HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Capital Markets

<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

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.

<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

<ul>
<li>
<a href="https://www.smartkarma.com/entities/mixue-group" target="_blank" data-smartkarma-citation="entities:40623:1" rel="noopener">Mixue Group (MIX HK)</a>, a world-leading manufacturer of freshly made drinks, is seeking to raise US$445 million through an HKEx IPO.</li>
<li>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>, 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, bottom-tier R&amp;D spending, high capex intensity, and bottom-tier FCF generation.   </li>
</ul>



Mixue Group (MIX HK), a world-leading manufacturer of freshly made drinks, is seeking to raise US$445 million through an HKEx IPO.
In MIXUE Group (2097 HK) 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, bottom-tier R&amp;D spending, high capex intensity, and bottom-tier FCF generation.   


<ul>
<li>
<a href="https://www.smartkarma.com/entities/mixue-group" target="_blank" data-smartkarma-citation="entities:40623:1" rel="noopener">Mixue Group (MIX HK)</a>, a world-leading manufacturer of freshly made drinks, is seeking to raise US$445 million through an HKEx IPO. </li>
<li>According to CIC, Mixue is the largest freshly made drinks company in China and worldwide, according to the number of stores as of September 30, 2024.</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>



Mixue Group (MIX HK), a world-leading manufacturer of freshly made drinks, is seeking to raise US$445 million through an HKEx IPO. 
According to CIC, Mixue is the largest freshly made drinks company in China and worldwide, according to the number of stores as of September 30, 2024.
The bull case rests on a strong brand, leading market share, peer-leading revenue growth, top-tier profitability and cash generation. 


China

Auntea Jenny (Shanghai) Industrial Co., Ltd. manufactures and distributes beverages. The Company produces grain tea, milk tea, freshly squeezed fruit tea, and other products. Auntea Jenny (Shanghai) Industrial also offers catering, alcohol products sales, and other services.

Auntea Jenny (Shanghai) Industrial (2589 HK)

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Auntea Jenny (Shanghai) Industrial (2589 HK)

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

MIXUE Group (2097 HK) IPO: The Bear Case

The bear case rests on unsustainable growth rates, pressure on KPIs, bottom-tier R&D spending, high capex intensity, and bottom-tier FCF generation.

Arun George

MIXUE Group (2097 HK) 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

Price Gauge

52-week Range

Market Cap (USDm)

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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

MIXUE Group (2097 HK) IPO: The Bear Case

The bear case rests on unsustainable growth rates, pressure on KPIs, bottom-tier R&D spending, high capex intensity, and bottom-tier FCF generation.

Arun George

MIXUE Group (2097 HK) 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

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...