Someone lost 470,000 Hong Kong dollars in one day!
Chabaidao, which finally won the status of "the second share of new tea drinks", suffered a break on the first day of listing, once falling by more than 38%.
Photo by Zuo Yu
On April 23, Chabaidao officially landed on the Hong Kong Stock Exchange, becoming the second listed tea brand after Nai Xue's tea, raising HK$2.59 billion, which is the largest IPO raised by Hong Kong stocks this year, with an offer price of HK$17.5 per share.
On the first day of listing, Chabaidao broke at the opening, with each share at HK$15.74, and the lowest price in the session reached HK$10.80, down more than 38% from the issue price. As of the close, Chabaidao fell 26.86%, with the latest market value of HK $18.91 billion.
According to the documents disclosed by the Hong Kong Stock Exchange, the total number of new shares in Chabaidao Group A is 4,589, one of whom won 100,000 shares, calculated according to the closing price of 12.8 Hong Kong dollars on the first day, compared with the issue price of 17.5 Hong Kong dollars, the loss of a single share on the day was 4.7 Hong Kong dollars, and the shareholder lost 470,000 Hong Kong dollars a day.
Looking back, on June 30, 2021, the first day of Nai Xue's tea listing, it also fell below the issue price.
According to Nai Xue's latest financial report, the company finally turned a profit last year, but the stock price and the company's market value both hit a new low. As of press time, the total market value of Nai Xue's tea was HK $3.962 billion, and the first day of listing was HK $29.363 billion, and the market value shrank by HK $25.4 billion in less than three years.
Shen Meng, director of Xiangsong Capital, believes that "secondary investors are not optimistic about the growth and profitability of tea companies, and investors in the private equity stage are in an information cocoon and have serious deviations in market judgment. In other words, he believes that tea companies have a low threshold, large cost investment in growth competition, and no moat, and scale expansion depends on the number of stores.
According to Frost & Sullivan data, Chabaidao is the third largest freshly made tea company in China in 2023, accounting for 6.8% of the market share, ranking behind Mixue Bingcheng and Gu Ming.
From 2021 to 2023, Chabaidao's revenue will be 3.644 billion yuan, 4.232 billion yuan, and 5.704 billion yuan respectively, with a growth rate of 16.1% and 34.8% during the period. It should be noted that more than 99% of Chabaidao's revenue comes from the franchise store business, of which the sales of goods and equipment to the franchise stores, including dairy products, tea and fruits and other materials and ingredients for making tea, as well as straws, cups and other packaging materials and store equipment, account for 95% of the company's revenue, and the franchise fee accounts for 4.1%.
This means that the company is highly dependent on the franchisee model, and the prospectus points out that the risk of this model is that the franchisee's store operation ability will greatly affect the company's performance, such as some franchisees terminate the cooperative relationship, or it is difficult to find new suppliers in the future, which will also have an adverse impact on the performance.
Shen Meng believes that in the current consumption environment, the operating pressure of franchisees is obvious, and the operation mode based on the franchise model is easy to cause conflicts of interests between brands and franchisees.
Competition among freshly made tea brands in China is fierce. According to the data of Narrow Door Dining Eye, as of April this year, the top four brands of tea stores were Mixue Bingcheng, Gu Ming, Tea Baidao, and Shanghai Auntie, with 28,443, 9,249, 8,208, and 7,794 stores respectively. In addition to the tea Baidao listed today, the other three have also submitted prospectuses and are waiting in line for listing.
Reporter Water Hibiscus
Edited by Zuo Yu
Editor-in-charge: Sun Xiao