The Zhitong Finance App learned that Hong Kong Stock Exchange documents show that on February 14, Aunt Shanghai submitted a listing application to the Hong Kong Stock Exchange. The co-sponsors were CITIC Securities (Hong Kong) Limited, Haitong International Capital Co., Ltd., and Oriental Finance (Hong Kong) Co., Ltd.

Established in 2013, Aunt Shanghai is a leading and rapidly growing ready-to-drink company. It mainly focuses on mid-priced ready-to-drink tea products with an average price of between 10 yuan and 20 yuan.

According to the prospectus, in 2022 and the first nine months of 2023, Shanghai Aunt achieved operating income of 2,199 billion yuan and 2,535 billion yuan, respectively, up 34.0% and 54.1% year on year; net profit for the corresponding period increased by 79.2% and 188.7% year on year, respectively.

The three major specialty brands cover a wide range of consumption scenarios, with an average of more than 100 new models per year

Currently, Aunt Shanghai has launched three major brands: “Shanghai Aunt,” “Shanghai Coffee,” and “Light Edition,” which can provide a variety of healthy ready-made drinks made from high-quality raw leaf tea, freshly ground coffee beans, yogurt, fresh fruit, NFC juice, milk, and various grains.

Based on existing products, Aunt Shanghai continues to promote product innovation, launching 100 new products each year in 2021, 2022 and 2023. At the same time, according to seasonal characteristics, Shanghai Aunt has launched seasonal products such as Xianxian Rose Green Tea, Mung Bean Milk Ice, and Freshly Stewed Whole Pears. Combining regional characteristics, Shanghai Aunt also offers frozen pear gaga sweet, tangerine, and refreshing yellow lemon tea.

In order to adapt to diverse consumption scenarios and changing consumer needs, in addition to freshly made tea, Shanghai Aunt also provides consumers with snack products such as wafer cookies, cookies, potato chips, and toast. It is worth mentioning that the company launched Little Milk Brick Toast in March 2023 and immediately became a popular product, selling 6 million packs from March to December.

With a rich product matrix and excellent product quality, Aunt Shanghai is widely loved by consumers. According to the prospectus, Shanghai Aunt's GMV for the first nine months of 2023 was 7.183 billion yuan. During the same period, the average quarterly active users of Aunt Shanghai's WeChat Mini Program exceeded 16 million, and the average quarterly repurchase rate was 41.3%.

Stores increased by 37.5% in the first nine months of 2023, making it the largest mid-priced ready-to-buy tea shop brand in northern China

Like most ready-to-drink companies, Auntie Shanghai has adopted a business model focusing on joining. Based on this, the number of Auntie stores in Shanghai continues to grow rapidly. According to the prospectus, in the first nine months of 2023, the number of Shanghai Aunt's stores in the entire system increased by 1,990, an increase of 37.5%. According to Insight Consulting, based on the number of stores in the entire system, Aunt Shanghai is growing the fastest among the top five existing tea shop brands in China.

As of September 30, 2023, Aunt Shanghai's store network has 7,297 stores, covering all four municipalities in China, as well as more than 300 cities in five autonomous regions and 22 provinces. According to Insight Consulting, as of September 30, 2023, based on the number of stores in the entire system, Aunt Shanghai is the number one mid-price ready-to-drink brand in the North and the third in China. Furthermore, according to the same data, among the mid-priced tea shop brands in China, as of September 30, 2023, Shanghai aunts ranked first in terms of the number of cities covered.

It is worth mentioning that Insight Consulting predicts that among China's Tier 3 cities, the compound GMV growth rate of current tea shops in Tier 3 cities will reach 25.4% from 2022 to 2027, far exceeding the overall growth rate of the current tea shop market. At the same time, the GMV of the current tea shop market in China's third-tier cities and below is expected to reach 227.2 billion in 2027, which is expected to become the fastest growing segment of the Chinese tea shop market.

In terms of store distribution, Aunt Shanghai strategically focuses on the sinking market and is in a market leading position among mid-priced ready-made tea shop brands in China's sinking market. According to the prospectus, as of September 30, 2023, about 49.0% of Shanghai Aunt's online stores were located in third-tier cities and below. Meanwhile, in the first nine months of 2023, 50.4% of the company's new stores were opened in third-tier cities.

Has nationwide supply chain coverage and digital control capabilities

In the context of large-scale operations, Aunt Shanghai has developed strong supply chain management capabilities and digital control capabilities by building a national supply chain, centralized procurement platforms, production facilities, and digital systems.

According to reports, Aunt Shanghai has established nationwide supply chain coverage. According to the prospectus, as of September 30, 2023, Aunt Shanghai's supply chain network includes 8 large warehousing and logistics bases, 4 equipment warehouses, 9 fresh agricultural product warehouses, and 19 front-end cold chain warehouses. Based on a nationwide supply chain, Shanghai Auntie can deliver ingredients to stores two to three times a week to ensure fresh ingredients while greatly improving the store's operating efficiency. According to Insight Consulting, as of September 30, 2023, Auntie Shanghai ranked first among the top five mid-priced tea shop brands in China based on the number of stores in the entire system, based on the city coverage area of warehouses.

Meanwhile, during the procurement process, Aunt Shanghai has set up a centralized procurement platform. The platform procures ingredients from selected high-quality local suppliers and production facilities set up by the company, and requires franchisees to purchase the vast majority of ingredients from the centralized procurement platform. In the production process, Aunt Shanghai currently has a production plant in Haiyan, Zhejiang Province, which is mainly used to produce and process a number of ingredients, mainly pearls, taro balls, and taro paste. In 2022, the factory was put into commercial production. Furthermore, Aunt Shanghai continues to promote business digitalization, and has formed comprehensive quality control “from source to finished product” through the establishment of digital WMS, online and offline supervision centers, and digital store supervision systems.

Focus on the 100 billion market for mid-priced ready-to-drink tea shops to drive long-term performance growth

According to Insight Consulting, the GMV generated by mid-priced tea shops in China increased from RMB 29.6 billion in 2017 to RMB 86.5 billion in 2022, with a CAGR of 23.9%. Based on GMV calculation, it is estimated that in the next five years, mid-price tea shops are expected to become the largest and fastest-growing category in the Chinese ready-to-drink market. In 2027, the GMV generated by mid-priced ready-to-drink tea shops in China will reach 244.4 billion yuan.

On the basis of penetrating the existing market, Shanghai Aunt will penetrate different market segments through diverse ready-made drinks, consumption scenarios, flexible pricing, and brand positioning, while increasing market share. Specifically, the company will continue to increase the network density of “Shanghai Aunt” stores in second- and third-tier cities, and plans to expand the “Shanghai Coffee” store network, including independent stores, and expand the “light and enjoy” store network to cover more cities below the third tier, including cities at the county level and below. The company also said that it will actively pay attention to the new overseas tea market in the future, and plans to open overseas stores in Malaysia, the Philippines, North America and other regions to further promote China's new tea culture while expanding new growth points.