Futu News, June 18, this Friday.$Nai Xue's tea (02150.HK) $According to the announcement, the company intends to issue about 257 million shares from June 18 to 23, of which about 25.727 million shares will be offered to the public and 231.5 million shares will be offered internationally at an issue price of HK $17.219.8 per share.It will be available on the market every day.

It is reported that the tea shop operated by the company is the leading high-end tea chain in China, focusing on providing ready-made tea. According to Zhenshi Consulting, Nai Xue's tea is the second largest tea shop brand in China's high-end tea shop market in terms of total retail consumption in 2020, with a market share of 18.9%. In terms of total retail consumption in 2020, Nai Xue's tea is the seventh largest tea shop brand in China's overall existing tea shop industry, with a market share of 3.9%.

In order to improve the convenience and personalized experience of Naxue's tea to customers, the company launched its tea membership system and its tea application, and realized the full integration with the company's tea shop network. The company's Nai Xue tea membership system has about 34.7 million registered members. In 2020, about 49.0% of Naxue's total tea orders came from Naixue's tea members.

The number of tea shops in Nai Xue increased rapidly from 44 as at 31 December 2017 to 491 as at 31 December 2020, and further increased to 562 as of the last practicable date. The revenue generated by the company's Nai Xue tea shop increased from 910 million yuan in 2018 to 2.292 billion yuan in 2019 and further to 2.871 billion yuan in 2020.

In addition, for the same store in 2018 and 2019, Naixue's tea same-store profit margin remained stable in 2018 and 2019, at 24.9% and 25.3%, respectively. As a result of the outbreak of COVID-19, for same-store teas in 2019 and 2020, the same-store profit margin for tea was 13.5% in 2020, compared with 21.0% in 2019.

Throughout the track record period, the company's profitability continued to improve, with total revenue rising from 1.087 billion yuan in 2018 to 3.057 billion yuan in 2020, with a compound annual growth rate of 67.7% from 2018 to 2020. The adjusted net loss decreased significantly from 56.58 million yuan in 2018 to 11.735 million yuan in 2019, and further reversed to an adjusted net profit of 16.643 million yuan in 2020.

In the first nine months of 2020, the company recorded an income of 2.115 billion yuan and an adjusted net profit of 4.484 million yuan. Under the influence of the epidemic, the domestic food industry has been greatly impacted, and the company has narrowed its net profit after adjustment, but its revenue still maintains a strong momentum of growth.

In recent years, China's current tea market has developed rapidly, and gradually showing a trend of high-end and diversification, among which, high-end tea shops, including "Nai Xue's Tea",However, it started late, but the growth rate was the most significant.

In terms of the retail consumption value of current tea drinks, the size of China's high-end tea market has increased from 800m yuan in 2015 to 12.9 billion yuan in 2020, with a compound annual growth rate of 75.8 per cent, according to the report. The market is expected to further expand at a compound annual growth rate of 32.2% to 52.2 billion yuan in 2025.

In addition, the company has entered into cornerstone investment agreements with five cornerstone investors who have agreed, subject to certain conditions, to subscribe for a certain number of offer shares at the issue price with a total amount of US $155 million. Cornerstone investors include UBS Fund, Huitianfu Fund, Guangfa Fund, Southern Fund Management and Qianyuan Fuxing.

In terms of fund-raising purposes, the company intends to use the net proceeds from the global sale for the following purposes: about 70.0% will be used to expand the tea shop network and increase market penetration in the next three years, and about 10.0% will be spent in the next three years by strengthening technical capabilities. Further enhance the company's overall operation to improve operational efficiency About 10.0% will be used to enhance the company's supply chain and channel building capacity in the next three years to support the company's scale expansion, and about 10.0% will be used for working capital and general corporate purposes.