Hong Kong – Shares of the Chinese bubble tea chain Chabaidao experienced a significant drop of nearly 40% during its initial public offering on the Hong Kong stock exchange. The stock, officially listed as Sichuan Baicha Baidao Industrial, fell to 10.84 Hong Kong dollars, a substantial decline of about 38% from its IPO price.
The bubble tea firm’s IPO made it the largest listing in Hong Kong in 2024 so far, resulting in net proceeds of HK$2.59 billion for the company, as stated in its prospectus filed with the Hong Kong exchange. Chabaidao claimed the third position in China’s freshly made tea shop market in 2023, holding a market share of 6.8%.
In the global offering, Chabaidao allocated 90% of its 147.7 million shares, with the remaining 10% offered in a public offering in Hong Kong. However, the public offer was only 0.5 times subscribed, leading the company to reallocate the remaining shares to the global offer, which saw a subscription rate of 1.11 times.
According to the prospectus, Chabaidao reported revenue of 5.7 billion yuan ($786.8 million) for the financial year ended 2023, with a gross profit of 1.96 billion yuan during the same period. The company also highlighted a compounded annual growth rate of 21.6% for its net profit from 2021 to 2023.
Investors will be closely monitoring the performance of Chabaidao in the coming days as the company aims to establish itself in the competitive market for freshly made teas in China. The significant drop in its stock price during the trading debut has sparked discussions about the company’s future growth prospects and how it plans to navigate through the challenges it faces in the market.
Overall, the launch of Chabaidao’s IPO in Hong Kong has garnered attention both locally and globally, with industry experts and investors weighing in on the implications of the company’s performance and its position within the rapidly evolving tea market landscape.