On the first working day of 2024, two Chinese tea brands are vying to IPO in Hong Kong.
On January 2, after Gu Ming submitted the form to the Hong Kong Stock Exchange, Mixue Bingcheng officially submitted a listing application to the Hong Kong Stock Exchange late at night.
As a representative of the tea franchise brand, Mixue Bingcheng turned to seek a Hong Kong stock listing this time, with Bank of America, Goldman Sachs and UBS Group as its joint sponsors, while Gu Ming's sponsors are also Goldman Sachs and UBS.
Since its opening in 2007, Mixue Bingcheng has earned a lot of money with its single-digit and ultra-low customer unit price, as well as 36,000 stores.
In the first nine months of 2023, Mixue Bingcheng achieved revenue of 15.4 billion yuan, a year-on-year increase of 46%, and net profit of 2.5 billion yuan, a year-on-year increase of 51.1%.
Compared with Mixue Bingcheng, Gu Ming, which also focuses on franchising, has a revenue of 5.571 billion yuan in the first three quarters of 2023, a year-on-year increase of 33.9%, and an adjusted profit of 1.045 billion yuan.
According to the prospectus, as of 2023, the number of Guming stores is 9,001. Among them, about 79% of the stores are located in second-tier cities and below.
Behind the listing of tea drinks, anxiety and hidden worries such as industry involution and intensified competition have gradually emerged. From 2020 to 2022, the growth rate of the new tea market will drop from 26% to 5.1%.
"The main reason for the tea to be listed is to deal with the upcoming price war. Sohu Finance learned from a head tea brand practitioner that the industry has entered a white heat, and various brands have extended from volume products, volume supply chain to volume capital, and the addition of Cudi has also made practitioners feel anxious. In addition to having a brand effect, listing can also cope with many uncertainties in the future.
茶饮届“拼多多”日入5000万
Honey Snow Ice City and Gu Ming occupy different price bands
Ice cream for 2 yuan, lemonade for 4 yuan, and bubble tea and coffee for 6 yuan are the "standard configurations" of the "Snow King" Honey Snow Ice City scattered in the streets and alleys of fourth- and fifth-tier cities.
The single-digit unit price of the product once made countless young people in small towns ecstatic, after all, compared with the unit price of brands such as Hey Tea, Nai Xue, and Tea Baidao, it can be said that it is more "cost-effective" to hold a cup of Honey Snow Bingcheng.
(The picture comes from the prospectus of Mixue Bingcheng)
Unlike mid-to-high-end tea brands such as Heytea and Naixue, which focus on first- and second-tier cities, Mixue Bingcheng focuses on the "sinking market".
According to the prospectus, as of the first three quarters of 2023, the number of stores in third-tier cities and below is 18,297, accounting for 56.9%, while the proportion of stores in new first-tier, second-tier and first-tier cities is 20.9%, 17.7% and 4.5% respectively.
The ultra-low unit price, the huge store network, and the countless franchisees have also made the "Pinduoduo" in the tea industry profitable.
According to Mixue Bingcheng, it has a freshly made tea brand "Mixue Bingcheng" and a freshly ground coffee brand "Lucky Coffee". In the first nine months of 2023, the store network of Mixue Bingcheng has achieved a total of about 5.8 billion cups and about 37 billion yuan of terminal retail sales.
In 2020 and 2021, the revenue of Mixue Bingcheng increased from 4.680 billion yuan to 10.351 billion yuan, with a growth rate of 82.38% and 121.18% respectively, and its non-net profit after deduction recorded 896 million yuan and 1.845 billion yuan respectively in the same period, an increase of 104.58% and 106.05% respectively over the same period of last year.
In the first nine months of 2022 and 2023, Mixue Bingcheng's revenue continued to climb, with revenue of 13.6 billion yuan and 15.4 billion yuan respectively, a year-on-year increase of 31.2% and 46% respectively, and net profit also increased from 2 billion yuan to 2.5 billion yuan, but the year-on-year growth rate was not as fast as the previous two years, recording 5.3% and 51.1% respectively.
If calculated according to the revenue of 15.4 billion yuan in the first three quarters of last year, the daily income of Mixue Bingcheng is about 57.04 million yuan.
Compared with the single-digit unit price of Mixue Bingcheng, the price of Gu Ming's products is usually between 10 yuan and 18 yuan.
According to the prospectus, in the first three quarters of 2023, Guming's revenue was 5.571 billion yuan, a year-on-year increase of 33.9%, and the adjusted profit was 1.045 billion yuan.
For the full year of 2022, Gu Ming's revenue was 5.559 billion yuan and its adjusted profit was 788 million yuan. For the full year of 2021, Gu Ming's revenue was 4.384 billion yuan and its adjusted profit was 770 million yuan.
In 2023, the GMV of Gu Ming stores will be 19.2 billion yuan, and as of the end of September 2023, Gu Ming's market share is about 16.4% in the mass freshly made tea market of 10-20 yuan, ranking first, and in the ready-made tea market in the full price range, Gu Ming's market share is about 8.3%, ranking second.
The franchise model is expanding rapidly
The number of Mixue Bingcheng stores reached 36,000
Gu Ming and Mixue Bingcheng's "way to make money" depends on franchisees, and the rapid expansion of stores has also become the "first priority" of franchised brands.
According to the prospectus, as of September 30, 2023, the number of Mixue Bingcheng stores exceeded 36,000, including more than 16,000 franchisees.
Mixue Bingcheng's business empire with an annual income of 10 billion yuan has expanded overseas, with 32,180 domestic stores and 3,973 overseas stores, mainly in Indonesia, Vietnam and other countries.
Sohu Finance locates a software in Zhongguancun to search for "Mixue Bingcheng", and finds that there are 5 Mixue Bingcheng stores densely distributed within 1 kilometer.
The stores of Mixue Bingcheng have also caught up with the number of stores of brands such as Heytea, Tea Baidao, and Naixue combined.
Sohu Finance learned that it is also a franchise model, and the number of stores that are about to go to Hong Kong to list ancient tea and tea Baidao has caught up with more than 9,000 and 8,000 respectively.
As of the end of 2023, the number of directly-operated Heytea stores is about 3,200, far lower than that of franchised brands, and as of September 30 last year, Naixue's tea directly operated stores were 1,360.
"We operate primarily through a franchise model. During the Track Record Period, the majority of our revenue was derived from the sale of goods and equipment to our franchised stores. As of September 30, 2023, more than 99.8% of our stores are franchised stores, and the rest are self-operated stores", said Mixue Bingcheng in the prospectus.
What does Mixue Bingcheng rely on to make money? The answer is to sell materials and equipment to franchisees.
Mixue Bingcheng also admits that "in terms of revenue model, we do not rely on franchise fees and related service fees as our main income. During the Track Record Period, only 2% of our revenue came from franchise fees and related service fees. ”
"Our revenue is mainly derived from the sale of store materials and equipment to franchisees", where store materials include food ingredients (such as sugar, milk, tea, coffee, fruit, grain, materials and other products), as well as packaging materials, while equipment sales revenue is mainly derived from the sale of store equipment to franchisees, such as refrigerators, ice cream machines, ice machines and coffee machines.
(The main components of the performance of Mixue Bingcheng / the picture comes from the prospectus of Mixue Bingcheng)
Sohu Finance flipped through the prospectus of Mixue Bingcheng and found that as of the first three quarters of 2023, the sales of goods and equipment brought 15.109 billion yuan of revenue to Mixue Bingcheng, accounting for 98.2% of the revenue. Among them, the sales revenue of goods accounted for 94.3%, and the sales revenue of equipment accounted for 3.9%.
According to the disclosure in the prospectus, the franchise and related service fees of Mixue Bingcheng accounted for only 1.8%.
Sohu Finance found from the official website of Mixue Bingcheng that its franchise fees are divided according to the city level, with costs ranging from 7,000 yuan to 11,000 yuan; in addition, the related costs of joining also include 20,000 yuan deposit, at least 50,000 yuan of material procurement fees, and 70,000 yuan of equipment purchase costs and estimated decoration costs of about 60,000 yuan, which are expected to start from 210,000 yuan.
Also as a ready-made beverage company in China, Gu Ming also operates mainly through franchises. According to the prospectus, except for a very small number of stores, Gu Ming's stores are operated by franchises, and the income mainly comes from selling goods and equipment to franchisees, as well as providing franchise management services.
As of 2023, the number of stores is 9,001. Among them, about 79% of the stores are located in second-tier cities and below.
According to the prospectus, except for a very small number of stores, Gu Ming's stores are operated by franchises, and the income mainly comes from selling goods and equipment to franchisees, as well as providing franchise management services.
In 2023, the single-store operating profit of Gu Ming franchisees will reach 376,000 yuan, and the single-store operating profit margin will reach 20.2%, while according to the CIC report, the estimated single-store operating profit margin of China's mass freshly made tea shop market will be about 10%-15% during the same period. In fourth-tier cities and below, the operating profit of a single store of Guming franchisees was 386,000 yuan
Unlike franchised brands, Nai Xue's tea, which is mainly directly operated, has suffered continuous losses.
According to the data, from 2020 to 2022, Naixue's tea revenue was 3.06 billion yuan, 4.30 billion yuan and 4.29 billion yuan respectively, and the net loss in three years was 200 million yuan, 140 million yuan and 470 million yuan respectively.
Judging from the half-year performance data disclosed by Nai Xue, Nai Xue's business situation has improved in 2023. Naixue's tea revenue in the first half of 2023 was 2.594 billion yuan, a year-on-year increase of 26.8%, and the adjusted profit was 70 million yuan.
In the first half of 2023, Naixue's tea recorded a store operating profit of 473 million yuan, an increase of 141.6% year-on-year.
Tea drinks are "piled up" on the market
Competition intensifies
New tea brands are being launched in a "bunch".
In addition to the listed Nai Xue, Gu Ming and Mixue Bingcheng, which are seeking the Hong Kong stock market, on August 15, 2023, the Hong Kong Stock Exchange also disclosed the prospectus of Chabaidao, and on December 21, 2023, the listing of Chabaidao Hong Kong stocks was also filed with the China Securities Regulatory Commission.
In addition, new tea brands such as Bawang Tea Ji, Tianlala, and Shanghai Auntie have all reported that they are seeking to go public.
Previously, Shen Meng, director of Xiangsong Capital, told Sohu Finance, "Compared with A-shares, the IPO requirements for Hong Kong stocks have been significantly reduced, especially for the chain tea industry." ”
Behind the tea brands seeking IPOs, anxiety and hidden worries such as industry involution and capital caution have gradually emerged.
According to the "2022 High-quality Development Report on New Tea Beverages", the market size of the new tea beverage industry will exceed 290 billion yuan in 2022, with a growth rate of 5.1%, while in 2020 and 2021, the growth rate of new tea drinks will be about 26% and 19%, and the growth rate of the new tea beverage market has slowed down in recent years.
Capital is also cautious about new tea drinks.
According to the "China Catering Investment and Financing Report 2023", the financing amount of the new tea beverage track will drop sharply in 2023. From January to August 2023, there is only one financing of 100 million yuan in the tea financing event, which comes from the strategic financing of Tea Baidao at the end of May of the same year.
Looking back at 2022, the financing amount of the new tea beverage track will exceed 4.5 billion yuan, and the data in 2021 will be 8.3 billion yuan.
Zhu Danpeng, an analyst of China's food industry, also believes that the new tea drink has entered the involution period, and the IPO is a blessing for the company's comprehensive strength, anti-risk ability, and new store expansion.
Sohu Finance learned from a leading tea brand practitioner that the price war of tea brands is coming, and Cudi also announced in November last year that it would enter the tea market, focusing on the low-cost tea market. In the face of unknowable risks, the listing of tea brands is more in response to the intensifying business competition in the future.
As for the future development direction, the person mentioned that while the tea brand continues to expand, it is extremely challenging to test the supply chain capabilities.
"The cost of fresh fruits, packaging materials and other materials is the highest, tea companies in the development of the upstream and downstream costs at the same time, such as increasing the direct fruit, dairy products and other core raw materials, as well as strengthening cooperation with packaging material suppliers, to further reduce the cost of packaging materials," the above-mentioned practitioners told Sohu Finance.
In Zhu Danpeng's view, the competitiveness of new tea brands lies in the perfect supply chain system. "There are more than 30,000 stores in Mixue Bingcheng, and its brand effect, scale effect, profit effect, fan effect and capital effect are already the strongest, so we are optimistic about the overall development of Mixue Bingcheng. Coupled with the downward pressure of the economy at this stage, under the lack of consumers' consumption willingness, consumption ability and consumer confidence, the national mass brand similar to Mixue Bingcheng will be favored and sought after by the capital side. ”
"However, the supply chain system and warehousing based on Gu Ming have not yet been perfected, and at present, it seems that its comprehensive strength needs to be improved compared with Chabaidao and Mixue Bingcheng, and the moat of Gu Ming needs to be established urgently," Zhu Danpeng added.
Produced by | Sohu Finance
Author | Chai Xinyang
Operations Editor | Xue Suwen
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