ChaPanda to Debut on the HKSE as the Second Stock of the "New Tea Beverage" Sector

ChaPanda, known as the "first stock of the new tea beverage," is set to debut on the Hong Kong Stock Exchange on the 23rd. The company has initiated its public offering yesterday, with plans to be listed on the main board of the Hong Kong Stock Exchange under the stock code "2555." Sichuan Baicha ChaPanda Industrial Co., Ltd. (hereinafter referred to as ChaPanda; Chinese: 茶百道) will commence its public offering on April 15th, closing on the 18th, and is scheduled to officially list on April 23rd. This means that ChaPanda is about to officially become the "second stock of new tea drinks," and will be one of the few new tea beverage companies to successfully land on the Hong Kong Stock Exchange in nearly three years.

During this initial public offering (IPO), ChaPanda plans to issue 147,763,400 shares. The offering includes 14,776,400 shares for public sale in Hong Kong and 132,987,000 shares for international sale, priced at HKD 17.5 per share. Based on this offering price, ChaPanda expects to raise approximately HKD 2.456 billion in net proceeds from this issuance.

ChaPanda has outlined the allocation of the net proceeds from this fundraising. Approximately 51.0% will be allocated to enhance overall operational capabilities and strengthen the supply chain, while around 20.0% will be directed towards developing digital capabilities, as well as recruiting and training professional talent. Additionally, about 12.0% will be used for brand building and promotional activities, 5.0% for promoting its own coffee brand and expanding a network of coffee shops across China, 2.0% for product development and innovation, and approximately 10.0% for working capital and general corporate purposes.

According to a report by Frost & Sullivan, based on 2023 retail sales, ChaPanda ranks third in the freshly made tea beverage market in China, holding a market share of 6.8%, which has increased from 6.6% in 2022. In 2023, ChaPanda's total retail sales from its stores amounted to approximately CNY 16.9 billion.

From 2021 to 2023, ChaPanda's franchise store closure rate remained significantly lower than the industry average, owing to its sustained and stable growth. According to Frost & Sullivan data, the closure rates for ChaPanda's franchise stores were 0.2%, 1.1%, and 2.3% from 2021 to 2023. In comparison, other industry players such as GoodMe(Chinese:古茗) saw closure rates of 3.6%, 5.13%, and 2.94%, while Mixue and Auntea Jenny experienced closure rates of 2.89%, 5.66%, and 2.4%, 7.49% in 2021 and 2022 respectively. This success is attributed to ChaPanda's small store model and stable franchisee system.

As of April 5, 2024, ChaPanda operates 8,016 stores across China, covering all 31 provinces and municipalities, achieving full coverage in all provincial and prefecture-level cities in China. As of December 31, 2023, ChaPanda's stores were distributed across various city tiers, with 10.6% in first-tier cities, 26.9% in new first-tier cities, 20.9% in second-tier cities, 19.4% in third-tier cities, and 22.2% in fourth-tier and lower cities, showcasing a diverse distribution across all city tiers. In terms of business format, as of December 31, 2023, ChaPanda's stores were situated in shopping centers (37.3%), communities (28.6%), and other commercial areas (34.1%).

This move marks a significant milestone for ChaPanda and underlines the company's ambitious expansion plans and strategic allocation of funds to fortify its market position and operational capabilities.

According to a report by Frost & Sullivan, the market size of China's freshly made tea beverage industry, based on retail sales, has surged from CNY 80.5 billion in 2018 to CNY 247.3 billion in 2023, representing a compound annual growth rate (CAGR) of 25.2%. It is anticipated to continue growing at a CAGR of 15.4% to reach ¥538.5 billion by 2028. In this burgeoning market, ChaPanda is poised to amplify its market dominance, driving high-speed performance growth and further expanding its market share.

Furthermore, given the vast potential in overseas markets, the international expansion of tea beverages has become a common choice for Chinese tea beverage enterprises, with ChaPanda actively participating. In January 2024, ChaPanda established its first overseas store in Seoul, South Korea, and is set to open its third store in April. Potential overseas markets also include Thailand, Vietnam, and Malaysia.

Simultaneously, ChaPanda is continuously broadening its business horizons. In January 2024, the company inaugurated its first overseas store in Seoul, South Korea. Similarly, in January 2024, ChaPanda launched its first self-operated coffee shop under the brand "咖灰" in Chengdu, China, primarily offering coffee, bagels, hamburgers, and other baked goods to consumers.

Reflecting on ChaPanda's journey to listing, in June 2023, the company secured its first public financing in over a decade. At that time, it was suggested that this might be ChaPanda's final round of financing before its IPO. Subsequently, on the evening of August 15, 2023, the Hong Kong Stock Exchange's official website disclosed ChaPanda's prospectus, outlining its plans to list on the main board. On December 21, 2023, the China Securities Regulatory Commission's official website revealed the filing notice for ChaPanda's overseas issuance and the full circulation of its unlisted shares domestically.

Since the successful listing of Naixue's Tea on the Hong Kong Stock Exchange as the "first stock of new-style tea drinks" on June 30, 2021, a wave of "listing frenzy" has been stirred up among tea beverage companies. On January 2, 2024, both Mixue and GoodMe simultaneously submitted applications to the Hong Kong Stock Exchange; on February 14, Auntea Jenny submitted a Hong Kong stock listing application. There have also been rumors about the listing plans of ChaGee and Auntea Jenny. The second stock of new tea drinks has already emerged, and it remains to be seen how other brands will perform.