--- title: "Behind Metro Supply Chain's breakthrough, the capital game of Wumart Group" type: "Topics" locale: "zh-CN" url: "https://longbridge.com/zh-CN/topics/26549903.md" description: "Metro Supply Chain recently submitted its listing application documents to the Hong Kong Stock Exchange again. Wumart acquired 100% equity of Metro China's entity in 2020 for 4.711 billion yuan and 1.593 billion euros in cash. Based on the current exchange rate of 7.5469 yuan per euro, the total cost may be 16.733 billion yuan. Subsequently, Metro's original controlling company acquired a 20.04% stake in Wumart's subsidiary for 1.997 billion yuan—the latter controls the Metro entity. Almost three years later, in 2023..." datetime: "2025-01-10T08:47:58.000Z" locales: - [en](https://longbridge.com/en/topics/26549903.md) - [zh-CN](https://longbridge.com/zh-CN/topics/26549903.md) - [zh-HK](https://longbridge.com/zh-HK/topics/26549903.md) author: "[财华社](https://longbridge.com/zh-CN/profiles/11651030.md)" --- > 支持的语言: [English](https://longbridge.com/en/topics/26549903.md) | [繁體中文](https://longbridge.com/zh-HK/topics/26549903.md) # Behind Metro Supply Chain's breakthrough, the capital game of Wumart Group Metro Supply Chain recently resubmitted its listing application to the Hong Kong Stock Exchange. In 2020, Wumart acquired 100% equity of Metro China for 4.711 billion yuan and 1.593 billion euros in cash. Based on the current exchange rate of 7.5469 yuan per euro, the total consideration would be approximately 16.733 billion yuan. Subsequently, Metro's original controlling company acquired a 20.04% stake in a Wumart subsidiary for 1.997 billion yuan—the latter controls the Metro entity. Nearly three years later in 2023, Metro's original controlling company sold the 20.04% stake back to Wumart for 2.003 billion yuan. Metro Supply Chain mentioned in the filing that it had applied for a listing on the Hong Kong Stock Exchange in March 2021 but terminated the process due to unfavorable market conditions. After completing a business restructuring, including the sale of its retail business to the controlling shareholder, Metro Supply Chain resubmitted its application at the end of 2024. Currently, Metro Supply Chain primarily engages in the food and FMCG supply chain business under the Wumart and Metro brands. It provides food service and distribution, welfare gifts, and wholesale services to corporate and institutional clients, as well as retail distribution solutions for retail businesses and independent retailers. ### **Metro Supply Chain's Main Revenue Sources** Metro Supply Chain's main revenue sources include: retail distribution solutions, food service and distribution solutions, welfare gift solutions, wholesale goods, and others. Retail distribution solutions account for the majority, contributing 59.58% of revenue in the first seven months of 2024. However, Caihua News also noted that the revenue share of the retail distribution business has slightly declined over the past two years, while the welfare gift solutions segment has been steadily increasing. This aligns with the company's strategy to expand its welfare gift business. The gross margin for the retail distribution business is only around 3.8% (first seven months of 2024, same below), whereas the welfare gift segment boasts a gross margin of 16.3%, indicating significantly higher profitability. As shown in the chart above, the company's revenue has declined for three consecutive years, which it attributes to reduced sales to its primary target, Wumart Group, as Wumart streamlines its store count. Meanwhile, Caihua News observed that Metro Supply Chain's adjusted net profit has significantly increased over the past two years, with the adjusted net profit margin rising from 0.39% in 2021 to 1.73%, likely due to higher contributions from the more profitable welfare gift segment and cost savings. However, adjusted net profit for the first seven months of 2024 fell to 59 million yuan from 159 million yuan in the same period last year, possibly due to a slight revenue decline and a 20.48% year-on-year increase in financial expenses. ### **Potential Risks and Opportunities for Metro Supply Chain** Potential risks include: 1) Slowing consumption growth amid intense industry competition. Metro Supply Chain needs to invest more in supply chain capabilities, digitalization, fresh produce handling, and infrastructure like distribution and fulfillment centers to consolidate and expand its position in a highly fragmented market. Moreover, its downstream clients face the direct impact of slowing consumption, which could negatively affect Metro Supply Chain's short-term performance if transmitted upstream. 2) High customer concentration. Due to its relationship with Wumart, Wumart is a key single client for Metro Supply Chain, accounting for 61.5%, 62.3%, 62.0%, and 61.4% of its revenue in 2021, 2022, 2023, and the first seven months of 2024, respectively. If Wumart falters in the competitive retail sector, Metro Supply Chain would also suffer. However, the company's potential opportunities should not be overlooked: 1) Starting in 2024, Metro Supply Chain began providing retail distribution solutions to two independent third-party retailers in Hunan and Hubei. Notably, its low-margin retail distribution solutions previously served only Wumart. Expanding to third-party clients could boost profits and reduce over-reliance on Wumart. 2) It positions the company to capitalize on China's consumption recovery. ### **Wumart's Capital Moves** Compared to Metro Supply Chain's relatively monotonous business and profit model, the capital market may be more interested in the story behind Wumart. In the Hong Kong stock market, Wumart is a seasoned player. The first Wumart supermarket opened in Beijing in December 1994, reportedly as a demo store for the POS system developed by Zhang Wenzhong. Unexpectedly, the store achieved a "small goal" in revenue by 1995, prompting Zhang to open a second Wumart supermarket in Beijing that same year. In 1997, Wumart shifted from single-store operations to systemic partnerships, collaborating with state-owned enterprise Shijingshan Tianxiang to convert its stores into Wumart-operated hypermarkets or convenience stores. Thereafter, Wumart rapidly expanded its Beijing footprint through similar 托管 arrangements with state-owned enterprises. By 2002, it operated 3 hypermarkets, 30 supermarkets, and over 200 convenience stores. In 2003, Wumart Commercial listed on the Hong Kong Growth Enterprise Market, raising HK$547 million. It accelerated acquisitions in 2004, buying 京北大世界商贸 and 超市发 to strengthen its Beijing presence. Mid-year, it raised over HK$200 million via a placement and acquired 12 合资 supermarkets in Tianjin from Japan's Daiei in December to expand into Tianjin. In 2006, Wumart entered the northwest market by acquiring Ningxia Xinhua Department Store, the largest commercial listed company in the region, while raising HK$443 million via an H-share placement. In 2008, it acquired a majority stake in Shaoxing County Supermarket Investment, indirectly controlling 54.09% of Zhejiang Supply Supermarket to expand into eastern China. In 2009, Wumart secured a $200 million strategic investment from a consortium including TPG，弘毅投资， and 联想控股 for mergers and new store openings, and acquired the remaining 25% stake in 美廉美 that year. In 2010, Wumart purchased four 天津易初莲花 stores and a 51% stake in 房超市 to further expand in northern and eastern China. In 2011, Wumart Commercial transitioned from the Growth Enterprise Market to the main board. However, despite revenue growth and improved gross margins thereafter, soaring rents and increased brand marketing expenses dragged down overall profitability. From 2011 to 2014, Wumart Commercial's revenue grew from 16.396 billion yuan to 21.638 billion yuan, a CAGR of 9.7%, while net profit fell from 586 million yuan in 2011 to 395 million yuan in 2014, a CAGR of -12.3%. This provided grounds for privatization. On January 7, 2016, Wumart Commercial delisted from the Hong Kong Stock Exchange at a privatization cost of approximately HK$3.551 billion. However, in 2015, Wumart Holdings, the controlling shareholder of the privatized Wumart Commercial, continued its expansion by acquiring a 70% stake in China B&Q for 1.4 billion yuan and quickly turned it profitable. In April 2018, Wumart acquired all of Lotte's stores in northern China. In June 2019, Wumart Investment secured a 45% stake in Chongqing Commercial. By 2020, Wumart spent over 10 billion yuan to acquire Metro China's business, leading to today's spin-off listing. Rumors abound regarding Wumart's capital maneuvers. Regardless of the truth, its rapid expansion is evident—early growth relied on 托管 partnerships with state-owned enterprises, followed by acquisitions. Financing activities show no shortage of channels, from loans to IPOs to private equity. The Metro Supply Chain spin-off is another sophisticated capital operation. According to Metro Supply Chain's filing, founder Dr. Zhang Wenzhong holds a 73.31% stake. Notably, in 2020, several institutional investors subscribed to Metro Supply Chain's preferred shares, including Tencent Holdings' (00700.HK) 意象架构投资， Abu Dhabi investors，联想集团's investment arm, Anbang, Everbright, China Merchants Bank, and other equity firms. The spin-off aims to raise funds for supply chain enhancements, new brand and imported product development, customer base expansion, digitalization, investments, M&A, and working capital. It may also validate the investments of 上述 backers. Besides Metro Supply Chain, Wumart also spun off its retail digital solutions firm, Duodian Smart (02586.HK), in late 2024. Despite backing from "traffic king" Pang Donglai, Duodian Smart's market performance has been disappointing. It listed on the Hong Kong main board on December 6, 2024, at HK$30.21 per share but plunged 54.32% on its debut. By January 10, 2025, shares had dropped to HK$6.06, down 72.07% from the IPO price, with market cap shrinking to HK$5.45 billion. In the current market, it's highly doubtful whether Metro Supply Chain can replicate Wumart Commercial's 2003 创业板 IPO success as that year's most oversubscribed offering. 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