The Snow King mascot on a cup at a Mixue retailer in Beijing, China, on Thursday, Feb. 27, 2025.
Bloomberg | Bloomberg | Getty Pictures
Shares of China’s largest bubble tea chain Mixue jumped greater than 40% on its market debut on Monday after a closely oversubscribed preliminary public providing.
Shares have been final seen buying and selling up roughly 41% at 285.8 Hong Kong {dollars} ($36.52) apiece, in comparison with the IPO provide worth of HK$202.5 per share. The inventory had initally opened commerce at HK$267, in response to trade information.
Mixue, which is thought for its milk tea, fruit drinks, ice cream and occasional, had provided 17.06 million shares in its IPO, elevating a complete of HK$3.45 billion.
Shares of different Chinese language bubble tea firms listed in Hong Kong traded decrease on Monday morning, erasing earlier beneficial properties. Nayuki traded down 6.2%, whereas Sichuan Baicha Baidao stood 5.5% decrease. Guming fell 3.3%.
The IPO has gained the assist of 5 cornerstone traders, which embrace M&G Investments, HongShan Progress, Persistence Progress Restricted, HHLR Fund and Meituan’s Lengthy-Z Fund.
Shares of Mixue have been extremely wanted, with the Hong Kong providing over 5,200 occasions oversubscribed. The worldwide providing was greater than 35 occasions oversubscribed.
The preliminary allocation of the IPO was 10% to the Hong Kong providing, and 90% to the worldwide providing.
Nonetheless, Mixue mentioned that as a result of Hong Kong providing being oversubscribed by greater than 100 occasions of the overall variety of provide shares initially obtainable, it had elevated its share of the IPO from 10% to 50%, with the opposite 50% to the worldwide providing.
The bookrunners for the IPO have been Financial institution of America Securities, Goldman Sachs and UBS.
Buyers ‘warming up’ to the bubble tea market
“Buyers are warming as much as the bubble tea market once more,” mentioned Longdley Zephirin, principal and analyst at The Zephirin Group, including that Mixue’s IPO is an illustration of how “hungry” traders are.
Whereas Mixue is presently largely primarily based in Southeast Asia, the bubble tea chain could come to comply with fellow Chinese language tea drink chain, Heytea, in increasing into Europe and the U.S, Zephirin mentioned.
Mixue’s greatest problem is shifting from tier two and tier three cities into tier one cities, the place most of its rivals like Nayuki and Heytea have shops, Zephirin mentioned.
Whereas there isn’t any official classification, cities in China are sometimes categorized in sure tiers primarily based on elements equivalent to gross home product (GDP) and inhabitants. Shanghai, Beijing and Guangzhou are extensively cited as first tier cities.
“Our base case valuation of Mixue Group is implied market cap of HKD 96 billion or goal worth of HKD 254, which is 26% larger than the preliminary IPO worth,” mentioned Douglas Kim, an IPO analyst at Douglas Analysis Advisory, who additionally publishes on Smartkarma.
