In the tide of modern capital markets, every listing of new shares seems to be a big test of corporate value.
The recent Hong Kong IPO of Sichuan Baicha Baidao Industrial Co., Ltd. ("Chabaidao") is a case in point.
As the largest IPO in the Hong Kong market in 2024, on April 23, 2024, Cha Baidao's first-day performance was suffocating, with the stock price plummeting by 38% at its lowest.
This almost became the worst first-day IPO since 2015, and this twist and turn was not only a major blow to Chabaidao itself, but also a test of the confidence of the entire market.
The journey to the market of Chamodo can be described as ups and downs.
The IPO raised US$331 million, with 200 shares per lot at the issue price and an initial share price of HK$17.5, but unfortunately, it fell sharply on the first day, meaning that retail investors suffered heavy paper losses.
This is rare in the Hong Kong stock market, especially as the China Securities Regulatory Commission (CSRC) has expressed support for more IPOs, which had been hoping to boost sentiment through new IPO activity.
The business model of Chabaidao is mainly operated nationwide through franchise chains, with more than 8,000 stores.
According to the company's public information, its revenue and net profit have maintained stable growth from 2019 to 2021, showing the company's resilience in the fierce market competition.
However, the company's gross profit margin has declined in recent years, which partly reflects the increase in raw material costs and the intensification of market competition.
It is worth noting that on the eve of the "International Consumer Rights Day" on March 15, Chabaidao encountered questions about food safety.
There were reports that the Chabaidao store had replaced the expiration date label of the ingredients, and this incident quickly became the focus of public opinion, seriously affecting the company's public image and investor confidence.
Although the company later said that it would seriously deal with the non-compliant stores and strengthen the management and supervision of stores across the country, the plunge in its stock price reflected the market's sensitivity to food safety incidents.
This series of turmoil can't help but make people think deeply, the foundation of an enterprise is to return to the quality of products and services.
In addition to the hype of capital, what is more important is the fundamentals and long-term brand image of the enterprise.
The dismal performance of Chabaidao's IPO undoubtedly dealt a heavy blow to the market, and also sounded the alarm for other companies preparing to go public:
No matter how favored the market is, the intrinsic value of the enterprise and the trust of consumers are the foundation that supports the stock price.
Overall, the road to listing of Tea Baidao reflects the many challenges of China's ready-made tea market.
In the fierce competition and complex market environment, only by truly operating with integrity and improving product quality can we prosper in the capital market for a long time.
For Chabaidao, how to restore the trust of consumers, improve the corporate image, and optimize its business structure and management model will be the key to future development.
In this way, we can stabilize our position in the wind and rain and create a new situation for the enterprise.