Long Feng's first-day listing: Attractive pricing, solid fundamentals, and worth watching.

Long Feng's First Day Listing: Attractively Priced with Solid Fundamentals and Worth Watching

Long Feng (2290) officially listed on the Hong Kong Stock Exchange today (June 5), successfully entering the international capital market. The public offering portion of the company received subscriptions from 134,000 people, oversubscribed by more than 660 times, which is sufficient proof of Long Feng's market popularity. The company's final issue price was set at HKD 5.18, with a post-listing market capitalization of approximately HKD 2.59 billion. The company estimates its full-year net profit for the 2026 fiscal year to be around HKD 265 million, implying a forecasted P/E ratio of 9.8x for 2026. Compared to the current dynamic P/E ratio of over 20x for peer Sa Sa (00178), Long Feng's listing price is highly attractive. Additionally, the company has also committed to recommending an annual dividend payout of no less than 50% of distributable profits after listing. Based on the listing price, this implies a forecasted dividend yield of nearly 5% for 2026. This move not only highlights its growth potential but also provides investors with stable return expectations, and it is believed it will be pursued by investors.

CAGR Reaches 50%, Strong Performance Growth

Long Feng has demonstrated significant high-growth characteristics in recent years. Total revenue rose from approximately HKD 1.094 billion in the 2023 fiscal year to HKD 2.461 billion in the 2025 fiscal year, achieving a compound annual growth rate (CAGR) of 50%. For the first eight months of the 2026 fiscal year, revenue was about HKD 2.035 billion, a year-on-year increase of 34.7%, while net profit surged 85.8% to approximately HKD 148 million. The full fiscal year net profit is estimated to reach around HKD 265 million.

It is noteworthy that Long Feng does not rely solely on store openings to drive revenue; rather, both revenue and profit are increasing simultaneously, reflecting continuous improvement in its operational quality. The gross profit margin increased from 24.9% in the 2023 fiscal year to 31.6% in the 2025 fiscal year, indicating that supply chain optimization and product structure upgrades are translating into actual profitability. This growth structure is relatively attractive within the retail sector.

Outstanding Supply Chain Advantages Form Long-term Competitive Barriers

Long Feng's core advantage lies in its deep control over the supply chain. The Group adopts a "Global Direct Sourcing + Long-term Cooperation" model, establishing solid cooperative relationships with over 600 suppliers, covering markets such as Japan, South Korea, Europe, and the United States. This not only enhances product stability but also strengthens its bargaining power and supply advantages.

On this foundation, the company can continuously optimize its product structure and improve gross profit margins, while also supporting the development of its own brands. It has currently established over 40 brands, offering more than 700 products. The combination of supply chain and brand development enables Long Feng to gradually transition from a single retail channel to a platform-based retailer with brand extension capabilities, providing support for long-term development.

"Multi-category + Large Store" Model Enhances Consumption and Profitability

From a business model perspective, Long Feng adopts a "Large Store Format + Multi-category" strategy. Each store typically provides over 9,000 SKUs, covering 11 major categories including pharmaceuticals, healthcare, and beauty. This model helps increase customer dwell time and average transaction value while promoting cross-selling, leading to higher operational efficiency.

Furthermore, store locations cover core tourist areas and residential districts, forming a dual customer source structure of "tourist consumption + local demand." This not only benefits from the incremental demand brought by returning tourists but also possesses a stable consumption base, enabling the overall business to maintain relatively stable performance across different cycles.

Efficient Store Replication with Strong Expansion Certainty

Long Feng's store model also features high efficiency. According to the prospectus, new stores on average reach breakeven within just 3 months and recoup their investment within 2 to 8 months. This reflects its mature capabilities in site selection, operations, and cost control.

For investors, the short payback period implies lower capital investment risk and also helps accelerate capital turnover. This highly replicable model provides a stable foundation for future store openings, giving its expansion strategy a high degree of certainty, rather than relying solely on market conditions or short-term demand pull.

Parallel Expansion and Dividend Payouts, Combining Growth and Return Attributes

Long Feng plans to add 18 to 21 new stores over the next three fiscal years starting from its listing to expand network coverage. Simultaneously, the company will continue to strengthen its supply chain and system construction and promote digitalization and online-offline integration to support future revenue and profit growth.

Long Feng possesses multiple characteristics such as high growth, high profitability, supply chain advantages, and a clear dividend policy, making it a relatively high-quality target within the Hong Kong stock retail sector. At the same time, the listing price is at the lower end of the range, reflecting a balance between attracting investor participation and considering long-term performance. Supported by solid fundamentals, if the company can continue to deliver on its performance growth and expansion strategy, it is expected to consistently attract market attention and possess medium- to long-term tracking value.