(Yicai Global) Feb. 23 -- Yang Guofu has filed for an initial public offering in Hong Kong, the city’s stock exchange said yesterday, making it China's first spicy hotpot chain to seek to go public.

Proceeds of the share sale will go to upgrade production facilities and support the company’s franchise business, which has been the basis of its rapid expansion since opening with a single restaurant in Harbin, Heilongjiang province in 2003.

According to the IPO prospectus, which did not say how much Yang Guofu hopes to raise, the firm wants to expand the supply of retail products, improve research and development capabilities, upgrade its information technology system, and acquire other businesses.

A number of Chinese catering chains have sought to go public recently. Country Style Cooking and Hefu Noodle filed in Hong Kong on Jan. 25 and Jan. 29, respectively. Wu Fang Zhai’s application was approved on Jan. 13, making it the first listed company that mainly makes zongzi, or stuffed glutinous rice dumplings.

There is optimism about the catering sector as consumers return to normal life, The Paper today reported Yu Jian, general manager of research company Kantar Worldpanel China, as saying. That has boosted confidence in such IPOs, Yu said.

Yang Guofu had 5,783 restaurants as of Sept. 30, just three of which are self-operated. The rest are franchises, mainly in its home market, with 21 overseas.

Franchises contributed CNY1.1 billion (USD174.1 million) to revenue in the first three quarters of last year, or 94.3 percent of the total. Its self-operated restaurants had income of CNY5.8 million (USD918,140), accounting for 0.5 percent. Nine-month net profit surged 114 percent to CNY202 million (USD32 million).

China Securities International is the sole sponsor.

Editor: Tom Litting