Key Takeaways:
- Oriental Rise had a successful debut on Nasdaq, raising $7 million.
- Funds will be used for a major expansion to increase cultivated land by 50%.
By Doug Young
Oriental Rise Holding Ltd. (ORIS) debuted on Nasdaq, soaring 50% on its first day. The company, focused on growing and selling white tea, attracted significant investor interest.
It raised $7 million by issuing 1.75 million shares at $4 each, underwritten by Tiger Securities. The traditional tea sector in China is less represented in public markets compared to tech industries, although there’s growth potential due to many small producers.
White tea sales have tripled from 2017 to 2021, showing an annual growth of 32.8%. Oriental Rise’s operations are mainly in Zherong County, Fujian province, and depend on local village agreements for land use, which carries regulatory risks.
Big Expansion Planned
Oriental Rise’s revenues have been stable, at $24.1 million last year, with a net profit of $11.5 million. Despite facing land limitations and turning away $92 million in potential orders, it aims to expand by acquiring more land and building a new processing plant.
The company currently uses 7.2 km² of land and plans to acquire another 3.5 km². This expansion will cost about 87.6 million yuan, financed through its cash flow and IPO proceeds. The new processing plant is estimated to cost around $5 million for land and $730,000 for construction.
On its first trading day, Oriental Rise’s market value is about $132 million, trading at a relatively low P/E ratio of 13 compared to peers, indicating potential for stock growth.
This article is an external contribution and may not reflect Benzinga’s views.
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