Deep cultivation of the supply chain and increased research and development are the fundamental ways of sustainable development of Chabaidao.
Author: Lin Ziqun Editor: He Xiang
出品：零售商业财经 ID：Retail-Finance
On April 23, the first day of the "second share of new tea drink" tea Baidao ringed the bell was broken.
The issue price of Chabaidao shares was HK$17.5 per share, and the opening price was HK$15.74, opening 10.06% lower, with the largest decline of 38.29% on the first day, and closing at HK$12.8, closing down 26.86%, and the market value of Chabaidao evaporated by about 7 billion yuan on the first day of listing.
The predecessor Nai Xue's tea is "the peak when it is listed", and the tea Baidao of "earning 5 billion a year", "selling 1 billion cups a year", and "the next Honey Snow Ice City" can break the curse of tea stocks falling again and again?
"Retail Business Finance" believes that in the tea track with obvious Matthew effect, it is the fundamental way to consolidate oneself and hone one's internal strength. Only by continuously strengthening the supply chain, deepening product R&D and innovation, and promoting digital upgrading can we truly be favored by the market.
01 Broke on the first day of listing, with a maximum decline of 38.29%
From the first submission of the prospectus to the Hong Kong Stock Exchange in August 2023 to the official ringing of the bell on April 23, 2024, Sichuan Baicha Baidao Industrial Co., Ltd. (hereinafter referred to as "Chabaidao") was officially listed on the main board of the Hong Kong Stock Exchange as the "second share of new tea drinks" with the stock code of "2555.HK".
Source: Brand
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. Based on the issue price, the valuation of Chabaidao is about HK$25.9 billion.
The vision is good, but the performance in the capital market is not optimistic.
On the first day of listing, the opening price of Chabaidao was HK$15.74, down 10.06% from the issue price of HK$17.5, and since then, the share price of Chabaidao has continued to fall, falling by more than 30% in one hour, and closing at HK$11.34 at noon on the 23rd, down 35.20%.
As of the close of the first day, the highest price was HK$15.74, which was the same as the opening, the lowest price was HK$10.8, the largest decline of 38.29%, and the closing price was HK$12.8 per share, down 26.86%, and the final market value also stayed at HK$18.9 billion, down 27.03%.
Source: Xueqiu
It broke on the first day of listing, in fact, the performance in the grey market has long been reflected.
Tea Baidao opened on April 22 in the Phillip grey market trading market, down 13.71%, once broken. In addition, the Bright Smart grey market closed down 8.57%, and the Futu grey market closed down 11.77%.
On June 30, 2021, Nayuki's tea (2150. HK) ringed the bell for listing, and the capital market performed the same on the first day, with an opening price of HK$18.86, a lower opening of 4.75%, a maximum decline of more than 15% on the first day, and a closing decline of 13.54% (issue price of HK$19.8, opening price of HK$18.86, closing price of HK$17.12, and lowest price of HK$16.68).
Since then, Nai Xue's tea share price has fallen for three consecutive years, and as of April 23, it closed at HK$2.28, a total decline of more than 88%, and the market value evaporated by more than HK$28.5 billion.
Source: Internet
Is it because the market doesn't like it, or is the cake of new tea drinks not delicious?
I have to say that after going through twists and turns, Chabaidao, who knocked on the door of the capital market, may not have time to breathe a sigh of relief, and urgently needs to prove that he has a bright future and is worthy of investors' expectations.
02 How to leverage capital?
Raising a total of nearly 2.6 billion Hong Kong dollars, Chabaidao was laying out its next move before it was listed.
Tea Baidao mentioned in the description of the purpose of fundraising that the funds will be used for three layouts:
First, 51% of the funds raised will be used to improve overall operational capacity and strengthen the supply chain;
Second, 32% of the funds raised will be used to develop the company's digital capabilities and brand promotion, including hiring and training digital professionals, brand building, co-branding and other activities;
In addition to recruiting and training internal R&D personnel and increasing R&D investment, Chabaidao also plans to establish a R&D center at the headquarters and equip it with advanced software and hardware.
On the whole, Chabaidao is trying to strengthen the supply chain, develop digital marketing, and deepen R&D and innovation.
Different from Nai Xue's tea, which is positioned as a high-end and focuses on creating a "third space", and Gu Ming, which relies on the closed-loop follow-up of the supply chain industry, Chabaidao focused on the franchise model at the beginning, which is also the key to its rapid business growth and success.
Since the opening of the national franchise in 2018, the expansion pace of tea Baidao has been rapid.
In 2019, the number of Chabaidao franchise stores exceeded 600, expanded to 2,242 in 2020, 2,835 in 2021, and 1,284 in 2022. By the end of 2023, the total number of Chabaidao stores has soared to 7,801, more than 70 times higher than the 100 stores in 2016.
Source: Prospectus
In other words, although it is jokingly called "the second share of new tea drinks", a more accurate name for tea Baidao should be "the first share of franchised tea drinks".
There are only 6 directly-operated stores, and the tea Baidao that relies on joining to deepen the channel stores can be described as the "non-tea" stocks of the new tea beverage track, and its main business is not directly derived from the sale of tea to consumers, but the sale of equipment and raw materials to franchisees.
According to the prospectus, since 2021-2023, the sales revenue obtained by Chabaidao from downstream franchisees accounts for as much as 95% of the total revenue.
In the eyes of industry insiders, this also determines that Chabaidao is highly dependent on the operation and number of franchise stores, and Mixue Bingcheng, which also holds this business model, has been listed and folded before, which has also worried the capital market.
Since the stores are located in all provinces and tier-level cities, Chabaidao must work the supply chain. 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.
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.
In the fiercely competitive new tea beverage track, Tea Baidao, which continues to break through, has also invested heavily in marketing.
According to the prospectus, in 2021, 2022, and 2023, the marketing investment of tea Baidao will be 5.484 million yuan, 12.945 million yuan, and 37.869 million yuan respectively, accounting for 0.52%, 1.43%, and 2.30% of revenue in the same period.
In terms of offline marketing layout, Chabaidao frequently participates in joint cross-border activities, sponsors music festivals, adopts giant pandas, all-round drainage, and breaks the circle of marketing, so as to strengthen the user's mind and cultivate a loyal fan group.
In terms of online channels, Chabaidao has entered online social platforms such as Weibo, Douyin, and Xiaohongshu in a big way, and has vigorously deployed the marketing method of "planting grass cultivation + business transformation". The whole link opens up short video planting, live broadcast marketing conversion, and short video further consolidation, so as to realize the real conversion from brand traffic to transaction consumption. In Douyin live broadcast, it has won the first place in many industries such as "ranking first in the national group buying list with goods", "GMV of live broadcast of tea drinks", and "conversion rate of brand special sessions".
As a member of the new consumer industry, in addition to expanding marketing channels, Chabaidao also has a clear positioning in the shaping of product power.
Backed by Chengdu, with "National Style Panda" as the IP Tea Baidao, it quickly pulled in the social distance with young customers with its unique brand image and product slogan of "fresh and good tea".
Source: Brand
Under the trend of "culture +" in the milk tea industry at that time, combined with Chinese tea and natural ingredients, Tea Baidao created classic products such as poplar nectar, soybean milk jade unicorn, and jasmine milk green.
In recent years, Tea Baidao has taken advantage of the great health of the new tea beverage market to release a new brand positioning, upgrading from "fresh fruit and Chinese tea" to "good tea as the base, freshly made", catering to the needs of health, refreshing and low burden, and creating products such as dragon bud jasmine green and bergamot lemon black tea.
Source: Brand
It's just that in terms of R&D investment, tea Baidao still needs to be refined.
According to the prospectus, the R&D expenditure of Chabaidao in 2022 will be 3.581 million yuan, accounting for 0.08% of revenue, and the R&D expenditure in 2023 will be 16.4117 million yuan, accounting for 0.29% of revenue.
Although about 300 products will be developed in 2022 and nearly 250 products in 2023, in combination with market performance, the main sales contribution is still its classic products, and the performance of new products is average.
Listing is not the end, but a new beginning. In order to further explore the profit space, Chabaidao will focus on the "sinking + going to sea + coffee" business in the future.
It is not yet known whether the new business can continue to bring incremental growth, but at present, the tea beverage industry is already a "high involution" track, and the mid-end customer price segment where Tea Baidao is located is even more competitive - gathering players such as Qifentian, Shanghai Auntie, and Gu Ming, there are also serious problems such as product homogenization.
Tea Baidao, which seems to have a firm foothold and got the admission ticket for Hong Kong stocks, still needs to make steady progress in supply chain, product innovation, marketing and other aspects.
03 Conclusion
Capital has increased, and the tea industry is surging.
Before Nai Xue's tea broke on the first day of listing, it fell again and again, from a valuation of more than 30 billion to less than 4 billion so far, and then there are Mixue Bingcheng, Shanghai Auntie, Hey Tea, and Bawang Chaji, who are still looking forward to the favor of capital.
Industry insiders believe that the tea track has developed to this stage, and the only thing that can be fought next is capital. At this time, if you don't go public and get capital as soon as possible, you will fall behind. It's true with any brand, and once a competitor gets the money and starts expanding faster, it puts you in an awkward position.
"Retail Business Finance" believes that the capital market is only a means rather than a focus, and as a new tea drink on the consumption track, it is more important to hone its internal strength and consolidate its ability to have a truly promising development prospect.