Nayuki’s tea started its IPO on June 18 and is expected to be officially listed for trading on June 30. As of today, Nayuki’s tea margin show temporarily recorded 83.86 billion Hong Kong dollars, 163.6 times over-subscription.
Research reports issued by many institutions all expressed their optimism about the development of the tea market in the Mainland and the performance of Nayuki’s tea.
Nayuki’s tea IPO in Hong Kong is sought after, oversubscribed by 163.6 times
“Hong Kong Economic Times” reported on June 21 that Nayuki’s tea started its IPO last Friday (18th). According to data from multiple brokerages, Nayuki’s tea margin trade temporarily recorded 83.86 billion Hong Kong dollars, an oversubscription of 163.6 times. Among them, Futu lent HK$21.5 billion, Yaocai lent HK$16.9 billion, and Phillip lent HK$13.3 billion.
Naxue’s Tea Holdings Co., Ltd. (hereinafter referred to as: Naxue’s Tea) previously announced on the Hong Kong Stock Exchange that it would officially launch its public offering on June 18. Its offer price is between 17.20 Hong Kong dollars and 19.80 Hong Kong dollars. The highest total fundraising is about 5.858 billion Hong Kong dollars. It is expected to officially land on the Hong Kong Stock Exchange on June 30, when Nay Xue’s tea will officially become the “first share of tea in the world”. “.
According to previous reports from the China Fund News, industry insiders predicted that Nay Xue’s valuation may reach RMB 35-40 billion, and most institutions have a high degree of attention and willingness to subscribe for Nay Xue’s IPO. According to Hong Kong media estimates, if the IPO goes smoothly, their founders, Peng Xin and Zhao Lin, may have a net worth of HK$19.35 billion, and they are expected to become the top 200 richest people in China.
According to the Beijing Youth Daily, data from Insight Consulting shows that the total retail consumption value generated by China’s high-end ready-made tea shops will increase from 15.2 billion yuan in 2020 to 62.3 billion yuan in 2025. In terms of total retail consumption in 2020, Naxue’s tea is the second largest tea shop brand in China’s high-end ready-made tea shop market, with a market share of 18.9%.
Naixue’s tea, which pioneered the “tea drink + soft European bag” sales model, has reached an average sales value of 43.0 yuan per customer per customer. According to the prospectus, as of the latest practicable date, the number of Nayuki’s tea stores will further increase to 562. But opening a store is still its main task. Nayuki’s Tea said that in the next three years, about 70% of the total funds raised will be used to expand the tea shop network and increase market penetration.
Organization: The milk tea market is growing rapidly, Nayuki’s tea is worthy of attention
The research report of Everbright Sun Hung Kai shows that the consumer group of the mainland’s ready-made tea market is huge and growing rapidly. In terms of retail consumption value, the total market size of freshly made tea in the Mainland in 2020 is about 113.6 billion yuan, and it is expected to reach 340 billion yuan by 2025, with a compound annual growth rate of 24.5%.
In 2020, the number of consumers of freshly made tea in the Mainland will reach 250 million, which is about three times that of the 84.7 million consumers of freshly ground coffee. In 2020, the annual per capita consumption of freshly-made tea in the Mainland will be 6.2 cups, and that of freshly ground coffee will be 1.7 cups.
According to the research report, the number of tea shops in Nayuki’s Tea Group has increased from 44 as of December 31, 2017 to 491 as of December 31, 2020, including 489 in 66 cities in mainland China. Xue’s tea and tea shop and Nayuki’s tea and tea shop in Hong Kong, China and Japan.
According to the data from CIC, as of December 31, 2020, the group has the most extensive network of high-end fresh-made tea shops in China in terms of the number of cities covered.
In addition, in 2020, the average sales value of each order of Naixue’s tea will reach RMB 43, ranking first among the high-end fresh-made tea chain stores in the Mainland (the industry average value is about RMB 35).
The high-end ready-made tea shop industry is relatively concentrated. Based on the total retail consumption value of all products in 2020, the top five market participants together account for approximately 58% of the market share. During the same period, based on the total retail consumption value, Naxue’s tea accounted for about 18.9% of the mainland’s high-end, ready-made tea shop market. Due to the strong brand awareness and product development of leading brands, it is expected that the high-end, ready-made tea shop market in the Mainland will continue to be concentrated in a few leading players in the next few years.
According to a research report by Fosun Hengli, Naxue’s tea was established in Shenzhen in 2014. The first Naxue’s tea shop was opened the following year. By the end of 2020, there were 491 Naxue’s tea and tea shops (170 in first-tier cities). Stores, accounting for 42.2%), and all Nay Xue’s tea and tea shops are self-operated stores.
As of the end of 2020, Nayuki’s Tea has 27.9 million members. According to reports, about 49.0% of its total orders come from these members. According to reports, the number of active members reached 5.8 million in the fourth quarter of last year, of which 29.8% were repurchase members, reflecting strong customer loyalty.
Fosun Hengli believes that the current price of the company has already reflected the current growth, but considering that Naxue’s tea is the first share of tea drinks, it is very scarce. If the market sentiment and purchase response are good, it will bring a good first day performance.
The research report of Western Securities stated that the current high-end ready-made tea industry in my country is highly concentrated, with a top 5 market share of up to 55%; Naixue’s tea, as the second leading brand in market share, is in product strength, brand power, and stores. With significant advantages in the model, the development is further accelerated under the blessing of capital, and it is recommended to focus on it.
The secret of success: seize the demands of female consumers
According to the Beiqing Daily, the origin of the name “Naixue’s Tea” is because the founder Peng Xin’s online name is “Naixue”. Peng Xin once said that all Naxue’s tea products are mainly targeted at young women between 20 and 35 years old. It can be said that Nayuki’s tea is developed and marketed according to her own preferences. According to industry insiders, one of the reasons for the brand’s success is to firmly grasp the demands of female consumers.
And Peng Xin’s husband, Zhao Lin, gave full play to his experience in the catering industry and was responsible for the storefront and daily operations. In the tea industry, Nayuki’s tea business model is undoubtedly innovative. The business model of large stores above 200 square meters plus the international space design, warm and stylish lighting layout, and quick and convenient services to get products within 15 minutes have allowed Nayuki’s tea to gradually gain a foothold in the tea market.
The superior store resources also represent expensive rents. Since Nayuki’s tea has always been claimed to be “social function” in the store, Nayuki’s tea shop is usually larger than the average milk tea shop. Peng Xin told the media that he would adopt an attitude of “emphasizing social functions and insisting on differentiated operations” and “firm goals and soft body”, and walk out of a different style from other tea shops. The prospectus shows that the average investment cost of Nayuki’s tea stores is about 1.85 million yuan (standard store) and 1.25 million yuan (PRO store).
The prospectus shows that of the cost of Nayuki’s tea in 2020, 37.9% will be used for tea materials, 30.1% will be used for employee expenditures, and 11.5% will be used for depreciation of the right-of-use assets, a total of 79.5%. The total of the above three costs accounted for 77.7% and 77.1% of revenue in 2018 and 2019, respectively. Higher costs have a certain impact on profit margins.
In addition, Fuxing Liheng’s research report mentioned that the CPI of tea and beverages increased from 101.6 in 2015 to 108.1 in 2020. If raw materials continue to fluctuate upwards, the company’s profit margin will be under pressure.
(Risk reminder: This article is for reference only and does not constitute a basis for buying and selling. Enter the market at your own risk.)
The daily economic news is integrated from the Hong Kong Economic Daily, Beijing Youth Daily, Naixue’s tea prospectus, China Fund News, Everbright Sun Hung Kai Research Report, Fuxing Liheng Research Report, Western Securities Research Report, public information, etc.