Why did Chabaida plummet on its first day of listing?
Analysis indicates that the entry barrier in the tea beverage market is low, competition is intense, and valuation is inevitably under pressure
Source: Hong Kong Broadband
This year's fundraising new stock king, Chabaidao, debuted on the first day of listing with a "dive" in stock price. Analysis points out that the entry barrier in the tea beverage market is low, competition is fierce, and valuation is inevitably under pressure.
Following Nayuki Tea in 2021, another mainland tea beverage brand has been listed in Hong Kong, raising approximately HKD 2.6 billion, making it the largest fundraising new stock so far this year. Chabaidao's public offering did not receive sufficient subscriptions, and the stock price on the first day of listing showed a significant "dive". Chabaidao's co-founder Gu Jilin said, "In the future, we will continue to expand our store network by increasing the penetration rate of the existing market and expanding into new markets, continue to enhance our supply chain capabilities, increase technological investment, and improve overall operational efficiency." According to data from consulting companies, the retail sales of freshly made tea beverage stores in the mainland exceeded RMB 240 billion last year, and it is expected to exceed RMB 300 billion this year. The compound annual growth rate from this year to 2028 is estimated to be over 15%, significantly slower than the over 25% compound annual growth rate in the previous five years.
Some analysts believe that the investment frenzy in the tea beverage industry is waning, coupled with intense industry competition, leading to pressure on stock valuation. Wu Lixian, a strategist at Everbright Sun Hung Kai Wealth Management, said, "The fundraising scale of Chabaidao's listing this time is actually slightly smaller than the market expected, so I think in the future (listing), it may not be very enthusiastic or exaggerated in terms of market heat. In terms of the industry, there is always fierce competition in the industry and the entry barrier to this industry is relatively low."
Tea-related companies that have submitted listing applications in Hong Kong include mainland chain milk tea brand Miju Ice City, mainland's largest chain tea beverage store Gumeng Holdings, and Shanghai's Auntie, which submitted its listing documents in February