A man gets food supply at a gate on May 31, 2022, in Shanghai, China.Hugo Hu/Getty ImagesAs Shanghai banned dine-in services and locked down the entire city in the spring of 2022 to quell an Omicron outbreak, food distributor Pang Pang Xiang saw its profits skyrocket instead of slip.Originally a food supplier for school and corporate cafeterias, it was one of the firms selected by the local government to make sure Shanghai’s 25 million residents had access to agricultural products.The Shanghai-based company launched a new business that took orders from neighborhoods, individuals, and government entities during the lockdown.Neighbors would band together to buy groceries in bulk from Pang Pang Xiang via WeChat, a Chinese super app, and Pang Pang Xiang would deliver the food to their communities.Pang Pang Xiang — which now wants to list on the Hong Kong exchange — said in an October prospectus that its new business benefited from the shrinking supply for grocery deliveries and heightened demand from the lockdowns.Its grocery delivery business yielded a nearly 70% gross profit margin for the first five months of 2022 — with a gross profit of $3.4 million from $4.9 million in sales, it said. The new business also contributed to half of Pang Pang Xiang’s revenues, per the prospectus.That pushed the gross profit margin for its entire business to 53% for that period, compared to around 30% during 2019 through 2021, per its prospectus. Local media and bloggers have since scrutinized Pang Pang Xiang’s profitability. They compared its profit margins to those of Qianwei Central Kitchen, a canteen food supplier that was listed on the Shenzhen Stock Exchange in 2021 and had gross profit margins of about 24% in 2018 and 2019.Pang Pang Xiang hasn’t said how much it will raise or when it expects the listing to happen but added that it wants to expand its canteen and grocery delivery services to other cities near Shanghai like Nanjing and Hangzhou.