On April 23, Tea Baidao (02555. HK) officially landed on the Hong Kong Stock Exchange, becoming the "first stock of franchised tea drinks", and it is also the second listed new tea brand after Nai Xue.
Unfortunately, on the first day of listing, Chabaidao broke and opened 10.06% lower at HK$15.74. Then it continued to fall, falling more than 38% intraday. As of today's close, the share price of Tea Baidao closed at 12.8 Hong Kong dollars, down 26.86%, and the current total market value of the company is about 18.914 billion Hong Kong dollars, if compared with the issue market value of 25.859 billion Hong Kong dollars, Tea Baidao evaporated nearly 7 billion Hong Kong dollars on the first day of listing.
The new tea drink cannot escape the "curse" of breaking hair
In fact, there are early signs of tea Baidao breaking.
First of all, investors are not enthusiastic about new listings. When the new shares of Chabaidao were subscribed, the enthusiasm of retail investors in the public offering market was not high, and even the subscription was not sufficient. According to the data of AiPO.com, as of April 18, the total margin funds of Chabaidao in the brokerage were HK $85 million, which was not fully subscribed, which means that it must be underwritten by the underwriters of the international placement.
According to the data, the number of final offer shares under the international offering of Chabaidao accounted for 95.04% of the global number of offer shares, and the final number of offer shares was 144 million shares. It is understood that in terms of international placement of Hong Kong stock IPO global offering, one percent is used for public offering for retail investors, and ninety percent is used for international offering to institutional investors. This shows that the secondary market is also not optimistic about tea Baidao.
Secondly, there is the poor performance of the grey market. According to AiPO data, on April 22, the grey market of Chabaidao fell by 13.71%, and the largest intraday decline was 15.43%.
Source: AiPO Network
Titanium Media APP understands that grey market trading is allowed before the listing of new shares in Hong Kong, that is, investors buy and sell stocks before the new shares are officially listed and traded. This type of trading is usually carried out within a specific securities company, not through a formal stock exchange, and the purpose of grey market trading is mainly to test the market's acceptance and price reaction to new shares in advance.
Grey market trading, on the other hand, has fallen sharply, meaning that market acceptance is low, and investors are cautious or negative about the stock's prospects. Therefore, the decline in stock prices in grey market trading will affect the confidence of subsequent investors, causing the stock to encounter selling pressure when it is officially listed, further depressing the stock price.
It is worth noting that "breaking when listed" seems to be a catastrophe that tea brands must go through. On June 30, 2021, Nai Xue's tea landed on the Hong Kong Stock Exchange with an issue price of HK$19.8, which opened 4.75% lower on the first day of listing, and closed nearly 14% lower than the issue price on the same day to HK$17.12. As of April 23, Nai Xue's tea share price has fallen to HK$2.28, and its market value is only HK$3.9 billion, which is more than HK$28.4 billion shrunk from the total market value of HK$32.3 billion at the time of listing.
At present, there are still tea brands including Mixue Bingcheng, Gu Ming, Shanghai Auntie and other tea brands in line to go to Hong Kong IPO, these companies have submitted prospectuses and are waiting for the review stage of the Hong Kong Stock Exchange.
wants to impact the "scale of 10,000 stores", but food safety problems are frequent
According to public information, Chabaidao was founded in 2008 by Wang Xiaokun and Liu Weihong, the first store was opened in Chengdu, Sichuan, mainly through the franchise model to expand the network. According to the latest data, as of April 5, 2024, the number of Chabaidao stores has reached 8,016, of which 8,010 are franchised stores, accounting for more than 99% of the total number of stores, covering 31 provinces and cities across the country.
According to the prospectus, as of the end of 2021, the end of 2022 and the end of 2023, Chabaidao has 4,634, 5,396 and 5,538 franchisees respectively, of which a total of 595 franchisees will operate more than two stores by 2023.
Relying on the sales of goods and equipment to franchise stores, the relevant operating income of Chabaidao in the past three years reached 3.447 billion yuan, 4.02 billion yuan and 5.42 billion yuan respectively, accounting for 94.6%, 95% and 95% of the overall revenue respectively, and the royalty and franchise fee income accounted for about 4%.
With a large lineup of franchisees, the company has achieved rapid growth. According to the prospectus, from 2020 to 2023, Chabaidao will achieve revenue of 1.08 billion yuan, 3.644 billion yuan, 4.232 billion yuan, and 5.704 billion yuan respectively, with a compound annual growth rate of 74.15%, and profits of 238 million yuan, 779 million yuan, 965 million yuan, and 1.151 billion yuan respectively in the same period, with a compound annual growth rate of more than 65%.
According to Frost & Sullivan, in 2023, Chabaidao will become the third largest freshly made tea company in China, accounting for 6.8% of the market share, ranking second to Mixue Bingcheng's 17.80% and Gu Ming's 7.8%.
The large-scale expansion did bring considerable revenue to Chabaidao, but Titanium Media APP noticed that in the process of Chabaidao's continuous expansion of stores, its store revenue has slowed down compared with the past. In 2023, the average retail sales of each store of Chabaidao will be 2.388 million yuan, down from 2.728 million yuan in 2021, and from 2021 to 2023, the average daily retail sales of each store will continue to decline, with 7,414.1 yuan, 6,927.3 yuan, and 6,887.2 yuan respectively, and the average sales volume of each store will decrease from 163,200 cups in 2021 to 143,500 cups in 2023.
Not only that, but Chamodo is also frequently involved in food safety issues.
During this year's "3.15" period, the topic of "tea Baidao store tampering with the expiration date of ingredients" rushed to the hot search on Weibo, according to relevant reports, a tea Baidao store in Wuhan was found that the unsold ingredients will not be poured out, but a new expiration date label for "compliance" treatment.
In this regard, Chabaidao customer service responded on March 16: "The company has always attached great importance to food safety, and the relevant departments of the company will conduct an investigation, and if it is confirmed that the store has violated the company's food safety regulations, it will be dealt with strictly, and continuously improve the management level of stores across the country to improve the consumer experience." ”
On the black cat complaint platform, 2246 complaints can be retrieved by entering "Tea Baidao", including "sharp plastics are drunk in milk tea", "cockroaches are drunk in tea Baidao milk tea", "lemons in tea turn black", "steel wool balls are drunk in tea Baidao milk tea", "insects and hair are drunk", "unknown lumps are drunk in tea Baidao poplar branch nectar" and so on.
Source: Black Cat Complaint Platform
In fact, in recent years, with the increasingly fierce competition on the track, various tea brands have made great efforts in store layout, product innovation, price, and finding a second growth line in order to gain a larger market share. For example, Nai Xue's tea, the "first share of new tea drinks", has opened up the franchise model, but its minimum investment of 580,000 yuan still discourages many franchisees.
However, it should be noted that although the opening of franchises can bring about revenue growth, there are also contradictions between franchisees and brands. When the franchise volume is too large, despite the strict regulations and management norms, it is difficult for the brand to intervene in the business process of each franchisee in every detail.
Some industry insiders pointed out that "the frequent occurrence of food safety problems also reflects the profit pressure of franchisees, because franchisees are more concerned about the cost of expenditure, including materials/raw materials, time, money, etc." With the more prominent regulatory contradictions in the expansion of the volume, it is bound to usher in more stringent scrutiny after the listing of enterprises. (This article was first published on Titanium Media APP, author: Chen Weina)