IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/chagee-holdings-limited" target="_blank" data-smartkarma-citation="entities:45011:1" rel="noopener">Chagee Holdings (CHA US)</a>, a leading premium tea drinks brand, is seeking to raise US$382-411 million through a Nasdaq IPO.</li>
<li>We previously discussed the IPO in <a href="https://www.smartkarma.com/insights/chagee-holdings-cha-us-ipo-the-bull-case" target="_blank" data-smartkarma-citation="insights:181653" rel="noopener">Chagee Holdings (CHA US) IPO: The Bull Case</a> and <a href="https://www.smartkarma.com/insights/chagee-holdings-cha-us-ipo-the-bear-case" target="_blank" data-smartkarma-citation="insights:182085" rel="noopener">Chagee Holdings (CHA US) IPO: The Bear Case</a>.</li>
<li>There are four cornerstone investors. Our valuation analysis suggests Chagee is attractively valued at the IPO price range. Therefore, we would participate in the IPO.</li>
</ul>



Chagee Holdings (CHA US), a leading premium tea drinks brand, is seeking to raise US$382-411 million through a Nasdaq IPO.
We previously discussed the IPO in Chagee Holdings (CHA US) IPO: The Bull Case and Chagee Holdings (CHA US) IPO: The Bear Case.
There are four cornerstone investors. Our valuation analysis suggests Chagee is attractively valued at the IPO price range. Therefore, we would participate in the IPO.


Chagee Holdings (CHA US) IPO: Valuation Insights

<ul>
<li>
<a href="https://www.smartkarma.com/entities/chagee-holdings-limited" target="_blank" data-smartkarma-citation="entities:45011:1" rel="noopener">Chagee Holdings (CHA US)</a>, a leading premium tea drinks brand, is seeking to raise US$400-500 million through a Nasdaq IPO.</li>
<li>In <a href="https://www.smartkarma.com/insights/chagee-holdings-cha-us-ipo-the-bull-case" target="_blank" data-smartkarma-citation="insights:181653" rel="noopener">Chagee Holdings (CHA US) IPO: The Bull Case</a>, we highlighted the key elements of the bull case. In this note, we outline the bear case.</li>
<li>The bear case rests on unsustainable growth rates, pressure on KPIs, signs of margin pressure, increasing S&amp;M expenses and weakening forward growth indicators.</li>
</ul>



Chagee Holdings (CHA US), a leading premium tea drinks brand, is seeking to raise US$400-500 million through a Nasdaq IPO.
In Chagee Holdings (CHA US) IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
The bear case rests on unsustainable growth rates, pressure on KPIs, signs of margin pressure, increasing S&amp;M expenses and weakening forward growth indicators.


Chagee Holdings (CHA US) IPO: The Bear Case

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

<ul>
<li>Chagee adopts the "1+1+9+N" business model, which ensures the successful replication of the single store model. However, we saw performance decline in 2024, and future performance growth sustainability is uncertain.</li>
<li>In terms of valuation, comparable companies include Starbucks and MIXUE. We think valuation of Chagee should be lower than MIXUE and Starbucks as both have proved themselves in the industry.</li>
<li>Future growth would inevitably slow down. Investors may need more 'safety margins' on valuation because despite short-term strong demand, investors need to be alert to the performance validation after IPO.  </li>
</ul>


Chagee adopts the "1+1+9+N" business model, which ensures the successful replication of the single store model. However, we saw performance decline in 2024, and future performance growth sustainability is uncertain.
In terms of valuation, comparable companies include Starbucks and MIXUE. We think valuation of Chagee should be lower than MIXUE and Starbucks as both have proved themselves in the industry.
Future growth would inevitably slow down. Investors may need more 'safety margins' on valuation because despite short-term strong demand, investors need to be alert to the performance validation after IPO.  


Pre-IPO Chagee Holdings - The Business Model, the Concerns Behind and Valuation Outlook

<ul>
<li>
<a href="https://www.smartkarma.com/entities/chagee-holdings-limited" target="_blank" data-smartkarma-citation="entities:45011:1" rel="noopener">Chagee Holdings (CHA US)</a>, a leading premium tea drinks brand, is seeking to raise US$400-500 million through a Nasdaq IPO. </li>
<li>According to iResearch, as of December 31, 2024, Chagee was the largest premium freshly made tea drink brand in China by the number of stores.</li>
<li>The bull case rests on a strong brand, leading market share, peer-leading revenue growth, top-tier profitability and cash generation.   </li>
</ul>



Chagee Holdings (CHA US), a leading premium tea drinks brand, is seeking to raise US$400-500 million through a Nasdaq IPO. 
According to iResearch, as of December 31, 2024, Chagee was the largest premium freshly made tea drink brand in China by the number of stores.
The bull case rests on a strong brand, leading market share, peer-leading revenue growth, top-tier profitability and cash generation.   


Chagee Holdings (CHA US) IPO: The Bull Case

<ul>
<li>
<a href="https://www.smartkarma.com/entities/mixue-group" target="_blank" data-smartkarma-citation="entities:40623:1" rel="noopener">Mixue Group (2097 HK)</a>, a world-leading manufacturer of freshly made drinks, is seeking to raise US$445 million through an HKEx IPO.</li>
<li>We previously discussed the IPO in <a href="https://www.smartkarma.com/insights/mixue-group-2097-hk-ipo-the-bull-case" target="_blank" data-smartkarma-citation="insights:177152" rel="noopener">MIXUE Group (2097 HK) IPO: The Bull Case</a> and <a href="https://www.smartkarma.com/insights/mixue-group-2097-hk-ipo-the-bear-case" target="_blank" data-smartkarma-citation="insights:177307" rel="noopener">MIXUE Group (2097 HK) IPO: The Bear Case</a>. </li>
<li>There are five cornerstone investors. Our valuation analysis suggests Mixue is attractively valued at the IPO price range. Therefore, we would participate in the IPO.</li>
</ul>



Mixue Group (2097 HK), a world-leading manufacturer of freshly made drinks, is seeking to raise US$445 million through an HKEx IPO.
We previously discussed the IPO in MIXUE Group (2097 HK) IPO: The Bull Case and MIXUE Group (2097 HK) IPO: The Bear Case. 
There are five cornerstone investors. Our valuation analysis suggests Mixue is attractively valued at the IPO price range. Therefore, we would participate in the IPO.


MIXUE Group (2097 HK) IPO: Valuation Insights

China

Auntea Jenny (Shanghai) Industrial (AJI HK)

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Auntea Jenny (Shanghai) Industrial (AJI HK)

Chagee Holdings (CHA US) IPO: Valuation Insights

Our valuation analysis suggests Chagee is attractively valued at the IPO price range. Therefore, we would participate in the IPO.

Arun George

Chagee Holdings (CHA US) IPO: The Bear Case

The bear case rests on unsustainable growth rates, pressure on KPIs, signs of margin pressure, increasing S&M expenses and weakening forward growth...

Arun George

Pre-IPO Chagee Holdings - The Business Model, the Concerns Behind and Valuation Outlook

Chagee's "1+1+9+N" model face uncertain future growth and should be valued lower than peers.Due to concerns, investors need more safety margins on...

Xinyao (Criss) Wang

Chagee Holdings (CHA US) IPO: The Bull Case

The bull case rests on a strong brand, leading market share, peer-leading revenue growth, top-tier profitability and cash generation.

Arun George

MIXUE Group (2097 HK) IPO: Valuation Insights

Our valuation analysis suggests Mixue is attractively valued at the IPO price range. Therefore, we would participate in the IPO.

Arun George

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Chagee Holdings (CHA US) IPO: Valuation Insights

Our valuation analysis suggests Chagee is attractively valued at the IPO price range. Therefore, we would participate in the IPO.

Arun George

Chagee Holdings (CHA US) IPO: The Bear Case

The bear case rests on unsustainable growth rates, pressure on KPIs, signs of margin pressure, increasing S&M expenses and weakening forward growth...

Arun George

Pre-IPO Chagee Holdings - The Business Model, the Concerns Behind and Valuation Outlook

​Chagee's "1+1+9+N" model face uncertain future growth and should be valued lower than peers.Due to concerns, investors need more safety margins on...

Xinyao (Criss) Wang

Chagee Holdings (CHA US) IPO: The Bull Case

The bull case rests on a strong brand, leading market share, peer-leading revenue growth, top-tier profitability and cash generation.

Arun George

MIXUE Group (2097 HK) IPO: Valuation Insights

Our valuation analysis suggests Mixue is attractively valued at the IPO price range. Therefore, we would participate in the IPO.

Arun George

Chagee's "1+1+9+N" model face uncertain future growth and should be valued lower than peers.Due to concerns, investors need more safety margins on...