Golden Heaven Group Holdings Ltd., an amusement park operator in China, debuted on the Nasdaq Capital Market under the symbol “GDHG” on Wednesday, April 12, 2023.
The Chinese amusement park operator raised $7 million by offering 1.75 million shares at a price $4.00 per ordinary share. The offering is expected to close on April 14, 2023, subject to satisfaction of customary closing conditions.
Golden Heaven manages and operates six amusement parks that are in geographically diverse markets across the south of China. Capitalized on the locations proximate to urban areas and famous attractions and all age group targets, the parks have expanded to approximately 426,560 square meters of land in aggregate with 139 rides and attractions and are easily accessible to more than 21 million population within the targets.
According to Golden Heaven’s SEC filing, the company booked $41.79 million and $38.52 million in revenue, $14.33 million and $13.58 million in net income, for the 12 months ended September 30, 2022 and September 30, 2021, respectively.
The revenue is derived from sales of in-park recreation, rental income, and park service fees. The total revenue increased by $3.27 million, or 8.49%, for the fiscal year ended September 30, 2022 compared with the same period one year ago. Such increase was primarily attributable to the increase in sales of in-park recreation and park service fees. Since fiscal year 2022, the Chinese government has eased the COVID-19 restrictions and taken measures to promote the economic recovery, including issuing consumption vouchers and allowing free admissions to certain scenic spots. As a result, the mobility of people increased, which contributed to the increase in sales of in-park recreation.
Golden Heaven focuses on the second- and third-tier cities instead of the first-tier cities. According to iResearch’s amusement park industry report, people in the second- and third-tier cities in China have affordable housing options, possess sufficient disposable income, and have plentiful time for leisure activities. The National Bureau of Statistics of China data also suggests that the GDP per capita in third-tier cities in 2021 was RMB74,502, up by 70.15% from RMB43,785 in 2013, while first-tier cities grew by only 54.05%. China is still one of the biggest and fastest growing economies in the world and focuses on long-term high quality and stable growth, and the GDP per capita in third- and lower-tier cities in China has grown at an increasing rate on the average.
The parks of Golden Heaven are generally open daily till 10:00 pm. By extending business operations into the night time, the company tried to take good advantage of the Night Economy in China, which refers to economic activities from 7pm to 6am next morning. The Night Economy plays an important role in urban development, and is supported by administrative policies of China. In this way, the parks provide guests with a destination to spend their leisure time after school or after work, and are able to increase the number of guest visits, extend guest stays, maximize guest spending per capita, and optimize the usage rate of amusement facilities.
The company aims to become the leading regional amusement park operator in China. To achieve the goal, they plan to endeavor to enhance guest experiences, develop appealing recreational products and services, boost the operational efficiency, and improve cost controls.
According to the SEC filing, the net proceeds from the offering will be used for expanding the market share by constructing new amusement parks, and by acquiring or investing in businesses engaged in the amusement park development; upgrading existing amusement parks, software and systems; improving internal control; increasing brand recognition through marketing and promotional activities; and for working capital and general corporate purposes.