SYDNEY, March 3 — Shares of China's largest bubble tea and drinks chain Mixue Group jumped nearly 30 per cent on their first day of trading on the Hong Kong Stock Exchange on Monday after the firm raised US$444 million (RM1.9 billion) in an initial public offering (IPO).
Mixue sold 17 million shares in the deal at a fixed price of HK$202.5 each.
The shares started trading at HK$262 each and the gains outpaced a 0.8 per cent rise in Hong Kong's Hang Seng Index.
Retail investors subscribed for 5,258 times more shares than were on offer in that tranche, according to Mixue's filings, making it one of Hong Kong's most popular ever IPOs.
The retail subscription rate was just below Bloks Group whose retail book was 6,000 times oversubscribed, a record, in its January IPO.
The institutional tranche of the deal was 35 times covered, the filings showed.
Media reported Hong Kong retail investors applied for a record HK$1.8 trillion (RM1 trillion) worth of margin loans to buy Mixue stock during the book-building process.
The debut is a positive start for Mixue compared to its rival Guming whose shares slumped 10 per cent on their first trading day in Hong Kong on February 12.
Mixue is often seen as China's largest chain of iced drinks, milk tea, and ice cream. However, it operates more like a raw-material supplier than a traditional beverage brand.
Founded in 1997 as a small ice shop in Zhengzhou, Henan province, Mixue has grown into a franchise giant with over 45,000 stores globally by September 2024, surpassing Starbucks' 40,576 stores worldwide.
Unlike Starbucks, which operates 53 per cent of its stores directly, Mixue relies heavily on franchising, with more than 99 per cent of its stores run by franchisees.
This model has proven highly profitable.
It sells drinks priced at an average of just 6 yuan (RM3.50) per cup.
The secret lies in its franchise model, which generates revenue by selling food materials, packaging, and equipment to thousands of franchisees, supported by its robust manufacturing capabilities, according to its filings.
Mixue's prospectus showed sales of goods and equipment accounted for 97.6 per cent of Mixue's total revenue in the first nine months of 2024, while franchise fees contributed a mere 2.4 per cent. Mixue relies on its supply chain rather than traditional franchise income.
Mixue's playful snowman mascot, Snow King, wearing a crown and a red cloak, played a significant role in the brand's popularity.
— Reuters
