Hidden value emerges: The fundamental strength and revaluation logic of Red Star Cold Chain (01641)

On January 13, Red Star Cold Chain (01641) made its debut on the Hong Kong Stock Exchange, and on the first day of trading, it witnessed a roller coaster ride in the market: it opened nearly 60% higher in the morning, reaching a high of 19.7 Hong Kong dollars, but ultimately closed at 12.3 Hong Kong dollars, only slightly higher than the issue price. For a company that had previously received 2309.25 times oversubscription in its public offering and attracted high market attention, such a closing performance inevitably surprised some market participants. However, for those familiar with the recent market dynamics of Hong Kong IPOs, this is not an isolated case. Since the IPO market in Hong Kong has picked up, significant gains from new listings have attracted a large number of retail investors, who often sell off their shares on the grey market or the first day of trading once they are allocated shares. In addition to technical selling pressure causing new stock prices to fall on the first day of trading, on January 13, market sentiment in the Hong Kong stock market was affected by macro factors such as the turmoil in the US Federal Reserve and geopolitical risks, leading to a rise in risk aversion sentiment and causing major indexes to exhibit a high opening followed by a decline, amplifying the volatility of new stock prices. If the short-term fluctuations in stock prices reflect market sentiment and fund speculation, the long-term value of a company is rooted in industry prospects and fundamental factors. For Red Star Cold Chain, the short-term fluctuations driven by non-fundamental factors not only do not undermine its long-term logic, but instead provide a chance for rational investors to examine its true value more deeply. Therefore, the most important question for potential investors is whether the current stock price level fully reflects the true value of Red Star Cold Chain, or if there exists an investment opportunity due to mispricing of valuation. From an industry perspective, the growth certainty of the cold chain sector is evident. Cold chain logistics, as a key link connecting production and consumption, plays a crucial role in unlocking consumer potential and facilitating the smooth operation of the supply chain, with long-term growth certainty becoming increasingly clear under the dual support of policies and demand. According to the market size and analysis of leading companies in the cold chain logistics industry in 2025 released by the Industry Research Institute on January 22, 2026, the market size of China's cold chain logistics industry is estimated to be around 540 billion yuan in 2024, with a compound annual growth rate of 9.59% over the past five years. Among them, the fresh food sector is the fastest-growing category. Due to its dense population and abundant resources, the market size growth rate in central China is higher than the national average. This data is also supported by the operating data of the cold chain logistics industry released by the China Federation of Logistics and Purchasing in 2024. The data shows that the growth rate of cold storage capacity in China in 2024 was revised up to 11.0%, reaching 253 million cubic meters. In recent years, the demand for cold chain logistics has shown a structural surge: on the one hand, emerging consumption scenarios such as pre-made meals and fresh e-commerce are rapidly rising. According to data from several industry reports, the market size of pre-made meals in China reached 485 billion yuan in 2024, a year-on-year growth of 33.8%. It is expected to continue growing in the following years, with the market size expected to exceed 749 billion yuan by 2026. Cold chain logistics, as a foundation for ensuring product quality and expanding sales, continues to see strong demand as the industry expands. On the other hand, the circulation rate of cold chain in the fruit and vegetable, meat, and aquatic product sectors in China continues to increase. Data from the China Federation of Logistics and Purchasing Professional Committee of Cold Chain Logistics shows that in 2023, the circulation rates of fruits and vegetables, meat, and aquatic products were 23%, 78%, and 80% respectively, while the average level in developed countries is between 80% and 95%. Among them, there is the greatest room for improvement in the circulation rate of fruits and vegetables. In summary, under multiple demands, the long-term growth logic of the cold chain logistics industry is solid. A stable investment target: solid fundamentals, core strengths highlighted To deeply analyze the true value of Red Star Cold Chain, one will find that "low-key" and "stable" are the most prominent labels of this company, with its core competitiveness rooted in deep industry foundations and unique business models. Firstly, its regional leading position is solid, and scale barriers are difficult to replicate. Red Star Cold Chain originated from the renowned "Three Xiang First Village" in Changsha, Red Star Village, and evolved from the agricultural industrial giant Red Star Industrial Group. Initially, the company was established to address the freezing storage and store lease needs of merchants at the Red Star Agricultural Wholesale Market. After twenty years of development, the company has grown to become the largest cold chain warehousing service provider in central China and Hunan, with business operations covering eight provinces nationwide. From the perspective of core assets, the company's two warehousing bases in the Yuhua District of Changsha have a total design capacity exceeding 1 million cubic meters, with available capacity of over 230,000 tons, accounting for 18.2% of the total available cold chain capacity in Hunan. This region serves as a core logistics hub in Changsha, adjacent to the Red Star Agricultural Wholesale Market, with a transportation radius more than 30% shorter than that of competitors, and notable scarcity of land resources. In terms of market share, the company holds a high market share of 54.7% in the frozen food store lease service market in Hunan province, far surpassing its competitors, establishing a solid regional monopoly advantage. Secondly, its unique business model has created high stickiness and profitability. Based on deep insights into merchant needs, Red Star Cold Chain has built a unique operating model of "front store, back warehouse, on-site storage, real-time trading," seamlessly integrating warehousing backend functions with store front sales. This model brings dual value to merchants: firstly, it reduces comprehensive costs as the bundled rental price of warehousing + store is lower than leasing separately, effectively alleviating the operating pressure on merchants; secondly, it enhances operational efficiency, reducing the inventory turnover days for merchants and significantly improving the response speed of real-time trading. This model not only effectively enhances the efficiency and convenience of merchant transactions but also generates high customer stickiness- data shows that in the first half of 2025, nearly 80% of customers simultaneously used warehousing and leasing services, with store rental rates consistently exceeding 94%, and renewal rates remaining above 90%. In terms of profitability, from 2022 to the first half of 2025, the company's gross profit margin has remained above 50%, reaching 52.8% in 2024, significantly higher than the average gross profit margin of the domestic cold chain warehousing industry during the same period, which was only 28.7%. Its net profit margin has been stable between 33% to 38%, demonstrating strong operational resilience. Thirdly, its high dividend attributes are prominent, supported by stable cash flow for long-term development. In addition to its strong operational fundamentals, Red Star Cold Chain's high dividend characteristics further enhance its investment appeal. From 2022 to the present, the company has distributed cash dividends totaling around 240 million yuan, with dividend payout ratios of 35%, 38%, and 40% in 2022, 2023, and 2024, respectively, with an average dividend payout ratio of 37.7%, significantly higher than the average dividend payout level in the Hong Kong stock market. In terms of financial health, the company's asset-liability ratio has remained below 35%, at 33% in the first half of 2025, with no interest-bearing debt, indicating a stable financial structure. Its net cash flow from operating activities has remained positive, consistently covering net profit and capital expenditures, providing solid support for the continuation of its dividend policy and business expansion. Uncovering growth potential, regional expansion opens up a value ceiling However, if Red Star Cold Chain is viewed solely as a high dividend stock, its growth potential is clearly underestimated. The company's prospectus mentions that 57.5% of the IPO proceeds (approximately 145 million Hong Kong dollars) will be used to build a processing plant and expand frozen food warehousing warehouses over the next four years, equipped with processing equipment and systems to provide frozen food processing services. About 19.7% (about 50 million Hong Kong dollars) will be used to seek strategic acquisitions and partnerships in the next four years to integrate the industrial chain, consolidating its position in the entire cold chain ecosystem. It is worth noting that Red Star Cold Chain has already established a comprehensive cold chain service matrix: starting from warehousing operations, the company has collaborated with third-party logistics service providers in trunk transport and loading and unloading stages, equipped with professional cold chain fleets, equipment, and real-time tracking systems; in inventory management consulting, packaging, labeling, and quality inspection stages, the company also provides a range of value-added services. In the future, it is expected to further cooperate with upstream suppliers such as logistics service providers and downstream producers of pre-made foods to deepen the integration of the industrial chain service model. Regarding its upcoming efforts in the central market, the company is not unprepared: public reports indicate that in recent years, the major shareholder Red Star Industrial has been actively expanding in the central market, establishing the largest modernized Shenzhen Agricultural Power Group trading platform in the central-southern region- the Red Star Global Agricultural Wholesale Center, creating a distribution network that covers six central provinces and 280 million consumer population. On December 30, 2025, the Changsha Land and Resources Online Trading System information system shows that in the Yuhua District, the Bai Zhu Village in the Tiaoma Town, a commercial service facility site with an area of 135,518.82 square meters ([2025] Changsha No. 083), with a plot ratio of less than or equal to 2.0, was successfully bid for by Hunan Red Star Agricultural Wholesale Limited Company (the major shareholder of which is also Red Star Industrial) for 193 million yuan, possibly for the development of Shenzhen Agricultural Power Group circulation, cold chain logistics, or related business developments, further promoting urban-rural integration and rural revitalization. Although the development plan for this commercial site is not yet clear, the well-established pipeline network and existing customer resources of the major shareholder are likely to become a strong endorsement for Red Star Cold Chain's expansion plan. Investment opportunities under valuation mismatch Currently, the average PE-TTM of the cold chain logistics sector in the Hong Kong stock market and A-share market is 15-20 times, with a PB ratio of 2.0-2.5 times (Wind data, January 2026). As of January 22, 2026, after a significant rebound of nearly 20%, the PE-TTM of Red Star Cold Chain is only 11.59 times, with a PB ratio of 0.85 times, significantly lower than the industry average, indicating a significant undervaluation. Some industry analysts have told GMTEight that the current discount may mainly stem from two factors: the market discount for regional companies in the Hong Kong stock market and investors' concerns about uncertainty regarding expansion outside the province. However, Red Star Cold Chain possesses both stable cash flow assets and high growth certainty, with a short-term view showing that a gross profit margin of over 50% and a dividend payout rate of over 37% provide a solid safety margin; in the long term, the expansion in the central market and extension of the industrial chain open up the growth potential. The current stock price has not fully reflected the company's asset value, profit resilience, and growth potential, indicating a significant undervaluation. As the company steadily expands in the central market, continues to fulfill its high dividend policy, and further validates its profit capabilities through subsequent financial reports, the market will gradually recognize its true value, making the current situation a starting point for value discovery and a golden allocation opportunity. In conclusion, for investors seeking steady growth, the volatility caused by short-term market sentiment may present a rare opportunity to invest in the regional cold chain leader.