China’s Mixue and GoodMe push for Hong Kong IPOs amid bubble tea consumption recovery · TechNode

China’s two largest bubble tea chains Mixue and GoodMe each filed prospectuses for Hong Kong listings on Tuesday, with the goal of broadening the businesses’ financing entry by share gross sales, offering important assist for the new-style tea manufacturers to navigate an especially aggressive business.

Why it issues: Three China-founded beverage retailers have now lined as much as apply for IPOs in Hong Kong in lower than 5 months, incluing fruit tea chain ChaBaiDao submitted its software final August, signaling that the business leaders are betting massive on retailer enlargement and tea consumption in China’s delayed post-Covid financial restoration.

Particulars: Mixue, which additionally sells ice cream for RMB 2 (lower than $0.3) per cup, generated RMB 15.4 billion ($2.17 billion) in income and recorded a web revenue of RMB 2.5 billion within the first 9 months of final 12 months. Mixue’s numbers are almost triple these of rival GoodMe on each metrics.

• With an attention-grabbing snowman emblem, Mixue boasted 32,180 shops throughout China as of September 30, 2023, with over 55% of these shops in third-tier and under cities. GoodMe, a 13-year-old model promoting bubble tea primarily in second-tier and under cities, had opened a complete of 9,001 shops by the top of 2023.
• The first income streams for Mixue and GoodMe are pushed by the gross sales of uncooked supplies and gear to franchisees; the previous has derived over 98% of its earnings from this technique previously three years.
• In response to GoodMe’s prospectus, income from instantly operated shops within the first three quarters of 2023 accounted for less than 0.1% of its whole, whereas the earnings from promoting items to franchisees made up as a lot as 75%.

Context: Mixue shifted to exploring a Hong Kong IPO as an alternative of a mainland China itemizing attributable to an absence of progress following a proposed RMB 6.5 billion Shenzhen IPO submitting again in 2022. The tea chain’s determination to place its mainland itemizing on maintain is extensively seen as an indication that Chinese language regulators have imposed strict guidelines discouraging firms that rely closely on franchise enterprise fashions from itemizing.

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