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Kingstar's IPO Filing Could End Dry Spell For Hong Kong Beer Listings

The brewer could become Hong Kong's first new beer listing in years, delivering high growth by pivoting to craft beers in an otherwise stagnating industry

Image Credit: Bamboo Works

Key Takeaways:

Kingstar Brewery has filed for a Hong Kong IPO, showing notably strong results through its strategic shift toward craft beers

The regional brewer's profit soared nearly 11-fold in the first nine months of last year, as its gross margin rose about 20 percentage points from 2023

As a banner year for IPOs concluded last month, the Hong Kong Stock Exchange had every reason "to raise a glass" to celebrate its status as the world's largest market in terms of annual fundraising. Now, investors could soon have another more concrete reason to raise their glasses, with the market's first new beer listing in years.

That application is coming from Henan Kingstar Brewery Co. Ltd., which submitted its IPO document to the stock exchange last week. A successful listing would end a dry spell for Hong Kong beer listings dating back to 2019, when Budweiser Brewing Co. APAC (1876.HK), the Asian arm of the U.S. beer giant, floated shares.

After two decades of rapid growth, China's alcoholic beverage market has plateaued in the last few years. As consumption volume peaks, many beer makers are turning to product refinement and diversification in search of new growth, serving up a greater variety of offerings to entice consumers for another round.

Among the many strategies they're trying, craft beer represents one of the fastest-growing segments. Third-party market data in Kingstar's listing document shows China's craft beer market expanded from about 12 billion yuan ($1.72 billion) in 2019 to 63 billion yuan in 2024, rising by an average of more than 35% annually. The shift has provided a golden opportunity for new growth among traditional breweries like Kingstar that have jumped on the craft beer wagon.

Established in 1982, Kingstar has long centered its operations on North China's Henan province as its core market, typical of the dozens of regional brewers that once dotted a fragmented Chinese beer landscape. Its historical edge stemmed primarily from its strong local distribution capabilities and cost ...