Financial Services Association, Feb. 14 (Editor: Feng Yi) On February 14, the tea brand Shanghai Aunt handed over the Hong Kong Stock Exchange. CITIC Securities, Haitong International, and Orient Securities International are co-sponsors.

Shanghai Aunt also became another tea brand that hit the Hong Kong stock IPO after Tea Baidao, Gu Ming, and Michelle Ice City. Nearly three years after Nai Xue's tea was listed, the competition for the “second share of tea drinking” in Hong Kong stocks has also entered the most intense window.

According to the prospectus, as of September 30, 2023, Aunt Shanghai operated the fourth-largest network of ready-made tea shops in China, with 7,297 stores across the system. Its GMV increased by 45.8% from 4.16 billion yuan in 2021 to 6.068 billion yuan in 2022. In the first three quarters of 2023, its GMV increased to 7.183 billion yuan.

Aunt Shanghai revealed that the financing will mainly be used to enhance digital capabilities, including upgrading digital infrastructure, upgrading store systems, etc.; upgrading the franchisee platform; enhancing supply chain capabilities; expanding the store network and enhancing the brand image.

At the industry level, according to GMV, the total market size of tea shops in China is 168 billion yuan in 2022, and is expected to grow to 451.3 billion yuan by 2027, with a compound annual growth rate of about 21.9% during the period.

Among them, the average price is 10-20 yuan (median price of 10-20 yuan) tea shops have the largest share, reaching 51.5%. The forecast is for a CAGR of 23.1% between 2022 and 2027.

According to the number of stores in the entire system, as of September 30, 2023, Aunt Shanghai is the third largest brand of mid-price ready-to-make tea shops in China; in terms of city coverage, Aunt Shanghai ranked first.

It is worth noting that, similar to many competitors, Aunt Shanghai's business model is mainly based on franchising. As of September 30, 2023, 99.3% or 7,245 of the 7297 stores in its network were operated by franchisees.

As of the first 9 months of 2023, the vast majority of Shanghai Auntie's revenue came from franchise business, which mainly included sales of goods and franchise services, accounting for 96.1%.

Meanwhile, during the same period, the sales revenue of store materials and equipment sold by Michelle Ice City to franchisees accounted for about 98%, while Guming and Chabaidao accounted for 80% and 95% of the same business revenue, respectively.

Financial data also shows that in 2021, 2022, and the first nine months of 2023, Shanghai aunts earned 1.64 billion yuan, 2,199 billion yuan, and 2,535 billion yuan respectively; profit attributable to parent company owners during the corresponding period was 83.399 million yuan, 149 million yuan, and 324 million yuan.

However, Aunt Shanghai also warned that the Chinese tea consumption market is becoming increasingly competitive, and the company is facing uncertainty in adapting to market changes, catering to consumer preferences, and store expansion, which will also have an impact on business performance.

In addition, Aunt Shanghai also said that since the store network is mainly composed of third-party franchisees, there are certain potential risks in terms of business control, inventory management, and brand.