Xinhua Finance Guangzhou, April 25 (Reporter Lv Guangyi) On the 23rd, the well-known new tea drink brand Chabaidao was listed on the main board of the Hong Kong Stock Exchange with the stock code of 2555. HK。 This is the second listed company to usher in the new tea beverage track since Nai Xue's tea landed on the Hong Kong stock market on June 30, 2021. According to the prospectus, the issue price of Chabaidao was HK$17.5 per share, but its share price broke on the first day of listing, and the stock price closed at HK$12.8 per share on the 23rd, down 26.86% from the issue price.
The stock price breaks and the profit depends on the franchisee
According to the prospectus, the issue price of Chabaidao is HK$17.5 per share, the number of new shares offered globally is 148 million shares, and the expected fundraising scale is HK$2.59 billion, making it the largest IPO in Hong Kong stocks so far in 2024. According to Cha Baidao, the funds raised will be used to improve the overall operational capacity and strengthen the supply chain, and to develop the company's digital capabilities.
On the first day of listing, the share price of Chabaidao was broken, and the stock price closed at HK$12.8 per share on the 23rd, down 26.86% from the issue price. Industry analysts believe that the main reason why the market is not as expected is that investors are cautious about the profit model of its franchise stores and the growth of the new tea beverage track.
Founded in 2008 and founded in Chengdu, Chabaidao is a representative of domestic mid-range tea brands. According to Frost & Sullivan's report, in terms of retail sales in 2023, Chabaidao ranks third in the mainland freshly made tea shop market, with a market share of 6.8%, and the top two in the industry are Mixue Bingcheng and Gu Ming.
In recent years, the revenue and net profit of Chabaidao have maintained rapid growth. According to the prospectus, the operating income of Tea Baidao in 2021 was 3.644 billion yuan, which will increase to 5.704 billion yuan in 2023. Net profit increased from RMB779 million in 2021 to RMB1.15 billion in 2023, with a compound annual growth rate of 21.6%. From 2021 to 2023, the gross profit margins of Chabaidao will be 35.7%, 34.41%, and 34.43% respectively, with an overall stable performance and strong profitability.
As a tea brand, Chabaidao's profitability does not come from the sale of beverages, but relies on the sale of goods and equipment to franchisees, and the collection of royalties and franchise fees. From 2021 to 2023, the revenue from the sale of goods and equipment to franchised stores will reach 3.447 billion yuan, 4.02 billion yuan and 5.42 billion yuan respectively, accounting for 94.6%, 95% and 95% of the revenue respectively. According to the prospectus, as of mid-February 2024, Chabaidao has 6 directly operated stores and 7,921 franchised stores.
The profit model of Chabaidao is highly dependent on franchisees, and the rapid growth of revenue mainly depends on the rapid expansion of stores. Gu Jilin, co-founder of Chabaidao, also said at the listing ceremony: "In the future, we will continue to expand our store network and continue to improve our supply chain capabilities by increasing the penetration rate of existing markets and expanding into new markets. ”
In the prospectus, Chabaidao admits that this model has certain risks, and believes that the operating ability of franchisee stores will greatly affect the company's performance, and if some franchisees terminate the cooperative relationship, or it is difficult to find new suppliers in the future, it will also have an adverse impact on the performance. However, compared with its peers, Chabaidao has an advantage in terms of store closure rate, and the store closure rates of the company's franchised stores in the first quarter of 2020-2023 are 0.1%, 0.2%, 1.1%, and 0.5%, respectively, which is far lower than the industry average.
Queue up to go on the market and plan a new story for new tea drinks
In the past few years, the new tea beverage industry has expanded rapidly, from staking in first-tier cities to sinking to the county seat, and now the most conspicuous stores on the city's commercial streets are the new tea brands. After several rounds of reform, the growth rate of the domestic new tea beverage industry has gradually slowed down, the market tends to be saturated, and it has begun to enter the stock market from the incremental market and enter a new stage of capitalization.
In addition to Nai Xue's tea and tea Baidao, which have been listed, public information shows that on January 2, 2024, Mixue Bingcheng and Gu Ming submitted their prospectuses to the Hong Kong Stock Exchange on the same day. A month later, Shanghai Auntie also submitted a listing application to the Hong Kong Stock Exchange.
How to stand out in the homogeneous competition of the industry is a problem that new tea beverage companies need to solve after seeking to go public, and the industry is gradually shifting from the store expansion competition to the supply chain competition. Tea Baidao said in the prospectus that 51% of the funds raised will be used to improve the overall operational capacity and strengthen the supply chain.
Behind the queue for IPOs of new tea drinks is the intensification of involution in the industry and the competition for market share. Liu Yuenan, a new consumption analyst at Guotai Junan Social Service Business, pointed out that the mainland tea market has a broad space, and the sinking market is the main driver for future growth. According to Frost & Sullivan data, the market size of new tea drinks will reach 484.5 billion yuan in 2027, and it is expected that the new tea market in third-tier and fourth-tier cities will grow at a compound annual growth rate of 21.8% and 19.2% respectively from 2022 to 2027.
According to the CIC report, as of December 31, 2022, the store density of ready-made tea shops in third-tier cities and below was only 247 stores per million people, far lower than the 460 stores per million people in first-tier cities. In terms of terminal retail sales, the market size of third-tier cities and below is expected to grow the fastest among all cities, with a compound annual growth rate of 24.6%, and will grow to 273.9 billion yuan by 2028, accounting for 51.5% of the total size of the national ready-made tea shop market.
While speeding up the seizure of the domestic sinking market, new tea brands are also "rolling" overseas, and going overseas has become an important means for new tea beverage companies to seek increment. Zhu Danpeng, vice president of the Guangdong Provincial Food Safety and Security Promotion Association, previously pointed out that going overseas is a good opportunity for new tea beverage companies to achieve market breakthroughs, but also facing challenges, such as the differences between the overseas market and the domestic market in terms of cultural background and business environment, how to build a brand overseas, and how to build an overseas supply chain.
New tea chain brands are also actively trying "side businesses". Recently, Changsha's new tea drink brand Chayan Yuese has opened five taverns in a row. Tea Baidao also mentioned in the prospectus that 5% of the funds raised will be used to promote the self-operated coffee brand "coffee ash" and build a network of coffee shops across the country, and plans to open 15 coffee shops in the next three years. According to its plan, after starting to establish and promote coffee brands in 2024, it will lay out a franchise store network and establish a supply chain system in 2025 and 2026.
Editor: Hu Chenxi
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