1. IPO Details
Purpose of IPO: Herbs Generation is raising approximately HK$140 million (USD $18 million) to fund production capacity expansion, R&D for innovative herbal products, and to bolster its distribution network. A smaller portion of the proceeds will address short-term debt obligations
The IPO was heavily oversubscribed, with over HK$11 billion in margin loans recorded on the first day, reflecting significant investor interest
2. IPO Placement and Outstanding Shares
Placement Amount: The IPO seeks to raise HK$140 million, with shares priced between HK$3.75 and HK$4.15 each
Approximately 35 million shares are being offered
First Day Likelihood: Given the significant oversubscription and enthusiastic investor response, Herbs Generation’s IPO is likely to perform strongly on its first day of trading
3. The IPO was led by ABC Capital and Zhongtai International, ensuring robust underwriting
4. Company Overview
Business Model and Industry: Herbs Generation specializes in herbal remedies and natural healthcare products, tapping into the growing demand for alternative medicine, valued globally at $400 billion annually
In 2023, the company generated HK$500 million in revenue, with profit margins at 15%. Debt levels are moderate and are expected to decrease post-IPO
Herbs Generation has a strong brand in Asia, with plans to expand into North America and Europe
The leadership includes CEO Lin Xiu and CFO Wang Hao, both with over 20 years of industry experience
4. The herbal remedies market is growing at a CAGR of 8%, driven by rising consumer interest in wellness
With increased investor interest in sustainable healthcare, the timing is ideal for Herbs Generation’s offering
5. Peer Comparison
Metric Herbs Generation Peer 1 (Tongrentang) Peer 2 (Eu Yan Sang)
P/E Ratio 22x 24x 20x
Revenue Growth 12% 10% 9%
EBITDA Margin 15% 14% 13%
6. Analysts suggest the IPO could trade 10-15% above the listing price, driven by oversubscription and sector demand
7. Retail investors received limited allotments due to oversubscription, further enhancing first-day demand
8. First-Day Trading Range
Estimated Range: HK$4.50–HK$5.00, reflecting strong investor sentiment
9. Prospectus Download
The prospectus can be downloaded at Herbs Generation Prospectus.
Deacons advises on the Main Board IPO of Herbs Generation Group Holdings Limited
