Mixue Bingcheng is making another dash for the Hong Kong stock IPO

I. Where Does the Confidence for Listing Come From?

Outstanding performance

Data shows that in 2022, 2023, and the first nine months of 2024, Mixue Bingcheng achieved revenues of 13.6 billion yuan, 20.3 billion yuan, and 18.7 billion yuan respectively, with year-on-year growth rates of 31.2%, 49.6%, and 21.2%. Its net profits were 2 billion yuan, 3.2 billion yuan, and 3.5 billion yuan respectively, with year-on-year growth rates of 5.3%, 58.3%, and 42.3%. As of September, the cash flow from operating activities of Mixue Bingcheng in 2024 was a net inflow of 5.1 billion yuan. Such stable and high-speed growth has laid a solid foundation for its sprint towards the Hong Kong Stock Exchange IPO.

Powerful store network

As of September 30, 2024, the number of its stores worldwide has exceeded 45,000. Among them, the number of stores in mainland China has exceeded 40,000, including 37,000 Mixue Bingcheng stores and nearly 3,000 Lucky Cup stores. In overseas markets, Mixue Bingcheng has also achieved remarkable results. It has opened nearly 4,800 stores in 11 countries and has taken the lead in the Southeast Asian market. The number of stores in Indonesia alone has exceeded 2,667, and the number of stores in Vietnam has also exceeded 1,304. Such a huge store system not only brings a continuous stream of revenue but also serves as a powerful witness to the brand's influence.

From the perspective of terminal retail sales

The store network of Mixue Bingcheng achieved terminal retail sales of approximately 22.8 billion yuan, 30.7 billion yuan, 47.8 billion yuan, and 44.9 billion yuan in 2021, 2022, 2023, and the first nine months of 2024 respectively. Behind these data is the high recognition of Mixue Bingcheng's products by consumers. Cups of low-priced and delicious tea drinks and ice creams meet the daily consumption needs of the public and have become "national drinks" that can be seen everywhere on the streets.

Excellent business model

Mixue Bingcheng's business model mainly focuses on franchising, which is the key to its rapid expansion. Among more than 45,000 stores, over 99% are franchised stores. The company mainly sells products such as ingredients, packaging materials, equipment and facilities, and operating materials required for making various freshly prepared beverages and freshly prepared ice creams to franchisees and provides franchise management services. At the same time, it directly sells freshly prepared beverages and freshly prepared ice creams to consumers through its directly-operated stores. The prospectus shows that in 2021, 2022, 2023, and as of September 30, 2024, the revenues of Mixue Bingcheng's franchised stores were 10.031 billion yuan, 13.102 billion yuan, 19.575 billion yuan, and 18.203 billion yuan respectively. During the reporting period, 1.9%, 2.0%, 2.0%, and 2.4% of the revenues came from franchise fees and related service fees, and the vast majority of the remaining revenues came from the sales of goods and equipment to franchised stores. The revenue situations of the self-operated stores were 83 million yuan, 72 million yuan, and 108 million yuan from 2021 to 2023 respectively, and 39 million yuan as of September 30, 2024. The advantages of the franchise model enable Mixue Bingcheng to rapidly expand the market at a relatively low cost. By leveraging the resources and strength of franchisees, it has achieved explosive growth in the number of stores. Meanwhile, by selling materials and equipment to franchisees, Mixue Bingcheng has ensured the stable operation of its own supply chain and further improved its profitability. The opening of self-operated stores is mainly to gain joint operation insights and consolidate the brand. Although the revenue proportion is relatively small, it plays an indispensable role in aspects such as brand image building and product innovation testing.

II. Why Switch to the Hong Kong Stock Market?

Failure in the A-share market

Mixue Bingcheng's listing journey has not been smooth sailing. As early as September 2022, Mixue Bingcheng made an attempt to list on the A-share market and planned to list on the main board of the Shenzhen Stock Exchange, aiming to raise 6.496 billion yuan. Based on this calculation, its valuation exceeded 60 billion yuan. However, this application ultimately failed, and the prospectus expired. Mixue Bingcheng had to adjust its strategy.

On January 2, 2024, Mixue Bingcheng switched to the Hong Kong Stock Exchange and submitted an application on the same day as GuMing, attempting to seek an opportunity to list on the Hong Kong stock market. However, by July 2024, the prospectuses of both companies were already in an expired state. Nevertheless, according to the listing rules of the Hong Kong Stock Exchange, the expiration of the prospectus does not mean the failure of the enterprise's listing. It just needs to supplement new financial data. Mixue Bingcheng responded quickly. Compared with the first version of the prospectus, it updated its performance from September 2023 to September 2024 and analyzed its own business and industry status in more detail. On January 1, 2025, it submitted the listing application to the Hong Kong Stock Exchange again, with Bank of America, Goldman Sachs, and UBS Group serving as joint sponsors.

Recovery of consumer IPOs in the Hong Kong Stock Market

Since 2024, the IPO market in the Hong Kong Stock Market has significantly recovered, especially consumer enterprises have witnessed a boom in listing. According to the data of Deloitte Capital Markets Services, the total financing amount of the consumer industry in the Hong Kong Stock Market IPOs reached approximately HK$58.8 billion in 2024, accounting for approximately 69.4% of the total financing amount of all IPOs. In contrast, the total financing amount of the consumer industry in the Hong Kong Stock Market IPOs in 2023 was HK$19.1 billion, with a proportion of only 41.3%. In the past year, Mao Geping, Xiao Cai Yuan, and Cao Ji Group successfully listed on the Hong Kong Stock Market. Among them, Mao Geping's share price rose by more than 70% at the opening, and its total market value once exceeded HK$25 billion. Xiao Cai Yuan's share price rose by more than 10% on the first day of listing, and its market value reached HK$11.295 billion.

The Hong Kong Stock Market platform is more international

The Hong Kong Stock Market has the advantages of a short listing cycle, fast speed, relatively loose listing standards, and being more international. It can help Mixue Bingcheng reach international capital, optimize its capital structure, further enhance the brand's global popularity, attract international talents, and help the enterprise move to a higher level.

III. Why Is It So Persistent in Sprinting towards the Capital Market?

Mixue Bingcheng is making its third attempt to list in more than two years. Behind its persistence is a deep desire for capital to help the enterprise achieve further development.

Intense competition in the tea drink industry: New tea drink and coffee brands have emerged in large numbers like bamboo shoots after a spring rain, and the internal competition is fierce. From high-end tea drink brands like Nayuki's Tea to tea drink brands that focus on special flavors like Chabaidao, major brands are carrying out all-round competition in aspects such as product innovation, store experience, and marketing strategies. Consumers' tastes are changeable, and their loyalty is relatively low. Once a new popular brand emerges, it may divert the customer source of Mixue Bingcheng.

Hidden concerns about brand aging: Mixue Bingcheng was founded in 1997, with an image of "low price" and "being close to the people". Its brand image is deeply rooted in people's hearts. However, with the younger and more fashionable consumption group, the corporate culture of "low price", "affordable for everyone", and "cute" that Mixue Bingcheng has always conveyed may face the risk of not being liked and recognized by the mainstream young group. Some market insiders pointed out that the brand of Mixue Bingcheng may give people a feeling of being a bit "rustic". In terms of brand image upgrading and integrating trendy elements, Mixue Bingcheng needs to make great efforts.

Bottleneck in overseas expansion: The expansion speed of overseas stores slowed down in 2024, and the proportion of revenue contributed from outside mainland China in the total revenue also declined. Although Mixue Bingcheng has supported its overseas store expansion through overseas supply chain construction, how to further break through cultural differences and adapt to the consumption habits of different markets remains an urgent problem to be solved.

Weakening of investors' confidence: Investors still hold a cautious attitude towards tea drink enterprises listing on the Hong Kong Stock Market, which mainly stems from the unsatisfactory performance of tea drink enterprises on the Hong Kong Stock Market before. Currently, there are two listed tea drink enterprises on the Hong Kong Stock Market, namely Nayuki's Tea and Chabaidao. Nayuki's Tea's market value has shrunk significantly. By the end of 2024, it was only about HK$2.44 billion, and it fell into a loss again in the first half of 2024. Although Chabaidao is still in a profitable state and its business is relatively good, its share price fell below the issue price on the first day of listing, and its share price has continued to be under pressure since then and is still significantly lower than the issue price so far. Mixue Bingcheng's continuous sprint towards the capital market is also to prove its position in the tea drink track to investors through strong performance.

IV. Where Is the Way to Break the Situation?

In terms of product innovation, it is necessary to adhere to the core positioning of "low price and high quality" to meet the daily consumption needs of the public, and at the same time, closely follow the trend, timely launch new flavors and new categories to attract young consumers. For example, it can combine the currently popular health and wellness concepts to develop tea drink products with low sugar, low fat, and rich nutrition. Or it can collaborate with popular IPs to launch limited-edition drinks and peripherals to enhance the brand's fashion sense and topicality.

In terms of brand upgrading, Mixue Bingcheng can increase its investment in brand image building, store decoration design, and advertising promotion. On the basis of retaining the cute and approachable image of "Snow King", it can integrate more fashionable and trendy elements to create a more modern brand visual system. Meanwhile, through multiple channels such as social media, online and offline activities, it can spread the new connotation of the brand and reshape the brand's impression in the minds of consumers.

For overseas markets, Mixue Bingcheng should conduct in-depth research on the consumption cultures, taste preferences, policies, and regulations of different countries and regions, and formulate market strategies according to local conditions. Strengthen local operations, closely cooperate with local suppliers and partners, optimize supply chain management, reduce costs, and improve operational efficiency. Utilize its own brand advantages and scale effects to gradually expand its overseas market share and achieve the dual-wheel-driven development of domestic and overseas markets.

In conclusion, Mixue Bingcheng's sprint towards the Hong Kong Stock Exchange IPO is a crucial step in its development process. Strengthen corporate governance, improve operational transparency, strengthen investor relationship management, regularly disclose the company's performance, strategic planning, and other information to investors to enhance investors' confidence. With its deep market foundation, outstanding performance, and keen insight into market changes, it is hoped that Mixue Bingcheng can inject new vitality into the development of the global tea drink industry in the capital market and remain invincible in the fierce market competition.