Hong Kong stocks, "the second share of new tea drinks" are here.
According to the Securities Times reporter, the new tea company Tea Baidao has been offering shares from April 15 to 18, with the stock code of 2555. HK, CICC is its sole sponsor and sole overall coordinator, with an offer price of HK$17.5, 200 shares per lot, a first-lot admission fee of HK$3,535.3 (including handling fees, etc.), and an issue market value of HK$25.859 billion.
According to the global prospectus documents, Chabaidao plans to issue about 150 million H shares and raise HK$2.59 billion, which is the largest IPO raised by Hong Kong stocks this year. Approximately 51% of the net proceeds will be used to enhance overall operational capabilities and strengthen the supply chain, 20% to develop digital capabilities and engage and train professionals, 12% to brand building and promotional activities, 5% to promote self-operated coffee brands and build up a network of coffee shops across China, 2% to develop and innovate, and 10% to work capital and for general corporate purposes.
The public sale of Tea Baidao was not fully subscribed today
Chabaidao is expected to be listed on April 23, which means that Chabaidao will become the second new tea drink to be listed after Nai Xue's tea.
According to the Securities Times reporter, in order to be able to sell the stock better, Chabaidao hired 11 underwriting groups to help sell "tickets", of which Chinese-funded brokerages occupy half of the country, including CICC International, CMB International, CCB International, Shenwan Hongyuan (Hong Kong), China Merchants Securities (Hong Kong), Futu, Tiger, Fosun International Securities, etc., and foreign-funded institutions have Citi.
However, as things stand, its public offering does not seem to be ideal. According to AIPO data, the amount of funds raised by the public offering of Chabaidao was HK$259 million, and the total margin funds for today's IPO were HK$97 million, which was not fully subscribed. Among them, Futu Securities margin subscription of HK$83 million, ranking first, followed by Phillip Securities' margin subscription of HK$09 million, which shows that retail investors are not enthusiastic about IPOs.
Against the backdrop of the current weak market conditions, there is indeed a lot of pressure on the public offering subscription of Chabaidao. According to the Securities Times reporter to professionals to understand, generally speaking, if the public offering part is not fully subscribed, the insufficient part will be reallocated to the international placement, by the sponsor team and the underwriter of the insufficient part of the underwriting, if the subscription is seriously insufficient, the IPO is likely to be shelved or postponed.
The Securities Times reporter noticed that the IPO of Chabaidao had a total share capital of 1.478 billion shares and a market value of 25.859 billion Hong Kong dollars, but it did not introduce cornerstone investors. Although cornerstone investors are not a mandatory evaluation item for Hong Kong stock IPOs, for example, most of the Hong Kong small-cap stocks do not introduce cornerstone investors. However, industry insiders believe that if there is no cornerstone investor during the tens of billions of plate IPO, it may mean that the company's valuation is either too expensive, or the management has problems, or the company's future earnings prospects are not optimistic, in short, institutional investors are not interested.
1 billion cups sold a year
According to the latest prospectus disclosed by Chabaidao, as of the latest practicable date (February 18, 2024, the same below), Chabaidao has a total of 8,010 stores in China, covering 31 provinces and cities across the country. As of 2023, there will be 2,098 stores in new first-tier cities and 1,628 stores in second-tier cities, accounting for 26.9% and 20.9% respectively.
It is worth mentioning that the company is mainly based on franchise stores, and by the end of 2023, the revenue of Chabaidao franchise stores will reach 5.659 billion yuan, accounting for 99.2%, and the revenue of directly operated stores will be 25.84 million yuan, accounting for 0.5%.
In 2023, the total retail sales of Chabaidao stores will reach 16.9 billion yuan (RMB, the same below), with a total of 1.016 billion cups sold, with an average retail sales of 27.4 yuan per order, an average retail sales of 2.388 million yuan per store, and an average daily retail sales of 6,887.2 yuan.
With the expansion of stores and the increase in sales, Chabaidao's financial performance has achieved strong growth, with operating income increasing from 3.644 billion yuan in 2021 to 5.704 billion yuan by the end of 2023. The company's operating income mainly comes from the sale of goods and equipment to franchised stores.
From 2021 to the end of 2023, the operating income from the sale of goods and equipment to franchise stores will reach 3.447 billion yuan, 4.02 billion yuan, and 5.42 billion yuan respectively, accounting for 94.6%, 95%, and 95% respectively, and the revenue from royalties and franchise fees will account for about 4%, although this part of the revenue accounts for a relatively small amount, but the gross profit margin is very high, maintaining about 92% all year round.
In terms of net profit, from 2021 to the end of 2023, the company's adjusted net profit was 900 million yuan, 967 million yuan and 1.258 billion yuan respectively, with a compound annual growth rate of 21.6%.
It is worth mentioning that the company also carried out 2 rounds of financing before listing, with a total financing of 970 million yuan, and the financing cost per share was 13.2 yuan, and the subscribers included Tower Quality, Zhengxin Valley Tanying, Suzhou Yuexiang, Xinjin Shengwang, Yellow Tomato Limited Partnership and CICC Tongfu and other investment institutions, and the current issue price of the company is 17.5 Hong Kong dollars, which means that the book profit of these institutions is not considerable, but for the current VC/PE, it is fortunate to be able to successfully list and exit.
According to the shareholding structure of the prospectus documents, before the IPO, Chabaidao was directly held by Hengsheng Herui about 67.68% of the equity, Wang Xiaokun directly held about 18.02% of the equity, Liu Weihong directly held about 5.74% of the equity, and Tongchuang Gongjin (employee incentive platform) directly held about 0.48% of the equity. Wang Xiaokun and Liu Weihong are spouses. Chengdu Jinbaisen directly holds 84.89% of the equity of Hengsheng Herui, while Chengdu Jinbaisen is jointly wholly owned by Wang Xiaokun and Liu Weihong. Its employee incentive platform, Co-creation and Progress, is controlled by Wang Xiaokun as its sole general partner.
The tea market is highly competitive
The market in China's ready-made tea shops is highly competitive. According to Frost & Sullivan's report, in 2023, the market size of China's ready-made tea shop market will be 247.3 billion yuan. In terms of retail sales, the top five players together accounted for about 40.2% of the market share. The Chamomodo brand ranked third with a market share of about 6.8%.
In addition, Cha Baidao is increasingly competing with other leading players at all levels of its business, including product innovation, product quality, customer experience, and customer acquisition and retention. Competition is likely to become increasingly fierce in the future as the number of ready-made tea shop brands continues to increase and the product differentiation of these brands in key aspects such as product availability and price level is not obvious. Freshly made tea shops of different brands may be located in adjacent areas, which also leads to more fierce competition.
In the prospectus, Chabaidao admitted that if it fails to compete effectively with other leading players, or wins the competition, it may have a material adverse impact on the company's operating results, financial condition and business prospects.
In the context of the increasingly fierce competition in the new tea beverage track in recent years, with the dense layout of stores, the growth rate of single-store sales in mature areas disclosed by some new tea beverage companies in the same industry has declined significantly, which will undoubtedly affect the future revenue and profit growth of these companies. The "2023 New Tea Drink Research Report" predicts that the market size growth rate of the national new tea drink market from 2024 to 2025 will be 19.7% and 12.4% respectively, which is significantly lower than the previous growth rate of 26.5% and 23.4% from 2018 to 2019.
Editor-in-charge: Wan Jianyi
Proofreading: Gao Yuan
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