Affected by recently introduced regulations, Chinese tea-based beverages brand Mixue has withdrawn a prospectus submitted to the Shenzhen Stock Exchange in September last year, and now plans to debut in Hong Kong, local media outlet NEWECOIPO reported on January 9.
Chinese regulatory authorities are expected to impose restrictions on the IPOs of firms in industries such as food and beverage, liquor, pandemic prevention, discipline training, funerals and interment, religious affairs, and more.
The biggest impact of the change of listing location for Mixue is its valuation, which, according to its prospectus, is as high as 64.8 billion yuan ($9.59 billion). Some investors said that considering that the future growth of Mixue is slowing down and its sustainability is in doubt, it cannot support the valuation of more than 60 billion yuan. In addition, the liquidity of Hong Kong stocks has been continuously insufficient since last year, and the valuation of Mixue will drop by at least 30% to 50%.
According to the prospectus, the operating income of Mixue has grown rapidly from 4.68 billion yuan in 2020 to 10.351 billion yuan in 2021. By the end of March, 2022, there were 22,276 stores in Mixue. According to statistics from Canyan Data, the number of stores of Mixue ranked first in the domestic tea industry.
In recent years, the brand influence and popularity of Mixue have gradually increased, and its drinks have been continuously updated, which has accelerated the development of the company’s business. According to its prospectus, the increase in the number of stores and the sales of a single store have become the main factors for the growth underpinning the company’s income.
Mixue has built a complete industrial chain of R&D, warehousing and logistics, operation and management, as well as three brands, such as the tea chain brand Mixue, coffee brand “Lucky Cup” and ice cream brand “Jilatu.”
Mixue adopts an average pricing of 6 to 8 yuan to attract consumers and provide a basis for the sustained and rapid expansion of the company’s stores in low-tier cities. Mixue has established a perfect brand marketing matrix, and created two major factors that are easily remembered by consumers – the theme song of Mixue and the title of “Snow King.”
According to iiMedia Research, the market size of China’s freshly made tea has increased from 29.1 billion yuan in 2016 to 279.6 billion yuan in 2021, with a compound annual growth rate of 57.23%. It is estimated that by 2025, the market size will further expand to 374.9 billion yuan. In addition, the freshly ground coffee and freshly made ice cream industries have broad development space.