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>MIXUE’s valuation should be higher than peers such as Guming and <a href="https://www.smartkarma.com/entities/sichuan-baicha-baidao-industrial-co-ltd" target="_blank" data-smartkarma-citation="entities:40029:1" rel="noopener">Baicha Baidao Industrial</a>. A comfortable valuation range is 18-20 P/E, higher than peers. So, the IPO pricing is attractive.</li>
<li>2024 full-year net profit is HK$4.8 billion.Net profit could reach HK$5.7 billion (up 19% YoY), HK$6.6 billion (up 16% YoY), HK$7.6 billion (up 15% YoY) in 2025, 2026, 2027, respectively. </li>
<li>Since Nongfu Spring’s revenue scale/net profit margin is higher than MIXUE, MIXUE’s valuation should be lower than Nongfu Spring. Investors need to be alert to the post-IPO performance growth pressure.</li>
</ul>


MIXUE’s valuation should be higher than peers such as Guming and Baicha Baidao Industrial. A comfortable valuation range is 18-20 P/E, higher than peers. So, the IPO pricing is attractive.
2024 full-year net profit is HK$4.8 billion.Net profit could reach HK$5.7 billion (up 19% YoY), HK$6.6 billion (up 16% YoY), HK$7.6 billion (up 15% YoY) in 2025, 2026, 2027, respectively. 
Since Nongfu Spring’s revenue scale/net profit margin is higher than MIXUE, MIXUE’s valuation should be lower than Nongfu Spring. Investors need to be alert to the post-IPO performance growth pressure.


Pre-IPO MIXUE Group (2097.HK) - The IPO Is Attractively Priced

HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<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> has a successful IPO in Hong Kong, with share price surged 43.2%. We will trim from here and will not buy at the current level.  </li>
<li>Our forecasts call for a decent 20.8% and 17.6% earnings growth for FY25 and FY26, putting it on RICH PERs of 19.1x for FY25 and 16.3x for FY26.</li>
<li>The Chinese tea sector has average PERs of 12.4x and 10.5x, suggesting MIXUE's leadership is well reflected in the over 50% premium, and the safety margin has significantly narrowed. </li>
</ul>



Mixue Group (2097 HK) has a successful IPO in Hong Kong, with share price surged 43.2%. We will trim from here and will not buy at the current level.  
Our forecasts call for a decent 20.8% and 17.6% earnings growth for FY25 and FY26, putting it on RICH PERs of 19.1x for FY25 and 16.3x for FY26.
The Chinese tea sector has average PERs of 12.4x and 10.5x, suggesting MIXUE's leadership is well reflected in the over 50% premium, and the safety margin has significantly narrowed. 


Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, 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/mixue-group" target="_blank" data-smartkarma-citation="entities:40623:1" rel="noopener">Mixue Group (2097 HK)</a> raised around US$450m in its Hong Kong IPO.</li>
<li>MIXUE Group (MIXUE) is a freshly-made drinks company providing affordable products to consumers, including freshly-made fruit drinks, tea, ice cream and coffee, typically priced at around one USD per item.</li>
<li>We have covered various aspects of the deal in our previous notes. In this note, we will talk about the trading dynamics.</li>
</ul>



Mixue Group (2097 HK) raised around US$450m in its Hong Kong IPO.
MIXUE Group (MIXUE) is a freshly-made drinks company providing affordable products to consumers, including freshly-made fruit drinks, tea, ice cream and coffee, typically priced at around one USD per item.
We have covered various aspects of the deal in our previous notes. In this note, we will talk about the trading dynamics.


MIXUE IPO Trading - Strong Demand, Set to Break the Tea Chain Jinx

Hong Kong

Nayuki Holdings Limited operates as a holding compnay. The Company, through its subsidiaries, produces and retails tea and bakery products. Nayuki serves customers in China.

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Nayuki Holdings (2150 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

Pre-IPO MIXUE Group (2097.HK) - The IPO Is Attractively Priced

MIXUE's IPO debut was stellar.By March 3, market value was over HK$100 billion, higher than HK$86.4-96 billion range as analyzed in insight. P/E...

Xinyao (Criss) Wang

MIXUE Group (2097 HK): What to Do Now?

MIXUE has a successful Hong Kong IPO with a 43.2% share price surge on the first day of trading, but caution is needed due to the high PER premium...

Osbert Tang, CFA

MIXUE IPO Trading - Strong Demand, Set to Break the Tea Chain Jinx

Mixue Group (2097 HK) raised around US$450m in its Hong Kong IPO, which was well covered. In this note, we talk about the trading dynamics.

Sumeet Singh

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52-week Range

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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

Pre-IPO MIXUE Group (2097.HK) - The IPO Is Attractively Priced

MIXUE's IPO debut was stellar.By March 3, market value was over HK$100 billion, higher than HK$86.4-96 billion range as analyzed in insight. P/E...

Xinyao (Criss) Wang

MIXUE Group (2097 HK): What to Do Now?

​MIXUE has a successful Hong Kong IPO with a 43.2% share price surge on the first day of trading, but caution is needed due to the high PER premium...

Osbert Tang, CFA

MIXUE IPO Trading - Strong Demand, Set to Break the Tea Chain Jinx

Mixue Group (2097 HK) raised around US$450m in its Hong Kong IPO, which was well covered. In this note, we talk about the trading dynamics.

Sumeet Singh

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...

MIXUE has a successful Hong Kong IPO with a 43.2% share price surge on the first day of trading, but caution is needed due to the high PER premium...