Today (April 23), Tea Baidao rang the bell on the Hong Kong Stock Exchange and was successfully listed, officially becoming the "second share of new tea drinks"! At the same time, Tea Baidao has also become the "first share of franchised tea drinks" on the Hong Kong Stock Exchange, and it is also the largest IPO of Hong Kong stocks in 2024 so far.
Tea Baidao issued approximately 148 million shares at an issue price of HK$17.50, and the net proceeds were approximately HK$2.456 billion based on the issue price.
1 Timeline to market
From the first submission of the prospectus to the successful ringing of the bell for listing, it took 8 months, and the specific timeline is as follows:
- On August 15, 2023, Chabaidao submitted a prospectus to the Hong Kong Stock Exchange for the first time.
- On December 21 of the same year, the website of the China Securities Regulatory Commission issued the Notice on the Filing of Overseas Issuance and Listing of Sichuan Baicha Baidao Industrial Co., Ltd. and the "Full Circulation" of Domestic Unlisted Shares. According to the Listing Rules of the Hong Kong Stock Exchange, companies are required to submit a "Notice of Filing" at least 4 business days before the date of the hearing, which means that Chabaidao has obtained a pre-requisite requirement for a Hong Kong listing hearing.
- On February 23, 2024, Chabaidao updated its Hong Kong stock prospectus.
- On March 24, Sichuan Baicha Baidao Industrial Co., Ltd., the parent company of Chabaidao, released a post-hearing information package and passed the listing hearing of the Hong Kong Stock Exchange.
- On April 15, Chabaidao issued an announcement, announcing that it intends to offer about 148 million shares globally, and the offer price will be HK$17.50 per share from April 15 to 18, and it is expected to be listed on the main board of the Hong Kong Stock Exchange on April 23.
- On April 23, Chabaidao was listed on the Hong Kong Stock Exchange.
2 Performance
As of April 5, 2024, Chabaidao has a total of 8,016 stores (including 6 directly operated stores) in China, covering 31 provinces and cities across the country, achieving full coverage of all provinces and tier-level cities in China. In addition, Chamoto's first overseas store will be launched in Seoul, South Korea in January 2024, and in the same month, Chamoto's first coffee shop ("Coffee Ash") will open in Chengdu, and in the next three years, Chamomodo plans to open 15 coffee shops in selected cities.
In terms of revenue and profit, from 2021 to 2023, the revenue of Chabaidao will be 3.644 billion yuan, 4.232 billion yuan and 5.704 billion yuan respectively, with a compound annual growth rate of 25.1%, and the gross profit will be 1.301 billion yuan, 1.456 billion yuan and 1.964 billion yuan respectively, and the gross profit margin will be 35.7%, 34.4% and 34.4% respectively in the same period.
From 2021 to 2023, the adjusted net profit of Chabaidao will be 900 million, 970 million and 1.26 billion yuan respectively, with a compound annual growth rate of 18.2% in net profit, and the adjusted net profit margin in 2023 will reach 22%. This profitability is significantly higher than the industry average (typically below 15%).
In terms of retail sales, the total retail sales of Chabaidao stores reached approximately RMB16.9 billion in 2023. According to Frost & Sullivan's report, in terms of retail sales in 2023, Chabaidao ranks third in China's freshly made tea shop market, with a market share of 6.8%.
In terms of sales volume, in 2023, Chabaidao sold a total of 1.016 billion cups of drinks, an increase of 27.9% year-on-year, the average sales volume per store was 143,500 cups, a year-on-year increase of 3.3%, and the average daily order volume of each store was 251.8 orders, with an average daily retail sales of 6,887.2 yuan.
In terms of franchise business, as of December 31, 2021, 2022 and 2023, Chabaidao had 5,070, 6,352 and 7,795 franchisees respectively, and correspondingly, as at the relevant dates, Chabaidao had 4,634, 5,396 and 5,538 franchisees respectively, of which 129, 363 and 595 franchisees operated more than two stores.
3 Key Highlights
After 16 years of development, Chabaidao has created a series of good achievements and precipitated fruitful results. Among them, in the following aspects, the achievements of Tea Baidao are particularly eye-catching:
Product research and development: Tea Baidao uses the "exclusive secret recipe" to reverse customize to upstream suppliers, which 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. In 2023, Chabaidao will develop a total of nearly 250 products, including 48 new products, and complete the upgrading of 13 classic product formulas.
Live & Membership: Tea Baidao won the first place in many industries such as "National Group Buying List with Goods", "GMV of Tea Beverage Live Broadcast" and "Brand Special Conversion Rate" in Douyin Live Broadcast. Among them, on March 10, 2023, the GMV of its Douyin live broadcast exceeded 100 million yuan in a single day, and the number of fans increased by about 230,000 in a single day, setting a new GMV record for the special live broadcast of the Douyin life service brand. At the same time, the number of members of Chabaidao has grown rapidly, and the number of registered members has exceeded 100 million. In the fourth quarter of 2023, the number of active members reached 20.4 million, and the repurchase rate of members reached 35%, which is higher than the industry average.
Franchise supervision: There are more than 8,000 franchise stores in Chabaidao so far, of which 44.3% of the stores are between 30 and 49 square meters. Behind the small store model, it is the comprehensive support and empowerment of tea Baidao to franchisees through the whole life cycle, so as to achieve a stable franchisee system. Tea Baidao has set up 16 training centers across the country, and has set up a regional supervision team composed of about 570 people, in addition to 3~4 regular inspections of stores every month, as well as daily random inspections by headquarters and regional inspection teams, and special inspections of food safety by third-party organizations. With such a combination of punches, Chabaidao has achieved a store closure rate far below the industry average in the past three years.
Supply chain: 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.
In addition, Chabaidao has a factory in Chengdu 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 and have an annual production capacity of 13,952 tons in 2023.
Social Responsibility: Since 2020, Chabaidao has actively donated money to fund rescue operations and post-disaster reconstruction work in various natural disasters, in 2022, Chabaidao cooperated with the Sichuan Youth Development Foundation to establish the "Chabaidao Special Public Welfare Fund", with an initial investment of RMB 1 million, and in May 2023, Chabaidao held the giant panda "Chacha" at the Chengdu Giant Panda Breeding Research Base In March 2024, Chabaidao donated 500,000 yuan to the Beijing Entrepreneur Environmental Protection Foundation to launch a giant panda habitat vegetation restoration plan, and in June 2023, Chabaidao cooperated with well-known charitable organizations such as Meituan Public Welfare and One Foundation to carry out a number of children's social welfare projects and donated children's playgrounds to underdeveloped areas.
4 Necessity of listing
In the prospectus, Chabaidao mentioned the main use of the funds raised in this listing:
- First, it will be used to improve overall operational capacity and strengthen the supply chain (approximately 51% of net proceeds);
- the second is to develop the digital capabilities of enterprises, and to appoint and train professionals (about 20%);
- the third is brand building and promotion activities (about 12%);
- fourth, to promote self-operated coffee brands and establish a network of coffee shops across China (about 5%);
- (5) product development and innovation, including recruitment, training and retention of in-house R&D staff, as well as the establishment of R&D centres at headquarters equipped with advanced software and hardware to streamline and optimise product development (about 2%);
- Sixth, for working capital and general corporate purposes (about 10%).
For Chabaidao, listing can endorse the brand, help enhance the brand image, expand the brand influence, help to obtain more resources, attract better talents, and the listing on the Hong Kong stock market is conducive to its entry into the international market.
Going public can also give companies an advantage in the increasingly fierce competition. In the price band of 10~16 yuan, there is no absolute king yet, and only a few brands are "competing for the deer". Now Cha Baidao is the first to "go ashore" and is one position ahead in the competition with friends.
In addition, the "2023-2024 Annual Development Report of China's Tea Industry" released by NCBD pointed out that the competition in the tea industry is extremely fierce, and now is the best window period for tea companies to go public. At this time, whether it is for tea Baidao or other brands, it is an opportunity not to be missed.
5 Impact of Listing
Before Chabaidao updated its prospectus in February, Mixue Bingcheng and Gu Ming (both on January 2) and Shanghai Auntie (February 14) successively submitted prospectuses to the Hong Kong Stock Exchange. In addition, Bawang Chaji has also been rumored to IPO in the United States again recently, and it is reported that it will be listed as soon as the middle of this year. As a result, there may be 6 listed companies in the tea industry, thus surpassing Lo Mei and becoming the catering segment with the most listed companies.
The listing of tea Baidao and other enterprises will further promote the chain rate of the tea industry. According to the above-mentioned report of NCBD, the chain rate of China's tea industry will be as high as 49.1% in 2023, and it is expected to reach 51.6% by 2024, and the living space of independent tea shops will be further compressed.
The listing of Tea Baidao also has a great demonstration effect on the tea drink and even the catering industry. This means that the domestic franchise chain catering brand has been recognized by the capital market, and is no longer limited to the direct chain model. This is undoubtedly a great benefit for a large number of catering brands in the industry that have adopted the franchise chain model.
Shortly before that, it was also the fourth day after Chabaidao passed the hearing of the Hong Kong Stock Exchange, on March 28, the Ministry of Commerce and other nine departments jointly issued the "Guiding Opinions on Promoting the High-quality Development of the Catering Industry", which mentioned that catering enterprises were supported to raise funds through credit loans, intellectual property pledges, domestic and foreign listings, and the issuance of credit bonds. At the beginning of last year, it was reported on the Internet that the catering industry was listed as a "red light industry" by A-shares, and since then the catering industry has set off a wave of listing in Hong Kong. The joint issuance of the nine departments is expected to promote more high-quality restaurant companies to go to A-shares. The tide of catering listings is becoming more and more turbulent.
6 Conclusion
Founded in 2008, after 16 years, Chabaidao has developed from a small bubble tea shop in front of the school to a listed company. This is a miracle that belongs to thousands of catering people, and it is also a dividend given to thousands of entrepreneurs in the new era.
In the above-mentioned "Guiding Opinions", the Ministry of Commerce and other nine departments have given the catering industry such a position: the catering industry plays an important role in expanding consumption, stabilizing employment, ensuring people's livelihood, and inheriting and developing the excellent traditional Chinese culture. It is foreseeable that in the future, there will be more and more catering people and catering enterprises to create more and greater miracles.
Congratulations on Tea Momochi!