---
title: "H1 Revenue HK$1.34 Billion, Nissin Foods Plans to List China Business, Competing with Master Kong for Mainland Premium Instant Noodle Market"
description: "On November 14, Nissin Foods Co., Ltd., the producer of instant noodle brands 'Demae Itcho' and 'Cup Noodles', filed with the Hong Kong Stock Exchange to spin off and list its China business. The IPO aims to raise about US$200 million, primarily for use in mainland China to further develop and consolidate its Greater China operations. Financially, Nissin's revenue has been stable, with HK$2.536 billion, HK$2.629 billion, and HK$2.63 billion in 2014, 2015, and 2016 respectively."
author: "杨苗苗"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2017-11-20"
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# H1 Revenue HK$1.34 Billion, Nissin Foods Plans to List China Business, Competing with Master Kong for Mainland Premium Instant Noodle Market

> On November 14, Nissin Foods Co., Ltd., the producer of instant noodle brands 'Demae Itcho' and 'Cup Noodles', filed with the Hong Kong Stock Exchange to spin off and list its China business. The IPO aims to raise about US$200 million, primarily for use in mainland China to further develop and consolidate its Greater China operations. Financially, Nissin's revenue has been stable, with HK$2.536 billion, HK$2.629 billion, and HK$2.63 billion in 2014, 2015, and 2016 respectively.

On November 14, Nissin Foods Co., Ltd. (hereinafter referred to as Nissin Foods), the producer of instant noodle brands "Demae Itcho" and "Cup Noodles", submitted a prospectus to the Hong Kong Stock Exchange, **planning to spin off and list its China business**.
**The IPO is expected to raise approximately US$200 million, with funds primarily directed to mainland China, aiming to further develop and consolidate its Greater China business.**
From Nissin Foods' financial data, revenue has been relatively stable. From 2014 to 2016, Nissin Foods recorded revenues of HK$2.536 billion, HK$2.629 billion, and HK$2.63 billion respectively, with adjusted net income of HK$171 million, HK$202 million, and HK$198 million in the same periods.
In the first half of this year, Nissin Foods' profit was HK$91.62 million, down 14% year-on-year; revenue was HK$1.34 billion, up 1.6% year-on-year.
In terms of product gross margin, Nissin Foods' mainland China business has a lower gross margin. In the first half of this year, the gross margin for instant noodles was 31.9%, down 1.9 percentage points year-on-year; the gross margin for Hong Kong instant noodles was 46.1% in the same period, down 1.3 percentage points year-on-year.
The company explained that the decrease in gross margin was due to a decline in Hong Kong sales and increased procurement costs after acquiring a 51% stake in Jieling.
****Holds 60% Market Share in Hong Kong Instant Noodle Market****
PART ONE
Momofuku Ando founded Nissin Japan Group as early as 1948 and invented the world's first instant noodle, "Chicken Ramen", in 1958. In 1984, Nissin Japan Group began its Hong Kong market operations with Nissin Foods as its base, and business gradually expanded to mainland China.
According to Frost & Sullivan data: **Over the past five years, Nissin has been the largest instant noodle company in Hong Kong**.
**In 2016, by retail sales value, Nissin instant noodles held a 65.3% share of the Hong Kong instant noodle market; by retail sales volume, Nissin ramen held a 62.6% share.**
Among these, Nissin's instant cup noodle and bowl noodle sales achieved a market share as high as 82%.
The growth driver for the instant noodle market in Hong Kong primarily comes from Hong Kong consumers' demand for convenience and speed, and this demand is expected to remain the main driver of growth in the Hong Kong instant noodle market.
Additionally, compared to price, Hong Kong consumers place more emphasis on food quality, safety, and nutritional value. Therefore, manufacturers focusing on developing premium instant noodles will attract more consumers.
**Market Share in Mainland China Below 3%, but Holds Advantage in Premium Segment**
PART TWO
Although Nissin Foods and the Nissin brand have international reputation, its competition in the mainland China market is relatively lagging.
For example, in 2016, **by retail sales value and volume, Nissin instant noodles accounted for approximately 2.8% and 1.4% of the overall mainland China market share, respectively**. Main competitors include: Master Kong, Uni-President, Jinmailang, Baixiang, and Huafeng.
To expand its business in China, Nissin Foods had chosen to cooperate with Jinmailang Group for over a decade. Later, Jinmailang gained an advantage in rural markets with low prices, gradually diverging strategically from Nissin's premium positioning.
In November 2015, Nissin Foods Holdings announced its exit from the instant noodle joint venture in China, selling its stake to its partner for approximately 8.6 billion yen (450 million RMB), and focusing on advantageous regions such as Hong Kong and Shanghai, selling its own products and independently competing in the premium instant noodle segment.
In recent years, with consumption upgrading in mainland China, multiple instant noodle manufacturers have moved toward the premium segment, increasing production and promotion of high-quality instant noodles.
**Nissin instant noodles hold the second position in China's premium instant noodle market.** In 2016, by retail sales value and volume, Nissin instant noodles accounted for approximately **19.8% and 18.2%** of China's premium instant noodle market share.
****Nissin Foods' Listing May Force Other Instant Noodle Companies to Innovate in R&D****
PART THREE
Nissin Foods stated that **the proceeds from this listing will be used to upgrade and expand production plants and facilities**, improving instant noodle production efficiency. Upon completion, Nissin's plants will have an annual instant noodle production capacity of 9 million boxes. **Funds will also be used to expand sales and distribution networks in the northwestern region of mainland China, develop new flavors, or acquire other food companies**.
In the prospectus, Nissin Foods also disclosed its future strategies:
**In terms of products:** Further enhance instant noodle business in Hong Kong and mainland China, especially in the premium instant noodle segment; further expand market share in frozen foods and other food products in Hong Kong and mainland China, and further enhance brand awareness and recognition.
**In terms of innovation and R&D:** Continue to promote product innovation to discover new value, further enhance R&D capabilities, and increase product variety.
**In terms of channels:** Further expand the coverage breadth and depth of sales and distribution networks in mainland China.
**In terms of production capacity:** Further enhance production capacity and continue to prioritize product quality and safety.
**In terms of top-level layout:** Establish appropriate strategic partnerships or pursue acquisitions to achieve horizontal and vertical business integration.
Regarding Nissin Foods' upcoming listing and its "offensive" on the mainland China market, Zhu Danpeng, a commentator on China's food industry, said:
As the leader and originator of instant noodles, Nissin has its brand advantages, R&D advantages, and quality and formula advantages. It is evident that they are very optimistic about the mainland China instant noodle market.
**If Nissin Foods goes public, it will increase investment in mainland China, which is good for the mainland China instant noodle industry and will positively force other instant noodle companies to enhance their R&D efforts.**
Source: Food Business Observation (ID: fbc180)
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