10 438,705 448,697
Bank loans
Finance costs
payable
Dividend
payables Lease liabilities Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
note 24 note 20 note 22
At 1 January 2023 /H1118/H1118/H1118/H1118/H11189,982 10 – 438,705 448,697
Changes from financing
cash flows:
Proceeds from bank loans /H1118 25,11 5––– 25,115
Repayment of bank loans /H1118 (35,097) – – – (35,097)
Interest of bank loans
paid /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (55) – – (55)
Payment of capital element
of lease liabilities /H1118/H1118/H1118/H1118/H1118– – – (128,611) (128,611)
Payment of interest
element of lease
liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – (19,074) (19,074)
Dividends paid /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (19,152) – (19,152)
Total changes from
financing cash flows /H1118/H1118/H1118(9,982) (55) (19,152) (147,685) (176,874)------ --- -- ---- ------ ------
Other changes:
Interest expenses
(note 6(a)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 45 – 19,074 19,119
Dividends approved /H1118/H1118/H1118/H1118/H1118– – 19,546 – 19,546
Increase in lease liabilities
from entering into new
leases during the year /H1118/H1118 – – – 276,220 276,220
Decrease in lease liabilities
from terminating leases
during the year /H1118/H1118/H1118/H1118/H1118/H1118– – – (9,762) (9,762)
Total other changes /H1118/H1118/H1118/H1118/H1118– 45 19,546 285,532 305,123------ --- -- ---- ------ ------
At 31 December 2023 /H1118/H1118/H1118 – – 394 576,552 576,946
APPENDIX I ACCOUNTANTS’ REPORT
– I-50 –


--- page 481 ---
Bank loans
Finance costs
payable
Dividend
payables Lease liabilities Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
note 24 note 20 note 22
At 1 January 2024 /H1118/H1118/H1118/H1118/H1118– – 394 576,552 576,946
Changes from financing
cash flows:
Proceeds from bank loans /H1118 50,00 0––– 50,000
Interest of bank loans
paid /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (381) – – (381)
Payment of capital element
of lease liabilities /H1118/H1118/H1118/H1118/H1118– – – (177,078) (177,078)
Payment of interest
element of lease
liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – (27,083) (27,083)
Dividends paid /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (394) – (394)
Total changes from
financing cash flows /H1118/H1118/H111850,000 (381) (394) (204,161) (154,936)
----- - - - - - - ------ ------
Other changes:
Interest expenses
(note 6(a)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 381 – 27,083 27,464
Increase in lease liabilities
from entering into new
leases during the year /H1118/H1118 – – – 375,110 375,110
Decrease in lease liabilities
from terminating leases
during the year /H1118/H1118/H1118/H1118/H1118/H1118– – – (39,965) (39,965)
Total other changes /H1118/H1118/H1118/H1118/H1118– 381 – 362,228 362,609
----- - - - - - - ------ ------
At 31 December 2024 /H1118/H1118/H111850,000 – – 734,619 784,619
(unaudited) Bank loans
Finance costs
payable
Dividend
payables Lease liabilities Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
note 24 note 20 note 22
At 1 January 2024 /H1118/H1118/H1118/H1118/H1118– – 394 576,552 576,946
Changes from financing
cash flows:
Payment of capital element
of lease liabilities /H1118/H1118/H1118/H1118/H1118– – – (85,145) (85,145)
Payment of interest
element of lease
liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – (12,555) (12,555)
Dividends paid /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (394) – (394)
Total changes from
financing cash flows /H1118/H1118/H1118 – – (394) (97,700) (98,094)
- - - - - - - ------ ------
Other changes:
Interest expenses
(note 6(a)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – 12,555 12,555
Increase in lease liabilities
from entering into new
leases during the period /H1118 – – – 175,742 175,742
Decrease in lease liabilities
from terminating leases
during the period /H1118/H1118/H1118/H1118/H1118– – – (987) (987)
Total other changes /H1118/H1118/H1118/H1118/H1118– – – 187,310 187,310
- - - - - - - ------ ------
At 30 June 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – 666,162 666,162
APPENDIX I ACCOUNTANTS’ REPORT
– I-51 –


--- page 482 ---
Bank loans
Finance costs
payable
Dividend
payables Lease liabilities Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
note 24 note 20 note 22
At 1 January 2025 /H1118/H1118/H1118/H1118/H111850,000 – – 734,619 784,619
Changes from financing
cash flows:
Repayment of bank loans /H1118 (50,000) – – – (50,000)
Interest of bank loans
paid /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (7) – – (7)
Payment of capital element
of lease liabilities /H1118/H1118/H1118/H1118/H1118– – – (104,166) (104,166)
Payment of interest
element of lease
liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – (14,329) (14,329)
Dividends paid /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (14,727) – (14,727)
Total changes from
financing cash flows /H1118/H1118/H1118(50,000) (7) (14,727) (118,495) (183,229)
------ -- -- ---- ------ ------
Other changes:
Interest expenses
(note 6(a)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 7 – 14,329 14,336
Dividends approved /H1118/H1118/H1118/H1118/H1118– – 14,727 – 14,727
Increase in lease liabilities
from entering into new
leases during the period /H1118 – – – 139,483 139,483
Decrease in lease liabilities
from terminating leases
during the period /H1118/H1118/H1118/H1118/H1118– – – (7,712) (7,712)
Total other changes /H1118/H1118/H1118/H1118/H1118– 7 14,727 146,100 160,834
------ -- -- ---- ------ ------
At 30 June 2025 /H1118/H1118/H1118/H1118/H1118/H1118– – – 762,224 762,224
(d) Total cash outflow for leases:
Y ears ended 31 December Six months ended 30 June
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Within operating cash
flows /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,228 18,409 20,639 9,211 15,980
Within financing cash
flows /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111885,545 147,685 204,161 97,700 118,495
90,773 166,094 224,800 106,911 134,475
These amounts relate to the following:
Y ears ended 31 December Six months ended 30 June
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Lease rentals settled /H1118/H1118/H1118/H111890,773 166,094 224,800 106,911 134,475
APPENDIX I ACCOUNTANTS’ REPORT
– I-52 –


--- page 483 ---
20 TRADE AND OTHER PAYABLES AND REDEMPTION LIABILITIES
(a) Trade and other payables
The Group
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Trade payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111824,198 47,645 49,828 56,872
Payables for purchase of property,
plant and equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,271 5,920 13,170 13,295
Staff cost payable /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11188,208 19,293 22,919 24,707
Deposits received from franchisees
and suppliers /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,334 8,475 9,643 9,301
Other taxes payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118123 809 1,275 1,441
Other payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,770 10,669 13,516 14,715
Dividends payable /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 3 9 4––
50,904 93,205 110,351 120,331
The Company
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Payables for purchase of property,
plant and equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,647 3,875 4,709 1,535
Staff cost payable /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,464 6,474 6,746 5,819
Deposits received from suppliers /H1118/H1118/H1118 1,310 1,479 1,415 1,401
Other taxes payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111816 145 261 319
Other payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118723 3,347 2,902 1,897
Amount due to subsidiaries /H1118/H1118/H1118/H1118/H1118/H111840,115 21,484 42,623 8,017
Dividends payable /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 3 9 4––
50,275 37,198 58,656 18,988
All of other payables is expected to be settled within one year or are repayable on demand.
As at 31 December 2022, 2023 and 2024 and 30 June 2025, the ageing analysis of trade payables, based on
the invoice date, is as follows:
The Group
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Within 1 year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111824,198 47,645 49,828 56,872
APPENDIX I ACCOUNTANTS’ REPORT
– I-53 –


--- page 484 ---
(b) Redemption liabilities
The Group and the Company
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Redemption liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111845,000 45,000 45,000 45,000
During 2014 to 2021, the Company conducted several rounds of financing by issuing paid-in capital to
investors and granting them certain special rights.
The Series Angel, Series Pre-A, Series A, Series A+, Series B and Series B+ investors (collectively refer to
as “the Investors”) are entitled to the same voting rights and dividend rights as the founding shareholder of the
Company. Certain key special rights issued to the Investors are summarised as follows:
Redemption rights
Redemption rights granted by the Company
In March 2021, the Company entered into an investment agreement with an investor (the “Series B Investor”),
pursuant to which, the Series B Investor agreed to pay, in aggregate, RMB30,000,000 to subscribe for the Company’s
paid-in capital of RMB487,000.
The Series B Investor would have the right to request the Company to purchase all or part of the paid-in capital
of the Company held by it, upon the occurrence of any of the specified contingent events, including but not limited
to:
(1) the Company fails to complete a qualified initial public offering on or before the seventh anniversary
from 11 March 2021;
(2) the Company or the actual controllers of the founding shareholder of the Company have seriously
breached any term of the transaction documents;
(3) the actual controllers of the founding shareholder of the Company lose control over the Company
without the written consent of the Series B Investor.
The redemption price is the higher of (i) the aggregate of the original issue price plus an annual rate of return
of 7% calculated on a simple basis plus all declared but unpaid dividends; and (ii) the aggregate of the 150% original
issue price plus all declared but unpaid dividends.
The redemption right will automatically expire upon the qualified initial public offering of the Company’s
shares.
Redemption rights granted by Huai’an Chuangtao Enterprise Management Partnership (Limited Partnership),
Mr. Song and Mr. Su
Certain investors had been granted redemption rights by Huai’an Chuangtao Enterprise Management
Partnership (Limited Partnership), Mr. Song and Mr. Su.
The directors of the Company have confirmed that (i) the Company does not have any obligation to fulfil the
redemption rights granted by Huai’an Chuangtao Enterprise Management Partnership (Limited Partnership), Mr.
Song and Mr. Su; and (ii) the Company has not provided any guarantee for the redemption rights granted by Huai’an
Chuangtao Enterprise Management Partnership (Limited Partnership), Mr. Song and Mr. Su in the event of a default
by Huai’an Chuangtao Enterprise Management Partnership (Limited Partnership), Mr. Song or Mr. Su. Accordingly,
no financial liability has been recorded in the Historical Financial Information with respect to the redemption rights
granted by Huai’an Chuangtao Enterprise Management Partnership (Limited Partnership), Mr. Song and Mr. Su.
APPENDIX I ACCOUNTANTS’ REPORT
– I-54 –


--- page 485 ---
Anti-dilution right
If the Company issues new shares at a price per share lower than the respective issue price per share to the
Investors, the Investors shall have the right to subscribe for new shares or to acquire shares from the founding
shareholder at nil consideration or at minimum consideration permitted by law, so that the total amount paid by the
Investors divided by the total amount of shares obtained is equal to the price per share in the new issuance.
Measurement
The Company recognised the financial liabilities arising from its obligation to purchase all or part of the
paid-in capital from the Series B Investor under the specified contingent events of which the occurrence are beyond
the control of the Company. The redemption liabilities are measured at the highest redemption amount under different
contingent events on a present-value basis.
21 CONTRACT LIABILITIES
The Group
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Current
Franchising income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,508 3,364 3,091 4,125
Stored value membership accounts
and issued vouchers /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111834,228 55,751 78,703 106,081
Customer loyalty scheme /H1118/H1118/H1118/H1118/H1118/H1118/H1118914 1,027 834 732
36,650 60,142 82,628 110,938
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Non-current
Franchising income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,875 3,564 4,564 4,553
The Company
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Stored value membership accounts
and issued vouchers /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111834,199 55,723 78,675 106,053
Customer loyalty scheme /H1118/H1118/H1118/H1118/H1118/H1118/H1118246 224 148 106
34,445 55,947 78,823 106,159
APPENDIX I ACCOUNTANTS’ REPORT
– I-55 –


--- page 486 ---
Movements in contract liabilities:
The Group
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
At the beginning of the year/period /H1118 20,845 38,525 63,706 87,192
Increase in contract liabilities as a
result of receiving advance
payment of franchising income
during the year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,683 5,019 4,039 2,477
Increase in contract liabilities as a
result of receiving advance
payment of stored value
membership accounts and issued
vouchers during the year/period /H1118/H1118 34,227 55,751 78,699 71,420
Increase in contract liabilities as a
result of receiving advance
payment of customer loyalty
scheme during the year/period /H1118/H1118 914 1,027 834 201
Decrease in contract liabilities as a
result of utilising during the
year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(19,144) (36,616) (60,086) (45,799)
Balance at the end of the
year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111838,525 63,706 87,192 115,491
The Company
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
At the beginning of the year/period /H1118 18,132 34,445 55,947 78,823
Increase in contract liabilities as a
result of receiving advance
payment of stored value
membership accounts and issued
vouchers during the year/period /H1118/H1118 34,199 55,723 78,675 71,420
Increase in contract liabilities as a
result of receiving advance
payment of customer loyalty
scheme during the year/period /H1118/H1118/H1118 246 224 148 26
Decrease in contract liabilities as a
result of utilising during the
year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(18,132) (34,445) (55,947) (44,110)
Balance at the end of the
year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111834,445 55,947 78,823 106,159
As at 31 December 2022, 2023 and 2024 and 30 June 2025, the amount of contract liabilities expected to be
recognised as income after more than one year is RMB1,875,000, RMB3,564,000 and RMB4,564,000 and
RMB4,553,000. All of the other contract liabilities are expected to be recognised as income within one year.
APPENDIX I ACCOUNTANTS’ REPORT
– I-56 –


--- page 487 ---
22 LEASE LIABILITIES
As at 31 December 2022, 2023 and 2024 and 30 June 2025, the lease liabilities were repayable as follows:
The Group
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Within 1 year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118124,151 162,441 219,473 239,105
After 1 year but within 2 years /H1118/H1118/H1118/H1118113,769 155,967 190,136 200,629
After 2 years but within 5 years /H1118/H1118/H1118186,601 259,496 328,853 330,098
After 5 years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111862,186 57,927 63,265 56,728
486,707 635,831 801,727 826,560
Less: total future interest expenses /H1118 48,002 59,279 67,108 64,336
Present value of lease liabilities /H1118/H1118/H1118438,705 576,552 734,619 762,224
Lease liabilities included in the
consolidated statements of
financial position
– Within 1 year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118108,548 141,318 194,423 214,308
– After 1 year but within 2 years /H1118/H1118 100,249 139,271 172,559 183,461
– After 2 years but within 5 years /H1118/H1118 171,296 240,603 307,321 310,259
– After 5 years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111858,612 55,360 60,316 54,196
330,157 435,234 540,196 547,916------
------ ------ ------
438,705 576,552 734,619 762,224
The Company
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Within 1 year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111843,550 45,682 43,539 36,960
After 1 year but within 2 years /H1118/H1118/H1118/H111840,227 48,324 29,900 27,776
After 2 years but within 5 years /H1118/H1118/H1118 64,088 63,849 40,925 36,575
After 5 years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,722 1,606 345 1,438
150,587 159,461 114,709 102,749
Less: total future interest expenses /H1118 11,147 12,088 7,380 6,524
Present value of lease liabilities /H1118/H1118/H1118139,440 147,373 107,329 96,225
Lease liabilities included in the
statements of financial position
– Within 1 year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111838,699 40,280 39,956 33,823
– After 1 year but within 2 years /H1118/H1118 36,865 44,914 27,801 25,861
– After 2 years but within 5 years /H1118/H1118 61,227 60,588 39,229 35,167
– After 5 years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,649 1,591 343 1,374
100,741 107,093 67,373 62,402------ ------ ------ ------
139,440 147,373 107,329 96,225
APPENDIX I ACCOUNTANTS’ REPORT
– I-57 –


--- page 488 ---
23 PROVISIONS
The Group
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Provisions for restoration costs /H1118/H1118/H1118/H11184,310 6,631 8,735 9,510
The Company
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Provisions for restoration costs /H1118/H1118/H1118/H11181,363 1,549 1,680 1,688
Movements in provisions:
The Group
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Balance at 1 January /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,405 4,310 6,631 8,735
Additional provisions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118880 2,107 2,151 1,047
Unwind of discount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118154 214 307 176
Provisions utilised /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(129) – (354) (448)
Balance at 31 December/30 June /H1118/H1118/H1118 4,310 6,631 8,735 9,510
The Company
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Balance at 1 January /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,128 1,363 1,549 1,680
Additional provisions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118185 128 91 49
Unwind of discount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111850 58 64 34
Provisions utilised /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (24) (75)
Balance at 31 December/30 June /H1118/H1118/H1118 1,363 1,549 1,680 1,688
Pursuant to the terms of the respective tenancy agreements entered into by the Group, the Group is required
to return its leased properties to the conditions as stipulated in the tenancy agreements at the expiration of the
corresponding lease term as appropriate. The provision for reinstatement costs was estimated based on certain
assumptions and estimates made by the Group’s management with reference to historical reinstatement costs and/or
other available market information. The estimation basis is reviewed on an ongoing basis and revised where
appropriate.
APPENDIX I ACCOUNTANTS’ REPORT
– I-58 –


--- page 489 ---
24 BANK LOANS
The analysis of the repayment schedule of bank loans is as follows:
The Group
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Within one year or on demand
– guaranteed /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189,982 – 50,000 –
The Company
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Within one year or on demand
– guaranteed /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189,85 9–––
All of the bank loans as at 31 December 2022 and 2024 were guaranteed by related parties (note 30(d)).
All of the Group’s banking facilities are subject to the fulfilment of covenants relating to the Group’s financial
metrics which are tested periodically, as are commonly found in lending arrangements with financial institutions. If
the Group were to breach the covenants, the related loans would become payable on demand. The Group did not
identify any difficulties complying with the covenants. Further details of the covenants and the Group’s management
of liquidity risk are set out in note 28(b). As at 31 December 2022 and 2024, none of the covenants relating to the
drawn down facilities had been breached.
25 INCOME TAX IN THE CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(a) Current taxation in the consolidated statements of financial position represents:
The Group
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
At the beginning of the year/period /H1118 50 (108) 2,034 6,732
Provisions for PRC income tax /H1118/H1118/H1118/H1118 9 9,826 17,936 10,039
Provisions for Hong Kong Profits
Tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 163 1,126
Income tax paid /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(167) (7,684) (13,401) (9,305)
At the end of the year/period /H1118/H1118/H1118/H1118/H1118(108) 2,034 6,732 8,592
Reconciliation to the consolidated
statements of financial position
Income tax payable /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186 3,610 7,459 9,260
Income tax recoverable /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(114) (1,576) (727) (668)
(108) 2,034 6,732 8,592
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 490 ---
Current taxation in the statements of financial position of the Company represents:
The Company
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
At the beginning of the year/period /H1118 12 (21) (628) 825
Provisions for PRC income tax /H1118/H1118/H1118/H1118 – 421 2,480 61
Income tax paid /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(33) (1,028) (1,027) (184)
At the end of the year/period /H1118/H1118/H1118/H1118/H1118(21) (628) 825 702
Reconciliation to the statements of
financial position of the Company
Income tax payable /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 825 702
Income tax recoverable /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(21) (628) – –
(21) (628) 825 702
(b) Deferred tax assets and liabilities recognised
(i) Movement of each component of deferred tax assets and liabilities
The components of deferred tax assets/(liabilities) recognised in the consolidated statements of financial
position and the movements for the years ended 31 December 2022, 2023 and 2024 and the six months ended 30 June
2025 are as follows:
The Group
Deferred tax
assets/(liabilities)
arising from:
Unused tax
losses
Right-of-use
assets
Lease
liabilities Provisions
Impairment
losses Others Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January
2022 /H1118/H1118/H1118/H1118/H1118/H1118/H11181,514 (86,862) 94,248 740 1,738 1,089 12,467
Credited/(charged)
to profit or
loss /H1118/H1118/H1118/H1118/H1118/H1118/H11185,150 (3,841) 8,358 191 1,867 456 12,181
At 31 December
2022 and 1
January 2023 /H1118 6,664 (90,703) 102,606 931 3,605 1,545 24,648
(Charged)
/credited to
profit or loss /H1118/H1118(5,848) (27,805) 29,930 462 1,175 688 (1,398)
At 31 December
2023 and 1
January 2024 /H1118 816 (118,508) 132,536 1,393 4,780 2,233 23,250
Credited/(charged)
to profit or
loss /H1118/H1118/H1118/H1118/H1118/H1118/H11181,295 (12,728) 14,251 319 (498) 1,279 3,918
At 31 December
2024 and
1 January 2025 2,111 (131,236) 146,787 1,712 4,282 3,512 27,168
Credited/(charged)
to profit or
loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118726 5,483 (5,314) 100 (146) (146) 703
At 30 June 2025 /H1118 2,837 (125,753) 141,473 1,812 4,136 3,366 27,871
APPENDIX I ACCOUNTANTS’ REPORT
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The components of deferred tax assets/(liabilities) recognised in the statements of financial position of the
Company and the movements for the years ended 31 December 2022, 2023 and 2024 and the six months ended 30
June 2025 are as follows:
The Company
Deferred tax
assets/(liabilities)
arising from:
Unused tax
losses
Right-of-use
assets
Lease
liabilities Provisions
Impairment
losses Others Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January
2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118– (28,801) 31,926 282 554 873 4,834
Credited/(charged)
to profit or
loss /H1118/H1118/H1118/H1118/H1118/H1118/H11181,135 (778) 2,134 59 471 333 3,354
At 31 December
2022 and 1
January 2023 /H1118 1,135 (29,579) 34,060 341 1,025 1,206 8,188
(Charged)
/credited to
profit or loss /H1118/H1118(1,135) (3,319) 3,570 46 422 355 (61)
At 31 December
2023 and 1
January 2024 /H1118 – (32,898) 37,630 387 1,447 1,561 8,127
Credited/(charged)
to profit or
loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118– 8,725 (9,402) 33 (70) 818 104
At 31 December
2024 and
1 January
2025 /H1118/H1118/H1118/H1118/H1118/H1118/H1118– (24,173) 28,228 420 1,377 2,379 8,231
Credited/(charged)
to profit or
loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118651 1,816 (3,170) 2 (321) (325) (1,347)
At 30 June 2025 /H1118 651 (22,357) 25,058 422 1,056 2,054 6,884
APPENDIX I ACCOUNTANTS’ REPORT
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(ii) Reconciliation to the consolidated statements of financial position
The Group
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Net deferred tax assets in the
consolidated statements of
financial position /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111824,648 23,250 27,168 27,871
Reconciliation to the statements of financial position of the Company
The Company
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Net deferred tax assets in the
statements of financial position /H1118/H1118 8,188 8,127 8,231 6,884
26 EQUITY SETTLED SHARE-BASED PAYMENTS
The share-based incentive scheme (the “Scheme”) was approved and adopted by Company in 2019. In
connection with the Scheme, Huai’an Y ujian Haoren Enterprise Management Partnership (Limited Partnership)
(“Huai’an Y ujian Haoren”) was established as the employee incentive vehicles to hold the shares of the Company.
The eligible employees under the Scheme would be granted options which give the holder the right to subscribe for
the shares of the Company through holding the limited partnership interests in Huai’an Y ujian Haoren at the exercise
price of RMB0.02 per share of the Company. As the Company has the right to direct the relevant activities of Huai’an
Y ujian Haoren so as to suit the Company’s obligations in relation to the Scheme, Huai’an Y ujian Haoren is treated
as the subsidiary of the Company.
Accordingly, the ordinary shares of the Company held by the Huai’an Y ujian Haoren are recorded under the
shares held for the share-based incentive scheme of the Group until the share options are exercised and vested.
(a) The terms and conditions of the grants are as follows:
Each share option would become exercisable when the explicit required service period and the grantee’s annual
performance evaluation during the explicit required service period are satisfied. The shares of the Company
underlying the share options (“Restricted Shares”) are not allowed to transfer before the completion of a qualified
listing of the Company (“IPO”) unless the Company approves the transfer. Before the completion of an IPO, the
Company has the right to repurchase the Restricted Shares at the original exercise price received per share for the
employees at manager-level or below or at the higher of 30% of the per-share valuation in the most recent financing
round and the original exercise price received per share for the employees at departmental director-level or above.
APPENDIX I ACCOUNTANTS’ REPORT
– I-62 –


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The grantees as the holder of the Restricted Shares would be entitled to the relevant non-forfeitable dividend
right. All unexercised share options shall become lapse upon the termination of employment.
Number of
instruments Required service period
Contractual life
of options
Options granted to employees at
departmental director-level or above:
– on 5 April 2019, 5 May 2019, 1 October
2019, 5 April 2020, 5 May 2020, 1 June
2020, 28 June 2020, 1 October 2020, 5 April
2021, 5 May 2021 and 1 October 2021 /H1118/H1118/H1118/H1118
9,353,550 No vesting period 0.25 years
– on 2 December 2019, 7 January 2020,
1 November 2020 and 1 December 2020 /H1118/H1118/H1118
1,595,300 2 years 2.25 years
– on 2 December 2019, 7 January 2020,
1 November 2020, 1 December 2020,
15 October 2021, 15 October 2022,
16 February 2023, 15 October 2023,
1 February 2024, 18 February 2024,
26 February 2024, 20 March 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118
6,118,150 3 years 3.25 years
– on 2 December 2019, 7 January 2020,
1 November 2020 and 1 December 2020 /H1118/H1118/H1118
1,595,700 4 years 4.25 years
– on 1 November 2020 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,025,650 4.91 years 5.16 years
– on 26 February 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118306,650 1.59 years 1.84 years
– on 9 January 2025 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118306,650 3 years 3.25 years
– on 31 March 2025 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111854,250 No vesting period 0.25 years
– on 31 March 2025 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,339,950 3 years 3.25 years
Options granted to employees at
manager-level or below:
– on 15 October 2021 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111860,000 Until the later of the
completion of an
IPO and the end of
3.96 years from the
date of the grant
4.21 years
– on 16 February 2023, 31 March 2023,
17 January 2024 and 28 March 2024 /H1118/H1118/H1118/H1118/H1118/H1118
1,020,000 Until the later of the
completion of an
IPO and the end of
3 years from the
date of the grant
3.25 years
– 16 January 2025 and 31 March 2025 /H1118/H1118/H1118/H1118/H1118/H11182,220,000 Until the later of the
completion of an
IPO and the end of
3 years from the
date of the grant
3.25 years
Total share options granted /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111825,995,850
APPENDIX I ACCOUNTANTS’ REPORT
– I-63 –


--- page 494 ---
(b) The number of share options and the number of the Restricted Shares are as follows:
Number of Options
Number of
Restricted Shares
Outstanding as of 1 January 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,143,400 –
Granted during the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118613,300 –
Exercised during the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,709,250) 1,709,250
V ested during the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (1,709,250)
Outstanding as of 31 December 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,047,450 –
Granted during the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,449,700 –
Exercised during the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,709,350) 1,709,350
V ested during the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (1,709,350)
Outstanding as of 31 December 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,787,800 –
Granted during the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,173,200 –
Exercised during the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,699,150) 1,699,150
V ested during the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (1,639,150)
Outstanding as of 31 December 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,261,850 60,000
Granted during the period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,920,850 –
Exercised during the period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(54,250) 54,250
V ested during the period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (54,250)
Forfeited during the period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(306,650) –
Outstanding as of 30 June 2025 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810,821,800 60,000
For the years ended 31 December 2022, 2023 and 2024 and the six months ended 30 June 2024 and 2025, the
Group recognised share-based expenses of RMB1,337,000, RMB1,419,000, RMB3,139,000, RMB1,551,000
(unaudited) and RMB2,624,000.
(c) Fair value of share options and assumptions
The fair value of services received in return for share options granted is measured by reference to the fair value
of share options granted. The estimate of the fair value of the share options granted is measured based on a binomial
lattice model. The contractual life of the share option is used as an input into this model. Expectations of early
exercise are incorporated into the binomial lattice model.
Y ears ended 31 December
Six months
ended 30 June
2022 2023 2024 2025
Fair value of share options and
assumptions
Fair value at measurement date
(RMB) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181.47 1.47-2.02 1.93-1.97 3.63
Share price (RMB) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181.49 1.49-2.04 2.04 3.77
Exercise price (RMB) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11180.02 0.02 0.02 0.02
Expected volatility /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111852.41%
54.84%-
55.61%
47.73%-
54.38%
50.02%-
50.59%
Option life (years) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183.25 3.25 1.84-3.25 3.25
Early exercise level /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182.80 2.20-2.80 2.20-2.80 2.20-2.80
Expected dividends /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11180.00% 0.00% 1.57% 1.11%
Risk-free interest rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182.24% 2.40%-2.53% 1.97%-2.31% 1.27%-1.60%
The expected volatility is based on the historic volatility (calculated based on the weighted average remaining
life of the share options), adjusted for any expected changes to future volatility based on publicly available
information. Changes in the subjective input assumptions could materially affect the fair value estimate.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 495 ---
27 CAPITAL, RESERVES AND DIVIDENDS
(a) Movements in components of equity
The reconciliation between the opening and closing balances of each component of the Group’s consolidated equity is set out in the consolidated state ments of changes in equity.
Details of the changes in the Company’s individual components of equity are set out below:
Note
Paid-in
Capital
Share
capital
Share
premium
Capital
reserve
Other
reserve
Share-based
payment
reserve
Statutory
reserve
Shares held for
the share-based
incentive
scheme
(Accumulated
losses)/
retained
profits Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
note 27(c) note 27(c) note 27(d)(i) note 27(d)(i) note 27(d)(iv) note 27(d)(ii) note
27(d)(iii)
note 26
At 1 January 2022 /H1118/H1118/H1118 12,266 – – 129,898 (45,000) 1,924 145 (327) (16,633) 82,273
Loss for the year /H1118/H1118/H1118/H1118 – – – – – – – – (10,157) (10,157)
Equity-settled share-
based transactions /H1118/H111826 – – – – – 1,337 – – – 1,337
Shares vested under
the share-based
incentive scheme /H1118/H1118/H111826&27(d) – – – 1,171 – (1,171) – 34 – 34
At 31 December 2022
and 1 January 2023 /H1118 12,266 – – 131,069 (45,000) 2,090 145 (293) (26,790) 73,487----- ------ ------ ------- ------ ----- ---- ------ ------ ------
Profit for the year /H1118/H1118/H1118 – – – – – – – – 22,837 22,837
Conversion into a joint
stock company /H1118/H1118/H1118/H111827(c) (12,266) 12,266 108,706 (131,069) – (2,369) (145) – 24,877 –
Equity-settled share-
based transactions /H1118/H111826 – – – – – 1,419 – – – 1,419
Shares vested under
the share-based
incentive scheme /H1118/H1118/H111826&27(d) – – 726 – – (726) – 34 – 34
Dividend declared /H1118/H1118/H111827(b) – – – – – – – – (19,546) (19,546)
At 31 December 2023
and 1 January 2024 /H1118 – 12,266 109,432 – (45,000) 414 – (259) 1,378 78,231----- ------ ------ ------- ------ ----- ---- ------ ------ ------
APPENDIX I ACCOUNTANTS’ REPORT
– I-65 –


--- page 496 ---
Note
Paid-in
Capital
Share
capital
Share
premium
Capital
reserve
Other
reserve
Share-based
payment
reserve
Statutory
reserve
Shares held for
the share-based
incentive
scheme
(Accumulated
losses)/
retained
profits Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
note 27(c) note 27(c) note 27(d)(i) note 27(d)(i) note 27(d)(iv) note 27(d)(ii) note
27(d)(iii)
note 26
Profit for the year /H1118/H1118/H1118 – – – – – – – – 40,916 40,916
Equity-settled share-
based transactions /H1118/H111826 – – – – – 3,139 – – – 3,139
Shares vested under
the share-based
incentive scheme /H1118/H111826&27(d) – – 1,418 – – (1,418) – 32 – 32
Appropriation to
statutory reserve /H1118/H1118/H111827(d)(iii) – – – – – – 3,531 – (3,531) –
At 31 December 2024
and 1 January 2025 /H1118 – 12,266 110,850 – (45,000) 2,135 3,531 (227) 38,763 122,318----- ------ ------ ------- ------ ----- ---- ------ ------ ------
Profit for the period /H1118/H1118 – – – – – – – – 12,028 12,028
Equity-settled share-
based transactions /H1118 26 – – – – – 2,624 – – – 2,624
Shares vested under
the share-based
incentive scheme /H1118/H1118/H111826&27(d) – – 16 – – (17) – 1 – –
Dividend declared /H1118/H1118/H111827(b) – – – – – – – – (14,727) (14,727)
At 30 June 2025 /H1118/H1118/H1118/H1118 – 12,266 110,866 – (45,000) 4,742 3,531 (226) 36,064 122,243
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 497 ---
(b) Dividends
For the years ended 31 December 2022, 2023 and 2024 and the six months ended 30 June 2025, the Company
approved dividends of nil, RMB19,546,000 (RMB0.03 per ordinary share), nil and RMB14,727,000 (RMB0.02 per
ordinary share), respectively to its shareholders.
(c) Paid-in capital and share capital
Note
No. of ordinary
shares issued
and fully paid Paid-in capital Share capital
’000 RMB’000 RMB’000
At 1 January 2022 and 31 December
2022 and 1 January 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118 – 12,266 –
Issue of ordinary shares upon conversion
into a joint stock limited liability
company /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118i 613,325 (12,266) 12,266
At 31 December 2023 and 31 December
2024 and 30 June 2025 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118613,325 – 12,266
Note:
Pursuant to the shareholders’ resolutions and agreements dated 30 August 2023, the shareholders of the
Company agreed to convert the Company into a joint stock limited liability company. The net assets of the
Company as of the conversion base date, which is 30 April 2023, including paid-in capital, capital reserve,
share-based payment reserve, statutory reserve and accumulated losses were converted into 613,324,800 shares
with par value of RMB0.02 each. The excess of the net assets converted over the nominal value of the ordinary
shares was credited to the Company’s share premium. Upon the completion of registration with the Company
on 7 September 2023, the Company was converted into a joint stock limited liability company under PRC
Company Law, and renamed from Guangzhou Meet Xiaomian Catering Management Co., Ltd. to Guangzhou
Xiao Noodles Catering Management Co., Ltd..
(d) Nature and purpose of reserves
(i) Capital reserve and share premium
The capital reserve of the Group represents:
(i) the differences between the net considerations received and the nominal amount of paid-in capital issued
by the Company before its conversion into a joint stock limited liability company in September 2023;
(ii) the grant date fair value of the share options issued to employees of the Group under the share-based
incentive scheme which have been vested and exercised before its conversion into a joint stock limited
liability company in September 2023.
The share premium of the Group represents:
(i) the difference between the net assets and total amount of the par value of share issued in relation to the
conversion into a joint stock limited liability company as disclosed in note 27(c);
(ii) the grant date fair value of the share options issued to employees of the Group under the share-based
incentive scheme which have been vested and exercised after its conversion into a joint stock limited
liability company in September 2023.
APPENDIX I ACCOUNTANTS’ REPORT
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(ii) Share-based payment reserve
The share-based payment reserve is for recognising the grant date fair value of options issued to employees
of the Group under the share-based incentive scheme which are not yet vested or exercised in accordance with the
accounting policy adopted for equity-settled share-based payments in note 2(q)(ii).
(iii) Statutory reserve
Pursuant to the Articles of Association of the Group’s PRC companies and relevant statutory regulations,
appropriations to the statutory reserve fund were made at 10% of profit after tax determined in accordance with
accounting rules and regulations of the PRC until the reserve balance reaches 50% of the registered capital. This
reserve fund can be utilised in setting off accumulated losses or increasing capital of the PRC companies provided
that the balance after such conversion is not less than 25% of their registered capital, and is non-distributable other
than in liquidation.
(iv) Other reserve
Other reserve represents the initial carrying amount of the redemption liabilities, which is reclassified from
equity as note 20(b) mentioned.
(v) Exchange reserve
The exchange reserve comprise all foreign exchange differences arising from the translation of the financial
information of operations with functional currency other than RMB.
(e) Capital management
The Group’s primary objectives when managing capital are to safeguard the Group’s ability to continue as a
going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders, by
pricing products and services commensurately with the level of risk and by securing access to finance at a reasonable
cost.
The Group actively and regularly reviews and manages its capital structure to maintain a balance between the
higher shareholder returns that might be possible with higher levels of borrowings and the advantages and security
afforded by a sound capital position, and makes adjustments to the capital structure in light of changes in economic
conditions.
28 FINANCIAL RISK MANAGEMENT AND FAIR V ALUES
Exposure to credit, liquidity, interest rate and currency risks arises in the normal course of the Group’s
business.
The Group’s exposure to these risks and the financial risk management policies and practices used by the
Group to manage these risks are described below.
(a) Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a
financial loss to the Group. The Group’s credit risk is primarily attributable to trade and other receivables, lease
payment receivables and long-term receivables. The Group’s exposure to credit risk arising from cash and cash
equivalents and restricted deposits is limited because the counterparties are banks and financial institutions with
high-credit-quality, for which the Group considers to have low credit risk. The Group’s exposure to credit risk arising
from refundable rental deposits is considered to be low, taking into account (i) the landlords’ credit rating and (ii)
the remaining lease term and the period covered by the rental deposits.
The Group’s trade receivables mainly due from the third party payment platforms such as Unionpay, Alipay
or WeChat Pay are with high credit rating and no past due history. The management of the Group considers these
assets are short-term in nature and the probability of default is negligible on the basis of high-credit-rating issuers
during the years ended 31 December 2022, 2023 and 2024 and the six months ended 30 June 2025, and accordingly,
no ECL allowance for trade receivables has been recognised at 31 December 2022, 2023 and 2024 and 30 June 2025.
APPENDIX I ACCOUNTANTS’ REPORT
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In determining the ECL for other receivables, lease payment receivables (excluding rental deposits) and
long-term receivables, the management of the Group has taken into account the historical default experience and
forward-looking information, as appropriate. The management of the Group has assessed that other receivables, lease
payment receivables and long-term receivables have not had a significant increase in credit risk since initial
recognition and risk of default is insignificant. The expected credit loss rate is minimal and therefore, no ECL
allowance for other receivables, lease payment receivables and long-term receivables have been recognised at 31
December 2022, 2023 and 2024 and 30 June 2025. The expected credit loss rate is minimal.
The Group does not provide any guarantee which would expose the Group to credit risk.
(b) Liquidity risk
As at 31 December 2022, 2023 and 2024 and 30 June 2025, the Group had net current liabilities amounting
to RMB148,565,000, RMB186,756,000 and RMB242,225,000 and RMB254,960,000, respectively. In management of
liquidity risk, the Group’s policy is to regularly monitor its liquidity requirements, to ensure that it maintains
sufficient reserves of cash to meet its liquidity requirements in the short and longer term.
The Group relies on the cash generated from operating activities as the main source of liquidity. For the years
ended 31 December 2022, 2023 and 2024 and the six months ended 30 June 2025, the Group had net cash generated
from operating activities of approximately RMB104,773,000, RMB245,126,000, RMB313,546,000 and
RMB202,051,000, respectively. The directors believe that the Group will have sufficient funds available to meet their
financial obligations in the foreseeable future.
The following tables show the remaining contractual maturities as at 31 December 2022, 2023 and 2024 and
30 June 2025 of the Group’s non-derivative financial liabilities, which are based on contractual undiscounted cash
flows (including interest payments computed using contractual rates or, if floating, based on rates current as at 31
December 2022, 2023 and 2024 and 30 June 2025 and the earliest date the Group can be required to pay:
Within 1 year
or on demand
More than
1 year but less
than 2 years
More than
2 years but
less than
5 years
More than
5 years Total
Carrying
amount at
31 December
2022
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Trade and other
payables /H1118/H1118/H1118/H1118/H1118/H1118/H111850,904 – – – 50,904 50,904
Redemption
liabilities /H1118/H1118/H1118/H1118/H1118/H111845,000 – – – 45,000 45,000
Bank loans /H1118/H1118/H1118/H1118/H1118/H1118/H11189,992 – – – 9,992 9,982
Lease liabilities /H1118/H1118/H1118/H1118124,151 113,769 186,601 62,186 486,707 438,705
230,047 113,769 186,601 62,186 592,603 544,591
Within 1 year
or on demand
More than
1 year but less
than 2 years
More than
2 years but
less than
5 years
More than
5 years Total
Carrying
amount at
31 December
2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Trade and other
payables /H1118/H1118/H1118/H1118/H1118/H1118/H111893,205 – – – 93,205 93,205
Redemption
liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H111845,000 – – – 45,000 45,000
Lease liabilities /H1118/H1118/H1118/H1118162,441 155,967 259,496 57,927 635,831 576,552
300,646 155,967 259,496 57,927 774,036 714,757
APPENDIX I ACCOUNTANTS’ REPORT
– I-69 –


--- page 500 ---
Within 1 year
or on demand
More than
1 year but less
than 2 years
More than
2 years but
less than
5 years
More than
5 years Total
Carrying
amount at
31 December
2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Trade and other
payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118110,351 – – – 110,351 110,351
Redemption
liabilities /H1118/H1118/H1118/H1118/H1118/H111845,000 – – – 45,000 45,000
Bank loans /H1118/H1118/H1118/H1118/H1118/H1118/H111850,254 – – – 50,254 50,000
Lease liabilities /H1118/H1118/H1118/H1118219,473 190,136 328,853 63,265 801,727 734,619
425,078 190,136 328,853 63,265 1,007,332 939,970
Within 1 year
or on demand
More than
1 year but less
than 2 years
More than
2 years but
less than
5 years
More than
5 years Total
Carrying
amount at
30 June 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Trade and other
payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118120,331 – – – 120,331 120,331
Redemption
liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H111845,000 – – – 45,000 45,000
Lease liabilities /H1118/H1118/H1118/H1118239,105 200,629 330,098 56,728 826,560 762,224
404,436 200,629 330,098 56,728 991,891 927,555
(c) Interest rate risk
The Group’s exposure to the interest rate risk is not significant since the Group does not hold any financial
instrument of which the fair value or future cash flows will fluctuate due to changes in market interest rates.
(d) Currency risk
The Group is not exposed to significant foreign currency risk since financial assets and liabilities denominated
in currencies other than the functional currencies of the Company and its subsidiaries are not significant.
As the Group’s principal activities are carried out in the Chinese Mainland, the Group’s transactions are mainly
dominated in Renminbi, which is not freely convertible into foreign currencies. All foreign exchange transactions
involving Renminbi must take place through the People’s Bank of China or other institutions authorised to buy and
sell foreign exchange. The exchange rates adopted for the foreign exchange transactions are the rates of exchange
quoted by the People’s Bank of China that are determined largely by supply and demand.
As at 31 December 2022, 2023 and 2024 and 30 June 2025, cash and cash equivalents situated in Chinese
Mainland amounted to RMB36,519,000, RMB26,739,000, RMB39,031,000 and RMB44,006,000. Remittance of
funds out of Chinese Mainland is subject to relevant rules and regulations of foreign exchange control.
APPENDIX I ACCOUNTANTS’ REPORT
– I-70 –


--- page 501 ---
(e) Fair value measurement
(i) Financial assets and liabilities measured at fair value
Fair value hierarchy
The following table presents the fair value of the Group’s financial instruments measured at the end of
each reporting period on a recurring basis, categorised into the three-level fair value hierarchy as defined in
IFRS 13, Fair value measurement . The level into which a fair value measurement is classified is determined
with reference to the observability and significance of the inputs used in the valuation technique as follows:
– Level 1 valuations: Fair value measured using only Level 1 inputs i.e. unadjusted quoted prices
in active markets for identical assets or liabilities at the measurement date
– Level 2 valuations: Fair value measured using Level 2 inputs i.e. observable inputs which fail
to meet Level 1, and not using significant unobservable inputs.
Unobservable inputs are inputs for which market data are not available.
– Level 3 valuations: Fair value measured using significant unobservable inputs
The Group has a team headed by the finance manager performing valuations for the financial
instruments, including structured deposits and financial assets measured at FVOCI which are categorised into
Level 3 of the fair value hierarchy. The team reports directly to the chief financial officer. A valuation report
with analysis of changes in fair value measurement is prepared by the team at each interim and annual
reporting date, and is reviewed and approved by the chief financial officer.
Fair value at
31 December
Fair value measurements as at
31 December 2022 categorised into
2022 Level 1 Level 2 Level 3
RMB’000 RMB’000 RMB’000 RMB’000
Recurring fair value
measurement
Financial assets measured at
FVPL:
– Unlisted structured deposits /H1118 7,009 – – 7,009
Fair value at
31 December
Fair value measurements as at
31 December 2023 categorised into
2023 Level 1 Level 2 Level 3
RMB’000 RMB’000 RMB’000 RMB’000
Recurring fair value
measurement
Financial assets measured at
FVOCI:
– Unlisted equity securities /H1118/H1118 5 0–– 5 0
Financial assets measured at
FVPL:
– Unlisted structured deposits /H1118 25,063 – – 25,063
APPENDIX I ACCOUNTANTS’ REPORT
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Fair value at
31 December
Fair value measurements as at
31 December 2024 categorised into
2024 Level 1 Level 2 Level 3
RMB’000 RMB’000 RMB’000 RMB’000
Recurring fair value
measurement
Financial assets measured at
FVOCI:
– Unlisted equity securities /H1118/H1118 5 0–– 5 0
Financial assets measured at
FVPL:
– Unlisted structured deposits /H1118 70,261 – – 70,261
Fair value at
30 June
Fair value measurements as at
30 June 2025 categorised into
2025 Level 1 Level 2 Level 3
RMB’000 RMB’000 RMB’000 RMB’000
Recurring fair value
measurement
Financial assets measured at
FVOCI:
– Unlisted equity securities /H1118/H1118 5 0–– 5 0
Financial assets measured at
FVPL:
– Unlisted structured deposits /H1118 25,018 – – 25,018
For the years ended 31 December 2022, 2023 and 2024 and the six months ended 30 June 2025 , there
were no transfers between Level 1 and Level 2, or transfer into or out of Level 3. The Group’s policy is to
recognise transfers between levels of fair value hierarchy as at the end of each reporting period in which they
occur.
Information about Level 3 fair value measurements
Valuation techniques
Significant
unobservable inputs
Unlisted structured deposits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Discounted cash
flow (note)
Discount rate
Note: The fair value of unlisted structured deposits is determined by discounting the estimated future cash
flows at risk-adjusted rate, which is the benchmark interest rate plus the risk premium as at the end of
each reporting period.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 503 ---
The following table indicates the instantaneous change in the Group’s loss/profit after tax and
accumulated losses/retained profits that would arise if fair value of unlisted structured deposits to which the
Group has significant exposure at the end of the each reporting period had changed at that date, assuming all
other risk variables remained constant.
At 31 December 2022 At 31 December 2023 At 31 December 2024 At 30 June 2025
Increase in
fair value of
unlisted
structured
deposits
Effect on
loss after tax
and
accumulated
losses
Increase in
fair value of
unlisted
structured
deposits
Effect on
profit after
tax and
accumulated
losses
Increase in
fair value of
unlisted
structured
deposits
Effect on
profit after
tax and
retained
profit
Increase in
fair value of
unlisted
structured
deposits
Effect on
profit after
tax and
retained
profit
RMB’000 RMB’000 RMB’000 RMB’000
5% 263 5% 940 5% 2,635 5% 938
-5% (263) -5% (940) -5% (2,635) -5% (938)
The movement during the period in the balance of Level 3 fair value measurements is as follows:
Unlisted structured deposits
At 31 December
2022
At 31 December
2023
At 31 December
2024
At 30 June
2025
RMB’000 RMB’000 RMB’000 RMB’000
At 1 January /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 7,009 25,063 70,261
Payment for purchases of
unlisted structured deposits /H1118 142,000 345,000 436,000 135,000
Disposals of unlisted
structured deposits /H1118/H1118/H1118/H1118/H1118/H1118(135,000) (327,009) (391,063) (180,261)
Changes in fair value
recognised in profit or loss
during the year/period /H1118/H1118/H1118/H1118 9 63 261 18
At 31 December/30 June /H1118/H1118/H1118/H11187,009 25,063 70,261 25,018
Any gains or losses arising from the remeasurement of the Group’s investment in unlisted structured
deposits are recognised in the profit or loss.
Any gains or losses arising from the remeasurement of the Group’s unlisted equity securities held for
strategic purposes are recognised in the fair value reserve (non-recycling) in other comprehensive income.
Upon disposal of the equity securities, the amount accumulated in other comprehensive income is transferred
directly to retained earnings.
(ii) Fair values of financial assets and liabilities carried at other than fair value
The carrying amounts of the Group’s financial instruments carried at amortised cost are not materially different
from their fair values as at 31 December 2022, 2023 and 2024 and 30 June 2025.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 504 ---
29 COMMITMENTS
Capital commitments of the Group outstanding at 31 December 2022, 2023 and 2024 and 30 June 2025 not
provided for in the Historical Financial Information were as follows:
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Contracted for acquisition of
property, plant and equipment /H1118/H1118/H1118 2,019 5,236 6,846 9,173
As at 31 December 2022, the Group has entered into new leases of four to eight years that are not yet
commenced, the lease payments under which amounted ranging from RMB340,000 to RMB865,000 per annum over
the lease terms.
As at 31 December 2023, the Group has entered into new leases of three to eleven years that are not yet
commenced, the lease payments under which amounted ranging from RMB470,000 to RMB938,000 per annum over
the lease terms.
As at 31 December 2024, the Group has entered into new leases of two to ten years that are not yet commenced,
the lease payments under which amounted ranging from RMB79,000 to RMB911,000 per annum over the lease terms.
As at 30 June 2025, the Group has entered into new leases of three to six years that are not yet commenced,
the lease payments under which amounted ranging from RMB198,000 to RMB977,000 per annum over the lease
terms.
30 MATERIAL RELATED PARTY TRANSACTIONS
(a) Names and relationships of the related parties that had material transactions with the Group
For the years ended 31 December 2022 and 2023 and 2024 and the six months ended 30 June 2025, the
directors are of the view that the following are related parties of the Group:
Name of party Relationship with the Group
Huai’an Y ujian Haoren Enterprise
Management Partnership (Limited
Partnership) ( ଊτ̹༾ԈλɛΆุ၍
ଣΥྫΆุ(Υྫ))* /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Shareholder
Mr. Song /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Chairman of our Board, executive director and ultimate
controlling party
Mr. Su /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Executive director
Ms. Luo Y anling (“Ms. Luo”) /H1118/H1118/H1118/H1118/H1118/H1118/H1118Key management personnel and close members of the family of
the ultimate controlling party
* The official names of these entities are in Chinese. The English names are for identification purpose
only.
APPENDIX I ACCOUNTANTS’ REPORT
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(b) Key management personnel remuneration
Remuneration for key management personnel of the Group, including amounts paid to the Company’s directors
as disclosed in note 8 and certain of the highest paid employees as disclosed in note 9, is as follows.
Y ears ended 31 December Six months ended 30 June
2022 2023 2024 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Salaries, wages and other
benefits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,475 3,395 3,713 1,781 2,006
Contributions to defined
contribution retirement
plan /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111832 33 38 19 21
Equity-settled share-based
payment expenses /H1118/H1118/H1118/H1118427 302 218 114 259
2,934 3,730 3,969 1,914 2,286
Total remuneration is included in “staff costs” (see note 6(b)).
(c) Balance with related parties
As at 31 December As at 30 June
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
Non-trade in nature
Dividends payable /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 3 9 4––
The balance with the related party is unsecured, interest-free and have no fixed repayment terms.
(d) Guarantees from related parties
All of the bank loans as at 31 December 2022 and 2024 were guaranteed by Mr. Song, Mr. Su and Ms. Luo.
As at 31 December 2022, 2023 and 2024 and 30 June 2025, the unused banking loan facilities of RMB9,950,000,
RMB80,000,000, RMB140,000,000 and RMB250,000,000 were guaranteed by Mr. Song, Mr. Su or Ms. Luo. These
guarantees from related parties will be released on or before the listing.
31 IMMEDIATE AND ULTIMATE CONTROLLING PARTY
As at the date of this report, the Directors consider the immediate parent of the Group to be Huai’an Chuangtao
Enterprise Management Partnership (Limited Partnership), which is incorporated in the PRC, and the ultimate
controlling party of the Company to be Mr. Song.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 506 ---
32 POSSIBLE IMPACT OF AMENDMENTS, NEW STANDARDS AND INTERPRETATIONS ISSUED
BUT NOT YET EFFECTIVE FOR THE ACCOUNTING YEAR BEGINNING ON 1 JANUARY 2025
Up to the date of issue of the Historical Financial Information, the IASB has issued a number of new or
amended standards, which are not yet effective for the year beginning on 1 January 2025 and which have not been
adopted in the Historical Financial Information. These developments include the following which may be relevant
to the Group.
Effective for
accounting periods
beginning on or after
Amendments to IFRS 9 and IFRS 7, Contracts Referencing Nature-dependent
Electricity /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
1 January 2026
Amendments to IFRS 9 and IFRS 7, Amendments to the classification and
measurement of financial instruments /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
1 January 2026
Annual improvements to IFRSs – V olume 11 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181 January 2026
IFRS 18, Presentation and disclosure in financial statements /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181 January 2027
IFRS 19, Subsidiaries without public accountability: disclosures /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181 January 2027
Amendments to IFRS 10 and IAS 28, Sale or Contribution of Assets between an
Investor and its Associate or Joint venture /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Note
Note: The effective date for these amendments was deferred indefinitely. Early adoption continues to be
permitted.
The Group is in the process of making an assessment of what the impact of these developments is expected
to be in the period of initial application. So far it has concluded that the adoption of them is unlikely to have a
significant impact on the Historical Financial Information except for the following:
IFRS 18, Presentation and disclosure in financial statements
IFRS 18 will replace IAS 1 Presentation of financial statements and aims to improve the transparency and
comparability of information about an entity financial statements. IFRS 18 is effective for the year beginning on or
after 1 January 2027 and is to be applied retrospectively.
Among other changes, under IFRS 18, entities are required to classify all income and expenses into five
categories in the statement of profit or loss, namely the operating, investing, financing, discontinued operations and
income tax categories. Entities are also required to provide specific disclosures about management-defined
performance measures in a single note in the financial statements.
The Group does not plan to early adopt IFRS 18 and IFRS 18 will impact the presentation of financial
statements and is not expected to have significant impact on the financial performance and positions of the Group.
33 SUBSEQUENT EVENTS
In October 2025, the Company passed a board resolution and shareholders resolution to declare a dividend of
RMB34,365,000 to existing shareholders.
SUBSEQUENT FINANCIAL STATEMENTS
No audited financial statements have been prepared by the Company and its subsidiaries
in respect of any period subsequent to 30 June 2025.
APPENDIX I ACCOUNTANTS’ REPORT
– I-76 –


--- page 507 ---
The information set forth in this appendix does not form part of the Accountants’ Report
prepared by KPMG, Certified Public Accountants, Hong Kong, the reporting accountants of
the Company, as set forth in Appendix I to this prospectus, and is included herein for
illustrative purposes only.
The unaudited pro forma financial information should be read in conjunction with the
section headed “Financial Information” of this prospectus and the Accountants’ Report set
forth in Appendix I to this prospectus.
A. UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET
TANGIBLE ASSETS
The following unaudited pro forma statement of adjusted consolidated net tangible assets
of the Group prepared in accordance with Rule 4.29 of the Listing Rules is to illustrate the
effect of the Global Offering on the consolidated net tangible assets of the Group attributable
to equity shareholders of the Company as if the Global Offering had been completed on 30 June
2025.
The unaudited pro forma statement of adjusted consolidated net tangible assets has been
prepared for illustrative purpose only and because of its hypothetical nature, it may not give
a true picture of the financial position of the Group had the Global Offering been completed
as at 30 June 2025 or at any future dates.
Consolidated net
tangible assets of
the Group
attributable
to equity
shareholders of
the Company as
of 30 June 2025 (1)
Estimated net
proceeds from the
Global Offering (2)
Estimated impact to
consolidated net
tangible assets upon
reclassification of
redemption
liabilities (3)
Unaudited pro
forma adjusted
consolidated net
tangible assets
attributable
to equity
shareholders of
the Company
Unaudited pro
forma adjusted
consolidated net
tangible assets
attributable to
equity shareholders
of the Company
per Share (4)
RMB’000 RMB’000 RMB’000 RMB’000 RMB HK$ (5)
Base on an Offer Price
of HK$5.64 per
H Share /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118143,153 461,242 45,000 649,395 0.93 1.01
Base on an Offer Price
of HK$7.04 per
H Share /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118143,153 582,069 45,000 770,222 1.10 1.19
Notes:
(1) The consolidated net tangible assets of the Group attributable to equity shareholders of the Company as at 30
June 2025 is calculated based on the total equity attributable to equity shareholders of the Company of
RMB147,090,000 and after deducting intangible assets of RMB3,937,000 as at 30 June 2025, as extracted from
the Accountants’ Report as set out in Appendix I in this prospectus.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-1 –


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(2) The estimated net proceeds from the Global Offering are based on the indicative Offer Prices of HK$5.64 per
H Share and HK$7.04 per H Share, being the lower end price and higher end price of the indicative Offer Price
range respectively and 97,364,500 H Shares expected to be issued under the Global Offering, after deduction
of the estimated underwriting fees and other related expenses related to Global Offering (excluding listing
expenses of approximately RMB12,276,000 which have been charged to profit or loss during the Track Record
Period), and takes no account of any Shares which may be issued upon the exercise of the Over-allotment
Option. The estimated net proceeds of the Global Offering have been converted to RMB at the exchange rate
of HK$1.00 to RMB0.92342. No representation is made that the Hong Kong dollar amounts have been, could
have been or could be converted into RMB, or vice versa, at that rate or at any other rates.
(3) As at 30 June 2025, the carrying amount of the redemption liabilities was RMB45,000,000, which was related
to the redemption rights issued to an investor. Upon the completion of the Global Offering, the redemption
rights will automatically terminated, and the redemption liabilities will be reclassified from liabilities to equity
accordingly.
(4) The unaudited pro forma adjusted consolidated net tangible assets attributable to equity shareholders of the
Company per Share is arrived at after the adjustments for the estimated net proceeds from the Global Offering
as described above and on the basis that a total of 699,500,800 Shares (which is calculated based on
613,324,800 Shares issued at 30 June 2025 and adjusted for 97,364,500 Shares newly issued upon the Global
Offering, but excluding 11,188,500 unvested Shares held by the Company’s employee incentive platform for
the Pre-IPO Employee Incentive Scheme) were in issue immediately following completion of the Global
Offering assuming that the Global Offering was completed on 30 June 2025, but takes no account of any Shares
which may be issued upon the exercise of the Over-allotment Option or pursuant to the Pre-IPO Employee
Incentive Scheme.
(5) The unaudited pro forma adjusted consolidated net tangible assets attributable to equity shareholders of the
Company per Share is converted into Hong Kong dollars at an exchange rate of HK$1.00 to RMB0.92342. No
representation is made that RMB amounts have been, could have been or may be converted into Hong Kong
dollars, or vice versa, at that rate.
(6) No adjustment has been made to the unaudited pro forma adjusted consolidated net tangible assets to reflect
any trading results or other transactions of the Group entered into subsequent to 30 June 2025, including but
not limited to the dividends of RMB34,365,000 declared in October 2025. Had such dividends been declared
on 30 June 2025, the pro forma adjusted consolidated net tangible assets would have decreased by
approximately RMB34,365,000 and the pro forma adjusted consolidated net tangible assets attributable to
equity shareholders of the Company per Share would have decreased by approximately RMB0.05 (equivalent
to HK$0.05).
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-2 –


--- page 509 ---
B. REPORT ON THE UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following is the text of a report received from the reporting accountants, KPMG,
Certified Public Accountants, Hong Kong, in respect of the Group’ s pro forma financial
information for the purpose of incorporation in this prospectus.
INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE
COMPILATION OF PRO FORMA FINANCIAL INFORMATION
TO THE DIRECTORS OF GUANGZHOU XIAO NOODLES CATERING
MANAGEMENT CO., LTD.
We have completed our assurance engagement to report on the compilation of pro forma
financial information of Guangzhou Xiao Noodles Catering Management Co., Ltd. (the
“Company”) and its subsidiaries (collectively the “Group”) by the directors of the Company
(the “Directors”) for illustrative purposes only. The unaudited pro forma financial information
consists of the unaudited pro forma statement of adjusted consolidated net tangible assets as
at 30 June 2025 and related notes as set out in Part A of Appendix II to the prospectus dated
27 November 2025 (the “Prospectus”) issued by the Company. The applicable criteria on the
basis of which the Directors have compiled the pro forma financial information are described
in Part A of Appendix II to the Prospectus.
The pro forma financial information has been compiled by the Directors to illustrate the
impact of the proposed offering of the ordinary shares of the Company (the “Global Offering”)
on the Group’s financial position as at 30 June 2025 as if the Global Offering had taken place
at 30 June 2025. As part of this process, information about the Group’s financial position as
at 30 June 2025 has been extracted by the Directors from the Group’s historical financial
information included in the Accountants’ Report as set out in Appendix I to the Prospectus.
Directors’ Responsibilities for the Pro Forma Financial Information
The Directors are responsible for compiling the pro forma financial information in
accordance with paragraph 4.29 of the Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited (the “Listing Rules”) and with reference to Accounting
Guideline 7 “Preparation of Pro Forma Financial Information for Inclusion in Investment
Circulars” (“AG 7”) issued by the Hong Kong Institute of Certified Public Accountants
(“HKICPA”).
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
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--- page 510 ---
Our Independence and Quality Management
We have complied with the independence and other ethical requirements of the Code of
Ethics for Professional Accountants issued by the HKICPA, which is founded on fundamental
principles of integrity, objectivity, professional competence and due care, confidentiality and
professional behaviour.
Our firm applies Hong Kong Standard on Quality Management 1 “Quality Management
for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or
Related Services Engagements”, which requires the firm to design, implement and operate a
system of quality management including policies or procedures regarding compliance with
ethical requirements, professional standards and applicable legal and regulatory requirements.
Reporting Accountants’ Responsibilities
Our responsibility is to express an opinion, as required by paragraph 4.29(7) of the
Listing Rules, on the pro forma financial information and to report our opinion to you. We do
not accept any responsibility for any reports previously given by us on any financial
information used in the compilation of the pro forma financial information beyond that owed
to those to whom those reports were addressed by us at the dates of their issue.
We conducted our engagement in accordance with Hong Kong Standard on Assurance
Engagements (“HKSAE”) 3420 “Assurance Engagements to Report on the Compilation of Pro
Forma Financial Information Included in a Prospectus” issued by the HKICPA. This standard
requires that the reporting accountants plan and perform procedures to obtain reasonable
assurance about whether the Directors have compiled the pro forma financial information in
accordance with paragraph 4.29 of the Listing Rules, and with reference to AG 7 issued by the
HKICPA.
For purpose of this engagement, we are not responsible for updating or reissuing any
reports or opinions on any historical financial information used in compiling the pro forma
financial information, nor have we, in the course of this engagement, performed an audit or
review of the financial information used in compiling the pro forma financial information.
The purpose of pro forma financial information included in an investment circular is
solely to illustrate the impact of a significant event or transaction on unadjusted financial
information of the Group as if the event had occurred or the transaction had been undertaken
at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any
assurance that the actual outcome of events or transactions as at 30 June 2025 would have been
as presented.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
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--- page 511 ---
A reasonable assurance engagement to report on whether the pro forma financial
information has been properly compiled on the basis of the applicable criteria involves
performing procedures to assess whether the applicable criteria used by the Directors in the
compilation of the pro forma financial information provide a reasonable basis for presenting
the significant effects directly attributable to the event or transaction, and to obtain sufficient
appropriate evidence about whether:
 the related pro forma adjustments give appropriate effect to those criteria; and
 the pro forma financial information reflects the proper application of those
adjustments to the unadjusted financial information.
The procedures selected depend on the reporting accountants’ judgement, having regard
to the reporting accountants’ understanding of the nature of the Group, the event or transaction
in respect of which the pro forma financial information has been compiled, and other relevant
engagement circumstances.
The engagement also involves evaluating the overall presentation of the pro forma
financial information.
We believe that the evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Our procedures on the pro forma financial information have not been carried out in
accordance with attestation standards or other standards and practices generally accepted in the
United States of America, auditing standards of the Public Company Accounting Oversight
Board (United States) or any overseas standards and accordingly should not be relied upon as
if they had been carried out in accordance with those standards and practices.
We make no comments regarding the reasonableness of the amount of net proceeds from
the issuance of the Company’s shares, the application of those net proceeds, or whether such
use will actually take place as described in the section headed “FUTURE PLANS AND USE
OF PROCEEDS” in the Prospectus.
Opinion
In our opinion:
(a) the pro forma financial information has been properly compiled on the basis stated;
(b) such basis is consistent with the accounting policies of the Group, and
(c) the adjustments are appropriate for the purposes of the pro forma financial
information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.
KPMG
Certified Public Accountants
Hong Kong
27 November 2025
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-5 –


--- page 512 ---
PRC TAXATION
Taxation of Security Holders
The taxation of income and capital gains of holders of H Shares is subject to the laws and
practices of the PRC and of jurisdictions in which holders of H Shares are resident or otherwise
subject to tax. The following summary of certain relevant taxation provisions is based on
current effective PRC laws and practices and no predictions are made about changes or
adjustments to relevant laws or policies, and no comments or suggestions will be made
accordingly. The discussion does not deal with all possible tax consequences relating to an
investment in the H Shares, nor does it take into account the specific circumstances of any
particular investor, some of which may be subject to special regulations. Accordingly, you
should consult your own tax adviser regarding the tax consequences of an investment in H
Shares. The discussion is based upon PRC laws and relevant interpretations in effect as of the
date of this document, all of which are subject to change and may have retrospective effect.
Prospective investors are urged to consult their financial adviser regarding the PRC and other
tax consequences of owning and disposing of H Shares.
Taxation on dividends
Individual investors
Pursuant to the Individual Income Tax Law of the PRC (੻೼
, the “ IIT Law ”), which was last amended on August 31, 2018 by the NPC Standing
Committee and came into effect on January 1, 2019, and the Regulations on Implementation
of the Individual Income Tax Law of the PRC (ૢԷ),
which were last amended on December 18, 2018 by the State Council and came into effect on
January 1, 2019, dividends paid by PRC enterprises are subject to individual income tax levied
at a flat rate of 20%. Unless otherwise provided by the competent financial and taxation
authorities under the State Council, all the interest, dividend and bonus, obtained from
enterprises, institutions, other organizations, and individual residents within China, are deemed
as derived from the PRC whether the payment place is in the PRC. Pursuant to the Circular on
Certain Issues Concerning the Policies of Individual Income Tax (ഄ
) promulgated by the Ministry of Finance and the SA T on May 13, 1994, overseas
individuals are exempted from the individual income tax for dividends or bonuses received
from foreign-invested enterprises. According to the Notice on Issues Concerning the
Administration of Individual Income Tax Collection Following the Annulment of Document
Guo Shui Fa [1993] No. 045 (Guo Shui Han [2011] No. 348) (਷೼೯[1993]045 ໮˖΁
(਷೼Ռ[2011]348 ໮)) issued on June 28, 2011 by
the STA, as for the income from dividends and bonuses obtained by foreign resident individual
shareholders from the shares issued in Hong Kong by domestic non-foreign invested
enterprises, the individual income tax shall be withheld by withholding agents according to the
item of “income from interest, dividends and bonuses”. Where a domestic non-foreign invested
enterprise issues shares in Hong Kong, its foreign resident individual shareholders can enjoy
relevant tax incentives in accordance with tax treaties signed between their countries of
APPENDIX III TAXATION AND FOREIGN EXCHANGE
– III-1 –


--- page 513 ---
residence and China as well as the provisions of tax arrangements between the Chinese
Mainland and Hong Kong. A domestic non-foreign invested enterprise that issues shares in
Hong Kong may, for the purpose of distributing dividends and bonuses, withhold individual
income tax at the rate of 10% in general, and the application procedure is not required. For
situations where the tax rate for dividend is not 10%, the following regulations shall apply:
where an individual who has earned the dividends is the resident of a country with which the
conventional tax rate is lower than 10%, such individual can apply for refund according to the
Announcement of the STA on Issuing the Measures for Non-resident Taxpayers’ Enjoyment of
Treaty Benefits (Announcement No. 35, 2019 of the STA) (͏ॶ
ʮѓ); where an individual who has earned the dividends is the
resident of a country with which the conventional tax rate is higher than 10% and lower than
20%, the withholding agent shall withhold the individual income tax in accordance with the
actual conventional tax rate when distributing dividends and bonuses, and the application
procedure is not required; where an individual who has earned the dividends is the resident of
a country which has not signed a tax treaty with China or is under other situations, the
withholding agent shall withhold the individual income tax at the rate of 20% when distributing
dividends and bonuses.
Enterprise investors
According to the Enterprise Income Tax Law of the PRC (੻೼
, the “ EIT Law ”), which was latest amended by the SCNPC and implemented on
December 29, 2018, and the Regulation on the Implementation of the Enterprise Income Tax
Law of the PRC (ૢԷ) enacted on December 6, 2007
by the State Council and became effective on January 1, 2008, and lately amended on
December 6, 2024, the corporate income tax shall be at the rate of 25%. But, a non-resident
enterprise is generally subject to a 10% enterprise income tax on PRC-sourced income, if it
does not have an establishment or premise in the PRC or has an establishment or premise in
the PRC but its PRC-sourced income has no real connection with such establishment or
premise. The aforesaid income tax payable for non-resident enterprises is deducted at source,
where the payer of the income is required to withhold the income tax from the amount to be
paid to the non-resident enterprise.
Notice from the State Administration of Taxation on Issues Concerning Withholding the
Enterprise Income Tax on the Dividends Paid by Chinese Resident Enterprises to H-Share
Holders Which Are Overseas Non-resident Enterprises (Guo Shui Han [2008] No. 897) ( ਷
͏ΆุΣྤ̮ H੻೼Ϟᗫ
(਷೼Ռ[2008]897 ໮)), which was issued and implemented by the STA on
November 6, 2008, further clarifies that a PRC-resident enterprise must withhold enterprise
income tax at a rate of 10% on the dividends of 2008 and onwards that it distributes to overseas
non-resident enterprise shareholders of H Shares. In addition, the Response to Questions on
Levying Enterprise Income Tax on Dividends Derived by Non-resident Enterprise from
Holding Stock such as B Shares (Guo Shui Han [2009] No. 394) (͏
Άุ՟੻Bҭᔧ(਷೼Ռ[2009]394 ໮)), which was
issued by the STA and came into effect on July 24, 2009, further provides that any
APPENDIX III TAXATION AND FOREIGN EXCHANGE
– III-2 –


--- page 514 ---
PRC-resident enterprise whose shares are listed on overseas stock exchanges must withhold
and remit enterprise income tax at a rate of 10% on dividends of 2008 and onwards that it
distributes to non-resident enterprises. Such tax rates may be further modified pursuant to the
tax treaty or agreement that China has entered into with a relevant country or region, where
applicable.
Pursuant to the Arrangement between the Mainland and the Hong Kong Special
Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with respect to Taxes on Income (ᅄ೼
τર, the “ Arrangement ”), which was signed between the STA and the
Hong Kong Government on August 21, 2006, the PRC Government may levy taxes on the
dividends paid by a PRC company to Hong Kong residents (including resident individual and
resident entities) in an amount not exceeding 10% of the total dividends payable by the PRC
company unless a Hong Kong resident directly holds 25% or more of the equity interest in the
PRC company, then such tax shall not exceed 5% of the total dividends payable by the PRC
company. The Fifth Protocol to the Arrangement between the Mainland and the Hong Kong
Special Administrative Region for the Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with respect to Taxes on Income ( <੻ᒒеᕐ
τર>), which came into effect on December 6, 2019,
added a criteria for the qualification of entitlement to enjoy treaty benefits. Although there may
be other provisions under the Arrangement, the treaty benefits under the criteria shall not be
granted in the circumstance where relevant gains, after taking into account all relevant facts
and conditions, are reasonably deemed to be one of the main purposes for the arrangement or
transactions which will bring any direct or indirect benefits under this Arrangement, except
when the grant of benefits under such circumstance is consistent with relevant objective and
goal under the Arrangement. The application of the dividend clause of tax agreements is
subject to the requirements of PRC tax law and regulation, such as the Notice of the STA on
the Issues Concerning the Application of the Dividend Clauses of Tax Agreements (Guo Shui
Han [2009] No. 81) ((਷೼Ռ
[2009]81 ໮)).
Tax Treaties
Non-PRC resident investors residing in countries which have entered into treaties for the
avoidance of double taxation with the PRC or residing in Hong Kong or Macau are entitled to
a reduction of the withholding taxes imposed on the dividends received from PRC companies.
The PRC currently has entered into Avoidance of Double Taxation Treaties or Arrangements
with a number of countries and regions including Hong Kong, Macau, Australia, Canada,
France, Germany, Japan, Malaysia, the Netherlands, Singapore, the United Kingdom and the
United States. Non-PRC resident enterprises entitled to preferential tax rates in accordance
with the relevant taxation treaties or arrangements are required to apply to the PRC tax
authorities for a refund of the enterprise income tax in excess of the agreed tax rate, and the
refund application is subject to approval by the PRC tax authorities.
APPENDIX III TAXATION AND FOREIGN EXCHANGE
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--- page 515 ---
Taxation on share transfer
Income Tax
Individual investor
According to the IIT Law and its implementation rules, the proceeds from the sale of
equity interests in PRC-resident enterprise are subject to income tax at a tax rate of 20%.
According to the Notice Concerning Continuing Temporary Exemption from Individual
Income Tax on The Income From Stocks Transfer (Cai Shui Zi [1998] No. 61) (ɛᔷ
ٝ( ৌ೼ο[1998]61 ໮)) promulgated by the STA and
became effective on March 30, 1998, since January 1, 1997, the individual income tax levied
on the individual income from transfer of stocks of listed companies will continue to be
temporarily exempted. In the newly revised IIT Law, the STA did not clearly stipulate whether
to continue to exempt individuals from tax on the income from transfer of stocks of listed
companies.
Furthermore, the Notice of the State Administration of Taxation on Issues Concerning the
Levy of Individual Income Tax on Incomes from the Transfer of Restricted Shares of Listed
Companies (Cai Shui [2009] No. 167) (੻೼
(ৌ೼[2009]167 ໮)) jointly issued by the MOF, the STA and the CSRC
which was implemented on December 31, 2009 stipulates that income derived by individuals
from transfer of shares of listed companies issued to the public by the listed companies and
transfer of shares of listed companies obtained from the market at the Shanghai Stock
Exchange and Shenzhen Stock Exchange shall continue to be exempted from individual income
tax, provided that it excludes the relevant restricted shares as defined in the Supplementary
Notice of the Ministry of Finance, State Administration of Taxation and China Securities
Regulatory Commission on Issues Concerning the Levy of Individual’ Income Tax on
Incomes from the Transfer of Restricted Shares of Listed Companies (Cai Shui [2010] No. 70)
( (ৌ೼[2010]70
໮)) jointly issued by these departments and implemented on November 10, 2010. As of the
Latest Practicable Date, the aforementioned provisions did not specify whether to impose the
individual income tax on the income from the transfer of shares of PRC-resident enterprise
listed on overseas stock exchanges by non-PRC resident individuals.
Enterprise investors
In accordance with the EIT Law and its implementation rules, a non-resident enterprise
that has not established an establishment or premises in the PRC or it has established an
establishment and premises but the income received has no actual connection with the
establishment and premises, it shall pay an enterprise income tax at a rate of 10% for the
income arising within the PRC (including the income from sale of equity interests of
PRC-resident enterprise). The aforesaid income tax payable for non-resident enterprises are
APPENDIX III TAXATION AND FOREIGN EXCHANGE
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--- page 516 ---
deducted at source, where the payer of the income is required to withhold the income tax from
the amount to be paid to the non-resident enterprise on each payment or when it is payable on
due date. The withholding tax may be reduced pursuant to applicable treaties or agreements on
avoidance of double taxation.
Stamp Duty
In accordance with the Stamp Tax Law of the People’s Republic of China ( ʕശɛ͏΍
) promulgated by the Standing Committee of the NPC on June 10, 2021 and
came into effect on July 1, 2022, entities and individuals that issue taxable certificates and
conduct securities transactions within the territory of PRC, or entities and individuals who
issue taxable certificates and conduct securities transactions outside the territory of PRC to be
used within the territory of the PRC shall subject to stamp duty.
Estate Duty
As of the Latest Practicable Date, no estate duty was levied within the PRC.
PRINCIPAL TAXATION OF OUR COMPANY IN THE PRC
Enterprise Income Tax
The Enterprise Income Tax Law of the PRC (),
promulgated by the National People’s Congress on March 16, 2007, came into effect on
January 1, 2008 and last amended on December 29, 2018, as well as the Implementation Rules
of the Enterprise Income Tax Law (ૢԷ), promulgated
by the State Council on December 6, 2007, came into force on January 1, 2008 and amended
on April 23, 2019, are the principal law and regulation governing enterprise income tax in the
PRC. According to the EIT Law and its implementation rules, enterprises are classified into
resident enterprises and non-resident enterprises. Resident enterprises refer to enterprises that
are legally established in the PRC, or are established under foreign laws but whose actual
management bodies are located in the PRC. Non-resident enterprises refer to enterprises that
are legally established under foreign laws and have set up institutions or sites in the PRC but
with no actual management body in the PRC, or enterprises that have not set up institutions or
sites in the PRC but have derived incomes from the PRC. A uniform income tax rate of 25%
applies to all resident enterprises and non-resident enterprises that have set up institutions or
sites in the PRC to the extent that such incomes are derived from their set-up institutions or
sites in the PRC, or such income are obtained outside the PRC but have an actual connection
with the set-up institutions or sites. And non-resident enterprises that have not set up
institutions or sites in the PRC or have set up institutions or sites but the incomes obtained by
the said enterprises have no actual connection with the set-up institutions or sites, shall pay
enterprise income tax at the rate of 10% in relation to their income sources from the PRC.
APPENDIX III TAXATION AND FOREIGN EXCHANGE
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--- page 517 ---
Value-Added Tax
The major PRC Law governing value-added tax are the Interim Regulations on
V alue-added Tax of the PRC (೼ᅲБૢԷ) issued on December 13,
1993 by the State Council, came into effect on January 1, 1994, and last revised on November
19, 2017, as well as the Implementation Rules for the Interim Regulations on V alue-Added Tax
of the PRC () issued on December 25, 1993 by
the MOF, came into effect on the same day and last revised on October 28, 2011, any entities
and individuals engaged in the sale of goods or processing, repair and assembly services, sale
of services, intangible assets, immovables and importation of goods within the territory of the
PRC are taxpayers of V A T and shall pay the V A T in accordance with the law and regulation.
Taxpayers of V A T shall pay V A T according to the tax rates of 0%, 6%, 11% and 17% for
different goods sold and services provided. With the V A T reforms in the PRC, the rate of V A T
has been changed several times. The MOF and the STA issued the Notice of on Adjusting V A T
Rates (Cai Shui [2018] No. 32) ((ৌ೼[2018]32 ໮)) on April 4,
2018 to adjust the tax rates of 17% and 11% applicable to any taxpayer’s V A T taxable sale or
import of goods to 16% and 10%, respectively, and this adjustment became effect on May 1,
2018. Subsequently, the MOF, the STA and the General Administration of Customs jointly
issued the Announcement on Relevant Policies for Deepening the V A T Reform (ଉʷᄣ
ʮѓ) on March 20, 2019 to make a further adjustment, which came into
effect on April 1, 2019. The tax rate of 16% applicable to the V A T taxable sale or import of
goods shall be adjusted to 13%, and the tax rate of 10% applicable thereto shall be adjusted to
9%.
PRC FOREIGN EXCHANGE
SAFE, with the authorisation of the People’s Bank of China (the “ PBOC ”), is empowered
with the functions of administering all matters relating to foreign exchange, including the
enforcement of foreign exchange control regulations.
On January 29, 1996, the State Council promulgated the Regulations of the PRC for
Foreign Exchange Control ( ʕശɛ͏΍ձ਷̮ි၍ଣૢԷ, the “ Foreign Exchange
Control Regulations ”) which became effective on April 1, 1996. The Foreign Exchange
Control Regulations classify all international payments and transfers into current items and
capital items. The Foreign Exchange Control Regulations were subsequently amended on
January 14, 1997 and August 5, 2008. The latest amendment to the Foreign Exchange Control
Regulations clearly states that no restriction will be imposed on international current payments
and transfers.
According to the Announcement on Improving the Reform of the Renminbi (the PBOC
Announcement [2005] No. 16) (ʮѓ(ʕ਷ɛ͏ვБ
ʮѓ[2005] ୋ16໮)), issued by the PBOC on July 21, 2005 and became effective on the same
date, the PRC began to implement a managed floating exchange rate system in which the
exchange rate would be determined based on market supply and demand and adjusted with
reference to a basket of currencies.
APPENDIX III TAXATION AND FOREIGN EXCHANGE
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Additionally, the revised Foreign Exchange Control Regulations of the PRC (2008
version), which have made substantial changes to the foreign exchange supervision system of
the PRC. First, the regulations have adopted an approach of balancing the inflow and outflow
of foreign exchange. Foreign exchange income received overseas can be repatriated or
deposited overseas, and foreign exchange and settlement funds under the capital account are
required to be used only for purposes as approved by the competent authorities and foreign
exchange administrative authorities; second, the regulations have improved the RMB exchange
rate floating system based on market supply and demand under management; third, in the event
that international balance of payment suffer or may suffer a material misbalance, or the
national economy encounters or may encounter a severe crisis, the State may adopt necessary
safeguard or control measures against international balance of payment; fourth, the regulations
have enhanced the supervision and administration of foreign exchange transactions and grant
extensive authorities to SAFE to enhance its supervisory and administrative powers.
The Decisions on Matters including Canceling and Adjusting a Batch of Administrative
Approval Items (Guo Fa [2014] No. 50) (
(਷೯[2014]50 ໮)) promulgated by the State Council and came into effect on October 23, 2014
provide to cancel the approval requirement of SAFE and its branches for the remittance and
settlement of the proceeds raised from the overseas listing of the foreign shares into RMB
domestic accounts.
Pursuant to the Notice of the State Administration of Foreign Exchange on Issues
Concerning the Foreign Exchange Administration of Overseas Listing (Hui Fa [2014] No. 54)
((ි೯[2014]54 ໮)) issued by
SAFE and became effective on December 26, 2014, a domestic company shall, within 15
business days of the date of the end of its overseas listing issuance, register the overseas listing
with the branch office of SAFE located at its registered address; the proceeds from an overseas
listing of a domestic company may be repatriated to China or deposited overseas, provided that
the intended use of the proceeds shall be consistent with the content of the document or other
public disclosure documents.
According to the Notice on Further Simplifying and Improving Policies for the Foreign
Exchange Administration of Direct Investment (Hui Fa [2015] No. 13) (ආɓӉᔊʷձ
(ි೯[2015]13 ໮)) promulgated by SAFE on February
13, 2015 and became effective on June 1, 2015, and partially repealed on December 30, 2019,
the confirmation of foreign exchange registration under domestic direct investment and the
confirmation of foreign exchange registration under overseas direct investment shall be
directly examined and handled by banks. SAFE and its branch offices shall indirectly regulate
the foreign exchange registration of direct investment through banks.
According to the Notice on Reforming and Regulating the Policies for the Administration
of Foreign Exchange Settlement under the Capital Accounts (Hui Fa [2016] No. 16) (׵
 (ි೯[2016]16 ໮)) which was promulgated by
SAFE and became effective on June 9, 2016, and amended on December 4, 2023, foreign
currency earnings in capital account that relevant policies of willingness exchange settlement
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have been clearly implemented on (including the recalling of raised capital by overseas listing)
may undertake foreign exchange settlement in the banks according to actual business needs of
the domestic institutions. The tentative percentage of foreign exchange settlement for foreign
currency earnings in capital account of domestic institutions is 100%, subject to adjust of
SAFE in due time in accordance with international revenue and expenditure situations.
According to the Notice on Optimising Administration of Foreign Exchange to Support
the Development of Foreign-related Business (Hui Fa [2020] No. 8) (׵
(ි೯[2020]8 ໮)) issued by SAFE and became
effective on April 10, 2020, eligible enterprises are allowed to make domestic payments by
using their capital, foreign credits and the income under capital accounts of overseas listing,
without providing materials to the bank in advance for authenticity verification on an
item-by-item basis, provided that their utilised capital shall be authentic and in line with
provisions, and conform to the prevailing administrative regulations related to the use of
income under capital accounts. The concerned bank shall manage and control the relevant
business risks under the principle of prudent business development and conduct spot checks
afterwards in accordance with the relevant requirements. Local foreign exchange authorities
shall strengthen monitoring and analysis and interim and ex-post supervision.
On October 23, 2019, the SAFE issued the Circular of the State Administration of Foreign
Exchange on Further Promoting Cross-border Trade and Investment Facilitation (̮ි
) (Hui Fa [2019] No. 28), which, among
other things, allows all foreign investment enterprises to use Renminbi converted from foreign
currency denominated capital for equity investments in China, as long as the equity investment
is genuine, does not violate applicable laws, and complies with the negative list on foreign
investment.
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This appendix contains a summary of laws and regulations on companies and securities
in the PRC. The principal objective is to provide an overview of the principal laws and
regulations applicable to us. Laws and regulations relating to taxation in the PRC are discussed
in “Appendix III — Taxation and Foreign Exchange”. For the discussion of laws and
regulations specifically governing the business of the Company, please see the section headed
“Regulatory Overview”.
THE PRC LEGAL SYSTEM
The PRC legal system is based on the PRC Constitution (, the
“Constitution ”), which was adopted on December 4, 1982 and respectively amended on April
12, 1988, March 29, 1993, March 15, 1999, March 14, 2004 and March 11, 2018. The PRC
legal system is made up of written laws, administrative regulations, local regulations,
autonomous regulations, separate regulations, rules and regulations of State Council
departments, rules and regulations of local governments, laws of special administrative regions
and international treaties of which the PRC government is a signatory and other regulatory
documents. Court judgments do not constitute legally binding precedents, although they are
used for the purposes of judicial reference and guidance.
The National People’s Congress (the “ NPC”) and the SCNPC are empowered to exercise
the legislative power of the State in accordance with the Constitution and the PRC Legislation
Law (, the “ Legislation Law ”), which was adopted on July 1, 2000
and amended on March 15, 2015 and March 13, 2023. The NPC has the power to formulate and
amend basic laws governing state organs, civil, criminal and other matters. The SCNPC
formulates and amends laws other than those required to be enacted by the NPC and to
supplement and amend parts of the laws enacted by the NPC during the adjournment of the
NPC, provided that such supplements and amendments are not in conflict with the basic
principles of such laws.
The State Council is the highest organ of state administration and has the power to
formulate administrative regulations based on the Constitution and laws.
The people’s congresses of the provinces, autonomous regions and municipalities and
their respective standing committees may formulate local regulations based on the specific
circumstances and actual needs of their respective administrative areas, provided that such
local regulations do not contravene any provision of the Constitution, laws or administrative
regulations. The people’s congresses of cities divided into districts and their respective
standing committees may formulate local regulations on aspects such as urban and rural
construction and management, environmental protection and historical and cultural protection
based on the specific circumstances and actual needs of such cities, provided that such local
regulations do not contravene any provision of the Constitution, laws, administrative
regulations and local regulations of their respective provinces or autonomous regions. If the
law provides otherwise on the matters concerning formulation of local regulations by cities
divided into districts, those provisions shall prevail. Such local regulations will become
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enforceable after being reported to and approved by the standing committees of the people’s
congresses of the relevant provinces or autonomous regions. The standing committees of the
people’s congresses of the provinces or autonomous regions examine the legality of local
regulations submitted for approval, and such approval should be granted within four months if
they are not in conflict with the Constitution, laws, administrative regulations and local
regulations of such provinces or autonomous regions. Where, during the examination for
approval of local regulations of cities divided into districts by the standing committees of the
people’s congresses of the provinces or autonomous regions, conflicts are identified with the
rules and regulations of the people’s governments of the provinces or autonomous regions
concerned, a decision should be made by the standing committees of the people’s congresses
of provinces or autonomous regions to resolve the issue. People’s congresses of national
autonomous areas have the power to enact autonomous regulations and separate regulations in
light of the political, economic and cultural characteristics of the ethnic groups in the areas
concerned.
The ministries and commissions of the State Council, PBOC, National Audit Office, the
subordinate institutions with administrative functions directly under the State Council and the
institutions required by the law may formulate departmental rules within the jurisdiction of
their respective departments based on the laws and administrative regulations, and the
decisions and orders of the State Council. The people’s governments of the provinces,
autonomous regions, municipalities and cities or autonomous prefectures divided into districts
may formulate rules and regulations based on the laws, administrative regulations and local
regulations of such provinces, autonomous regions and municipalities.
According to the Constitution and the Legislation Law, the power to interpret laws is
vested in the SCNPC. Pursuant to the Resolution of the Standing Committee of the NPC
Providing an Improved Interpretation of the Law (ج
Ӕᙄ) implemented on June 10, 1981, the Supreme People’s Court of the PRC
has the power to give interpretation on issues related to the application of laws in a court trial,
and issues related to the application of laws in a prosecution process of a procuratorate should
be interpreted by the Supreme People’s Procuratorate. If there is any disagreement in principle
between Supreme People’s Court’s interpretations and Supreme People’s Procuratorate’s
interpretations, such issues shall be reported to the SCNPC for interpretation or judgment. The
other issues related to laws other than the abovementioned should be interpreted by the State
Council and the competent authorities. The State Council and its ministries and commissions
are also vested with the power to give interpretations of the administrative regulations and
departmental rules which they have promulgated. At the regional level, the power to interpret
regional laws is vested in the regional legislative and administrative authorities which
promulgate such laws.
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THE PRC JUDICIAL SYSTEM
Under the Constitution and the Law of Organization of the People’s Courts of the PRC
(), which is adopted on January 1, 1980 and respectively
amended on September 2, 1983, December 2, 1986, October 31, 2006 and October 26, 2018,
the PRC judicial system is made up of the Supreme People’s Court, the local people’s courts
and special people’s courts.
The Supreme People’s Court can establish circuit courts to decide cases designated by the
Supreme People’s Court in accordance with laws. Circuit courts are part of the Supreme
People’s Court. Judgments, rulings, and decisions made by the circuit courts are deemed
judgments, rulings and decisions of the Supreme People’s Court. The local people’s courts are
comprised of the basic people’s courts, the intermediate people’s courts and the higher people’s
courts. The intermediate people’s courts have divisions similar to those of the basic people’s
courts and may set up other special divisions if needed. These two levels of people’s courts are
subject to supervision by people’s courts at higher levels. The Supreme People’s Court is the
highest judicial authority in the PRC. It supervises the administration of justice by the people’s
courts at all levels and special people’s courts.
A people’s court takes the rule of the second instance as the final rule. A party may appeal
against the judgment or ruling of the first instance of a local people’s court. The people’s
procuratorate may present a protest to the people’s court at the next higher level in accordance
with the procedures stipulated by the laws. In the absence of any appeal by the parties and any
protest by the people’s procuratorate within the stipulated period, the judgments or rulings of
the people’s court are final. Judgments or rulings of the second instance of the intermediate
people’s courts, the higher people’s courts and the Supreme People’s Court, and judgments or
rulings of the first instance of the Supreme People’s Court are final. However, if the Supreme
People’s Court finds some definite errors in a legally effective judgment, ruling or conciliation
statement of the people’s court at any level, or if the people’s court at a higher level finds such
errors in a legally effective judgment, ruling or conciliation statement of the people’s court at
a lower level, it has the authority to review the case itself or to direct the lower-level people’s
court to conduct a retrial. If the chief judge of all levels of people’s courts finds some definite
errors in a legally effective judgment, ruling or conciliation statement, and considers a retrial
is preferred, such case shall be submitted to the judicial committee of the people’s court at the
same level for discussion and decision.
The Civil Procedure Law of the PRC (, the “ Civil
Procedure Law ”) adopted on April 9, 1991 and respectively amended on October 28, 2007,
August 31, 2012, June 27, 2017, December 24, 2021 and September 1, 2023, prescribes the
conditions for instituting a civil action, the jurisdiction of the people’s courts, the procedures
for conducting a civil action, and the procedures for enforcement of a civil judgment or ruling.
All parties to a civil action conducted within the PRC must abide by the Civil Procedure Law.
Generally, a civil case is initially heard by the court located in the defendant’s place of
domicile. The court of jurisdiction in respect of a civil action may also be chosen by explicit
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agreement among the parties to a contract, provided that the people’s court having jurisdiction
should be located at places substantially connected with the disputes, such as the plaintiff’s or
the defendant’s place of domicile, the place where the contract is executed or signed or the
place where the object of the action is located, provided that the provisions regarding the level
of jurisdiction and exclusive jurisdiction shall not be violated.
A foreign individual, a person without nationality, a foreign enterprise or a foreign
organization is given the same litigation rights and obligations as a citizen, a legal person or
other organizations of the PRC when initiating actions or defending against litigations at a PRC
court. Should a foreign court limit the litigation rights of PRC citizens or enterprises, the PRC
court may apply the same limitations to the citizens and enterprises of such foreign country.
A foreign individual, a person without nationality, a foreign enterprise or a foreign organization
must engage a PRC lawyer in case he or it needs to engage a lawyer for the purpose of initiating
actions or defending against litigations at a PRC court. In accordance with the international
treaties to which the PRC is a signatory or participant or according to the principle of
reciprocity, a people’s court and a foreign court may request each other to serve documents,
conduct investigation and collect evidence and conduct other actions on its behalf. All parties
to a civil action shall perform the legally effective judgments and rulings. If any party to a civil
action refuses to abide by a judgment or ruling made by a people’s court or an award made by
an arbitration tribunal in the PRC, the other party may apply to the people’s court for the
enforcement of the same subject to application for postponed enforcement or revocation. If a
party fails to satisfy within the stipulated period a judgment which the court has granted an
enforcement approval, the court may, upon the application of the other party, mandatorily
enforce the judgment on the party.
Where a party applies for enforcement of a judgment or ruling made by a people’s court,
and the opposite party or his property is not within the territory of the PRC, the applicant may
directly apply to a foreign court with jurisdiction for recognition and enforcement of the
judgment or ruling, or a people’s court may apply to a foreign court with jurisdiction or
recognition in accordance with the international treaties that China has concluded or acceded
to or on a reciprocal basis. A foreign judgment or ruling may also be recognized and enforced
by the people’s court in accordance with the PRC enforcement procedures if the PRC has
entered into, or acceded to, international treaties with the relevant foreign country, which
provided for such recognition and enforcement, or if the judgment or ruling satisfies the court’s
examination according to the principle of reciprocity, unless the people’s court considers that
the recognition or enforcement of such judgment or ruling would violate the basic legal
principles of the PRC, its sovereignty or national security, or against the social and public
interests.
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THE PRC COMPANY LA W, TRIAL ADMINISTRATIVE MEASURES OF OVERSEAS
SECURITIES OFFERING AND LISTING BY DOMESTIC COMPANIES AND THE
GUIDELINES FOR THE ARTICLES OF ASSOCIATION OF LISTED COMPANIES
The PRC Company Law () was adopted by the 5th meeting of
the Standing Committee of the 8th National People’s Congress Session on December 29, 1993
and came into effect on July 1, 1994. It was amended on December 25, 1999, August 28, 2004,
October 27, 2005, December 28, 2013, October 26, 2018 and December 29, 2023 respectively.
The latest revised PRC Company Law was implemented on July 1, 2024.
On February 17, 2023, with the approval of the State Council, the CSRC promulgated the
Overseas Listing Trial Measures and relevant five guidelines, which came into force on March
31, 2023. The Overseas Listing Trial Measures are designated in accordance with the Securities
Law and other laws and are applicable to domestic enterprises that issue securities overseas or
list their securities for trading. On February 17, 2023, CSRC promulgated the Guidelines for
the Applications of Regulatory Rules — Overseas Issuance and Listing Category No. 1,
stipulating that direct issuance and listing by domestic companies shall abide by the relevant
provisions of the Overseas Listing Trial Measures and refer to the Guidelines for Articles of
Association of Listed Companies and other relevant provisions of CSRC on corporate
governance to formulate its articles of association and standardize corporate governance.
Set out below is a summary of the major provisions of the PRC Company Law, the
Overseas Listing Trial Measures and Guidelines for Articles of Association of Listed
Companies.
General Provisions
A joint stock limited company refers to an enterprise legal person incorporated under the
Company Law with its registered capital divided into shares of equal par value. The liability
of its shareholders is limited to the amount of shares held by them and the company is liable
for its debts with all its property.
A joint stock limited company shall conduct its business in accordance with laws and
administrative regulations. It may invest in other limited liability companies and joint stock
limited companies and its liabilities with respect to such invested companies are limited to the
amount invested. Where any laws stipulate that a company cannot be the capital contributor
who has the joint liabilities associated with the debts of the invested enterprises, such
requirements shall prevail.
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Incorporation
A joint stock limited company may be incorporated by promotion or public subscription.
A joint stock limited company may be incorporated by a minimum of one but not more
than 200 promoters, and at least half of the promoters must have residence within the PRC. The
promoters must convene an inaugural meeting within 30 days after the issued shares have been
fully paid up, and must give notice to all subscribers or make an announcement of the date of
the inaugural meeting 15 days before the meeting. The inaugural meeting may be convened
only with the presence of promoters or subscribers holding more than half of the voting rights.
At the inaugural meeting, matters including the adoption of articles of association and the
election of members of the board of directors and members of the Supervisory Committee of
the company will be dealt with. All resolutions of the meeting require the approval of
subscribers with more than half of the voting rights present at the meeting.
Within 30 days after the conclusion of the inaugural meeting, the board of directors must
apply to the registration authority for registration of the establishment of the joint stock limited
company. A company is formally established, and has the status of a legal person, after the
business license has been issued by the relevant registration authority.
A joint stock limited company’s promoters shall be liable for:
 the payment of all expenses and debts incurred in the incorporation process jointly
and severally if the company cannot be incorporated;
 the refund of subscription monies to the subscribers, together with interest, at bank
rates for a deposit of the same term jointly and severally if the company cannot be
incorporated; and
 damages suffered by the company as a result of the default of the promoters in the
course of incorporation of the company.
According to the Interim Provisional Regulations on the Administration of Share Issuance
and Trading (၍ଣᅲБૢԷ) promulgated by the State Council on April
22, 1993 (which is only applicable to the issuance and trading of shares in the PRC and their
related activities), if a company is established by means of public subscription, all the
promoters or the Directors and the Lead Underwriters are required to sign on the document to
ensure that the document does not contain any misrepresentation, serious misleading
statements or material omissions, and assume joint and several responsibility for it.
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Share Capital
The promoters of a company may make a capital contribution in currencies, or
non-monetary assets such as in kind or intellectual property rights or land use rights which can
be appraised with monetary value and transferred lawfully, except for assets which are
prohibited from being contributed as capital by the laws or administrative regulations. If a
capital contribution is made in non-monetary assets, a valuation and verification of the fair
value of the assets contributed must be carried out.
Allocation and issuance of shares
All issue of shares of a joint stock limited company shall be based on the principles of
equality and fairness. The same class of shares must carry equal rights. Shares issued at the
same time and within the same class must be issued on the same conditions and at the same
price. Shares may be offered at a price equal to or greater than, but not less than, par value.
The domestic enterprises that engage in the overseas issuance and listing of securities
shall, in accordance with the Overseas Listing Trial Measures, submit to the CSRC a filing
report, legal opinions and other relevant materials that truly, accurately and completely
describe shareholder information and other circumstances for the record. In case of the direct
overseas issuance and listing of domestic enterprises, the issuer shall report the matter to the
CSRC for the record. In case of the indirect Overseas Issuance and Listing of domestic
enterprises, the issuer shall designate a major domestic operating entity as the domestic
responsible person to report the matter to the CSRC for the record.
Registered shares
Under the Company Law, when the company issues shares in registered form, it shall
maintain a register of shareholders, stating the following matters:
 the name and domicile of each shareholder;
 the class and number of shares held by each shareholder;
 in case of shares issued in paper form, the serial numbers of share certificates; and
 the date on which each shareholder acquired the shares.
Increase in Share Capital
According to the Company Law, if a joint stock limited company issues new shares, the
general meeting shall pass a resolution on the class and amount of new shares, the issuance
price of the new shares, the commencement and termination dates of the issuance of the new
shares and the class and amount of new shares to be issued to existing shareholders. When a
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company is approved by the securities supervision and administration department under the
State Council to issue new shares to the public, it shall publish the document, its financial and
accounting statements, and shall prepare the subscription form. Upon full receipt of the
proceeds from the company’s newly issued shares, the company shall carry out alteration
registration with the company registration authority and shall make a public announcement.
After the issue of new shares the company has been paid up, the change must be registered
with the company registration authorities and a public announcement must be made
accordingly. Where an increase in registered capital of a company is made by means of an issue
of new shares, the subscription of new shares by shareholders shall be made in accordance with
the relevant provisions on the payment of subscription monies for the establishment of a
company.
Reduction of Share Capital
When a company needs to reduce its registered capital, it shall prepare a statement of
financial position and a property list. The company shall inform its creditors within 10 days and
publish an announcement in the newspaper within 30 days after the resolution of the
shareholders’ meeting approving the reduction of registered capital has been passed. Creditors
may within 30 days after receiving the notice, or within 45 days of the public announcement
if no notice has been received, require the company to pay its debts or provide guarantees
covering the debts.
Repurchase of Shares
According to the Company Law, a joint stock limited company may not repurchase its
own shares other than for one of the following purposes:
(i) to reduce its registered capital;
(ii) to merge with another company that holds its shares;
(iii) to grant its shares to its employees for the purpose of implementing the employee
stock ownership plan or share incentive scheme;
(iv) to repurchase its shares from shareholders who are against the resolution regarding
the merger or division with other companies at the general meeting;
(v) to use for the conversion of the convertible corporate bonds issued by the listed
company; and
(vi) to protect the value of the company and the rights and interests of shareholders of
the listed company as required.
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The acquisition of shares on the grounds set out in (i) to (ii) above shall be approved by
the resolution of general meeting. The repurchase of its shares in cases (iii), (v) or (vi) above
shall require a resolution of the board of directors by two-thirds of the directors present at the
board meeting, in accordance with the provisions of the articles of association of the company
or as authorized by the general meeting.
Following the repurchase of its shares in accordance with (i) above, such shares shall be
canceled within 10 days from the date of repurchase; the shares repurchased in the case of (ii)
or (iv) above shall be transferred or canceled within six months. The total number of shares
held by the company after share repurchase under the circumstances in (iii), (v) or (vi) above
shall not exceed 10% of the total number of the company’s issued shares, and shall be
transferred or canceled within three years.
A listed company that repurchases its own shares shall fulfill its disclosure obligations in
accordance with the provisions of the Securities Law. If a share repurchase is made pursuant
to (iii), (v) or (vi) above, it shall be publicly traded in a centralized manner.
Transfer of Shares
Shares held by shareholders may be transferred in accordance with the relevant laws and
regulations. Pursuant to the Company Law, transfer of shares by shareholders shall be carried
out at a legally established securities exchange or in other ways stipulated by the State Council.
No modifications of registration in the share register caused by transfer of registered shares
shall be carried out within 20 days prior to the convening of shareholder’s general meeting or
five days prior to the base date for determination of dividend distributions. However, where
there are separate provisions by law on alternation of registration in the share register of listed
companies, those provisions shall prevail.
Under the Company law, shares issued prior to the public issuance of shares shall not be
transferred within one year from the date of the joint stock limited Company’s listing on a stock
exchange. Directors, supervisors and senior officers shall declare to the company their
shareholdings in the Company and any changes of such shareholdings. They shall not transfer
more than 25% of all the shares they hold in the Company annually during their tenure. They
shall not transfer the shares they hold within one year from the date on which the Company’s
shares are listed and commenced trading on a stock exchange, nor within six months after their
resignation from their positions with the Company.
Shareholders
Under the Company Law and the Articles of Association Guidelines, the rights of holders
of ordinary shares of a joint stock limited company include:
 the right to attend or appoint a proxy to attend general meetings and to vote thereat;
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 the right to transfer shares in accordance with laws, administrative regulations and
provisions of the articles of association;
 the right to inspect the Company’s articles of association, share register, counterfoil
of Company debentures, minutes of general meetings, resolutions of meetings of the
board of directors, resolutions of meetings of the Supervisory Committee and
financial and accounting reports and to make proposals or enquiries on the
Company’s operations;
 the right to bring an action in the people’s court to rescind resolutions passed by
general meetings and board of directors where the articles of association is violated
by the above resolutions;
 the right to receive dividends and other forms of profit distribution according to the
proportion of shares they hold;
 in the event of the termination or liquidation of the Company, the right to participate
in the distribution of the residual properties of the Company in proportion to the
number of shares held; and
 other rights granted by laws, administrative regulations, other regulatory documents
and the Company’s articles of association.
The obligations of a shareholder include the obligation to abide by the Company’s articles
of association, to pay the subscription moneys in respect of the shares subscribed for and in
accordance with the form of making capital contributions, to be liable for the Company’s debts
and liabilities to the extent of the amount of his or her subscribed shares and any other
shareholders’ obligation specified in the Company’s articles of association.
Shareholders’ General Meetings
The general meeting is the organ of authority of the company, which exercises its powers
in accordance with the Company Law. Under the Company Law, the general meeting exercises
the following powers and functions:
 to elect or replace the directors and supervisors (other than the supervisor
representative of the employees) and to decide on matters relating to the
remuneration of directors and supervisors;
 to review and approve reports of the Board;
 to review and approve reports of the Supervisory Committee;
 to review and approve annual financial budgets and final accounts;
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 to review and approve profit distribution plans and loss recovery plans;
 to make resolutions concerning the increase or reduction of the registered capital;
 to resolve on the issue and listing of corporate bonds and other securities;
 to decide on issues such as merger, division, dissolution, liquidation and structure
change;
 to modify the articles of association; and
 other powers and functions stipulated by the articles of association.
The annual general meeting is required to be convened once a year. Under the Company
Law, an extraordinary general meeting is required to be held within two months after the
occurrence of any of the following:
 the number of directors is less than the number stipulated by the law or less than two
thirds of the number specified in the articles of association;
 the aggregate losses of the company which are not recovered reach one-third of the
company’s total paid-in share capital;
 shareholders alone or in aggregate holding 10% or more of the Company’s shares
request for the convening of an extraordinary general meeting;
 the Board considers it necessary;
 the Supervisory Committee proposes to hold; or
 other circumstances stipulated by the articles of association.
Under the Company Law, general meetings shall be convened by the Board, and presided
over by the chairman of the Board. In the event that the chairman is incapable of performing
or does not perform his duties, the meeting shall be presided over by the vice chairman. In the
event that the vice chairman is incapable of performing or does not perform his duties, a
director nominated by more than half of directors shall preside over the meeting.
Where the Board of Directors is incapable of performing or does not perform its duties
of convening the general meetings, the supervisory committee shall convene and preside over
such meetings in a timely manner. In case the supervisory committee fails to convene and
preside over such meetings, shareholders alone or in aggregate holding more than 10% of the
company’s shares for 90 days consecutively may unilaterally convene and preside over such
meetings.
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LEGAL AND REGULATORY PROVISIONS
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Under the Company Law, notice of general meetings shall state the time and venue of and
matters to be considered at the meeting and shall be given to all shareholders 20 days before
the meeting. Notice of extraordinary general meeting shall be given to all shareholders 15 days
prior to the meeting. According to the Articles of Association Guidelines, after the notice of the
General Meeting is given, without cogent reason, the general meeting shall not be postponed
or canceled, and the proposals set out in the notice shall not be canceled. Once the general
meeting is adjourned or canceled, the convener shall make public announcement and explain
the reasons at least 2 working days before the original holding date.
There is no specific provision in the PRC Company Law regarding the number of
shareholders constituting a quorum in Shareholders’ meetings. According to the Articles of
Association Guidelines, The board of directors and the board secretary shall cooperate for the
general meeting convened by the Supervisory Committee or the Shareholders on their own.
When the general meeting is held, all the directors, supervisors and board secretary of the
company shall attend the meeting, while the general manager and other senior officers shall
attend as a nonvoting delegate.
According to the Articles of Association Guidelines, the shareholders holding more than
1% of the shares of the Company separately or jointly may raise temporary proposal and submit
it to the convener in writing 10 days before the general meeting is held. The convener shall
supplement the notice of general meeting in 2 days after receiving the proposal and publicize
the content of the temporary proposal.
Under the Company Law, shareholders present at general meetings have one vote for each
share they hold, save that shares held by the company are not entitled to any voting rights.
Pursuant to the provisions of the articles of association or a resolution of the general
meeting, the accumulative voting system may be adopted for the election of directors and
supervisors at the general meeting. Under the accumulative voting system, each share shall be
entitled to vote equivalent to the number of directors or supervisors to be elected at the general
meetings and shareholders may consolidate their voting rights when casting a vote.
Pursuant to the Company Law and the Articles of Association Guidelines, resolutions of
the general meeting shall be adopted by more than half of the voting rights held by the
shareholders present at the meeting. However, resolutions of the general meeting regarding the
following matters shall be adopted by more than two-thirds of the voting rights held by the
shareholders present at the meeting: (i) amendments to the articles of association; (ii) the
increase or decrease of registered capital; (iii) the equity incentive plans; (iv) the amount of
purchase or disposal of major assets or guarantee of the company within one year exceeding
thirty percent of the company’s total audited assets for the most recent period; (v) the merger,
division, dissolution, liquidation or change in the form of the company; (vi) other matters
considered by the general meeting, by way of an ordinary resolution, to be of a nature which
may have a material impact on the company and should be adopted by a special resolution,
according to the laws, administrative regulations or the articles of association.
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LEGAL AND REGULATORY PROVISIONS
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Under the Company Law, meeting minutes shall be prepared in respect of decisions on
matters discussed at the general meetings. The chairman of the meeting and directors attending
the meeting shall sign to endorse such minutes. The minutes shall be kept together with the
shareholders’ attendance register and the proxy forms.
Board of Directors
Under the Company Law, a joint stock limited company shall have a board of directors.
Members of the board of directors may include representatives of the employees of the
company, who shall be democratically elected by the company’s staff at the staff representative
assembly, general staff meeting or otherwise. The term of the directors shall be prescribed by
the articles of association, provided that each term may not exceed 3 years. Upon the expiration
of the term, the Directors may be re-elected and serve consecutive terms. A director shall
continue to perform his duties in accordance with the laws, administrative regulations and
articles of association until a duly re-elected director takes office, if re-election is not
conducted in a timely manner upon the expiry of his term of office, or if the resignation of
directors results in the number of directors being less than the quorum.
Under the Company Law, the board of directors mainly exercises the following powers
and functions:
 to convene the general meetings and report on its work to the general meetings;
 to implement the resolutions of general meetings;
 to decide on the company’s business plans and investment proposals;
 to formulate the profit distribution plan and loss recovery plan of the Company;
 to formulate proposals for the increase or reduction of the Company’s registered
capital and the issuance of corporate bonds;
 to develop the scheme on the merger, separation, dissolution and change of company
form of the Company;
 to formulate the basic management system of the Company; and
 any other powers and functions stipulated by the articles of association.
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LEGAL AND REGULATORY PROVISIONS
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Board Meetings
Under the Company Law, meetings of the board of directors of a joint stock limited
company shall be convened at least twice a year. Notice of meeting shall be given to all
directors and supervisors 10 days before the meeting. Interim board meetings may be proposed
to be convened by shareholders representing more than 10% of voting rights, more than
one-third of the directors or the supervisory committee. The chairman of the board shall
convene and preside over a board meeting within ten days after receiving the proposal. Aboard
meeting not be held unless half or more of the directors are present. Resolutions of the board
of directors shall be passed by more than half of all directors. In the voting process, one
director shall represent one vote. Directors shall attend board meetings in person. If a director
is unable to attend a board meeting, he may appoint another director by a written power of
attorney specifying the scope of the authorization to attend the meeting on his behalf.
If a resolution of the board of directors violates the laws, administrative regulations or the
articles of association, and as a result of which the company sustains serious losses, the
directors participating in the resolution are liable to compensate the company. However, if it
can be proved that a director expressly objected to the resolution when the resolution was voted
on, and that such objection was recorded in the minutes of the meeting, such director may be
released from that liability.
Board Chairman
Under the Company Law, the board of directors shall appoint a chairman and may appoint
a vice chairman. The chairman and the vice chairman are elected with approval of more than
half of all the directors. The chairman shall convene and preside over board meetings and
examine the implementation of board resolutions. The vice chairman shall assist the work of
the chairman. In the event that the chairman is incapable of performing or not performing his
duties, the duties shall be performed by the vice chairman. In the event that the vice chairman
is incapable of performing or not performing his duties, a director nominated by more than half
of the directors shall perform his duties.
Qualifications of Directors
The Company Law provides that the following persons may not serve as a director:
 a person who is unable or has limited ability to undertake any civil liabilities;
 a person who has been convicted of an offense of bribery, corruption, embezzlement
or misappropriation of property, or the destruction of socialist market economy
order; or who has been deprived of his political rights due to his crimes, in each case
where less than five years have elapsed since the date of completion of the sentence,
in case of a suspended sentence, not more than two years have elapsed since the date
of expiry of the probationary period;
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LEGAL AND REGULATORY PROVISIONS
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 a person who has been a former director, factory manager or manager of a company
or an enterprise that has entered into insolvent liquidation and who was personally
liable for the insolvency of such company or enterprise, where less than three years
have elapsed since the date of the completion of the bankruptcy and liquidation of
the company or enterprise;
 a person who has been a legal representative of a company or an enterprise that has
had its business license revoked due to violations of the law and has been ordered
to close down by law and the person was personally responsible, where less than
three years have elapsed since the date of such revocation or the order for closure;
or
 being listed as a dishonest person subject to enforcement by the people’s court due
to his/her failure to pay off a relatively large amount of debts which has fall due.
Other unsuitable circumstances for directorships are detailed in the Articles of
Association Guidelines.
Supervisory Committee
A joint stock limited company shall have a supervisory committee, unless otherwise
provided for in paragraph 1 of Article 121 and Article 133 of the Company Law. The
supervisory committee shall have not less than three members. The supervisory committee is
made up of representatives of the shareholders and an appropriate proportion of representatives
of the employees of the company. The actual proportion shall be stipulated in the articles of
association, provided that the proportion of representatives of the employees shall not be less
than one third of the supervisors. Representatives of the employees of the company in the
supervisory committee shall be democratically elected by the employees at the employees’
representative assembly, employees’ general meeting or otherwise. A director and a senior
officer of the company shall not serve concurrently as a supervisor.
The supervisory committee shall have a chairman and may have a vice chairman. The
chairman and deputy chairman of the supervisory committee shall be elected by more than half
of all supervisors. The chairman of the supervisory committee shall convene and preside over
the meetings of the supervisory committee. In the event that the chairman of the supervisory
committee is unable or fails to perform his/her duties, the vice chairman of the supervisory
committee shall convene and preside over the meetings of the supervisory committee. In the
event that the vice chairman is unable or fails to perform his/her duties, the meetings shall be
convened and presided over by a supervisor jointly nominated by more than half of all the
supervisors.
Each term of a supervisor shall be three years, and a supervisor may continue to serve his
post if he is re-elected. A supervisor shall continue to perform his duties in accordance with the
laws, administrative regulations and articles of association until a duly re-elected director takes
office, if re-election is not conducted in a timely manner upon the expiry of his term of office,
or if the resignation of supervisors results in the number of supervisors being less than the
quorum.
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LEGAL AND REGULATORY PROVISIONS
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--- page 535 ---
The supervisory committee shall convene a meeting at least every six months. According
to the Company Law, the supervisory committee shall make resolutions with the consent of a
majority of all supervisors.
The supervisory committee exercises the following functions and power:
 to review the financial position;
 to supervise the directors and senior officers in the performance of their duties and
to propose the removal of directors or senior officers who violate laws, regulations,
the articles of association or resolutions of the general meeting;
 when the acts of directors and senior officers are harmful to the company’s interests,
to require correction of those acts;
 to propose the convening of extraordinary general meetings and to convene and
preside over general meetings when the board of directors fails to perform the duty
of convening and presiding over general meetings under the law;
 to initiate proposals for resolutions to general meetings;
 to initiate proceedings against directors and senior officers;
 other powers and functions stipulated by the articles of association; and
 The supervisors may attend the meetings of the board, and may inquire about or put
forth proposals on matters covered by resolutions of the board. The supervisory
committee may initiate investigations into any irregularities identified in the
operation of the company and, where necessary, may engage an accounting firm to
assist their work at the company’s expense.
Manager and Senior Officers
Under the Company Law, a company shall have a manager who shall be appointed or
removed by the board of directors. The manager shall be responsible to the board of directors
and shall exercise his duties and powers in accordance with the provisions of the company’s
articles of association or the authorization of the board of directors:
 to supervise the business and administration of the company and arrange for the
implementation of resolutions of the board of directors;
 to arrange for the implementation of the company’s annual business plans and
investment proposals;
 to formulate the general administration system of the company;
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LEGAL AND REGULATORY PROVISIONS
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 to formulate the specific rules of the company;
 to recommend the appointment and dismissal of deputy managers and person in
charge of finance;
 to appoint or dismiss other administration officers (other than those required to be
appointed or dismissed by the board of directors); and
 other powers conferred by the board of directors or the articles of association.
The manager shall comply with other provisions of the articles of association concerning
his/her powers. The manager shall attend board meetings.
According to the Company Law, senior officers shall mean the manager, deputy
manager(s), person-in-charge of finance, board secretary (in case of a listed company) of a
company and other personnel as stipulated in the articles of association.
Duties of the Directors, Supervisors and Senior Officers
Directors, supervisors and senior officers of the Company are required under the
Company Law to comply with the relevant laws, regulations and the articles of association, and
shall owe a duty of loyalty to the company, shall take measures to avoid conflicts between their
own interests and the interests of the company, and shall not make use of their positions to gain
undue advantage. They shall also owe a duty of diligence to the company and shall perform
their duties with the reasonable care normally expected of a manager in the best interests of the
company. Furthermore, directors and senior officers are prohibited from:
 embezzlement of company properties and misappropriating the funds of the
company;
 depositing the company funds into accounts under his own name or the name of
other individuals;
 utilising power to accept bribe or accept other illegal income;
 accepting and possessing commissions paid by a third party for transactions
conducted with the company;
 unauthorized divulgence of confidential business information of the Company; or
 other acts in violation of the duty of loyalty to the company.
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LEGAL AND REGULATORY PROVISIONS
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--- page 537 ---
A director, supervisor or senior officer who contravenes any law, regulation or the
Company’s articles of association in the performance of his duties and result in any loss to the
Company shall be personally liable to the Company.
Finance and Accounting
Under the Company Law, a company shall establish financial and accounting systems
according to laws, administrative regulations and the regulations of the financial department of
the State Council. The Company shall at the end of each financial year prepare a financial and
accounting report which shall be audited by an accounting firm as required by law. The
Company’s financial and accounting report shall be prepared in accordance with provisions of
the laws, administrative regulations and the regulations of the financial department of the State
Council.
Pursuant to the Company Law, the Company shall deliver its financial and accounting
reports to all shareholders within the time limit stipulated in the articles of association and
make its financial and accounting reports available at the Company for inspection by the
shareholders at least 20 days before the convening annual general meeting. The joint stock
limited company that has publicly issued its shares shall also publish its financial and
accounting reports.
When distributing each year’s after-tax profits, the company shall set aside 10% of its
after-tax profits into a statutory common reserve fund (except where the fund has reached 50%
of its registered capital).
If its statutory common reserve fund is not sufficient to make up losses of the previous
year, profits of the current year shall be applied to make up losses before allocation is made
to the statutory common reserve fund pursuant to the above provisions.
After making allocation to the statutory common reserve fund of the Company from its
after-tax profits, the Company may, subject to resolutions adopted at a Shareholders’ meeting,
allocate funds from the after-tax profits to the discretionary common reserve fund.
The remaining after-tax profits after making up losses and allocation of common reserve
fund shall be distributed in proportion to the number of shares held by the shareholders, unless
otherwise stipulated in the articles of association. Shares held by the Company shall not be
entitled to any distribution of profit.
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LEGAL AND REGULATORY PROVISIONS
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The premium received through issuance of shares at prices above par value, the amount
of proceeds from the issuance of no-par value shares not included in the registered capital and
other incomes required by the financial department of the State Council to be allocated to the
capital reserve fund shall be allocated to the company’s capital reserve fund.
The Company’s reserve fund shall be applied to make up losses of the Company, expand
its business operations or be converted to increase the registered capital of the company. When
utilising reserve funds to make up for a company’s losses, the discretionary reserve fund and
statutory reserve fund should be used first; if the losses still cannot be made up, the capital
reserve fund may be used in accordance with regulations. Upon the conversion of statutory
common reserve fund for increasing registered capital, the balance of the statutory common
reserve fund shall not be less than 25% of the registered capital of the company before such
conversion.
The Company shall have no other accounting books except the statutory accounting
books. Its assets shall not be deposited in any accounts opened in the name of any individual.
Employment and Retirement of Accounting Firms
According to the Company Law, the appointment or dismissal of accounting firms
responsible for the auditing of a company shall be determined by the general meeting, board
of directors or supervisory committee in accordance with the articles of association. The
accounting firm should be allowed to make representations when the shareholders’ general
meeting, board of directors or supervisory committee conducts a vote on the dismissal of the
accounting firm. The company shall provide true and complete accounting vouchers,
accounting books, financial accounting reports and other accounting materials to the hired
accounting firm, and shall not refuse, conceal or make false reports.
The audit fee of an accounting firm shall be decided by the general meeting.
Profit Distribution
According to the Company Law, the Company shall not distribute profits before losses are
covered and the statutory common reserve is drawn.
Revision of the Articles of Association
Any amendments to the company’s articles of association must be made in accordance
with the procedures set out in the company’s articles of association. In the event of a company
registration, the amendments to the articles of association shall be registered with the relevant
registration authorities.
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LEGAL AND REGULATORY PROVISIONS
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--- page 539 ---
Dissolution and Liquidation
According to the Company Law, a company shall be dissolved by reason of the following:
(i) the term of its operations set down in the Articles of Association has expired or other
events of dissolution specified in the Articles of Association have occurred; (ii) the general
meeting has resolved to dissolve the company; (iii) the company is dissolved by reason of
merger or division; (iv) the business license is revoked; the company is ordered to close down
or be dissolved; or (v) the company is dissolved by the people’s court in response to the request
of shareholders holding shares that represent at least 10% of the voting rights of all its
shareholders, on the grounds that the company suffers significant hardship in its operation and
management that cannot be resolved through other means, and the ongoing existence of the
company would bring significant losses to shareholders.
The company shall, within ten days of the occurrence of the reasons for dissolution as
stipulated in the preceding paragraph, make public the reasons for dissolution through the
National Enterprise Credit Information Publicity System. In the event of (i) and (ii) above and
in case that no assets have been distributed to shareholders, the company may carry on its
existence by amending its articles of association or by a resolution of shareholders’ meeting.
The amendment of the articles of association or the resolution of a shareholders’ meeting in
accordance with provisions set out above shall require approval of at least two thirds of voting
rights of shareholders attending the general meeting.
Where the company is dissolved in the circumstances described in subparagraphs (i), (ii),
(iv), or (v) above, the liquidation shall be carried out. Directors shall be the liquidation
obligors, and a liquidation committee shall be established within 15 days of the date on which
the dissolution matter occurs.
The members of the company’s liquidation committee shall be composed of its directors,
unless the company’s articles of association provide otherwise or the shareholders’ meeting
resolves to elect someone else. If the liquidation obligor fails to fulfil its liquidation
obligations in a timely manner and causes losses to the company or creditors, it shall be liable
for compensation. If a liquidation committee is not established within the stipulated period, or
if the liquidation is not carried out after the establishment of the liquidation committee, the
interested parties may apply to the people’s court and request the court to appoint relevant
personnel to form the liquidation committee. The people’s court should accept such application
and form a liquidation committee to conduct liquidation in a timely manner.
The liquidation committee shall exercise the following functions and power during
liquidation:
 to liquidate the company’s assets and to prepare a balance sheet and an inventory of
the assets;
 to notify creditors through notice or public announcement;
APPENDIX IV SUMMARY OF PRINCIPAL
LEGAL AND REGULATORY PROVISIONS
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 to deal with the outstanding business of the Company in connection with liquidation;
 to settle all outstanding tax payment and the tax payment which arise in the course
of the liquidation process;
 to claim credits and pay off debts;
 to distribute the company’s remaining assets after its debts have been paid off; and
 to represent the company in civil lawsuits.
The liquidation committee shall notify the company’s creditors within 10 days after its
establishment and issue public notices in newspapers or on the National Enterprise Credit
Information Publicity System within 60 days. A creditor shall lodge his claim with the
liquidation committee within 30 days after receiving notification, or within 45 days of the
public notice if he/she did not receive any notification. A creditor shall state all matters
relevant to his creditor rights in making his/her claim and furnish evidence. The liquidation
committee shall register such claims. The liquidation committee shall not make any debt
settlement to creditors during the period of claim.
Upon liquidation of properties and the preparation of the balance sheet and inventory of
assets, the liquidation committee shall draw up a liquidation plan to be submitted to the general
meeting or people’s court for confirmation.
The company’s remaining assets after payment of liquidation expenses, wages, social
insurance expenses and statutory compensation, outstanding taxes and debts shall be
distributed to shareholders according to their shareholding proportion. It shall continue to exist
during the liquidation period, although it can only engage in any operating activities that are
related to the liquidation. The company’s properties shall not be distributed to the shareholders
before repayments are made in accordance to the foregoing provisions.
Upon liquidation of the company’s properties and the preparation of the balance sheet and
inventory of assets, if the liquidation committee becomes aware that the company does not
have sufficient assets to meet its liabilities, it must apply to the people’s court for a declaration
for bankruptcy.
Following the acceptance of application for bankruptcy by the people’s court, the
liquidation committee shall hand over all matters relating to the liquidation to the bankruptcy
administrator designated by the people’s court.
Upon completion of the liquidation, the liquidation committee shall submit a liquidation
report to the shareholders’ general meeting or the people’s court for verification. Thereafter, the
report shall be submitted to the registration authority of the company in order to cancel the
company’s registration.
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LEGAL AND REGULATORY PROVISIONS
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When performing the duties in relation to the liquidation, members of the liquidation
committee shall bear the duties of loyalty and diligence. If members of the liquidation
committee are reluctant in performing their liquidation duties and cause losses to the company,
they shall be liable for compensation; members of the liquidation committee who have caused
the creditors to suffer from any loss due to intentional fault or gross negligence, should be
liable for making compensations to the company or its creditors. In addition, liquidation of a
company declared bankrupt according to laws shall be processed in accordance with the laws
on corporate bankruptcy.
Overseas Listing
According to the Overseas Listing Trial Measures, overseas listing of a company shall be
filed with CSRC. Where an issuer conducts an overseas initial public offering or listing, it shall
file with CSRC within 3 working days after submitting the issuance and listing application
documents overseas. The remittance and cross-border flow of funds related to overseas
issuance and listing of domestic enterprises shall comply with national regulations on
cross-border investment and financing, foreign exchange management and cross border RMB
management.
Loss of Share Certificates
A shareholder may, in accordance with the public notice procedures set out in the PRC
Civil Procedure Law, apply to a people’s court if his share certificate(s) in registered form is
either stolen, lost or destroyed, for a declaration that such certificate(s) will no longer be valid.
After the people’s court declares that such certificate(s) will no longer be valid, the shareholder
may apply to the company for the issue of a replacement certificate(s).
Merger and Division
A merger agreement shall be signed by merging companies and the involved companies
shall prepare respective statements of financial position and inventory of assets. The
companies shall within 10 days of the date of passing the resolution approving the merger
notify their respective creditors and publicly announce the merger in newspapers or on the
National Enterprise Credit Information Publicity System within 30 days. A creditor may, within
30 days of receipt of the notification, or within 45 days of the date of the announcement if he
has not received the notification, request the company to settle any outstanding debts or
provide relevant guarantees. In case of a merger, the credits and debts of the merging parties
shall be assumed by the surviving or the new company.
In case of a division, the company’s assets shall be divided and a statement of financial
position and an inventory of assets shall be prepared. When a resolution regarding the
company’s division is approved, the company should notify all its creditors within 10 days of
the date of passing such resolution and publicly announce the division in newspapers or on the
National Enterprise Credit Information Publicity System within 30 days. Unless an agreement
in writing is reached with creditors before the company’s division in respect of the settlement
of debts, the liabilities of the company which have accrued prior to the division shall be jointly
borne by the divided companies.
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LEGAL AND REGULATORY PROVISIONS
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--- page 542 ---
In accordance with the laws, cancelation of a company shall be registered when a
company is dissolved and incorporation of a company shall be registered when a new company
is incorporated.
THE PRC SECURITIES LA WS AND REGULATIONS
The PRC has promulgated a number of regulations that relate to the issue and trading of
shares and disclosure of information. In October 1992, the State Council established the
Securities Committee and the CSRC. The Securities Committee is responsible for coordinating
the drafting of securities regulations, formulating securities-related policies, planning the
development of securities markets, directing, coordinating and supervising all securities-
related institutions in the PRC and administering the CSRC. The CSRC is the regulatory arm
of the Securities Committee and is responsible for the drafting of regulatory provisions of
securities markets, supervising securities companies, regulating public offers of securities by
PRC companies in the PRC or overseas, regulating the trading of securities, compiling
securities related statistics and undertaking relevant research and analysis. In April 1998, the
State Council consolidated the two departments and reformed the CSRC.
The Interim Provisional Regulations on the Administration of Share Issuance and Trading
(၍ଣᅲБૢԷ) deals with the application and approval procedures for
public offerings of equity securities, trading in equity securities, the acquisition of listed
companies, deposit, clearing and transfer of listed equity securities, the disclosure of
information with respect to a listed company, investigation, penalties and dispute settlement.
On December 25, 1995, the State Council promulgated the Regulations of the State
Council Concerning Domestic Listed Foreign Shares of Joint Stock Limited Companies ( ਷
). These regulations principally govern the
issue, subscription, trading and declaration of dividends and other distributions of domestic
listed foreign shares and disclosure of information of joint stock limited companies having
domestic listed foreign shares.
The Securities Law of the PRC (, the “ PRC Securities Law ”)
took effect on July 1, 1999 and was revised as of August 28, 2004, October 27, 2005, June 29,
2013, August 31, 2014 and December 28, 2019, respectively. The PRC Securities Law, which
was revised on December 28, 2019 and came into effect on March 1, 2020, is divided into 14
chapters and 226 articles, regulating, among other things, the issue and trading of securities,
the listing of securities, and takeovers by listed companies.
Article 224 of the PRC Securities Law provides that domestic enterprises which, directly
or indirectly, issue securities or list and trade their securities outside the PRC shall comply with
the relevant regulations of the State Council. Currently, the issue and trading of foreign issued
securities (including shares) are principally governed by the regulations and rules promulgated
by the State Council and the CSRC.
APPENDIX IV SUMMARY OF PRINCIPAL
LEGAL AND REGULATORY PROVISIONS
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--- page 543 ---
ARBITRATION AND ENFORCEMENT OF ARBITRAL A W ARDS
The Arbitration Law of the PRC (, the “ PRC Arbitration
Law”) was enacted by the SCNPC on August 31, 1994, which became effective on September
1, 1995 and was amended on August 27, 2009 and September 1, 2017, respectively. It is
applicable to, among other matters, economic disputes involving foreign parties where all
parties have entered into a written agreement to resolve disputes by arbitration before an
arbitration committee constituted in accordance with the PRC Arbitration Law.
The PRC Arbitration Law provides that an arbitration committee may, before the
promulgation of arbitration regulations by the PRC Arbitration Association, formulate interim
arbitration rules in accordance with the PRC Arbitration Law and the PRC Civil Procedure
Law. Where the parties have agreed to settle disputes by means of arbitration, a people’s court
will refuse to handle a legal proceeding initiated by one of the parties at such people’s court,
unless the arbitration agreement is invalid.
Under the PRC Arbitration Law and PRC Civil Procedure Law, an arbitral award shall be
final and binding on the parties involved in the arbitration. If any party fails to comply with
the arbitral award, the other party to the award may apply to a people’s court for its
enforcement. The people’s court can issue a ruling prohibiting the enforcement of an arbitral
award made by an arbitration commission after verification by collegial bench formed by the
people’s court if there is any procedural irregularity (including but not limited to irregularity
in the composition of the arbitration tribunal or arbitration proceedings, the jurisdiction of the
arbitration commission, or the making of an award on matters beyond the scope of the
arbitration agreement).
Any party seeking to enforce an award of a foreign affairs arbitral body of the PRC
against a party who or whose property is not located within the PRC may apply to a foreign
court with jurisdiction over the case for recognition and enforcement of the award. Likewise,
an arbitral award made by a foreign arbitral body may be recognized and enforced by a PRC
court in accordance with the principle of reciprocity or any international treaties concluded or
acceded to by the PRC.
The PRC acceded to the Convention on the Recognition and Enforcement of Foreign
Arbitral Awards (, the “ New Y ork Convention ”) adopted on
June 10, 1958 pursuant to a resolution passed by the SCNPC on December 2, 1986. The New
Y ork Convention provides that all arbitral awards made in a state which is a party to the New
Y ork Convention shall be recognized and enforced by other parties thereto subject to their
rights to refuse enforcement under certain circumstances, including but without limitation to
where the enforcement of the arbitral award is against the public policy of that state. At the
time of the PRC’s accession to the Convention, the SCNPC declared that (i) the PRC will only
APPENDIX IV SUMMARY OF PRINCIPAL
LEGAL AND REGULATORY PROVISIONS
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--- page 544 ---
apply the Convention to the recognition and enforcement of arbitral awards made in the
territories of other parties based on the principle of reciprocity; and (ii) the will only be applied
to disputes deemed under PRC laws to be arising from contractual or non-contractual
mercantile legal relations.
An arrangement for mutual enforcement of arbitral awards between Hong Kong and the
Supreme People’s Court of China was reached. The Supreme People’s Court of China adopted
the Arrangements on the Mutual Enforcement of Arbitral Awards between the mainland and the
Hong Kong Special Administrative Region (ʝੂБ΀൒൒Ӕ
τર) on June 18, 1999, which went into effect on February 1, 2000. The arrangement
reflects the spirit of the New Y ork Convention. Under the arrangements, the courts of the Hong
Kong SAR have agreed to enforce arbitration awards made by Chinese Mainland arbitration
organisations in accordance with the Arbitration Law of the People’s Republic of China, and
people’s courts of the Chinese Mainland have agreed to enforce arbitration awards made in the
Hong Kong SAR in accordance with the Arbitration Ordinate of the Hong Kong SAR. If the
Mainland court finds that the enforcement of awards made by the Hong Kong arbitral bodies
in the mainland will be against public interests of the mainland, or the court of Hong Kong
SAR decides that the enforcement of the arbitral awards made by Chinese Mainland arbitration
organisations in Hong Kong SAR will be against public policies of Hong Kong SAR, the
awards may not be enforced. The Supreme People’s Court of China adopted the Supplementary
Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and
Hong Kong SAR (໾̂τર, the
“Supplemental Arrangement ”) on November 11, 2020. The Supplemental Arrangement
mainly provide additional provisions to the Arrangement on Mutual Enforcement of Arbitral
Awards between the Chinese Mainland and Hong Kong SAR (޴
τર). Articles 1 and 4 of the Supplemental Arrangement shall come into
effect on November 27, 2020, while Articles 2 and 3 shall come into effect on a date to be
announced by the Supreme People’s Court.
Judicial Judgment and its Enforcement
According to the Arrangement on Mutual Recognition and Enforcement of Judgments in
Civil and Commercial Matters by the Courts of the Chinese Mainland and of the Hong Kong
Special Administrative Region (ʝႩ̙ձ
τર) promulgated by the Supreme People’s Court on January 25,
2024 and implemented on January 29, 2024, in the case of effective judgment of a civil and
commercial case or civil damages in a criminal case made by the court of China and the court
of the Hong Kong Special Administrative Region, any party concerned may apply to the
People’s Court of China or the court of the Hong Kong Special Administrative Region for
recognition and enforcement based on this arrangement.
APPENDIX IV SUMMARY OF PRINCIPAL
LEGAL AND REGULATORY PROVISIONS
– IV-25 –


--- page 545 ---
This appendix contains a summary of the main provisions of the Articles of Association
of the Company adopted on April 2, 2025 which will take effect from the date of listing of H
shares on the Hong Kong Stock Exchange. The main purpose of this appendix is to provide
potential investors with an overview of the Articles of Association of the Company, so it may
not contain all the information that is important to potential investors.
SHARES AND REGISTERED CAPITAL
The total number of shares at the time of incorporation was 613,324,800 and the capital
structure of the Company was: 613,324,800 ordinary shares and no other classes of shares.
The shares of the Company shall be issued in the form of registered share certificates.
The Company shall issue shares in an open, fair and just manner, and each share of the
same.
Shares of the same class issued at the same time shall be issued under the same conditions
and at the same price per share; subscribers shall pay the same price per share for the shares
they subscribe for.
When the Company issues new shares, the Company’s shareholders registered on the
share register date of the shareholders’ meeting approving the issuance of new shares do not
have pre-emptive rights, unless such shareholders’ meeting has expressly made a pre-emptive
subscription arrangement in compliance with the applicable laws and regulations and the
provisions of the rules of the securities supervision and regulation of the place where the
Company’s shares are listed.
Where the Board of Directors is authorised by the Company’s Articles of Association or
the shareholders’ meeting to decide on the issuance of new shares, the resolution of the Board
of Directors shall be passed by at least two-thirds of all directors.
INCREASE AND REDUCTION OF CAPITAL AND REPURCHASE OF SHARES
(1) Increase of Capital
The Company may, based on its business and development needs and in accordance with
the laws and regulations, increase its capital in the following manners upon resolutions being
adopted by the general meetings:
(i) public offering of shares;
(ii) non-public offering of shares;
(iii) distributing bonus shares to its existing shareholders;
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--- page 546 ---
(iv) conversion of capital reserve to share capital;
(v) other means required by the laws, administrative regulations and approved by CSRC
and SEHK.
(2) Reduction of Capital
The Company may reduce its registered capital. The Company shall reduce its registered
capital in accordance with the procedures stipulated in the Company Law, other relevant
regulations of the PRC, the Listing Rules, other securities regulatory rules of the place where
the Company’s shares are listed and the Articles of Association.
The Company shall notify its creditors within 10 days from the date on which the
resolution of the shareholders’ general meeting on reduction of registered capital is passed and
make an announcement on the newspaper or on the information publicity media Company
designates within 30 days. The creditors shall have the right to require the Company to repay
the debts or to provide the corresponding guarantee within 30 days from the receipt of
notification or within 45 days from the date of announcement if they do not receive
notification.
The reduced registered capital of the Company shall not be less than the statutory
minimum threshold.
(3) Repurchase of Shares
The Company shall not repurchase its own shares, except in one of the following
circumstances:
(i) to reduce the registered capital of the Company;
(ii) to merge with other companies which hold the shares of the Company;
(iii) to utilize its shares in employee stock ownership plans or share incentive;
(iv) where the shareholders, who disagree with the resolution in relation to merger or
division of the Company made at the general meeting, require the Company to
repurchase the shares held by such shareholders;
(v) to use the shares for conversion of corporate bonds issued by the Company which
are convertible into shares;
(vi) to safeguard the value of the Company and the interests of the shareholders when
necessary;
(vii) any other circumstances permitted by the laws, administrative regulations, securities
regulatory rules of the place where the Company’s shares are listed.
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--- page 547 ---
The Company may repurchase its shares by open centralized transaction method or other
method approved by laws, administrative regulations, the Listing Rules and the CSRC as well
as the securities regulatory authorities of the place where the shares of the Company are listed.
When the Company repurchases its own shares under any of the circumstances specified
in item (i) or (ii) mentioned above, a resolution adopted by shareholders’ general meeting is
required. Where the Company repurchases its own shares pursuant to the provisions of items
(iii), (v) and (vi), it shall be resolved by a resolution of a meeting of Board of Director attended
by more than two-thirds of the directors in accordance with the provisions of the Company’s
Articles of Association or the authorization of the shareholders’ general meeting.
In the event that the Company repurchases its shares under the circumstances set out in
item (i) thereof, the shares shall be cancelled within 10 days after the date of repurchase; where
it falls under the circumstances set out in item (ii) or (iv) thereof, the shares shall be transferred
or cancelled within 6 months, where it falls under the circumstances set out in items (iii), (v)
and (vi) thereof, the total number of shares of the Company held by the Company shall not
exceed 10% of the total number of shares issued by the Company and shall be transferred or
cancelled within three years. Where laws, regulations or the securities regulatory authority at
the place where the Company’s stocks are listed have other provisions on the relevant matters
related to the aforementioned share repurchase, subject to compliance with the requirements of
the Listing Rules and other securities regulatory rules of the place where the Company’s shares
are listed, such provisions shall prevail.
TRANSFER OF SHARES
The shares of the Company issued before public offering shall not be transferred for one
year from the date on which the Company’s shares are listed and traded on a stock exchange.
The Directors, Supervisors and senior officers of the Company shall report to the
Company their shareholdings and changes thereof and shall not transfer more than 25% of the
total number of their shares of the same class in the Company per annum during their terms
of office as determined when they take office. The shares of the Company they hold shall not
be transferred within one year from the date when the Company’s shares are listed and traded
on the stock exchange. The aforesaid persons shall not transfer their shares in the Company
within half a year after they terminate service with the Company.
If there are other provisions on the transfer restrictions of overseas listed shares in the
Listing Rules or the relevant regulations of the securities regulatory authority in the place
where the Company’s stocks are listed, such provisions shall prevail.
FINANCIAL ASSISTANCE FOR THE PURCHASE OF THE SHARES OF THE
COMPANY
The Company or its subsidiaries (including the subsidiary enterprises of the Company)
shall not, by any means of gifts, advances, guarantees, compensation, or loans, provide any
financial assistance to purchasers or potential purchasers of the Company’s shares, except for
the Company’s implementation of the employee stock ownership plan.
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--- page 548 ---
SHARE CERTIFICATES AND REGISTER OF SHAREHOLDERS
(1) Share Certificates
The Company’s shares take the form of share certificates.
The share certificates issued by the Company have a nominal value in RMB, with each
share having a nominal value of RMB0.02.
(2) Register of Members
The Company shall establish a register of members in accordance with certificates from
the share registrar. The register of members is sufficient evidence of the shareholders’
shareholdings in the Company. A shareholder shall enjoy the relevant rights and assume the
relevant obligations in accordance with the class of shares he/she holds. Shareholders holding
the same class of shares shall enjoy the same rights and assume the same obligations.
In respect of the register of shareholders of overseas-listed H shares, the original register
of members of shares listed in the Hong Kong Stock Exchange shall be maintained in Hong
Kong.
RIGHTS AND OBLIGATIONS OF SHAREHOLDERS
The shareholders of the Company shall enjoy the following rights:
(i) the right to receive dividends and other distributions in proportion to their
shareholdings;
(ii) the right to request, convene, preside over, attend or appoint a proxy to attend
general meetings and to exercise the voting rights in accordance with the law;
(iii) the right to supervise the Company’s business operations, to present proposals and
to raise enquiries;
(iv) the right to transfer, give as a gift or pledge shares held by them in accordance with
laws, administrative regulations and the Articles of Association;
(v) the right to inspect and duplicate the Articles of Association, the register of
members, minutes of general meetings, resolutions of Board meetings, resolutions
of Board of Supervisors and financial accounting reports, shareholders that meet the
requirements could inspect the accounting documents and accounting books;
(vi) in the event of the termination or liquidation of the Company, the right to participate
in the distribution of remaining assets of the Company in proportion to the
shareholdings;
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--- page 549 ---
(vii) for shareholders who vote against any resolution adopted at the general meeting on
the merger or division of the Company, the right to demand the Company to buy
back their shares; and
(viii) other rights under laws, administrative regulations, departmental rules, normative
documents, listing rules of the places where the shares of the Company are listed and
the Articles of Association.
RESTRICTIONS ON THE RIGHTS OF CONTROLLING SHAREHOLDER
Controlling shareholders and de facto controllers of the Company who do not serve as
directors but who actually carry out the affairs of the Company shall have a duty of loyalty to
the Company and shall take measures to avoid conflicts between their own interests and the
interests of the Company and shall not make use of their powers to gain undue advantage; they
shall have a duty of diligence to the Company, and they shall carry out their duties in the best
interests of the Company to the extent of the reasonable care that is normally required of
managers.
The controlling shareholder and the de facto controller of the Company shall have a
fiduciary obligation to the Company and the shareholders of the Company’s public shares. The
controlling shareholder shall exercise their rights as capital contributors in strict accordance
with the law. The controlling shareholder shall not use profit distribution, asset restructuring,
external investment, capital occupation or loan guarantee to undermine the legitimate rights
and interests of the Company and the shareholders of public shares, and shall not use their
control position to undermine the interests of the Company and the shareholders of public
shares.
GENERAL MEETINGS
(1) General Provisions for Convening General Meetings
The general meeting shall be the authority of power of the Company and shall exercise
the following functions and powers in accordance with laws:
(i) to elect and change Directors and Supervisors who are not employees’
representatives, and decide on the remunerations of Directors and Supervisors;
(ii) to consider and approve reports of the Board;
(iii) to consider and approve reports of the Supervisory Committee;
(iv) to consider and approve the Company’s profit distribution plans and loss recovery
plans;
(v) to resolve on the increase or reduction of the registered capital of the Company;
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-5 –


--- page 550 ---
(vi) to resolve on the issuance of corporate bonds;
(vii) to resolve on the merger, division, dissolution, liquidation or change in the form of
the Company;
(viii) to amend the Articles of Association;
(ix) to resolve on the Company’s appointment or dismissal of accounting firms that
undertake the Company’s audit business;
(x) to consider and approve the guarantees which shall be approved at the general
meeting;
(xi) to consider the purchase or sale of significant assets by the Company within one year
that exceed 30% of the Company’s latest audited total assets;
(xii) to consider and approve the change of use of proceeds;
(xiii) to consider share incentive schemes and employee stock ownership plans;
(xiv) to consider any transaction where any one of the applicable percentage ratios
calculated in accordance with the provisions of Rule 14.07 of the Listing Rules
regarding percentage ratios reaches twenty-five percent (25%) or more (including
one-off transactions and a series of transactions for which the percentage ratios need
to be calculated on a combined basis, but excluding any transactions that are exempt
from shareholder approval under the Listing Rules or approved by the HKEX for
such exemption), or any connected transaction where any one of the applicable
percentage ratios reaches five percent (5%) or more (including one-off transactions
and a series of transactions for which the percentage ratios need to be calculated on
a combined basis, but excluding any connected transaction that is exempt from the
approval of independent shareholders under the Listing Rules or approved by the
HKEX for such exemption);
(xv) to consider other matters which shall be resolved at the general meeting in
accordance with laws, administrative regulations, departmental rules, Listing Rules
and relevant requirements of securities regulatory authorities of the places where the
shares of the Company are listed or the Articles of Association.
General meetings consist of annual general meetings and extraordinary general meetings.
The annual general meeting shall be held once a year within six months after the end of the
previous accounting year.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-6 –


--- page 551 ---
The Company shall convene an extraordinary general meeting within two months upon
occurrence of the following events:
(i) when the number of Directors falls below the minimum requirement of the Company
Law, or is less than two thirds of the number specified by the Articles of Association;
(ii) when the unrecovered losses of the Company amount to one third of the total amount
of its paid-up share capital;
(iii) when shareholder(s) severally or jointly holding more than ten percent of the
Company’s shares request(s) to convene such meeting;
(iv) when the Board considers necessary;
(v) when the Supervisory Committee proposes to convene such meeting; and
(vi) other circumstances stipulated by laws, administrative regulations, departmental
rules, normative documents, the Listing Rules and the listing rules of the places
where the shares of the Company are listed or the Articles of Association.
Convening Shareholder’s General Meeting
Shareholder’s general meetings shall be convened by the Board of Directors, unless
otherwise provided by law or these Articles of Association.
Any independent director may propose to the board of directors to hold an extraordinary
general meeting. For the aforesaid proposal, the board of directors shall, in accordance with
laws, administrative regulations, the Listing Rules and the Articles of Association, give a
written feedback on whether or not it agrees to hold an extraordinary general meeting within
10 days of receipt of the proposal. Where the Board of Directors agrees to hold an
extraordinary general meeting, it will send out a notice thereon within 5 days after the relevant
resolution of the Board of Directors is made. If the Board of Directors does not agree to hold
an extraordinary general meeting, it shall state reasons and make an announcement.
The Supervisory Committee may propose to the Board of Directors to hold an
extraordinary general meeting and shall put forward the proposal to the Board of Directors in
written form. The Board of Directors shall, in accordance with laws, administrative
regulations, the Listing Rules and the Articles of Association, give a written feedback on
whether or not it agrees to hold an extraordinary general meeting within 10 days of receipt of
the proposal.
Where the Board of Directors agrees to hold an extraordinary general meeting, it shall
send out a notice thereon within 5 days after the relevant resolution of the Board of Directors
is made; any change to the original proposal in the notice is subject to the consent of the
Supervisory Committee.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-7 –


--- page 552 ---
Where the Board of Directors does not agree to hold an extraordinary general meeting or
fails to give a written feedback within 10 days of receipt of the proposal, it shall be deemed
that the Board of Directors is unable or fails to perform its duty to convene a shareholders’
general meeting, and the Supervisory Committee may convene and preside over an
extraordinary general meeting itself.
Shareholder(s) severally or jointly holding more than 10% of the shares of the Company
shall be entitled to request the Board to convene an extraordinary general meeting and to add
resolutions to the agenda of the meeting, and shall put forward such request to the Board in
written form. The Board shall, in accordance with laws, administrative regulations, the Listing
Rules and the Articles of Association, inform in writing whether it agrees or disagrees to
convene an extraordinary general meeting within ten days upon receipt of the request.
If the Board of Directors agrees to convene an extraordinary general meeting, a notice for
convening such meeting shall be issued within five days after the date of the resolution of the
Board of Directors and any changes to the original proposal contained in the notice shall be
subject to the approval of the relevant shareholders.
If the Board of Directors does not agree to convene such meeting, or fails to give a
response within ten days after receipt of the request, shareholders holding 10% or more of the
shares of the Company separately or in aggregate shall have the right to propose to the
Supervisory Committee to convene an extraordinary general meeting, and shall put forward
such request to the Supervisory Committee in writing.
If the Supervisory Committee agrees to convene an extraordinary general meeting, a
notice for convening such meeting shall be issued within five days after receipt of the request
and any changes to the original proposal contained in the notice shall be subject to the approval
of the relevant shareholders.
If the Supervisory Committee fails to issue a notice convening the shareholders’ general
meeting by the prescribed period, the Supervisory Committee shall be deemed to refuse to
convene and preside over such meeting, and shareholders holding 10% or more of the shares
of the Company separately or in aggregate for no less than 90 consecutive days shall have the
right to convene and preside over the meeting on their own.
(2) Proposals of General Meetings
The proposals put forward to the shareholders’ general meetings shall fall within the
scope of functions and powers of the shareholders’ general meeting, have clear issues for
discussion and specific matters to be resolved, and comply with the laws, administrative
regulations, the Listing Rules and the Articles of Association.
When the Company convenes a general meeting, the Board of Directors, the Supervisory
Committee and shareholders holding 1% or more of the shares of the Company separately or
in aggregate shall be entitled to put forward proposals to the Company.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
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--- page 553 ---
Shareholders individually or jointly holding 1% or more of the shares of the Company
may submit ad hoc proposals to the convener of a shareholders’ general meeting in writing ten
days prior to shareholders’ general meeting. The convener shall issue a supplementary notice
of the shareholders’ general meeting to announce the information of such ad hoc proposals
within 2 days after receipt thereof, and submit such ad hoc proposals to General Meetings.
Except as provided in the preceding paragraph, the convener of a shareholders’ general
meeting shall not amend the proposals set out in the notice of the shareholders’ general meeting
or put up any new proposals after the issuance of the notice of the shareholders’ general
meeting.
(3) Notices of General Meetings
The Company shall convene an annual general meeting by notifying the shareholders in
writing 20 days prior to the meeting and an extraordinary general meeting by notifying the
shareholders in writing 15 days prior to the meeting.
When calculating the time limit of the notice, the date of the general meeting convened
shall not be included but the issue date of such notice shall be included.
After the notice of the shareholders’ general meeting is issued, the meeting shall not be
postponed or cancelled and the proposals set out in the notice shall not be cancelled without
proper reasons. In the case of any postponement or cancellation of the meeting, the convenor
shall make an announcement at least two working days prior to the original date of the
convening and state the reasons therefor. If the convening is postponed, the date of the
postponed convening shall be stated in the announcement.
(4) Holding of General Meetings
All shareholders registered on the record date or their proxies shall be entitled to attend
the general meeting. They shall exercise their voting rights in accordance with the relevant
laws and regulations and the Articles of Association of the Company.
Shareholder may attend the general meeting in person, or appoint a proxy (who does not
have to be a shareholder) to attend and vote on his/her behalf.
If such shareholder is a recognized clearing house (or its nominee(s)) as defined in the
relevant regulations from time to time in Hong Kong, the clearing house shall be entitled to
appoint a proxy or corporate representative to attend general meetings of the issuer and
meetings of creditors, and such proxy or corporate representative shall have the same statutory
rights as other shareholder s, including the right to speak and vote.
A general meeting shall be presided over by the chairman of the Board of Directors. If the
chairman is unable or fails to discharge his/her duties, more than a half of the directors shall
designate a director to preside over the meeting.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-9 –


--- page 554 ---
If a general meeting is convened by the Supervisory Committee, the chairman of the
Supervisory Committee shall preside over the meeting. If the chairman of the Supervisory
Committee is unable or fails to discharge his/her duties, more than a half of the supervisors
shall designate a supervisor to preside over the meeting.
If a general meeting is convened by the shareholders themselves, the convener shall
nominate a representative to preside over the meeting.
When a general meeting is convened, if the presider of the meeting contravenes the rules
of procedure, rendering the meeting impossible to proceed, with the consent from more than
half of the attending shareholders with voting rights, one person may be nominated at the
general meeting to serve as the presider and the meeting may proceed.
Individual shareholders attending a general meeting in person shall produce their identity
cards or other valid proof or evidence of their identities or stock account card, and in the case
of attendance by proxies, the proxies shall produce valid proof of their identities and the proxy
forms from shareholders.
For a corporate shareholder, its legal representative or a proxy appointed by such legal
representative shall attend the general meeting. In the case of attendance by legal
representatives, they shall produce their identity cards and valid proof of their capacities as
legal representatives and, in the case of attendance by proxies of such legal representatives,
such proxies shall produce their identity cards and the letters of authorization issued by such
legal representatives according to the laws.
(5) Voting at and Resolutions of the General Meetings
Resolutions of the general meetings include ordinary resolutions and special resolutions.
Ordinary resolution at a general meeting shall be adopted by more than one half of the
voting rights held by shareholders (including their proxies) attending the general meeting.
Special resolution at a general meeting shall be adopted by more than two thirds of the voting
rights held by shareholders (including their proxies) attending the general meeting.
The following matters shall be resolved by way of ordinary resolutions at a general
meeting:
(i) the work reports of the Board of Directors and the Supervisory Committee;
(ii) the profit distribution plans and plans for making up losses drafted by the Board of
Directors;
(iii) the dismissal and remuneration of the members of the Board of Directors and the
Supervisory Committee and the method of payment of the remuneration;
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
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--- page 555 ---
(iv) the matters other than those that laws, administrative regulations, the Listing Rules,
the listing rules of the places where the shares of the Company are listed or the
Articles of Association require to be adopted by special resolution.
The following matters shall be resolved by way of special resolutions at a general
meeting:
(i) increase or reduction of the registered capital of the Company;
(ii) division, merger, dissolution and liquidation of the Company;
(iii) amendments of the Articles of Association;
(iv) purchase or disposal of major assets or guarantee of the Company within one year
with the amount exceeding 30% of the latest audited total assets of the Company;
(v) share incentive schemes;
(vi) other matters as required by laws, administrative regulations, the Listing Rules, the
listing rules of the places where the shares of the Company are listed or the Articles
of Association, and matters which, as resolved by way of an ordinary resolution at
a general meeting, will have a material impact on the Company and need to be
approved by way of special resolutions.
Shareholders (including proxies) shall exercise their voting rights according to the
number of voting shares they represent, with one vote for each share, unless individual
shareholders are required by the Listing Rules to abstain from voting on individual matters.
When a ballot voting is held, the shareholders (including proxies) having two or more
votes need not use all of their voting rights to vote for or against such matters or abstentions.
Where any shareholder is required by the Listing Rules to abstain from voting on any
particular matter or is restricted to voting only for or only against any particular matter, such
shareholder shall abstain from voting or casting his vote in accordance with such requirement;
any votes cast by or on behalf of such shareholder in contravention of such requirement or
restriction shall not be counted in the voting result.
When the shareholders’ meeting considers major matters affecting the interests of small
and medium-sized investors, the votes of small and medium-sized investors shall be counted
separately. The results of the separate vote counting shall be publicly disclosed in a timely
manner.
Shares in the Company which are held by the Company do not carry any voting rights,
and shall not be counted in the total number of voting shares represented by shareholders
present at a general meeting.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
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--- page 556 ---
When the general meeting considers matters relating to a connected transaction, the
connected shareholders shall not participate in the vote, and the number of voting shares
represented by them shall not be counted in the total number of valid voting shares. The
resolution of the general meeting shall fully disclose the voting by the unconnected
shareholders.
DIRECTORS AND BOARD OF DIRECTORS
(1) Directors
Directors shall be elected or replaced by the general meeting, and may further be removed
from their office prior to the conclusion of the term thereof by the general meeting. Directors
shall have a term of three years, renewable upon expiry if re-elected. The term of office of
independent Directors is the same as other Directors, and the term is renewable upon
re-election when it expires.
A director’s term of office shall commence from the date when he/she takes office and end
upon expiry of the term of the current session of the Board of Directors. The existing director
shall continue to perform the duties of a director in accordance with laws, administrative
regulations, departmental rules and the Articles of Association after the expiry of his/her term
if no re-election is held in time.
The general manager and senior officers may concurrently serve as directors, provided
that the total number of directors who concurrently serve as the general manager and senior
management members and the directors who are employees’ representatives shall not be more
than half of the total number of directors of the Company.
Subject to the relevant laws and regulatory rules of the place where the Company’s shares
are listed, any person appointed by the Board as a Director to fill a casual vacancy on the Board
or to increase the number of places on the Board shall hold office only until the next following
annual general meeting and shall then be eligible for re-election.
(2) Board of Directors
The Company shall have a Board of Directors which shall be accountable to the general
meeting.
The Board of Directors is composed of seven directors, with one chairman. The directors
are composed of executive directors, non-executive directors, and independent directors.
An independent director shall perform his/her duties and responsibilities independently,
without the interference of the substantial shareholders or the actual controller of the Company
or other entities or individuals that have a material interest in the Company.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
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--- page 557 ---
The Board shall exercise the following powers and duties:
(i) to convene a general meeting and report its work to such meeting;
(ii) to implement the resolutions of a general meeting;
(iii) to decide on the operation plans and investment plans for the Company;
(iv) to prepare the Company’s profit distribution plans and loss recovery plans;
(v) to prepare the plan for the Company to increase or reduce its registered capital, issue
bonds or other securities and listing plans;
(vi) to prepare plans of the Company with respect to material acquisitions and
acquisitions of the Company’s shares or merger, division, dissolution or change in
the form of the Company;
(vii) within the scope of authorisation by the shareholders’ meeting, to decide on matters
such as foreign investment, acquisition and sale of assets, pledge of assets, external
guarantee matters, entrusted financial management, connected transactions, and
external donations;
(viii) to decide on the establishment of the internal organizations;
(ix) to decide to appoint or remove the general manager, secretary of the Board and other
senior management of the Company, and decide on the remunerations and rewards
and punishments thereof; to decide to appoint or remove the deputy general
manager, financial controller and other senior management members of the
Company nominated by the general manager, and decide on the remunerations and
rewards and punishments thereof;
(x) to formulate the Company’s basic management system;
(xi) to prepare plans to amend the Articles of Association;
(xii) to manage the disclosure of information of the Company;
(xiii) to propose to the general meeting with respect to the appointment or replacement of
the accounting firm for the audit of the Company;
(xiv) to receive the work report of the general manager of the Company and examine such
work; and
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
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--- page 558 ---
(xv) to consider and approve: (1) share transactions where all the percentage ratios
calculated in accordance with the provisions of Rule 14.07 of the Listing Rules
regarding percentage ratios are less than five percent (5%) and the consideration
includes the shares to be issued for listing (including one-off transactions and a
series of transactions for which the percentage ratios need to be calculated on a
combined basis); (2) disclosable transactions where any one of the applicable
percentage ratios reaches five percent (5%) or above but is less than twenty-five
percent (25%) (including one-off transactions and a series of transactions for which
the percentage ratios need to be calculated on a combined basis); or (3) partially
exempt connected transactions and non-exempt connected transactions where any
one of the percentage ratios (excluding the profit ratio) calculated in accordance
with the provisions of Rule 14.07 of the Listing Rules regarding percentage ratios
reaches zero point one percent (0.1%) or above but is less than five percent (5%)
(including one-off transactions and a series of transactions for which the percentage
ratios need to be calculated on a combined basis, but excluding any connected
transactions that are exempt from disclosure or announcement in accordance with
the Listing Rules or approved by the HKEX for exemption from disclosure or
announcement);
(xvi) to exercise any other duties and powers specified in laws, administrative regulations,
departmental rules, the Listing Rules and the listing rules of the places where the
shares of the Company are listed or the Articles of Association.
A director shall not enter into contracts with the Company or carry out transactions with
the Company in violation of the provisions of the Articles of Association of the Company or
without the consent of shareholders or a shareholders’ general meeting.
The Board of Directors of the Company shall establish special committees such as audit
committee, remuneration and appraisal committee and nomination committee etc. according to
the relevant resolutions of the shareholder’s general meeting. All members of special
committees shall comprise directors. All of the special committees shall be accountable to the
Board of Directors. The proposal of each special committee shall be submitted to the Board of
Directors for deliberation and decision.
The members of specialized committees shall be exclusively composed of directors.
Independent non-executive directors shall serve as conveners in the Audit committee,
Nomination Committee, Remuneration and Appraisal Committee.
Decisions of the Audit Committee will be taken on a majority basis.
A resolution of the Board of Directors on the following matters shall be passed by a
majority of all the members of the Audit Committee before it is made: (i) the engagement or
dismissal of the accounting firm that undertakes the Company’s auditing business; (ii) the
appointment or dismissal of the person in charge of finance; (iii) the disclosure of the financial
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-14 –


--- page 559 ---
accounting report; and (iv) any other matters stipulated in the rules of the securities regulatory
authorities under the State Council or other securities regulatory rules of the place where the
Company’s shares are listed/quoted.
The Board of Directors is responsible for formulating the rules of procedure and work
protocols of the special committees and regulating the operation of the special committees.
SECRETARY TO THE BOARD
The Company shall have a secretary of the Board of Directors. The secretary of the Board
is a senior officer of the Company, responsible to the Board of Directors. The secretary of the
Board of Directors shall be nominated by the chairman of the Board and appointed or dismissed
by the Board of Directors.
The secretary of the Board of Directors shall comply with laws, regulations, normative
documents, the Listing Rules, the working rules of the secretary of the board of directors, and
relevant provisions of the Articles of Association.
The secretary of the Board of Directors shall possess the necessary professional
knowledge and experience to perform his/her duties, as well as good professional ethics and
personal character.
The circumstances stipulated in the Articles of Association that prohibit the appointment
of the director apply to the secretary of the Board of Directors as well.
The Secretary of the Board of Directors is responsible for the preparation of the
shareholder’s general meeting and the Board of Directors, the custody of meeting minutes and
documents, the management of shareholder information, information disclosure, and other
daily affairs; as well the secretary is responsible for filing the documents of the general
meeting of shareholders, the Board of Directors, and the Supervisory Committee with the
relevant securities regulatory departments where the shares of Company are listed
(if necessary).
The Company shall sign a confidentiality agreement with the secretary of the Board of
Directors at the time of appointment, requiring to promise to continue fulfilling the
confidentiality obligations during the secretary’s tenure and after leaving until relevant
information is disclosed, except for information related to the Company’s illegal activities.
Before leaving office, the secretary of the Board of Directors shall undergo a review of
the departure by the Board of Directors and the Supervisory Committee, and transfer relevant
archives and documents, as well as ongoing or pending matters, under the supervision of the
Supervisory Committee.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-15 –


--- page 560 ---
The resignation report of the secretary of the Board of Directors can only take effect after
he/she completes the transfer of work and the relevant announcement is disclosed. Before the
resignation report takes effect, the secretary of the Board of Directors who intends to resign
shall continue to perform his/her duties.
SUPERVISORY COMMITTEE
The Company shall have a Supervisory Committee. The Supervisory Committee shall
consist of three supervisors. A supervisory chairman will be appointed by election by all
supervisors in a majority vote. The chairman of the Supervisory Committee shall convene and
preside over a meeting of the Supervisory Committee. If the chairman of the Supervisory
Committee is unable or fails to perform his/her duties, a supervisor selected by more than one
half of all supervisors shall convene and preside over the meeting of the Supervisory
Committee.
The Supervisory Committee shall consist of shareholder representatives and an
appropriate proportion of the Company’s employee representatives and the percentage of
employee representatives shall not be less than one-third. The employee representatives of the
Supervisory Committee shall be elected by employees of the Company at the employee
representatives’ meeting, the employee meeting or otherwise democratically.
The directors, the general manager and the senior management officers of the Company
shall not act concurrently as supervisors.
The term of office of a supervisor shall be 3 years. The supervisors are renewable upon
re-election and re-appointment.
The appointment and removal of the chairman of the Supervisory Committee shall be
determined by the affirmative votes of more than half of the members of the Supervisory
Committee.
The Supervisory Committee shall exercise the following duties and powers:
(i) to review the regular reports of the Company prepared by the Board of Directors and
to submit written review opinions thereon;
(ii) to review the financial position of the Company;
(iii) to supervise the performance of Directors and senior management members of their
duties to the Company, and propose dismissal of Directors and senior management
members that have violated the laws, administrative regulations, the Articles of
Association or the resolutions of the general meetings;
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-16 –


--- page 561 ---
(iv) to demand rectification by Directors and senior management members when the acts
of such persons are prejudicial to the Company’s interest and, if necessary, report to
the general meeting or relevant national competent authorities;
(v) to propose the convening of an extraordinary general meeting, and to convene and
preside over the general meeting when the Board fails to perform such duties as
specified by the Company Law;
(vi) to put forward proposals to general meetings;
(vii) to initiate litigations against Directors and senior management member in
accordance with provisions of Article 189 of the Company Law;
(viii) to initiate investigations into any irregularities identified in the operation of the
Company and, where necessary, may engage an accounting firm and a law firm to
assist their work at the Company’s expense; and
(ix) to require directors and senior management to submit reports on the execution of
their duties.
Meetings of the Supervisory Committee are divided into regular and interim meetings.
The Supervisory Committee meets at least once every six months. The Supervisory
Committee may convene an interim meeting within ten days if one of the following
circumstances arises:
(i) when any supervisor proposes to convene it;
(ii) when the shareholders’ meeting or the Board of Directors’ meeting passes a
resolution that violates laws, regulations, departmental rules, the Listing Rules,
other securities regulatory rules of the place where the shares of Company are listed,
as well as the Articles of Association, resolutions of the Company’s shareholders’
meeting and other relevant provisions;
(iii) when the misconduct of the Directors and senior management may cause material
damage to the Company or create a bad influence in the market;
(iv) when the Company, directors, supervisors and senior management are subject to
litigation by shareholders;
(v) when the Company, directors, supervisors or senior management are punished by the
securities regulatory authorities or publicly condemned by the stock exchange;
(vi) other circumstances as provided for in these Articles of Association.
A meeting of the Supervisory Committee shall be held only when a majority of the
supervisors are present. Resolutions of the Supervisory Committee shall be passed by a
majority of all supervisors.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-17 –


--- page 562 ---
GENERAL MANAGER AND OTHER SENIOR MANAGEMENT MEMBERS
The Company shall have one general manager, who shall be appointed or dismissed by the
Board of Directors. The Company shall have several vice general managers, who shall be
appointed or dismissed by the Board of Directors.
The Company’s general manager, vice general manager, the chief financial officer and the
secretary of the Board of Directors are members of the senior management of the Company.
The general manager serves for a term of three years, subject to re-appointment upon the
expiry of the term.
The general manager shall report to the Board and have the following duties and powers:
(i) to take charge of the production operations and management tasks of the Company
and organize the implementation of the Board’s resolutions, and to report work to
the Board;
(ii) to organize the implementation of the Company’s annual operating plan and
investment plan;
(iii) to devise the set-up of the Company’s internal management structure;
(iv) to devise the basic management policy of the Company;
(v) to formulate the specific rules of the Company;
(vi) to propose the appointment or dismissal of vice general managers and the chief
financial officer;
(vii) to appoint or dismissal management officers, aside from those requiring the Board
to decide the appointment or removal; and
(viii) other duties as granted by the Company’s Articles of Association and the Board.
The general manager attend the board meetings.
FINANCIAL AND ACCOUNTING SYSTEM
The Company formulates its financial and accounting system in accordance with laws,
administrative regulations, and relevant national departments. If there are other provisions in
the Listing Rules or the securities regulatory authorities of the place where the Company’s
stocks are listed, such provisions shall apply.
The Company shall prepare its annual financial accounting report within 4 months from
the end of each fiscal year, and prepare a semi-annual financial accounting report within
2 months from the end of the first 6 months of each fiscal year.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-18 –


--- page 563 ---
The above financial and accounting reports are prepared in accordance with relevant laws,
administrative regulations, departmental rules, the Listing Rules, and other securities
regulatory rules of the Company’s stock listing location.
The Company will not establish separate accounting books except for statutory
accounting books. The assets of the Company shall not be stored in any individual’s account.
PROFIT ALLOCATION
The Company shall allocate 10% of the annual after-tax profits as the statutory reserve
fund of the Company. When the cumulated amount of the statutory reserve fund of the
Company has reached 50% or more of its registered capital, no further allocations is required.
If the statutory reserve fund of the Company is insufficient to make up for the losses of
the preceding year, the profits of the current year shall first be used to make up the said losses
before any statutory reserve fund is withdrawn as per the provision of the preceding paragraph.
After withdrawing the statutory reserve fund out of its after-tax profits, the Company may
also allocate some of its after-tax profits into its discretionary reserve if so resolved by the
shareholders’ general meeting.
After making up for the losses and making contributions to the common reserve fund, any
remaining profits after tax shall be distributed to the shareholders in proportion to their
respective shareholdings, except it is stipulated in the Articles of Association of the Company
that profit distributions shall not be made in accordance with the shareholding proportion.
DISSOLUTION AND LIQUIDATION OF THE COMPANY
The Company shall be dissolved for the following reasons:
(i) the business term stipulated in the Articles of Association has expired or other
circumstances for dissolution specified in the Articles of Association arise;
(ii) the general meeting has resolved to dissolve the Company;
(iii) the merger or division of the Company requires a dissolution;
(iv) the business license is revoked, or the Company is ordered to close down or is
dissolved according to laws;
(v) if the Company suffers significant hardship in its operation and management, and
the ongoing existence would bring significant losses for shareholders that cannot be
resolved through other means, the shareholders holding more than ten percent of the
total voting rights of the Company may request the People’s Court to dissolve the
Company.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-19 –


--- page 564 ---
In the case of item (i) and (ii) mentioned above and the Company has not distribute
properties to the shareholders, the Company may survive by amending the Articles of
Association or the resolution of the general meeting, which shall be approved by more than
two-thirds of the voting rights represented by the shareholders present at the general meeting.
Where the Company is dissolved under the circumstances set out in items (i), (ii), (iv) and
(v) above, the Company shall establish a liquidation group to commence liquidation within
fifteen days upon the occurrence of the circumstances for dissolution. The composition of the
liquidation group shall be determined by Directors or general meeting. If the Company fails to
establish a liquidation group on time, creditors may request the People’s Court to designate
certain persons to form a liquidation group to perform liquidation.
The liquidation team shall exercise the following functions and power during the period
of liquidation:
(i) liquidating he properties of the Company, and preparing the balance sheets and asset
checklists separately;
(ii) informing creditors by a notice or public announcement;
(iii) disposing of and liquidating the unfinished businesses of the Company;
(iv) clearing off the outstanding taxes and the taxes incurred from the process of
liquidation;
(v) clearing off credits and debts;
(vi) distributing the residual properties after settling such debt; and
(vii) participating in the civil litigation on behalf of the Company.
The liquidation team shall, within 10 days of its formation, notify the creditors, and shall,
within 60 days, make public announcements on the information disclosure media designated by
the Company. Creditors shall, within 30 days of the receipt of the notice or within 45 days of
the release of the public announcement in the case of failure to receive said notice, file their
creditors’ rights with the liquidation team.
After the liquidation team has liquidated the properties of the Company and has prepared
the balance sheets and checklists of properties, it shall prepare a plan of liquidation, and report
it to the shareholders’ general meeting or the People’s Court for confirmation.
The remaining assets that result from paying off the liquidation expenses, wages of
employees, social insurance premiums and statutory compensation, the outstanding taxes and
the debts of the Company may be distributed according to the ratios of shareholding of the
shareholders.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-20 –


--- page 565 ---
During the liquidation period, the Company still exists but shall not carry out any
business activities not related to liquidation. The property of the Company shall not be
distributed to shareholders until all liabilities have been paid off in accordance with the
provisions of the preceding paragraph.
AMENDMENT TO ARTICLES OF ASSOCIATION
Under any one of the following circumstances, the Company shall amend the Articles of
Association:
(i) after amendment has been made to the Company Law, the relevant laws,
administrative regulations or the Listing Rules, the contents of the Articles of
Association shall conflict with the amended laws, administrative regulations or the
Listing Rules;
(ii) the changes that the Company have undergone are not in consistence with the
records made in the Articles of Association; and
(iii) the shareholders’ general meeting decides that the Article of Association should be
amended.
APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION
– V-21 –


--- page 566 ---
A. FURTHER INFORMATION ABOUT OUR COMPANY
1. Establishment of Our Company
Our Company was incorporated as a limited liability company under PRC Law on
February 14, 2014 and was converted into a joint stock company with limited liability on
September 7, 2023. Our registered office is located at Room 4068, 4th Floor, No. 102, Keyun
Road, Zhongshan Avenue, Tianhe District, Guangzhou, Guangdong province, China.
We have established a place of business in Hong Kong at Room 1912, 19/F, Lee Garden
One, 33 Hysan Avenue, Causeway Bay, Hong Kong and was registered with the Registrar of
Companies in Hong Kong as a non-Hong Kong company under Part 16 of the Companies
Ordinance on April 11, 2025. Ms. Tang King Yin ( ቎౻ሬ), our joint company secretary, is the
authorized representative of our Company for the acceptance of service of process and notices
on behalf of our Company in Hong Kong under Part 16 of the Companies Ordinance. The
address for service of process on our Company in Hong Kong is the same as our principal place
of business in Hong Kong as set out above.
As our Company was established under PRC Law, we are subject to the relevant PRC
Law. A summary of the relevant aspects of laws and regulations of China and our Articles of
Association is set out in Appendices IV and V to this prospectus.
2. Changes in the Share Capital of Our Company
There has been no alteration in the share capital of our Company within the two years
immediately preceding the date of this prospectus.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-1 –


--- page 567 ---
3. Changes in the Share Capital of our Subsidiaries
A summary of the corporate information and the particulars of our major subsidiaries are
set out in the Accountants’ Report, the text of which is set out in Appendix I. The following
subsidiaries were incorporated within the two years immediately preceding the date of this
prospectus:
Name
Place of
incorporation
Date of
incorporation
Registered
capital/share
capital
Guangzhou Y ujian One Xiaomian
Catering Management Co., Ltd.
(ʮ̡) /H1118/H1118
Chinese Mainland May 8, 2024 RMB1,000,000
Foshan Y ujian Mian Catering
Management Co., Ltd. ( Нʆ༾Ԉᙢ᎛
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Chinese Mainland June 14, 2024 RMB1,000,000
Guangzhou Y ujian Two Xiaomian
Catering Management Co., Ltd. ( ᄿψ
ʮ̡) /H1118/H1118/H1118/H1118/H1118
Chinese Mainland July 23, 2024 RMB1,000,000
Shanghai Y ujian Mian Catering
Management Co., Ltd. ( ɪऎ༾Ԉᙢ᎛
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Chinese Mainland August 14, 2024 RMB1,000,000
Shenzhen Y ujian Mian Catering
Management Co., Ltd. ( ଉέ༾Ԉᙢ᎛
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Chinese Mainland August 14, 2024 RMB1,000,000
Guangzhou Y ujian Three Xiaomian
Catering Management Co., Ltd.
(ʮ̡) /H1118/H1118
Chinese Mainland August 21, 2024 RMB1,000,000
Beijing Y ujian One Xiaomian Catering
Management Co., Ltd. ( ̏ԯ༾Ԉఠʃ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Chinese Mainland August 23, 2024 RMB1,000,000
Guangzhou Y ujian Xiaomian Information
Technology Co., Ltd. (ڦ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Chinese Mainland August 23, 2024 RMB1,000,000
Guangzhou Y ujian Four Xiaomian
Catering Management Co., Ltd.
(ʮ̡) /H1118/H1118
Chinese Mainland October 16, 2024 RMB1,000,000
Guangzhou Y ujian Five Xiaomian
Catering Management Co., Ltd.
(ʮ̡) /H1118/H1118
Chinese Mainland November 26,
2024
RMB1,000,000
Suqian Y ujian Haopin Supply Chain
Management Co., Ltd. (ۜ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Chinese Mainland November 27,
2024
RMB10,000,000
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-2 –


--- page 568 ---
Name
Place of
incorporation
Date of
incorporation
Registered
capital/share
capital
Guangzhou Y ujian Six Xiaomian
Catering Management Co., Ltd.
(ʮ̡) /H1118/H1118
Chinese Mainland December 18,
2024
RMB1,000,000
HK Xiao Noodles Catering Management
Limited (ʮ
̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Hong Kong SAR January 6, 2025 HK$1,000,000
Foshan Y ujian Two Mian Catering
Management Co., Ltd. ( Нʆ༾Ԉ൩ᙢ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Chinese Mainland January 16, 2025 RMB1,000,000
Guangzhou Y ujian Seven Xiaomian
Catering Management Co., Ltd.
(ʮ̡) /H1118/H1118
Chinese Mainland February 19,
2025
RMB1,000,000
Xiao Noodles Catering Management
Group Pte. Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Singapore January 21, 2025 50,000 Singapore
dollars
Shanghai Y ujian Two Mian Catering
Management Co., Ltd. ( ɪऎ༾Ԉ൩ᙢ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Chinese Mainland February 20,
2025
RMB1,000,000
Shenzhen Y ujian One Mian Catering
Management Co., Ltd. ( ଉέ̹༾Ԉఠ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Chinese Mainland March 6, 2025 RMB1,000,000
Guangzhou Y ujian Eight Mian Catering
Management Co., Ltd. (ᙢ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Chinese Mainland March 17, 2025 RMB1,000,000
Haikou Y ujian One Mian Catering
Management Co., Ltd. ( ऎɹ༾Ԉఠᙢ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Chinese Mainland June 9, 2025 RMB1,000,000
Guangzhou Y ujian Thirteen Mian
Catering Management Co., Ltd.
(ʮ̡) /H1118/H1118
Chinese Mainland June 18, 2025 RMB1,000,000
Guangzhou Y ujian Ten Mian Catering
Management Co., Ltd. (ᙢ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Chinese Mainland June 18, 2025 RMB1,000,000
Guangzhou Y ujian Fourteen Mian
Catering Management Co., Ltd. ( ᄿψ
ʮ̡) /H1118/H1118/H1118/H1118/H1118
Chinese Mainland June 18, 2025 RMB1,000,000
Hangzhou Y ujian Mian Catering
Management Co., Ltd. (ψ༾Ԉᙢ᎛
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Chinese Mainland July 31, 2025 RMB10,000,000
Xuzhou Y ujian Haowu Supply Chain
Management Co., Ltd. (ي
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Chinese Mainland August 22, 2025 RMB5,000,000
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-3 –


--- page 569 ---
Name
Place of
incorporation
Date of
incorporation
Registered
capital/share
capital
Nanjing Y ujian Mian Catering
Management Co., Ltd. (ԯ༾Ԉᙢ᎛
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Chinese Mainland September 29,
2025
RMB10,000,000
Huizhou Y ujian One Mian Catering
Management Co., Ltd. ( ౉ψ༾Ԉఠᙢ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Chinese Mainland November 10,
2025
RMB1,000,000
Further, the following changes in the share capital of our subsidiaries have taken place
within the two years immediately preceding the date of this prospectus:
 On November 30, 2023, the registered capital of Guangzhou Y ujian Xiaomian
Catering Service Co., Ltd. (ʮ̡) was increased from
RMB1,000,000 to RMB10,000,000.
 On January 26, 2024, the registered capital of Shenzhen Y ujian Xiaomian Catering
Management Co., Ltd. (ʮ̡) was increased from
RMB1,000,000 to RMB10,000,000.
 On May 22, 2025, the registered capital of Beijing Y ujian Xiaomian Catering
Management Co., Ltd. (ʮ̡) was increased from
RMB1,000,000 to RMB5,000,000.
Save as disclosed above, there has been no alteration in the share capital of our
subsidiaries within two years immediately preceding the date of this prospectus.
4. Resolutions of our Shareholders
At the general meetings of the Shareholders held on April 2, 2025 and August 6, 2025,
the following resolutions, among others, were duly passed:
(1) the issue by the Company of H Shares with a nominal value of RMB0.02 each and
such H Shares be listed on the Stock Exchange;
(2) that the number of H Shares to be issued shall not be more than 25% of the total
issued share capital of our Company as enlarged by the Global Offering (before the
exercise of the Over-allotment Option), and the grant to the underwriters of the
Over-allotment Option of not more than 15% of the number of H Shares issued
pursuant to the Global Offering;
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-4 –


--- page 570 ---
(3) subject to the completion of the Global Offering, the revised Articles of Association
be approved and adopted, which shall become effective on the Listing Date and the
Board has been authorized to amend the Articles of Association in accordance with
any legal or statutory requirements, or any comments from any governmental or
regulatory authorities;
(4) subject to the approval of the CSRC filing, upon completion of the Global Offering,
613,324,800 Unlisted Shares held by eleven Shareholders will be converted into
H Shares on a one-for-one basis;
(5) upon completion of the Listing, the granting of a general mandate to the Board to
allot, issue and deal with Shares of not more than 20% of the number of Shares in
issue as of the Listing Date (excluding any Shares which may be issued pursuant to
the exercise of the Over-allotment Option) at any time within a period up to the date
of the conclusion of the next annual general meeting of our Company or the date on
which it is varied or revoked by an ordinary resolution of our Shareholders in a
general meeting, whichever is earlier; and
(6) authorization of the Board or its authorized representatives to handle all matters
relating to, among other things, the Global Offering, the Conversion of Unlisted
Shares into H Shares and the issue and listing of H Shares on the Stock Exchange.
B. FURTHER INFORMATION ABOUT OUR BUSINESS
1. Summary of Material Contracts
The following contracts (not being contracts entered into in the ordinary course of
business) were entered into by our Company or its subsidiaries within the two years preceding
the date of this prospectus and are or may be material:
(a) a cornerstone investment agreement dated November 25, 2025 entered into among
our Company, HHLR Advisors, Ltd., CMB International Capital Limited and China
Galaxy International Securities (Hong Kong) Co., Limited with respect to a
subscription of the Offer Shares at the Offer Price in the aggregate amount of the
Hong Kong dollar equivalent of US dollar 5.0 million;
(b) a cornerstone investment agreement dated November 25, 2025 entered into among
our Company, Guotai Junan Investments (Hong Kong) Limited and CMB
International Capital Limited with respect to a subscription of the Offer Shares at the
Offer Price in the aggregate amount of the Hong Kong dollar equivalent of US dollar
2,570,000;
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-5 –


--- page 571 ---
(c) a cornerstone investment agreement dated November 25, 2025 entered into among
our Company, Dream’ee (Hong Kong) Open-ended Fund Company, CMB
International Capital Limited and Futu Securities International (Hong Kong)
Limited with respect to a subscription of the Offer Shares at the Offer Price in the
aggregate amount of the Hong Kong dollar equivalent of US dollar 2,430,000;
(d) a cornerstone investment agreement dated November 25, 2025 entered into among
our Company, Hong Kong Shengying Investment Limited, CMB International
Capital Limited and BOCI Asia Limited with respect to a subscription of the Offer
Shares at the Offer Price in the aggregate amount of the Hong Kong dollar
equivalent of US dollar 5.0 million;
(e) a cornerstone investment agreement dated November 25, 2025 entered into among
our Company, Zeta Wisdom OFC (acting for itself and for and on behalf of and for
the account of its sub-fund, LI Fund), Zeta Capital (H.K.) Limited, CMB
International Capital Limited and SDIC Securities (Hong Kong) Limited with
respect to a subscription of the Offer Shares at the Offer Price in the aggregate
amount of the Hong Kong dollar equivalent of US dollar 5,000,000;
(f) a cornerstone investment agreement dated November 25, 2025 entered into among
our Company, Hai Di Lao Holdings Pte. Ltd. and CMB International Capital Limited
with respect to a subscription of the Offer Shares at the Offer Price in the aggregate
amount of the Hong Kong dollar equivalent of USD2,000,000; and
(g) the Hong Kong Underwriting Agreement.
2. Our Material Intellectual Property Rights
(a) Trademarks
As of the Latest Practicable Date, we had registered the following trademarks which we
considered to be material to our business:
No. Trademark Class
Registered
owner
Place of
registration
Registration
number
Registration
date Expiry date
1. /H1118/H1118/H1118
 29 The Company Chinese
Mainland
53824064 April 14, 2024 April 13, 2034
2. /H1118/H1118/H1118
 30, 35, 43 Xiao Noodles
International
Holdings
Limited ( ༾Ԉ
Ϟ
ʮ̡)( “ XN
International ”)
Hong Kong SAR 306266403 February 20,
2024
June 8, 2033
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-6 –


--- page 572 ---
No. Trademark Class
Registered
owner
Place of
registration
Registration
number
Registration
date Expiry date
3. /H1118/H1118/H1118
 30, 35, 43 XN International Hong Kong SAR 306266412 February 20,
2024
June 8, 2033
4. /H1118/H1118/H1118
 30, 35, 43 XN International Hong Kong SAR 306266421 February 20,
2024
June 8, 2033
5. /H1118/H1118/H1118
 30 The Company Chinese
Mainland
53488972 January 14,
2024
January 13,
2034
6. /H1118/H1118/H1118
 29 The Company Chinese
Mainland
53514081 January 14,
2024
January 13,
2034
7. /H1118/H1118/H1118
 29 The Company Chinese
Mainland
58558367 January 14,
2024
January 13,
2034
8. /H1118/H1118/H1118
 30 The Company Chinese
Mainland
53798311 September 14,
2023
September 13,
2033
9. /H1118/H1118/H1118
 30 The Company Chinese
Mainland
58573888 September 14,
2023
September 13,
2033
10. /H1118/H1118/H1118
 43 The Company Chinese
Mainland
58563942 August 28, 2023 August 27, 2033
11. /H1118/H1118/H1118
 35 The Company Chinese
Mainland
58578652 March 28, 2023 March 27, 2033
12. /H1118/H1118/H1118
 43 The Company Chinese
Mainland
15327283 May 21, 2017 May 20, 2027
13. /H1118/H1118
 30, 35, 43 XN International Hong Kong SAR 306823224 July 3, 2025 February 27,
2035
(b) Patents
As of the Latest Practicable Date, we had registered the following patents which we
considered to be material to our business:
No. Patent
Patent
type Patentee
Place of
registration Patent number
Application
date Expiry date
1. /H1118/H1118/H1118Bowl (red)
(ມ(Ѝ))
Design The Company Chinese
Mainland
ZL202030164905.9 April 21, 2020 April 20, 2030
2. /H1118/H1118/H1118Bowl (golden
bowl) ( ມ(ږ
ມ))
Design The Company Chinese
Mainland
ZL202330143711.4 March 23,
2023
March 22,
2038
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-7 –


--- page 573 ---
(c) Software Copyrights
As of the Latest Practicable Date, we had registered the following software copyrights
which we considered to be material to our business:
No. Copyright Owner
Place of
registration
Registration
number
Registration
date
1. /H1118Y ujian Xiaomian
ordering
application
management
backend
production task
system ( ༾Ԉʃᙢ
ܝ
̨͛ପ΂ਕӻ୕)
Sichuan Y ujian
Haowan
Information
Technology Co.,
Ltd. ( ̬ʇ༾Ԉλ
ʮ
̡)( “ Sichuan
Yujian Haowan ”)
Chinese
Mainland
2024SR0762881 June 5, 2024
2. /H1118Y ujian Xiaomian
data viewing
operation system
(ᅰ༶
ᐄӻ୕)
Sichuan Y ujian
Haowan
Chinese
Mainland
2024SR0661222 May 16, 2024
3. /H1118Y ujian Xiaomian
business middle
office meet
numbers platform
(༾Ԉʃᙢุਕʕ
̨༾ᅰ̨̻)
Sichuan Y ujian
Haowan
Chinese
Mainland
2024SR0618336 May 9, 2024
4. /H1118Y ujian Xiaomian
data middle office
meet numbers
platform ( ༾Ԉʃ
ᙢᅰኽʕ̨༾ᅰ̻
̨)
Sichuan Y ujian
Haowan
Chinese
Mainland
2024SR0565982 April 26, 2024
5. /H1118Y ujian Xiaomian
printing service
task production
system ( ༾Ԉʃᙢ
ਕ͛ପ΂ਕ
ӻ୕)
Sichuan Y ujian
Haowan
Chinese
Mainland
2024SR0544605 April 23, 2024
6. /H1118Y ujian Xiaomian
settlement center
operation system
(༾Ԉʃᙢഐၑʕ
ː༶ᐄӻ୕)
Sichuan Y ujian
Haowan
Chinese
Mainland
2024SR0314200 February 27,
2024
7. /H1118Y ujian Xiaomian
food delivery
operation system
(༾Ԉʃᙢ̈᎛ᘒ
༶ᐄӻ୕)
Sichuan Y ujian
Haowan
Chinese
Mainland
2024SR0299286 February 23,
2024
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-8 –


--- page 574 ---
No. Copyright Owner
Place of
registration
Registration
number
Registration
date
8. /H1118Y ujian Xiaomian
KDS function
production
management
system ( ༾Ԉʃᙢ
KDŠঐ͛ପ၍ଣ
ӻ୕)
Sichuan Y ujian
Haowan
Chinese
Mainland
2024SR0014262 January 3, 2024
9. /H1118Store POS
management
backend operation
system (ֳژPOS
̨༶ᐄӻ
୕)
Sichuan Y ujian
Haowan
Chinese
Mainland
2023SR1689761 December 20,
2023
10. Store assistant
operation system
(ʃп˓༶ᐄ
ӻ୕)
Sichuan Y ujian
Haowan
Chinese
Mainland
2023SR1692393 December 20,
2023
11. Food ordering mini
program operation
system ( ᓃ᎛ʃ೻
ҏ༶ᐄӻ୕)
Sichuan Y ujian
Haowan
Chinese
Mainland
2023SR1696227 December 20,
2023
12. Special mini program
operation system
(त஢ʃ೻ҏ༶ᐄ
ӻ୕)
Sichuan Y ujian
Haowan
Chinese
Mainland
2023SR1682623 December 19,
2023
(d) Domain names
As of the Latest Practicable Date, we had registered the following domain name which we
considered to be material to our business:
No. Domain name Registered owner Expiry date
1. /H1118/H1118/H1118/H1118xiaonoodles.com the Company April 23, 2028
Save as disclosed above, as at the Latest Practicable Date, there were no other intellectual
property rights which were material in relation to our Group’s business.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-9 –


--- page 575 ---
C. FURTHER INFORMATION ABOUT OUR DIRECTORS, SUPERVISORS AND
SUBSTANTIAL SHAREHOLDERS
1. Disclosure of interests of our Directors, Supervisors and Chief Executive
Immediately following the completion of the Global Offering and Conversion of Unlisted
Shares into H Shares, the interests and/or short positions (as applicable) of the Directors,
Supervisors and the chief executive of the Company in the Shares, underlying Shares and
debentures of the Company and any interests and/or short positions (as applicable) in shares,
underlying Shares or debentures of any of the Company’s associated corporations (within the
meaning of Part XV of the SFO) which (1) will have to be notified to the Company and the
Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests
and/or short positions (as applicable) which they are taken or deemed to have under such
provisions of the SFO), (2) will be required, pursuant to Section 352 of the SFO, to be entered
in the register referred to therein or (3) will be required, pursuant to the Model Code for
Securities Transactions by Directors of Listed Issuers as set out in Appendix C3 to the Listing
Rules, to be notified to the Company and the Stock Exchange, in each case once the Shares are
listed on the Stock Exchange, will be as follows:
(a) Interests in our Company
Name of Director,
Supervisor or
Chief Executive Nature of Interest
Number and
Description of
Shares
(1)
Approximate
percentage of
shareholding in
the total issued
share capital
of our Company
immediately upon
completion of the
Global Offering and
the Conversion of
Unlisted Shares into
H Shares (2)
Mr. Song (3)(4) /H1118/H1118/H1118/H1118/H1118Interest in controlled
corporation
326,795,850
H Shares
45.98%
Ms. Luo (5) /H1118/H1118/H1118/H1118/H1118/H1118/H1118Interest of spouse 326,795,850
H Shares
45.98%
Mr. Su (3) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Interest in controlled
corporation
300,800,000
H Shares
42.33%
Mr. Peng Y ue
(ుᚔ)(6) /H1118/H1118/H1118/H1118/H1118/H1118/H1118
Beneficial owner 2,500,000
H Shares
0.35%
Ms. Zhang Qi
(ੵೡ)(7) /H1118/H1118/H1118/H1118/H1118/H1118/H1118
Beneficial owner 180,000
H Shares
0.03%
Ms. Qin Y an
(ॢዲ)(8) /H1118/H1118/H1118/H1118/H1118/H1118/H1118
Beneficial owner 60,000
H Shares
0.01%
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-10 –


--- page 576 ---
Notes:
(1) All interests stated are long positions.
(2) The calculation is based on the total number of 710,689,300 H Shares in issue immediately after the
completion of the Global Offering (without taking into account the H Shares to may be issued upon the
exercise of the Over-allotment Option) and the Conversion of Unlisted Shares into H Shares.
(3) As of the Latest Practicable Date, Huai’an Chuangtao was a limited partnership established under PRC
Law. It was established by Mr. Song and Mr. Su in April 2016 as their shareholding platform. Mr. Song,
as the general partner, and Mr. Su, as the limited partner, held 66.67% and 33.33% of the partnership
interest therein, respectively. Accordingly, under Part XV of the SFO, Mr. Song and Mr. Su are deemed
to be interested in all the Shares held by Huai’an Chuangtao upon the Listing.
(4) As of the Latest Practicable Date, Mr. Song is the general partner of Huai’an Y ujian Haoren, our
Company’s employee incentive platform. Accordingly, under Part XV of the SFO, Mr. Song is deemed
to be interested in all the Shares held by Huai’an Y ujian Haoren upon the Listing.
(5) Ms. Luo is the spouse of Mr. Song. Accordingly, under Part XV of the SFO, Ms. Luo is deemed to be
interested in all the Shares in which Mr. Song is deemed to be interested in upon the Listing.
(6) As of the Latest practicable Date, Mr. Peng Y ue was granted Awards (defined below) pursuant to the
Pre-IPO Employee Incentive Scheme representing approximately 2,500,000 Shares, the details of which
are set out in “— D. Pre-IPO Employee Incentive Scheme — Details of the Awards Granted”.
(7) As of the Latest practicable Date, Ms. Zhang Qi was granted Awards (defined below) pursuant to the
Pre-IPO Employee Incentive Scheme representing approximately 180,000 Shares, the details of which
are set out in “— D. Pre-IPO Employee Incentive Scheme — Details of the Awards Granted”.
(8) As of the Latest practicable Date, Ms. Qin Y an was granted Awards (defined below) pursuant to the
Pre-IPO Employee Incentive Scheme representing approximately 60,000 Shares, the details of which are
set out in “— D. Pre-IPO Employee Incentive Scheme — Details of the Awards Granted”.
2. Substantial Shareholders
Save as disclosed in the section headed “Substantial Shareholders” in this prospectus,
immediately following the completion of the Global Offering and without taking into account
any Shares which may be issued pursuant to the exercise of the Over-allotment Option, our
Directors or chief executive are not aware of any other person (other than a Director or chief
executive of our Company) who will have an interest or short position in the Shares or the
underlying Shares which would fall to be disclosed to our Company and the Stock Exchange
under the provisions of Divisions 2 and 3 of Part XV of the SFO, or are, directly or indirectly,
interested in 10% or more of the nominal value of any class of share capital carrying rights to
vote in all circumstances at general meetings of our Company or any of our subsidiaries.
3. Particulars of Directors’ and Supervisors’ Service Contracts and Appointment
Letters
Each of our executive Directors and Supervisors has entered into a service contract with
our Company and we have issued letters of appointment to our non-executive Director and each
of our independent non-executive Directors. The service contracts and the letters of
appointment are subject to termination in accordance with their respective terms. The service
contracts may be renewed in accordance with our Articles of Association and the applicable
Listing Rules.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-11 –


--- page 577 ---
Save as disclosed above, none of our Directors or Supervisors has entered, or has
proposed to enter, a service contract with any member of our Group (other than contracts
expiring or determinable by the employer within one year without the payment of
compensation (other than statutory compensation)).
4. Remuneration of Directors and Supervisors
See “Directors, Supervisors and Senior Management” and note 8 to the Accountants’
Report in Appendix I to this prospectus for the remuneration or benefits in kind paid to our
Directors and Supervisors for each of the years ended December 31, 2022, 2023 and 2024 and
the six months ended June 30, 2025.
During the Track Record Period, no fees were paid by our Group to any of the Directors,
Supervisors or the five highest paid individuals as an inducement to join us or as compensation
for loss of office.
5. Disclaimers
Save as disclosed in this Appendix and in sections headed “Directors, Supervisors and
Senior Management” and “Substantial Shareholders” in this prospectus:
(a) none of our Directors, Supervisors or chief executive of our Company has any
interests or short positions in the shares, underlying shares and debentures of our
Company or our associated corporations (within the meaning of Part XV of the SFO)
which will be required to be notified to our Company and the Stock Exchange
pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short
positions which he is taken or deemed to have taken under such provisions of the
SFO) or which will be required, pursuant to Section 352 of the SFO, to be entered
in the register referred to in that section, or which will be required, pursuant to the
Model Code for Securities Transactions by Directors of Listed Issuers, to be notified
to our Company and the Stock Exchange, once the Shares are listed on the Stock
Exchange. For this purpose, the relevant provisions of the SFO will be interpreted
as if they applied to the Supervisors;
(b) so far as is known to any Director, Supervisor or chief executive of our Company,
no person has an interest or short position in the Shares and underlying Shares which
would fall to be disclosed to our Company and the Stock Exchange under the
provisions of Divisions 2 and 3 of Part XV of the SFO, or is, directly or indirectly,
interested in 10% or more of the nominal value of any class of share capital carrying
rights to vote in all circumstances at general meetings of any other member of our
Group;
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-12 –


--- page 578 ---
(c) none of our Directors, Supervisors nor any of the persons listed in “E. Other
Information — 4. Qualifications and Consents of Experts” below is interested in the
promotion of, or in any assets which have been, within the two years immediately
preceding the issue of this prospectus, acquired or disposed of by or leased to any
member of our Group, or are proposed to be acquired or disposed of by or leased to
any member of our Group;
(d) none of our Directors, Supervisors nor any of the persons listed in “E. Other
Information — 4. Qualifications and Consents of Experts” below is materially
interested in any contract or arrangement with our Group subsisting at the date of
this prospectus which is unusual in its nature or conditions or which is significant
in relation to the business of our Group as a whole;
(e) save in connection with Underwriting Agreements, none of the persons listed in “E.
Other Information — 4. Qualifications and Consents of Experts” below has any
shareholding in any member of our Group or the right (whether legally enforceable
or not) to subscribe for or to nominate persons to subscribe for securities in any
member of our Group;
(f) none of our Directors or Supervisors has entered or has proposed to enter into any
service agreements with our Company or any member of our Group (other than
contracts expiring or determinable by the employer within one year without payment
of compensation other than statutory compensation); and
(g) save as contemplated under the Underwriting Agreements, none of our Directors,
Supervisors or their respective associates (as defined under the Listing Rules), or
Shareholders who are interested in more than 5% of the issued share capital of our
Company has any interest in our Company’s five largest customers and five largest
suppliers in each year/period during the Track Record Period.
D. PRE-IPO EMPLOYEE INCENTIVE SCHEME
The Pre-IPO Employee Incentive Scheme was approved and adopted by our Company in
August 2019. The purpose of the Pre-IPO Employee Incentive Scheme is to further improve our
Company’s governance structure, establish and improve the incentive and restraint
mechanisms for our senior management, middle-level management and other key employees,
stabilize and attract excellent management and other talents, improve our market
competitiveness and sustainable development capabilities, and ensure the realization of our
development strategy and business objectives. The Pre-IPO Employee Incentive Scheme is not
subject to the provisions of Chapter 17 of the Listing Rules as it does not involve the grant of
new Shares or options over new Shares by our Company to subscribe for new Shares after the
Listing.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-13 –


--- page 579 ---
Huai’an Y ujian Haoren was established under PRC Law as our Company’s employee
incentive platform. The eligible participants under the Pre-IPO Employee Incentive Scheme
would be granted awards to subscribe for partnership interests in Huai’an Y ujian Haoren (the
“Award”) and, upon the exercise of the Award, become limited partners thereof and be
indirectly interested in the incentive Shares held by Huai’an Y ujian Haoren. As of the Latest
Practicable Date, Huai’an Y ujian Haoren held 25,995,850 Shares, representing 4.24% of our
total issued share capital.
The following is a summary of the principal terms of the Pre-IPO Employee Incentive
Scheme.
Eligible Participants
Eligible participants include senior management and middle-level management members
of our Group.
Exercise Price
The exercise price of each Award is calculated based on the price of RMB1 per RMB1 of
our Company’s registered capital that the eligible participant will be indirectly interested in
upon the exercise of the Award.
Scheme Administration
Our Board is the scheme administrator responsible for drafting, formulating and revising
the Pre-IPO Employee Incentive Scheme, as well as executing and managing the Pre-IPO
Employee Incentive Scheme. Our Board is also responsible for reviewing and approving the
number of grants, eligible participants, exercise price, exercise period and exercise method of
the Awards. Our Board has further authorized Mr. Song to be responsible for the specific
implementation and execution of all matters related to the Pre-IPO Employee Incentive
Scheme. Our supervisory committee is the supervisory body of the Pre-IPO Employee
Incentive Scheme and is responsible for verifying the list of eligible participants and
supervising whether the implementation of the Pre-IPO Employee Incentive Scheme complies
with the relevant laws, regulations and our Articles of Association.
Number of Shares
The number of Shares underlying the Awards granted under the Pre-IPO Employee
Incentive Scheme is approximately 25,995,850 Shares, representing approximately 4.24% of
our total issued share capital immediately before the completion of the Global Offering and
3.66% of our total issued share capital immediately following the completion of the Global
Offering (assuming the Over-allotment Option is not exercised). There are no Shares
underlying the Pre-IPO Employee Incentive Scheme that are reserved for grant of Awards to
future grantees under the Pre-IPO Employee Incentive Scheme. No further Awards are expected
to be granted after Listing under the Pre-IPO Employee Incentive Scheme.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-14 –


--- page 580 ---
Termination and Withdrawal of Awards
Unvested and/or vested but unexercised Awards granted under the Pre-IPO Employee
Incentive Scheme may be terminated, and all exercised Awards (i.e. the partnership interests
in Huai’an Y ujian Haoren) may be withdrawn and be required to be transferred to Mr. Song or
to a third party designated by Mr. Song if the eligible participant (not exhaustive) (i) seriously
violates the rules and regulations of our Group and is punished by demotion or other penalties;
(ii) seriously neglects his/her duties, engages in malpractice for personal gain, and causes
major damage to our Group or to Huai’an Y ujian Haoren; (iii) establishes an employment
relationship with other employers while employed with us, which seriously affects the
completion of his/her work with our Company; (iv) is held criminally liable in accordance with
the law, or is investigated by the judicial authorities for suspected criminal offenses; (v) causes
serious damage to our Group or to Huai’an Y ujian Haoren intentionally or due to gross
negligence, and the amount of compensation to our Group or to Huai’an Y ujian Haoren reaches
RMB50,000; (vi) seriously violates the partnership agreement of Huai’an Y ujian Haoren; (vii)
discloses the commercial secrets of our Group; (viii) damages the interests or reputation of our
Group; (ix) seriously violates his/her duty of diligence and principle of good faith; (x) without
the written consent of our Company, donates, transfers, guarantees, entrusts, pledges, sets up
a trust using, sets up third-party rights using, repays debts using the exercised Award or
disposes of the exercised Award in other ways; and (xi) loses the ability to work, loses civil
capacity or passes away from non-employment related behavior.
Lock-up and Restrictions on Transfer
The Awards granted under the Pre-IPO Employee Incentive Scheme are subject to a
lock-up period from the date the eligible participants hold partnership interests in Huai’an
Y ujian Haoren to at least one year after our Company completes the Listing.
Without the consent of Mr. Song and our Board, the eligible participant shall not donate,
transfer, guarantee, entrust, pledge, set up a trust using, set up third-party rights using, repay
debts using, or otherwise dispose of the exercised Award in other ways. If the eligible
participant deals with the exercised Award in violation of the Pre-IPO Employee Incentive
Scheme, the income obtained from the violation shall belong to our Company and the eligible
participant shall compensate for the losses borne by Mr. Song and our Company due to the
violation.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-15 –


--- page 581 ---
Details of the Awards Granted
As of the Latest Practicable Date, all the underlying Shares under the Pre-IPO Employee
Incentive Scheme had been granted to a total of 69 grantees.
Details of the Awards granted under the Pre-IPO Employee Incentive Scheme as of the
Latest Practicable Date are as follows:
Name of the grantee
Relationship with
our Group
Number of Shares
underlying the Award
granted under the
Pre-IPO Employee
Incentive Scheme (1)
Approximate
percentage of effective
shareholding
immediately following
the completion of the
Global Offering (2)
(Approximate)
Directors, Supervisors, senior management and other Connected Persons
Mr. Xu Zhi ( ஢౽) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Chief financial officer
and vice president (4)
2,711,300 (5) 0.38%
Mr. Peng Y ue ( ుᚔ) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Supervisor 2,500,000 (6) 0.35%
Mr. Li Bin ( ҽ੸) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Executive director and
manager of multiple
subsidiaries of our
Company
913,300
(7) 0.13%
Ms. Zhang Qi ( ੵೡ) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Supervisor 180,000 (8) 0.03%
Mr. Pan Rujun (ڲ)H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Human resource
manager (4)
62,500 (9) 0.01%
Ms. Qin Y an ( ॢዲ)/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Chairwoman of our
supervisory
committee
60,000
(10) 0.01%
Mr. Du Chao ( Ӂ൴) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Supervisor of research
and development and
the brother-in-law of
Mr. Peng Y ue, our
Supervisor
60,000
(11) 0.01%
Mr. Song /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Chairman of our Board,
executive Director
and chief executive
officer
54,250
(12) 0.01%
Other grantees
61 current or past employees
of our Group /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
19,454,500 (13) 2.74%
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111825,995,850 (14) 3.66%
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-16 –


--- page 582 ---
Notes:
(1) For illustrating the indirect interests of grantees in our Company, the number of Shares are presented and
calculated by multiplying their respective percentage of partnership interests in Huan’an Y ujian Haoren
(assuming all the Awards are vested and exercised) by the total number of Shares held by Huan’an Y ujian
Haoren.
(2) Assuming the Over-allotment Option is not exercised.
(3) All the Unlisted Shares held by Huai’an Y ujian Haoren will be converted into H Shares, subject to the relevant
regulatory approvals and registration.
(4) Resigned as a Director on April 1, 2025.
(5) Awards representing approximately 1,025,650 underlying Shares have been vested and exercised and Awards
representing approximately 1,685,650 underlying Shares shall vest from the Listing Date to March 30, 2028,
subject to certain performance targets being met.
(6) Awards granted to Mr. Peng Y ue have all been vested and exercised.
(7) Awards representing approximately 76,925 underlying Shares have been vested and exercised and Awards
representing approximately 836,375 underlying Shares shall vest from February 15, 2026 to March 30, 2028,
subject to certain performance targets being met.
(8) Awards representing approximately 180,000 underlying Shares shall vest from February 15, 2026 to March 30,
2028, subject to certain performance targets being met.
(9) Awards granted to Mr. Pan Rujun have all been vested and exercised.
(10) Awards representing approximately 60,000 underlying Shares shall vest on March 28, 2027, subject to certain
performance targets being met.
(11) Awards representing approximately 60,000 underlying Shares shall vest on March 30, 2026, subject to certain
performance targets being met.
(12) Awards granted to Mr. Song have all been vested and exercised.
(13) Awards representing approximately 11,148,050 underlying Shares have been vested and exercised and Awards
representing approximately 8,306,450 underlying Shares shall vest from October 14, 2025 to March 30, 2028,
subject to certain performance targets being met.
(14) As of the Latest Practicable Date, Awards granted to 59 grantees (including three grantees who also held vested
partnership interest in Huai’an Y ujian Haoren as limited partners), representing 11,128,475 underlying Shares,
had not yet exercised. The corresponding partnership interest in Huai’an Y ujian Haoren (i.e., 42.81%) was held
by Mr. Song and will be transferred to the relevant grantees upon the vesting and exercise of the Awards. The
remaining Awards, representing 14,867,375 underlying Shares were vested and exercised, and the
corresponding partnership interest in Huai’an Y ujian Haoren were held by 13 grantees (including three
grantees who were also counted in the above 59 grantees as they also held unvested partnership interest in
Huai’an Y ujian Haoren). For details, see “History, Development and Corporate Structure — Employee
Incentive platform.”
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-17 –


--- page 583 ---
E. OTHER INFORMATION
1. Estate Duty
Our Directors have been advised that no material liability for estate duty under PRC Law
is likely to fall on our Company or its subsidiaries.
2. Litigation
As of the Latest Practicable Date, no member of our Group was engaged in any litigation,
arbitration or claim of material importance, and no litigation, arbitration or claim of material
importance was known to our Directors to be pending or threatened by or against our Group,
that would have a material adverse effect on its business, financial condition or results of
operations.
3. Sole Sponsor
The Sole Sponsor has made an application on behalf of our Company to the Stock
Exchange for the listing of, and permission to deal in, the H Shares to be issued pursuant to
the Global Offering (including any additional H Shares which may be issued pursuant to the
exercise of the Over-allotment Option) and the H Shares to be converted from the Unlisted
Shares upon completion of the Global Offering. All necessary arrangements have been made
to enable our H Shares to be admitted into CCASS.
The Sole Sponsor satisfies the independence criteria applicable to sponsors as set out in
Rule 3A.07 of the Listing Rules.
The Sole Sponsors will receive an aggregate fee of USD1.1 million for acting as the
sponsor for the Listing.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-18 –


--- page 584 ---
4. Qualifications and Consents of Experts
The following are the qualifications of the experts (as defined under the Listing Rules and
the Companies (Winding Up and Miscellaneous Provisions) Ordinance) who have given
opinions or advice which are contained in this prospectus:
Name Qualification
CMB International Capital Limited /H1118/H1118Licensed corporation to conduct Type 1 (dealing
in securities) and Type 6 (advising on corporate
finance) regulated activities as defined under
the SFO
KPMG /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Certified Public Accountants
Public Interest Entity Auditor registered in
accordance with the Accounting and Financial
Reporting Council Ordinance
Jingtian & Gongcheng /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Legal advisor to our Company as to PRC Law
Jia Y uan Law Offices /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Legal advisor to our Company as to PRC Law
on cybersecurity and data privacy protection
Mr. Clay Huen /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Hong Kong Barrister-at-law
Frost & Sullivan (Beijing) Inc.,
Shanghai Branch Co. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Independent industry consultant
Each of the experts named above has given and has not withdrawn their respective written
consents to the issue of this prospectus with the inclusion of their reports and/or letters and/or
legal opinion (as the case may be) and references to their names included in the form and
context in which it respectively appears.
None of the experts named above has any shareholding interests in our Company or any
of our subsidiaries or the right (whether legally enforceable or not) to subscribe for or to
nominate persons to subscribe for securities in our Company or any of our subsidiaries.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-19 –


--- page 585 ---
5. Promoters
Information of our promoters as of the time of our Company’s conversion into a joint
stock limited company on September 7, 2023 is as follows:
No. Name
1./H1118/H1118/H1118Huai’an Chuangtao
2./H1118/H1118/H1118Wonderful Dawn Holdings Limited
3./H1118/H1118/H1118Mr. Gu Dongsheng (͛)
4./H1118/H1118/H1118Guangzhou Pinxin Y uegu Enterprise Management Co., Ltd. (ᇅΆุ
ʮ̡)
5./H1118/H1118/H1118Foshan Nanhai Huibi No. 2 Equity Investment Partnership (Limited
Partnership) (ᛆҳ༟ΥྫΆุ(Υྫ))
6./H1118/H1118/H1118Huai’an Y ujian Haoren
7./H1118/H1118/H1118Foshan Nanhai Huibi No. 1 Equity Investment Partnership (Limited
Partnership) (ᛆҳ༟ΥྫΆุ(Υྫ))
8./H1118/H1118/H1118Shanghai Qingcong Capital Investment Partnership (Limited Partnership) ( ɪऎ
ᛆҳ༟ΥྫΆุ(Υྫ))
9./H1118/H1118/H1118Mr. Gao Defu ( ৷ᅃ၅)
Within the two years immediately preceding the date of this prospectus, no cash,
securities, amount or benefit has been paid, allotted or given, or has been proposed to be paid,
allotted or given, to any of the promoters named above in connection with the Global Offering
or the related transactions described in this prospectus.
7. Taxation of Holders of H Shares
The sale, purchase and transfer of H Shares are subject to Hong Kong stamp duty if such
sale, purchase and transfer is effected on the H Share register of members of our Company,
including in circumstances where such transaction is effect on the Stock Exchange. The current
rate of Hong Kong stamp duty for such sale, purchase and transfer is 0.1% of the consideration
or, if higher, the fair value of the H Shares being sold or transferred.
8. Preliminary Expenses
We have not incurred any material preliminary expenses.
9. No Material Adverse Change
Our Directors confirm that there has been no material adverse change in the financial or
trading position or prospects of our Group since June 30, 2025.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-20 –


--- page 586 ---
10. Binding Effect
This prospectus shall have the effect, if an application is made in pursuance of this
prospectus, of rendering all persons concerned bound by all of the provisions (other than the
penal provisions) of Sections 44A and 44B of the Companies (Winding Up and Miscellaneous
Provisions) Ordinance insofar as applicable.
11. Bilingual Document
The English language and Chinese language versions of this prospectus are being
published separately, in reliance upon the exemption provided by Section 4 of the Companies
(Exemption of Companies and Prospectuses from Compliance with Provisions) Notice
(Chapter 32L of the Laws of Hong Kong).
This prospectus is written in the English language and contains a Chinese translation for
information purpose only. Should there be any discrepancy between the English language of
this prospectus and the Chinese translation, the English language version of this prospectus
shall prevail.
12. Miscellaneous
Save as disclosed in this prospectus:
(a) within the two years immediately preceding the date of this prospectus:
(i) neither we nor any of our subsidiaries has issued or agreed to issue any share
or loan capital fully or partly paid up either for cash or for a consideration
other than cash;
(ii) no share or loan capital of our Company or any of our subsidiaries is under
option or is agreed conditionally or unconditionally to be put under option;
(iii) save as in connection with the Underwriting Agreements, no commissions,
discounts, brokerage or other special terms have been granted in connection
with the issue or sale of any shares or loan capital of any member of our Group;
(iv) no commission has been paid or payable (except commission to
sub-underwriters) to any persons for subscription, agreeing to subscribe,
procuring subscription or agreeing to procure subscription of any shares of our
Company or any of our subsidiaries;
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-21 –


--- page 587 ---
(v) no founder, management or deferred shares of our Company or any of our
subsidiaries have been issued or agreed to be issued; and
(vi) there is no arrangement under which future dividends are waived or agreed to
be waived.
(b) our Directors confirm that:
(i) since June 30, 2025 (being the date on which the latest audited consolidated
financial statements of our Group were made up), there has been no material
adverse change in our financial or trading position or prospects;
(ii) there has not been any interruption in the business of our Company which may
have or have had a material adverse effect on the financial position of our
Company in the twelve months immediately preceding the date of this
prospectus;
(iii) our Company has no outstanding convertible debt securities or debentures;
(iv) there are no treasury shares held by our Company or our subsidiaries or
through our agents or nominees.
APPENDIX VI STATUTORY AND GENERAL INFORMATION
– VI-22 –


--- page 588 ---
A. DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES IN HONG
KONG
The documents attached to the copy of this prospectus delivered to the Registrar of
Companies in Hong Kong for registration were:
(i) a copy of each of the material contracts referred to in “Statutory and General
Information — B. Further Information about our Business — 1. Summary of
Material Contracts” in Appendix VI; and
(ii) the written consents referred to in the section headed “Statutory and General
Information — E. Other Information — 4. Qualifications and Consents of Experts”
in Appendix VI.
B. DOCUMENTS A V AILABLE ON DISPLAY
Electronic copies of the following documents will be available on display on the website
of our Company at https://www.xiaonoodles.com and on the website of the Stock Exchange
at www.hkexnews.hk during a period of 14 days from the date of this prospectus:
(i) the Articles of Association;
(ii) the Accountants’ Report from KPMG, the text of which is set out in Appendix I;
(iii) the audited consolidated financial statements of our Group for the years ended
December 31, 2022, 2023, 2024 and the six months ended June 30, 2025;
(iv) the report from KPMG on the unaudited pro forma financial information of our
Group, the texts of which are set out in Appendix II;
(v) the industry report issued by Frost & Sullivan referred to in “Industry Overview”;
(vi) the legal opinion issued by Jingtian & Gongcheng, our PRC Legal Advisor, in
respect of certain general corporate matters and property interests of our Group
under PRC law;
(vii) the memorandum issued by Jia Y uan Law Offices, our PRC Data Compliance
Advisor, in respect of China’s cybersecurity and data privacy protection laws;
(viii) the legal opinion prepared by Mr. Clay Huen, our Hong Kong Legal Counsel, in
respect of the operations of certain subsidiaries in Hong Kong and personal data
privacy and information security;
(ix) the material contracts referred to in “Statutory and General Information — B.
Further Information about our Business — 1. Summary of Material Contracts” in
Appendix VI;
APPENDIX VII DOCUMENTS DELIVERED TO THE REGISTRAR OF
COMPANIES AND A V AILABLE ON DISPLAY
– VII-1 –


--- page 589 ---
(x) the service contracts and appointment letters referred to in “Statutory and General
Information — C. Further Information about Our Directors, Supervisors and
Substantial Shareholders — 3. Particulars of Directors’ and Supervisors’ Service
Contracts and Appointment Letters” in Appendix VI;
(xi) the written consents referred to in “Statutory and General Information — E. Other
Information — 4. Qualifications and Consents of Experts” in Appendix VI; and
(xii) the PRC Company Law, the Securities Law, and the Trial Measures, together with
unofficial English translations thereof.
APPENDIX VII DOCUMENTS DELIVERED TO THE REGISTRAR OF
COMPANIES AND A V AILABLE ON DISPLAY
– VII-2 –


--- page 590 ---
廣州遇見小麵餐飲股份有限公司
Guangzhou Xiao Noodles Catering Management Co., Ltd.
