Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Douglas Research Advisory

Equity Capital Markets

<ul>
<li>Our base case valuation of Chagee Holdings is target price of $46.7 per share, representing 67% higher than the high end of the IPO price range ($28 per share). </li>
<li>Our base case valuation is based on a P/E of 21.4x on our estimated net profit of 2.9 billion RMB in 2025. </li>
<li>We used a very conservative valuation multiple, mainly due to the extremely high macro risks related to the ongoing tariff dispute between China and the United States.</li>
</ul>


Our base case valuation of Chagee Holdings is target price of $46.7 per share, representing 67% higher than the high end of the IPO price range ($28 per share). 
Our base case valuation is based on a P/E of 21.4x on our estimated net profit of 2.9 billion RMB in 2025. 
We used a very conservative valuation multiple, mainly due to the extremely high macro risks related to the ongoing tariff dispute between China and the United States.


HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

<ul>
<li>The main reason behind declining performance is related to the increase in regional market density brought about by newly opened teahouses. Franchisees would be more cautious about investing in Chagee.</li>
<li>With the passage of time and the declining same store GMV, the low teahouse closure rate will gone. Product strategy of "flagship product + classic basics " also has risks.</li>
<li>Based on our forecast of 2025 net profit of about RMB3 billion (or US$400 million) and US IPO market value of US$5 billion, P/E is about 12.5x. </li>
</ul>


The main reason behind declining performance is related to the increase in regional market density brought about by newly opened teahouses. Franchisees would be more cautious about investing in Chagee.
With the passage of time and the declining same store GMV, the low teahouse closure rate will gone. Product strategy of "flagship product + classic basics " also has risks.
Based on our forecast of 2025 net profit of about RMB3 billion (or US$400 million) and US IPO market value of US$5 billion, P/E is about 12.5x. 


Pre-IPO Chagee Holdings - Some Points Worth the Attention

Equity Bottom-Up

<ul>
<li>Revenue growth of MIXUE in 2024 was the lowest in recent three year but is still higher than competitors.Together with higher profit margin, MIXUE’s valuation should be higher than peers. </li>
<li>Based on 2024 results, we adjusted our forecast for the next three years. Declining performance growth is inevitable, but successful internationalization helps reassure its high growth outlook in the future</li>
<li>Due to concerns, investors need to pay attention to the performance verification.If 2025H1 net profit growth is significantly lower than 30% YoY, investors should be alert to a potential correction.</li>
</ul>


Revenue growth of MIXUE in 2024 was the lowest in recent three year but is still higher than competitors.Together with higher profit margin, MIXUE’s valuation should be higher than peers. 
Based on 2024 results, we adjusted our forecast for the next three years. Declining performance growth is inevitable, but successful internationalization helps reassure its high growth outlook in the future
Due to concerns, investors need to pay attention to the performance verification.If 2025H1 net profit growth is significantly lower than 30% YoY, investors should be alert to a potential correction.


Mixue Group (2097 HK) - Updates on Valuation Outlook and Growth Forecast Based on 2024 Results

APAC IPOs & Placements, Aequitas Research

Nicholas Tan

APAC IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

<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>  is planning to raise up to US$500m through its upcoming US IPO.</li>
<li>It is a leading premium tea drinks brand, serving healthy and delicious freshly-made tea drinks.</li>
<li>We have looked at the company’s past performance in our earlier notes. In this note, we discuss latest industry dynamics, conduct a quick peer comparison and discuss the company’s valuation.</li>
</ul>



Chagee Holdings (CHA US)  is planning to raise up to US$500m through its upcoming US IPO.
It is a leading premium tea drinks brand, serving healthy and delicious freshly-made tea drinks.
We have looked at the company’s past performance in our earlier notes. In this note, we discuss latest industry dynamics, conduct a quick peer comparison and discuss the company’s valuation.


Chagee IPO: Peer Comp and Thoughts on Valuation

Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

<ul>
<li>Chagee is the No. 6 largest teahouse chain in China according to store number.</li>
<li>Very few teahouses have a per customer transaction higher than Chagee.</li>
<li>We believe Chagee has advantages in the high price market.</li>
</ul>


Chagee is the No. 6 largest teahouse chain in China according to store number.
Very few teahouses have a per customer transaction higher than Chagee.
We believe Chagee has advantages in the high price market.


Chagee (霸王茶姬) Pre-IPO: Very Few Exact Competitors - A Viewpoint on the Ground

China

MIXUE Group is a leading company specializing in the development, production, and franchise operation of freshly-made ice cream and tea beverages, including fruit drinks and coffee, under its Mixue and Lucky Cup brands. The company also supplies ingredients, packaging materials, and equipment to its extensive franchisee network. MIXUE Group was founded in 1997 and is headquartered in Zhengzhou, China.

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MIXUE (2097 HK)

Chagee Holdings IPO Valuation Analysis

Our base case valuation of Chagee Holdings is target price of $46.7 per share, representing 67% higher than the high end of the IPO price range...

Douglas Kim

Pre-IPO Chagee Holdings - Some Points Worth the Attention

With declining performance, franchisees are cautious about investing in Chagee. Due to sharp decline in US stocks, Chagee's IPO may not perform...

Xinyao (Criss) Wang

Mixue Group (2097 HK) - Updates on Valuation Outlook and Growth Forecast Based on 2024 Results

We adjusted next 3yr forecast. Declining performance growth is inevitable, but successful internationalization helps reassure its high growth...

Xinyao (Criss) Wang

Chagee IPO: Peer Comp and Thoughts on Valuation

Chagee, a leading premium tea drinks brand, is planning to raise up to US$500m through its upcoming US IPO. In this note, we discuss the company's...

Nicholas Tan

Chagee (霸王茶姬) Pre-IPO: Very Few Exact Competitors - A Viewpoint on the Ground

Chagee is the No. 6 largest teahouse chain in China according to store number. Very few teahouses have a per customer transaction higher than Chagee.

Ming Lu

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