On March 24, 2024, Sichuan Baicha Baidao Industrial Co., Ltd., Sichuan Baicha Baidao Industrial Co., Ltd. (“Chabaidao” for short) from Chengdu, Sichuan disclosed its prospectus on the Hong Kong Stock Exchange after the hearing to issue H shares and list them on the Hong Kong Main Board. The forms were submitted twice, on August 15, 2023 and February 23, 2024.
On December 21, 2023, Chabaidao received the “Full Circulation” Filing Notice for Overseas Issued Listed and Domestic Unlisted Shares from the International Cooperation Department of the China Securities Regulatory Commission (China Securities Regulatory Commission (2023) No. 1991), and plans to issue no more than 510 million overseas listed common shares.
According to last week's market news, Chabaidao plans to launch a pre-roadshow this week. The goal is to go public in April. It plans to raise 300 million US dollars (about HK$2.34 billion) in an IPO.
Link to the prospectus after the Chabaidao hearing:
Main business
Chabaidao, founded in 2008, focuses on exploring creative combinations of natural ingredients and Chinese tea drinks. Adhering to the core concept of making fresh tea based on good tea, the company provides consumers with fresh and healthy tea products. Through the franchise model, the company has become a leading enterprise among new tea brands in the country. As of February 18, 2024, Chabaidaomen has a total of 7,927 stores across the country, achieving full coverage in all provinces and tier cities in China.
According to Frost & Sullivan's report, in terms of retail sales in 2023, Chabaidao ranked third in the Chinese new-style tea store market, with a market share of 6.8%. Total retail sales of Chabaidao reached RMB 16.9 billion in 2023.
Tea Baidao's product portfolio includes a variety of classic teas, seasonal teas, and regional teas. Classic teas are usually served throughout the year. Seasonal teas and regional teas are only sold at specific times or regions, mainly depending on the availability of relevant seasonal fruits or local specialty fruits, consumer acceptance, and sales and marketing factors.
Tea Baidao mainly operates through a franchise model. The company's revenue mainly comes from:
Sales of goods and equipment. The company sells dairy products, tea, fruit and other materials and ingredients for making tea drinks, as well as packaging materials and store equipment to Chabaidao franchise stores;
Royalties and franchise fee revenue, including non-refundable upfront initial costs, royalty income, and pre-opening training service fees;
Other revenue mainly comes from store design services, online operation and management services for takeout platforms, and direct store revenue.
Shareholder structure
According to the prospectus, in the pre-listing shareholder structure of Chabaidao,
Mr. Wang Xiaolong directly holds 18.0167% of the shares;
Ms. Liu Hong directly holds 5.7449% of the shares;
Wang Xiaoyi and Liu Weihong hold 67.6758% of the shares through Hengsheng Herui;
* Hengsheng Helui, with Mr. Wang and Ms. Liu holding 84.888% of the shares through Chengdu Jinbaisen. Ms. Daly, Mr. Wang Hongxue, Ms. Gu Jilin, and Mr. Chen Keyuan held 7.78%, 3.78%, 2.222%, and 1.33% of the interests respectively through their wholly-owned investment companies.
The employee incentive platform co-creates and advances (Mr. Wang is GP) and holds 0.4802% of the shares.
Ms. Daly holds 1.3163% of the shares;
Mr. Wang Hongxue holds 0.6395% of the shares;
Ms. Gu Jilin holds 0.3759% of the shares;
Mr. Chen Keyuan holds 0.2250% of the shares;
Lanxin Asia, through Tower Quality, holds 4.5573% of the shares;
Shanghai Zhengxin Valley holds 0.1709% and 0.2279% of shares, respectively, through Zhengxin Valley Tanying and Suzhou Yue Xiang;
Liu Yonghao, through Xinjin Shengwang, holds 0.2848% of the shares;
Tomato Private Equity and Xiamen Weiguang Investment, held 0.1709% of the shares through Yellow Tomato;
CICC, through CICC Tongfu, holds 0.1139% of the shares.
Management
The board of directors of Cha Baidao consists of 8 directors, including 4 executive directors (Mr. Wang Xiaokun, Mr. Wang Hongxue, Ms. Dai Li, Mr. Chen Keyuan), 1 non-executive director (Dr. Chen Da), and 3 independent non-executive directors (Mr. Yang Zhiyuan, Dr. Tang Yong, and Ms. Cheng Li).
3 members of the Supervisory Board (Ms. Liu Weihong, Mr. Zhu Mingxing, Mr. Zhang Yu).
In addition to the executive director, senior executives include Dr. Zhang Rui, Deputy General Manager, Mr. Zhou Dapeng, Head of Finance, Ms. Yi Rui, Deputy General Manager, Mr. Wang Feng, Deputy General Manager, and Mr. Xue Zenghui, Secretary of the Board of Directors.
Company performance
According to the prospectus, in the past 2021, 2022 and 2023, Chabaidao's revenue was RMB 3,644 billion, RMB 4.232 billion and RMB 5.704 billion, respectively, and net profit for the corresponding period was RMB 779 million, 965 million and 1.151 billion yuan respectively.
Intermediary team
The intermediary team for Cha Baidao's IPO mainly consists of CICC as its sole sponsor and overall coordinator; Citibank as the overall coordinator; Deloitte as its auditor; Jingtian Gongcheng and Dawei are the company's Hong Kong lawyers; King & Co., Ltd. and Gao Weishen are its Chinese lawyers and Hong Kong lawyers respectively; and Frost Sullivan as their industry advisors.