Shares of China’s largest bubble tea and drinks chain Mixue Group jumped practically 30% on their first day of buying and selling on the Hong Kong Inventory Alternate on Monday after the agency raised $444 million in an preliminary public providing.
Mixue bought 17 million shares within the deal at a set worth of HK$202.50 ($26.04) every.
The shares began buying and selling at HK$262 every and the good points outpaced a 0.8% rise in Hong Kong’s Hold Seng Index.
Retail traders subscribed for five,258 instances extra shares than have been on provide in that tranche, in line with Mixue’s filings, making it one in all Hong Kong’s hottest ever IPOs.
The retail subscription charge was slightly below Bloks Group, whose retail ebook was 6,000 instances oversubscribed, a report, in its January IPO.
The institutional tranche of the deal was 35 instances lined, the filings confirmed.
Media reported Hong Kong retail traders utilized for a report HK$1.8 trillion price of margin loans to purchase Mixue inventory through the book-building course of.
The debut is a optimistic begin for Mixue in comparison with its rival Guming whose shares slumped 10% on their first buying and selling day in Hong Kong on Feb. 12.
Mixue is commonly seen as China’s largest chain of iced drinks, milk tea, and ice cream. Nevertheless, it operates extra like a raw-material provider than a standard beverage model.
Based in 1997 as a small ice store in Zhengzhou, Mixue has grown right into a franchise large with over 45,000 shops globally by final September, surpassing Starbucks’ 40,576 shops worldwide.
Not like Starbucks, which operates 53% of its shops immediately, Mixue depends closely on franchising, with greater than 99% of its shops run by franchisees.
This mannequin has confirmed extremely worthwhile. Within the first 9 months of 2024, Mixue reported a internet revenue of three.49 billion yuan, up from 3.19 billion yuan in the identical interval of the earlier 12 months, in line with its IPO filings.
This comes from promoting drinks priced at a median of simply 6 yuan ($0.8234) per cup.
The key lies in its franchise mannequin, which generates income by promoting meals supplies, packaging, and gear to 1000’s of franchisees, supported by its sturdy manufacturing capabilities, in line with its filings.
Mixue’s prospectus confirmed gross sales of products and gear accounted for 97.6% of Mixue’s whole income within the first 9 months of 2024, whereas franchise charges contributed a mere 2.4%. Mixue depends on its provide chain slightly than conventional franchise revenue.
Mixue’s playful snowman mascot, Snow King, carrying a crown and a purple cloak, performed a major position within the model’s recognition.
Mixue has expanded at an astonishing tempo, including 8,582 internet new shops in 2023 and one other 7,737 within the first 9 months of 2024 – averaging 28 new shops day by day. In distinction, Starbucks opened simply 377 internet new shops within the quarter ending December 2024.
This speedy development is underpinned by Mixue’s vertically built-in provide chain. The corporate produces about 60% of its beverage components in-house, the best proportion in China’s freshly made beverage trade. It additionally ensures 100% procurement of beverage components, packaging supplies, and gear from its personal model, a rarity within the trade.
Mixue’s 5 manufacturing bases throughout China churn out huge portions of sugar, milk, tea, and occasional. In 2023 alone, the corporate produced 244,666 tons of sugar, accounting for 1.8% of China’s whole output. This scale permits Mixue to take care of its low-price technique whereas guaranteeing high quality management.
