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- Source/Night Deep Finance
- Author/Night Deep Finance
Introduction: Tea Baidao fell below the issue price on the first day of listing!
Just yesterday, Chabaidao was listed on the Hong Kong stock market, falling as much as 38% on the first day of listing, and finally closed at HK$12.8, which fell more than 26%.
The market value shrank by 30% within one hour of listing, and the net profit was lost for three years!
According to the tea Baidao prospectus documents, a large investor directly subscribed for 1 million shares, and according to the issue price and closing price, it is expected that this large investor will lose 4.7 million Hong Kong dollars!
As of press time, Chabaidao came to 11.60 Hong Kong dollars, down 9.38% from yesterday's closing price.
Source: Baidu Stock Market
It can be said that once it is listed, it will be done for nothing for three years.
01. Tea drinks joined the first Waterloo, and the leaders in the industry were listed one after another
Founded in 2008 in Chengdu, Sichuan, after more than ten years of development, Tea Baidao has launched a variety of special Chinese tea drinks that are deeply loved by consumers with its excellent innovation ability, and has now become the third largest tea brand in the domestic industry with a market share of 6.8% by virtue of its excellent innovation ability.
The founders, Mr. and Mrs. Wang Xiaokun, were only in their 20s when they first started their business. At that time, the couple ran a small milk tea shop with a good price near a middle school, which was popular with the student group because of its affordable prices, and then opened a second branch on the campus of Southwestern University of Finance and Economics (Liulin Campus).
In the following ten years, the tea industry ushered in the outlet. With the hard work of the husband and wife, Tea Baidao has been comprehensively upgraded, and the "Tea Baidao" brand was officially registered in 2016, and its own positioning of "Fresh Fruit and Chinese Tea" has been established.
At the same time, Tea Baidao opened the Chengdu franchise station, and after gaining a firm position, it was opened to the whole country in 2018, and then Tea Baidao was quickly spread to the whole country. As of April 2024, the number of tea Baidao franchise stores nationwide has exceeded 8,000.
When the IPO was launched on April 15 this year, Gu Jilin, co-founder of Chabaidao, was asked "why he chose to list at this moment", she said that although the current market conditions are relatively weak, the plan to go public has been carefully considered, and claimed that it is now an "excellent time" to land on the Hong Kong stock market.
On April 23, Tea Baidao was successfully listed, and it took 16 years for Tea Baidao to go from a campus shop to the first share of Hong Kong stock tea drinks.
However, just one hour after listing, the stock price immediately fell by 30%, and the debut of the first share of tea drinks ended hastily.
Source: Tea Baidao official website
However, this is not only the story of tea Baidao, but also a classic case of the rise of new tea drink brands.
When Nai Xue's tea was listed in 2021, it also suffered the same situation, with an issue price of HK$19.8 per share, but after the opening of the market, each share fell to HK$18.86, which was also broken at the opening. Three years after listing, Nai Xue's tea share price is hovering at HK$2.42 today, which can be described as the peak of listing.
Source: Baidu Stock Market
In addition to Naixue's tea and tea Baidao, which have already been listed, in addition, tea brands such as Mixue Bingcheng, Gu Ming, and Bawang Chaji are also rumored to be speeding up the pace of listing.
02. The competition in mid-range tea drinks is fierce, and 1.26 billion yuan has become the confidence of the market
At present, the tea beverage industry is divided into three levels of market according to price, such as the highest sales volume, focusing on the third and fourth-tier cities of Mixue Bingcheng, the price of core products is generally 4-10 yuan, and the same level of tea Baidao aimed at the mid-end market of 15-30 yuan Coco Duke, Gu Ming, Bawang Tea Ji, Yidian, Tea Yan Yuese, Shanghai Auntie, etc. There are also such as the price is generally 20-40 yuan, and even some products reach about 50 yuan, and the tea and Hey tea of Naixue, which are mainly in the high-end market.
It can be seen that the current low-end market is almost monopolized by Mixue Bingcheng, and the most competitive market is the mid-end market where Chabaidao is located.
Under such fierce competition, Chabaidao's net profit last year was as high as 1.26 billion yuan, and the net profit margin of 22% was far higher than the industry average of 15%. Since April 15, when Tea Baidao launched its IPO on the Hong Kong Stock Exchange, the net amount of funds raised was HK$2.456 billion, which is the largest IPO of Hong Kong stocks this year.
So how did Tea Baidao stand out in the mid-end market with many competing products and fierce competition, and become the "first share of tea drink franchise"?
Source: Tea Baidao official website
The core is the innovation of product strength. 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. Almost all year round, "every week has a new experience", and continues to bring fresh experience to consumers. 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.
Unlike Nayuki's tea, which is mainly self-operated, Chabaidao is to expand its body in the form of franchise stores. As the first share of tea franchise, the proportion of tea Baidao franchise stores is more than 99%, and there are only 6 directly-operated stores. According to the distribution of stores on the official website of Chabaidao, there are 8,000 stores in 31 provinces across the country, which can be said to cover the whole field.
Source: Tea Baidao official website
The marketing is good and the pricing is reasonable. The main consumer group in the tea market is naturally young people, and in 2023, Tea Baidao and miHoYo's otome game "Book of Undetermined Events" will jointly carry out a joint campaign. In this event, Chabaidao demonstrated its respect and recognition for consumers through a series of thoughtful measures, such as honoring consumers as "lawyers", remembering the name of the male protagonist of the game, and properly keeping the co-branded merchandise of the event. These practical actions have won praise from consumers, and the co-branded campaign has been a great success. This event was also rated as a benchmark case of cross-border co-branding activities by the industry.
At present, the mid-end market is showing a situation of fragmentation and competition for the Central Plains. It is not difficult to find that in addition to Hey Tea and Nai Xue's tea blooming everywhere in first-tier cities such as Beijing, Shanghai, Guangzhou and Shenzhen, whether it is Shanghai Auntie who was born in Shanghai or Tea Baidao, the main force and main market of mid-end brands is not actually a first-tier city, but a new first-tier city and the vast Central Plains region. It can be seen that the current mid-range brand is entering the sinking market, taking Tea Baidao as an example, its classic tea drink average selling price is maintained at 13.9 yuan, close to Mixue Bingcheng, while ensuring quality, strive to create cost-effective and enhance competitiveness.
Mature and complete supply chain system, as well as corresponding training and supervision supporting measures. It is reported that in September 2021, Tea Baidao Vocational Skills Training School was established, with more than 140 full-time lecturers, providing full-cycle professional training from the initial stage to the mature period through online and offline training. In addition to conducting routine inspections of stores 3 to 4 times a month, the headquarters and regional inspection teams conduct daily random inspections, as well as special food safety inspections by third-party organizations to ensure food safety. Under such a regulatory mechanism, Chabaidao has achieved a store closure rate far below the industry average from 2021 to 2023. And Chabaidao has a "resource + technology" type 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.
03, whether the tea Baidao is worth it or not, this cup of tea Hong Kong stocks is difficult to digest
The current situation of the listing of tea Baidao is undoubtedly a wake-up call for the entire new tea drink, and the listing of other tea drinks may be suspended due to the bloody listing of Nayuki's tea and tea Baidao.
Some netizens believe that the listing of Tea Baidao shows the fact that Tea Baidao is not worth the price, and some netizens complained that a milk tea company actually has a market value of 20 billion, pointing out that the industry has a low threshold, no core competitiveness, and is not worth it at all.
Source: Weibo
Some netizens also said that the blood of Chabaidao was listed, and it was also the blood of ordinary shareholders, and for the original shareholders, it was just a matter of earning more and earning less.
Source: Weibo
And after the listing of Tea Baidao fell sharply, there was still 16.745 billion, so it is believed that Tea Baidao is obviously issued at a high price.
In the cold environment of the whole track, Chabaidao, as a profitable tea, is still facing a bloody listing, which shows that the capital market is much calmer and more cautious than before. Although the tea industry has a variety of styles and innovations, the essence has not changed much, and the practice of fresh fruits is ever-changing or falls on a fresh and delicious one. Moreover, tea drinks can be reproducible, such as the popular Yangzhi nectar, which is made by almost every tea brand, and it is difficult to open the gap.
Investors in Hong Kong stocks may need a sector dominated by the technology innovation industry, so the recognition of tea brands is naturally not high.
For Cha Baidao, it remains to be thought about whether the act of listing will become a sign of a company's success. With the change of the capital environment, the listing behavior may not be a measure to maximize the profits of some companies, on the contrary, it may also bring negative effects. Judging from the case of Nayuki's tea, which is at its peak when it was listed, the long-term decline in stock prices has dealt a huge blow to investors' confidence.
Despite the poor performance of Chabaidao's debut, there are still opportunities for improvement and adjustment. As a newly listed company, it is natural to rush to the future with abundant confidence and momentum, but in the face of opportunities and challenges in the capital market, Chabaidao should pay attention to the improvement of product quality, enhance the company's sustainability and profitability, and win the recognition and support of more consumers while pursuing listing and expanding stores.
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