The New Tea Beverage Brand ChaPanda has Debuted on HKEX

Consumer Staples Author: EqualOcean News, Jiahui Liao Editor: Yiru Qian Apr 23, 2024 06:21 PM (GMT+8)
tea with milk

On April 23, 2024, ChaPanda successfully debuted on the Hong Kong Stock Exchange with the stock code 2555. The initial public offering (IPO) price for ChaPanda was set at HKD 17.5 per share, with a total of 148 million shares issued, raising a total of HKD 25.86 billion. This marks the largest IPO fundraising in the Hong Kong stock market this year. As of the time of this report, ChaPanda's stock closed at HKD 12.62 per share.

ChaPanda has stated that approximately 51.0% of the net proceeds from this fundraising will be allocated to enhancing overall operational capabilities and strengthening the supply chain. Around 20.0% will be used for developing digital capabilities, hiring and training professional talent, while approximately 12.0% will be allocated for brand building and promotional activities. Additionally, around 5.0% will be directed towards promoting their self-operated coffee brand, "Coffee Grey," and establishing a network of coffee shops across China. About 2.0% will be earmarked for product development and innovation, with approximately 10.0% allocated for working capital and general corporate purposes.

Established in 2008, ChaPanda has been dedicated to exploring the combination of natural ingredients with traditional Chinese tea beverages, continually developing diversified tea drink products. From 2021 to 2023, ChaPanda's revenues were CNY 3.64 billion, CNY 4.23 billion, and CNY 5.70 billion, respectively, with a compound annual growth rate of 25.1%. This rapid and sustained revenue growth has allowed the company to firmly establish itself in the fiercely competitive made-to-order tea beverage industry and ascend to a leading position in the industry.

Regarding profitability, ChaPanda has maintained high-quality profit growth matching its revenue increase. From 2021 to 2023, the company's gross profits were CNY 1.30 billion, CNY 1.46 billion, and CNY 1.96 billion, respectively, with a compound annual growth rate of 22.9%, while the gross profit margin remained at 34.4%. Adjusted net profits for the same period were CNY 900 million, CNY 970 million, and CNY 1.26 billion, with a compound annual growth rate of 18.2%, reaching a net profit margin of 22% in 2023. This profitability significantly surpasses the industry average (typically below 15%).

According to a Frost & Sullivan report based on 2023 retail sales, ChaPanda ranked third in China's made-to-order tea beverage market, with a market share of 6.8%, an increase from 6.6% in 2022. In 2023, ChaPanda's stores sold a total of 1.016 billion cups of milk tea, generating approximately CNY 16.9 billion in retail sales.

As of April 5, 2024, ChaPanda had a total of 8,016 stores in China, covering all 31 provinces and municipalities, achieving full coverage in all provinces and various tier cities in China. As of December 31, 2023, ChaPanda's stores were distributed across different tier cities, with the percentages of stores in first-tier, new first-tier, second-tier, third-tier, fourth-tier, and lower-tier cities accounting for 10.6%, 26.9%, 20.9%, 19.4%, and 22.2%, respectively, showcasing a diverse distribution across all tier cities. In terms of store format, as of December 31, 2023, ChaPanda's stores in shopping centers, communities, and other commercial districts accounted for 37.3%, 28.6%, and 34.1% of the total store count, respectively. It is understood that ChaPanda will focus on the direction of "sinking + going global + coffee" in the future.

Since Naixue's Tea successfully debuted on the Hong Kong Stock Exchange as the "first stock of new-style tea beverages" on June 30, 2021, a wave of "listing frenzy" has emerged among tea beverage companies: on January 2, 2024, both MIXUE and GoodMe simultaneously submitted applications to the Hong Kong Stock Exchange; on February 14, 2024, Shanghai Auntie submitted an application for a Hong Kong stock listing; and there were rumors about the listing plans of CHAGEE and Auntea Jenny. The second stock of new-style tea beverages has now emerged, and the performance of other brands remains to be seen.