Liuliu Mei's Hong Kong IPO Push Carries Cash-Flow and Dividend Questions

Liuliu Mei has finally passed its Hong Kong listing hearing after a seven-year path through failed and delayed listing attempts. The progress gives the Chinese preserved-plum snack brand a chance to reach public investors, but the file contains enough weak points to make the offering look less comfortable than the headline suggests.

The company traces its origins to a business founded by Yang Fan in Anhui in 1999 and has built a recognizable brand around plum-based fruit snacks. Industry data cited in listing materials ranked Liuliu Mei first in China's fruit-snack market by 2024 retail sales, with a 4.9 percent market share. That position gives the company a real consumer identity in a fragmented category.

The listing path has been unusually drawn out. Liuliu Mei first tried to list on the Shenzhen Stock Exchange in 2019 but withdrew the application later that year after heavy spending on brand upgrades and national marketing weighed on performance. It then turned to Hong Kong, where earlier filings in 2025 lapsed before completion. The current hearing approval came only after a third updated filing under the renamed Liuliu Mei Co. Ltd.

Revenue and profit have moved in the right direction. From 2023 to 2025, revenue rose from 1.32 billion yuan to 1.62 billion yuan and then to 1.71 billion yuan. Net profit increased from 99.2 million yuan to 148 million yuan and then 182 million yuan. Those numbers show a business with scale, profitability and brand traction.

The problem is cash quality. At the end of 2025, the company held only 33.9 million yuan in cash and cash equivalents, while bank borrowings stood at 475 million yuan. Operating cash flow also moved the wrong way, falling from 127 million yuan in 2023 to 84.4 million yuan in 2024 and 74.5 million yuan in 2025. A company can report higher profit while still becoming less comfortable in cash terms. That is exactly the kind of mismatch public investors tend to punish.

The pre-IPO dividend makes the optics worse. Listing materials show that no dividend was paid or declared during the track-record period, but on May 10, 2026, the company declared a 67.3 million yuan dividend based on shareholders' holdings as of March 31 and paid it in full two days later. The payment occurred while cash reserves were thin and borrowings were much larger than cash on hand.

That does not automatically make the dividend improper. Private companies often settle shareholder economics before listing. But the timing forces a sharper question: is the IPO primarily funding growth, or is it arriving after insiders have already extracted cash from a balance sheet that does not look especially strong?

Ownership concentration adds another layer of concern. Before the IPO, Yang Fan, his spouse and related holding platforms controlled the overwhelming majority of the company. Yang directly held 37.97 percent, a couple-controlled investment platform held 36.53 percent and his spouse directly held 4.37 percent. Family and employee platforms added further concentration. External investors held smaller stakes.

The investor-agreement history also matters. Several outside investors had redemption or buyback rights tied to listing deadlines. A Sequoia-linked fund invested in 2015 and originally had a right to require a buyback if the company had not filed for listing by June 2020. The deadline was extended, but because the underlying fund approached expiry, Liuliu Mei bought back the fund's shares in early 2025 under the original mechanism. Other external investors later agreed to extend redemption triggers, with rights potentially restored if the company did not complete a listing by June 30, 2026.

That history suggests the IPO is not only a growth milestone. It is also a pressure valve for early investors, family ownership and delayed liquidity. Public investors should pay attention to whether proceeds are being used for brand, distribution and product expansion, or whether the listing mainly resolves private-market tensions accumulated over years.

The consumer story is not without merit. China's snack market is large, and Liuliu Mei has a clear brand in a niche with repeat-purchase potential. But a 4.9 percent share also shows that leadership in the category does not equal dominance of the broader snack economy. Growth will require marketing, channel spending, product renewal and probably more working capital.

The negative reading is that Liuliu Mei is arriving in Hong Kong with a good brand but an uncomfortable financial setup. Rising profit is helpful, but falling operating cash flow, high borrowings relative to cash, concentrated ownership and a large pre-listing dividend will make governance and capital allocation central to the investment case.

Passing a listing hearing is not the same as proving public-market quality. Liuliu Mei has cleared an important procedural hurdle. It still has to persuade investors that the company is not using the market to clean up a long, strained listing history while leaving new shareholders with the harder cash-flow questions.