KK Group Submits Hong Kong Stock Exchange Listing Application—Is the "First Trend Retail Stock" Nearing Launch?

Text / Ba Zhen

Produced by / Node Finance

According to Node Finance, on November 4, trend-focused multi-brand retailer KK Group formally submitted its listing application to the Hong Kong Stock Exchange, seeking a main-board listing.

The prospectus reveals that KK Group was founded in 2015 and focuses on operating trendy retail stores, offering distinctive products through a DTC model.

To date, the company operates four brands—KKV, a comprehensive lifestyle and trend retail chain; THE COLORIST, a trendy beauty retailer; X11, a trend culture retail store; and KK Lifestyle Mini Mart—with a total of 680 active stores spanning 169 cities across China and one city in Indonesia.

As one of China's three leading trend-focused retailers, KK Group offers consumers trendy products across 18 key categories, with a portfolio of more than 20,000 SKUs, covering essential lifestyle categories such as beauty, trendy toys, food and beverages, home goods, and stationery.

In terms of performance, from 2018 to 2020, KK Group recorded operating revenues of RMB 155 million, RMB 464 million, and RMB 1.646 billion, with corresponding net losses of RMB 79.485 million, RMB 515 million, and RMB 2.017 billion, respectively.

In the first half of 2021, KK Group's revenue surged by 235% to RMB 1.683 billion, surpassing its full-year level for the previous year; however, its net loss nearly doubled year on year to RMB 4.397 billion, with total losses for the reporting period exceeding RMB 7 billion.

KK Group attributed the loss to ongoing investments aimed at expanding its business scale and store network, as well as the increase in the fair value of financial liabilities measured at fair value through profit or loss.

After excluding this factor, the company's adjusted net profits for the years 2018–2020 and the first half of 2021 were –RMB 41.796 million, –RMB 76.951 million, –RMB 171.000 million, and –RMB 38.462 million, respectively.

Notably, although KK Group has yet to reverse its losses, its profitability has been steadily improving: from 2018 through the first half of 2021, its gross profit margins were 32.1%, 27.1%, 30.4%, and 36.2%, respectively. In particular, the gross profit margin for the first half of 2021 increased by 6 percentage points compared with the same period last year.

Node Finance has learned that, given the vast prospects of China's trendy retail market and KK Group's rapid growth, the company has attracted significant attention from investors since its inception. It has received investments from several prominent institutions, including Shenzhen Venture Capital, IDG Capital, Hongtai Fund, CMC Capital, Wuyue Capital, and JD.com, with total funding exceeding RMB 4 billion and a pre-IPO valuation as high as RMB 20 billion.

With this filing, KK Group aims to become the "first publicly listed company in the trendy retail sector" and plans to raise capital to further expand its store network, increase market penetration, enhance the digitalization of its operations, and scale and optimize its supply chain and distribution channels.

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