(Yicai Global) March 7 -- Juewei Food's stock price tumbled after the Chinese braised duck retailer said it plans a secondary share offering in Hong Kong.

Shares of Juewei [SHA: 603517] ended down 8.2 percent at CNY47 (USD6.79) each today, after earlier sinking by as much as 9.7 percent.

The Hong Kong listing is aimed at accelerating Juewei's internationalization strategy and enhancing its ability to raise capital offshore, it said late yesterday. The Changsha-based company listed in Shanghai in March 2017. 

Juewei had 14,921 stores in China as of June 30, far more than rivals Zhou Hei Ya International Holdings and Jiangxi Huangshanghuang Group Food, which had 3,160 and 4,024, respectively.

Huangshanghuang is also listed in the Chinese mainland, while Zhou Hei Ya trades on the Hong Kong stock market. Juewei’s market capitalization is about CNY29.7 billion (USD4.3 billion), while Huangshanghuang’s is about CNY6.5 billion (USD937 million) and Zhou Hei Ya’s is around HKD9.6 billion (USD1.2 billion). Their price-earnings ratio is about 100 times, 217 times, and 58 times, respectively, with the valuation of Hong Kong shares being comparatively lower.

There is a significant gap in valuations and trading volumes for Hong Kong shares compared with Chinese mainland shares, Securities Daily reported today, citing industry insiders. Issuing Hong Kong stock after a mainland floatation can indicate that a firm is considering internationalization or entering the overseas market, the report said.

Juewei expects net profit to have dropped 78 percent to less than CNY260 million (USD37.5 million) last year, the firm has said, because of the temporary closure of some factories and stores because of the Covid-19 pandemic.

The company also has stores in Singapore and Canada, with overseas market revenue logging a compound annual growth rate of 53 percent from 2017 to 2021.

Editor: Martin Kadiev