Lei Jianping on April 23
Sichuan Baicha Baidao Industrial Co., Ltd. (hereinafter referred to as "Chabaidao", stock code: "02555") was listed on the Hong Kong Stock Exchange today.
The issue price is HK$17.5, and 148 million shares are issued, raising a total of HK$2.59 billion, making it the largest new stock so far in 2024.
The opening price of Chabaidao is HK$15.74, and so far, the share price has fallen by about 20%, and the company's market capitalization is about HK$20.2 billion.
Gu Jilin, co-founder of Chabaidao, said that despite the current weak market conditions, after careful consideration, he believes that now is the "perfect moment" for listing, which will help the company's long-term development and maximize shareholder benefits.
At present, Mixue Bingcheng, Gu Ming Holdings, and Shanghai Auntie have also submitted prospectuses to the Hong Kong Stock Exchange to prepare for listing in Hong Kong.
1 billion cups are sold a year, and the number of stores has reached 8,016
In 2008, the first tea Baidao was born in Chengdu. Since its establishment, Tea Baidao has focused on exploring the combination of natural ingredients and Chinese tea, and has continued to develop diversified tea products to improve consumer experience. Behind the brand positioning of Tea Baidao is the presentation of brand strategy and the direction of product research and development.
According to reports, Tea Baidao continues to visit the tea mountain, explore the fresh original leaves, pay attention to every process of tea from growth, picking, production to cup, establish a global supply chain system, use high-quality tea, select seasonal fresh fruits, and strictly control the quality of each cup.
In terms of retail sales in 2023, Chabaidao ranked third with a market share of 6.8% in China's freshly made tea shop market. In 2023, a total of 1.016 billion cups of milk tea will be sold in Chabaidao stores, with a total retail sales of about 16.9 billion yuan.
As of April 5, 2024, the number of Chabaidao stores has reached 8,016, covering 31 provinces and cities across the country, achieving full coverage of all provinces and tier-level cities.
By discovering and exploring the tastes and characteristics of various raw materials, Chabaidao develops original recipes, cooperates with upstream suppliers and has them implement production processes in strict accordance with the company's product requirements, and allows consumers to sample and test new products before they are launched.
These initiatives have led to the standardization of product development, enabling all stores in the Chamodo store network to offer a uniform product to consumers.
Tea Baidao uses the "exclusive secret recipe" to carry out reverse customization to upstream suppliers, which also solves the problem of product homogenization that has always existed in the tea industry, and deepens the moat for the core competitiveness of its products.
Relying on the company's R&D capabilities, Chabaidao has formed a rich product matrix composed of classic teas, seasonal teas and regional teas, which can meet the diversified consumption needs of different types of consumers.
The five classic products listed in the tea Baidao prospectus together account for nearly 40% of GMV, and a total of 350 million cups will be sold in 2023, which can be described as "a hot model", of which "Jasmine Milk Green" sells 110 million cups a year, and "Yangzhi Manna Dew" has a retail sales of nearly 1.8 billion yuan a year. Seasonal products such as "Black Lacquer" and "Green Jasmine" and regional products such as "Yellow Peel and Lemon" have maintained a high-frequency new rhythm.
Taking 2023 as an example, Chabaidao has developed a total of nearly 250 products, including 48 new products, and completed the upgrading of 13 classic product formulas. In other words, almost all the year round, "every week is new". Chabaidao's product strategy of "seasonal tea plus regional tea" ensures that consumers can get surprises in time and space, and together with its classic tea product matrix, it constitutes a very solid product fundamentals.
Annual revenue was 5.7 billion, an increase of 34.7% year-on-year
According to the prospectus, the revenue of Tea Baidao in 2021, 2022 and 2023 will be 3.644 billion, 4.232 billion and 5.7 billion yuan respectively, with a compound annual growth rate of 25.1%, of which the revenue of Tea Baidao in 2023 will increase by 34.7% year-on-year;
In 2021, 2022 and 2023, the gross profit of Chabaidao will be 1.3 billion yuan, 1.456 billion yuan and 1.964 billion yuan respectively, with a compound annual growth rate of 22.9% and a gross profit margin of 34.4%.
The growth of gross profit and the stable and healthy gross profit margin reflect that Chabaidao's cost control and pricing strategy has done a good job, and it has better maintained the company's profitability and market competitiveness while grasping market opportunities.
As a brand mainly aimed at young people, Chabaidao has also established a positive image in the minds of consumers. In the 2023 joint campaign with miHoYo's otome game "Book of Undetermined Events", Chabaidao succeeded by honoring consumers as "lawyers" (the profession of the protagonist in the game), memorizing the name of the male protagonist of the game, and properly keeping the co-branded merchandise of the event.
On the basis of chain operation, Chabaidao focuses on the small store model and takeaway business, which has more cost advantages and leverages more young consumers, which can not only meet the needs of consumers in terms of quality and price ratio, but also better guarantee the growth of business performance. The small store model can save store costs to a great extent, with lower expenses in terms of rent, decoration, and personnel costs, and at the same time can support takeaway business and window pick-up to improve operational efficiency.
Among the Chabaidao stores, 44.3% of the stores are between 30 and 49 square meters, and 42.8% are between 50 and 100 square meters.
Behind the small store model, Chabaidao fully supports and empowers franchisees through the whole life cycle, so as to achieve a stable franchisee system. Chabaidao has set up 16 training centers across the country. The training center not only conducts continuous training for franchisees and their employees, but also helps new franchisees through old franchisees, provides support for online operation and continuous operation, and improves store operation efficiency through digital system system.
At the same time, Chabaidao has set up a regional supervision team composed of about 570 people across the country, in addition to routine inspections of stores 3 to 4 times a month, as well as daily random inspections by headquarters and regional inspection teams, and special inspections of food safety by third-party organizations. It is under such a combination that Chabaidao has achieved a store closure rate lower than the industry average from 2021 to 2023.
The profit of Chabaidao in 2021, 2022 and 2023 will be 779 million yuan, 965 million yuan and 1.151 billion yuan respectively, and the profit margin during the year will be 21.4%, 22.8% and 20.2% respectively.
The adjusted profit of Chabaidao in 2021, 2022, and 2023 will be 900 million yuan, 967 million yuan, and 1.258 billion yuan, respectively.
As of December 31, 2023, Chabaidao had cash and cash equivalents of $716 million.
Laying a national supply chain to strengthen the "last mile"
Chabaidao has formed a nationwide supply chain capability, and plans to continue to optimize this capability and promote a complete layout.
At present, Chabaidao has established a nationwide warehousing and logistics network through self-management and third-party cooperation to achieve high-frequency and timely distribution services, and ensure the supply of fresh and high-quality materials with the help of digital empowerment such as the establishment of an order management system (OMS) and a transportation management system (TMS).
By the end of 2023, Chabaidao has 21 multi-temperature warehouses across the country, including 20 central warehouses and 1 front warehouse, with a total area of about 80,000 square meters. Through a distribution fleet of 300 multi-temperature transport vehicles, Chabaidao has achieved delivery to 97% of its stores twice a week or more, and has opened up 41 night delivery routes in Beijing, Chengdu and other places.
At the same time, Tea Baidao has deepened the layout of the production area, strengthened the "last mile", and created a "resource + technology" supply chain system. As of 2023, Chabaidao has directly signed procurement agreements with high-quality fruit producing areas across the country for some core fruits, such as peaches, Tainong mangoes, summer black grapes, etc., and strengthened cooperation with leading suppliers around core raw materials such as dairy products, tea, and frozen freshly squeezed juices, so as to lock in high-quality production areas and supply of upstream raw materials.
The prospectus also shows that Chabaidao will further explore the national high-quality production areas, increase the category and proportion of directly harvested fruits, and plan to carry out counterpart support plans for fruit producing areas with large procurement scales, so as to strengthen cooperation with local suppliers and support local farmers and local economic development.
The prospectus of Tea Baidao also discloses that Tea Baidao has a factory in Chengdu, Sichuan Province that produces environmentally friendly new material packaging materials "Senmian Factory", with a total area of more than 10,000 square meters, which will be put into operation in 2021. The plant has an annual production capacity of 13,952 tons in 2023, and the biodegradable straws, packaging bags and other environmentally friendly packaging materials produced can not only be used by Chabaidao's own products, but also can be used for external procurement needs.
Seize the sinking market and accelerate the tea drink to the sea
By the end of 2023, the number of Chabaidao stores in first-tier, new first-tier, second-tier, third-tier, fourth-tier and below cities will account for 10.6%, 26.9%, 20.9%, 19.4% and 22.2% respectively. In the prospectus, Chabaidao believes that there is a large market space in lower-tier cities, so it plans to further carry out store encryption in second-tier cities and below to seize the sinking market.
Zhu Danpeng, an analyst of China's food industry, believes that among the leading new tea brands in China, there are more or less problems of uneven distribution at the regional and urban levels. If the distribution of stores is too concentrated in one area, it will reduce the brand's influence on a national scale. However, if the distribution of stores in high-tier cities is small, it is not conducive to improving brand awareness and communication volume. ”
Tea Baidao has achieved a reasonable balance in this regard, and its stores have spread to all provinces in the country, especially in first-tier cities such as Beijing, Shanghai, Guangzhou and Shenzhen. In the competition of the sinking market, this kind of high-tier city brand is more attractive to consumers in counties and towns, and it is likely to form a dimensionality reduction blow to regional brands.
Due to the huge space of overseas markets, tea drinks going overseas have been the common choice of Chinese tea enterprises for a period of time.
In January 2024, Chabaidao will open its first overseas store in Seoul, South Korea, and will open its third store in South Korea in April. Potential overseas markets also include Thailand, Vietnam, Malaysia, Australia, etc. Zhu Danpeng introduced: "Southeast Asia, as a region with tea culture and tradition, will be much more receptive to tea products than European and American countries. At the same time, due to the geographical proximity, the construction of the supply chain is relatively easy, so domestic tea brands often choose Southeast Asia as their first stop when going overseas. ”
The prospectus also mentions that 5% of the funds raised will be used to promote the self-operated coffee brand "Coffee Ash" and set up a network of coffee shops across China. In the next three years, 15 coffee shops are planned to be opened, and the coffee brand will adopt both direct operation and franchise models, including large coffee shops of more than 50 square meters and small coffee shops of less than 50 square meters for quick pick-up and takeaway.
Industry insiders generally believe that the coffee track seems to be a small market scale at present, but it has huge growth potential in the future. On the one hand, the competition in the coffee market is relatively small, and there are not many brands that have formed a real scale advantage in China; on the other hand, the "price war" of the coffee track since last year is completing the cultivation of consumers, and the future market space is broad. The action of going overseas to the Southeast Asian market and entering the coffee track also provides greater imagination for the future development of Chabaidao.
New Hope and Shimmer are shareholders
The executive directors of Chabaidao are Wang Xiaokun, Wang Hongxue, Ms. Dali and Chen Keyuan, the non-executive directors are Dr. Chen Da, and the independent non-executive directors are Yang Zhida, Dr. Tang Yong and Ms. Cheng Li.
On May 22, 2023, Chabaidao, Hengsheng Herui, Wang Xiaokun, Tower Quality Limited (Tower Quality), Shanghai Tanying Investment Partnership (Limited Partnership) (Zhengxin Valley Tanying), Suzhou Yuexiang Equity Investment Partnership (Limited Partnership) (Suzhou Yuexiang), Chengdu Xinjin Shengwang Jiaozi New Consumer Equity Investment Fund Partnership (Limited Partnership) (Xinjin Shengwang), Nanjing Yellow Tomato Equity Investment Partnership (Limited Partnership) entered into a capital increase agreement, pursuant to which Tower Quality, Zhengxin Valley Tanying, Suzhou Yuexiang, Xinjin Shengwang and Yellow Tomato Limited Partnership respectively subscribed to the new registered capital of the Company at cash considerations of RMB 800 million, RMB 30 million, RMB 40 million, RMB 5,000 and RMB 30 million respectively.
On June 19, 2023, Chabaidao, Hengsheng Herui, Wang Xiaokun, and CICC Tongfu (Quanzhou) Consumer Industry Venture Capital Fund Partnership (Limited Partnership) (CICC Tongfu) entered into a capital increase agreement, pursuant to which CICC Tongfu subscribed to the company's new registered capital at a cash consideration of 20 million yuan.
Chabaidao received a total of 970 million yuan in financing this time, with a cost of 13.2 yuan per share.
Before the IPO, Hengsheng Herui held 67.6758% of the shares, Wang Xiaokun held 18.0167% of the shares, Ms. Liu Weihong held 5.7449% of the shares, Tongchuang Gongjin held 0.4802% of the shares, Ms. Dali held 1.3163% of the shares, Wang Hongxue held 0.6395% of the shares, Ms. Gu Jilin held 0.3759% of the shares, and Chen Keyuan held 0.2250% of the shares.
Before the IPO, the shareholding structure of Chabaidao
Hengsheng Herui is 84.888% owned by (i) Chengdu Jinbaisen (100% owned by Wang Xiaokun and Ms. Liu Weihong), 7.78% by Ms. Dali through her wholly-owned subsidiary, Chengdu Jingchen Enterprise Management Co., Ltd., and (iii) 3.78% by Wang Hongxue through her wholly-owned subsidiary, Chengdu Lirong Jinsheng Enterprise Management Co., Ltd.;
Ms. Gu Jilin holds a 2.222% interest through her wholly-owned subsidiary, Sichuan Yongrunlin Enterprise Management Consulting Co., Ltd., and Chen Keyuan holds a 1.33% interest through her wholly-owned subsidiary, Chengdu Lianlin Enterprise Management Co., Ltd. Together with Ms. Liu Weihong, Chengdu Jinbaisen and Hengsheng Herui, together with Ms. Liu Weihong, Chengdu Jinbaisen and Hengsheng Herui, are regarded as a group of controlling shareholders.
Tower Quality holds 4.5573% of the shares, Zhengxin Gu Tanying holds 0.1709%, Suzhou Yuexiang holds 0.2279%, New Hope's Xinjin Shengwang holds 0.2848%, Xiamen Weiguang Qichuang's Yellow Tomato Limited Partnership holds 0.1709%, and CICC Tongfu holds 0.1139%.
After the IPO, the shareholding structure of Chabaidao
After the IPO, Hengsheng Herui held 60.9082% of the shares, Wang Xiaokun held 16.215% of the shares, Ms. Liu Weihong held 5.1704% of the shares, and Tongchuang Gongjin held 0.4322% of the shares;
Ms. Dali holds 1.1847%, Wang Hongxue holds 0.5756%, Ms. Gu Jilin holds 0.3383%, and Chen Keyuan holds 0.2025%.
Tower Quality holds 4.1016%, Zhengxin Gu Tanying holds 0.1538%, Suzhou Yuexiang holds 0.2051%, New Hope's Xinjin Shengwang holds 0.2563%, Xiamen Microlight Qichuang's Yellow Tomato Limited Partnership holds 0.1538%, and CICC Tongfu holds 0.1025%.
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