[IPO Outlook] Grandpa's Farm Goes Public in Hong Kong: What Are the Risk Factors Amid Rising Performance?

After a period of divergent market performance, the Hong Kong stock new issue market has recently shown signs of warming, including$BIREN TECH (06082.HK)$ 、 $INSILICO (03696.HK)$ 、 $NUOBIKAN (02635.HK)$ multiple new stocks achieving significant gains on their first day of trading.

Meanwhile, the rush to list in Hong Kong remains strong, with many companies recently submitting listing applications to the Hong Kong Stock Exchange in quick succession.

Among them, Grandpa's Farm International Holdings Limited (hereinafter referred to as 'Grandpa's Farm') officially submitted its prospectus on January 5th, planning to list on the main board of the Hong Kong stock market, with CMB International acting as the sole sponsor.

Positioning in the infant and child snacks and supplementary food, as well as household food sectors

Grandpa’s Farm adopts an offshore structure of 'Cayman holding - overseas subsidiary - domestic operating entity,' with its history traceable back to 2015. At that time, four founders Yang Gang, Jiang Fuquan, He Jianong, and Liu Haibo jointly established Guangzhou Jianteweiri Daily Necessities Co., Ltd. in Guangzhou, officially commencing business operations.

In 2018, the company launched its first infant complementary food product and opened a flagship store on Tmall. In 2021, the company underwent a major strategic upgrade, not only strategically entering the household food sector but also registering a holding company in the Cayman Islands, ultimately forming today's offshore structure, as shown in the figure below.

Among them, Yang Gang, Jiang Fuquan, He Jianong, and Liu Haibo respectively hold shares in Grandpa’s Farm through entities set up in the British Virgin Islands, with ownership percentages of 55%, 15%, 15%, and 15% respectively.

The prospectus shows that after years of development, Grandpa’s Farm’s products in the infant and child snack and supplementary food sector include edible oils, condiments, grain-based complementary foods, juices, fruit purees, yogurt-based fruit puree products, and snacks; while products in the household food sector include liquid milk products, convenience foods, rice products, condiments, and edible oils.

The company’s SKUs increased from 158 at the end of 2023 to 179 at the end of 2024, and further increased to 269 by the end of Q3 2025.

According to Frost & Sullivan, in 2024, Grandpa's Farm ranked second in terms of Gross Merchandise Value (GMV) in China’s infant and children's snacks and supplementary food sector. Among the top five companies by GMV, Grandpa's Farm achieved the highest compound annual growth rate from 2022 to 2024. In 2024, it ranked first in GMV for organic infant and children's snacks and supplementary food in China.

How is its performance?

In terms of financial performance on the revenue side, Grandpa's Farm has maintained steady growth in recent years. Data shows that its revenue increased by 40.6% from RMB 622 million in 2023 to RMB 875 million in 2024, and reached RMB 780 million in the first three quarters of 2025, representing a year-on-year growth of 23.2%.

On the profitability side,Adjusted net profit for 2023, 2024, and the first three quarters of 2025(Non-IFRS measurement)were RMB 75.914 million, RMB 103 million, and RMB 90.085 million respectively,also showing a growth trend;while the adjusted net profit margin for the respective periods were 12.2%, 11.8%, and 11.6%, reflecting a decline.

By product segment, infant and children's snacks and supplementary food is Grandpa's Farm’s main source of revenue. In 2023, 2024, and the first three quarters of 2025,the revenue contribution from infant supplementary food accounted for 79.6%, 65.8%, and 53.6% of total revenue respectively;the revenue share from infant snacks was 13.5%, 22.2%, and 26.8% respectively; while family food contributed 6.9%, 12.0%, and 19.6% of revenue respectively.

Overall,Grandpa's Farm still relies on revenue from infant and toddler complementary food products, but the positive sign is that its income is becoming more balanced.

These areas are also worth paying attention to.

However, there are some aspects of Grandpa's Farm that investors should take note of.

The prospectus disclosed,To maintain brand influence and sales growth, Grandpa's Farm’s sales and distribution expenses have continued to grow, with the growth rate of these expenses exceeding that of revenue growth.

Data shows that in the first three quarters of 2023, 2024, and 2025, the company's sales and distribution expenses were 201 million yuan, 306 million yuan, and 283 million yuan respectively, accounting for 32.3% of revenue, rising to 35.0%, and further increasing to 36.3%.

Meanwhile, in the first three quarters of 2023, 2024, and 2025,Grandpa's Farm’s R&D expenses remained below the 30 million yuan level, forming a stark contrast with the continuously growing sales and distribution expenses.

Looking at the breakdown, e-commerce platform services and promotional fees are the main components of sales and distribution expenses. In the first three quarters of 2023, 2024, and 2025,the proportion of e-commerce platform services and promotional fees were 66.3%, 70.6%, and 72.3%, respectively,indicating that Grandpa's Farm is quite reliant on traffic from e-commerce platforms.

In addition, Grandpa's Farm adopts an OEM model and states in the prospectus thatThe company commissions third-party OEM manufacturers to produce almost all of its own-brand products.

The prospectus disclosed that Grandpa’s Farm sources products from 62 OEM manufacturers. The main reasons for outsourcing production to OEM manufacturers are: (1) These OEM manufacturers have rich supply experience in the infant and toddler snack and supplementary food sectors as well as household food products, allowing the company to optimize the manufacturing capabilities and design resources of OEM manufacturers to drive business growth; (2) The OEM model enables the company to meet the needs of rapid product development, thereby improving flexibility to maintain a diversified and frequently updated product lineup; (3) Outsourcing arrangements allow the company to control and manage product costs while reducing investment risks.

However, over-reliance on the OEM model can easily lead to risks of substandard quality, a situation that is not uncommon in the food and beverage sector.

Grandpa's Farm also stated in the prospectus that the company has taken measures to prevent the risk of over-reliance on specific product OEM manufacturers. The company has sufficient alternative suppliers capable of providing substitute products with comparable quality and pricing.

On the other hand, Grandpa's Farm is building its own factory. According to the prospectus, Grandpa's Farm has established a multifunctional facility in Zengcheng, Guangzhou, used for independently producing selected small-batch products, R&D, quality control and testing, as well as logistics and warehousing.

Funds raised will be allocated to the following areas

For this Hong Kong IPO, Grandpa’s Farm plans to allocate the net proceeds of the offering towards these directions:(1) Enhancing product development capabilities and continuously innovating and upgrading the infant and toddler snack and supplementary food product lines as well as household food product lines; (2) Investing in supply chain development and strengthening internal production capabilities as well as end-to-end procurement management to ensure product source quality; (3) Strengthening brand building and marketing promotion to increase brand awareness and reach a wider consumer base; (4) Expanding sales networks and developing overseas markets; (5) Working capital and general corporate purposes.

Overall, regarding the use of the proceeds, Grandpa’s Farm has various ideas, but whether the company will ultimately be able to successfully go public still requires time to verify.

Author: Yun Zhifengqi

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