After a difficult period of revenue contraction in 2024, the mid-tier premium tea seller returned to strong profit growth last year
Key Takeaways:
- Auntea Jenny said it expects to report its profit last year rose as much as 60% from 2024
- The mid-tier bubble tea seller’s overseas expansion is stalled at just a single store, significantly trailing behind its more aggressive larger peers
By Lau Chi Hang
There was a time when investors couldn’t get enough of bubble tea companies, finding special sweetness in their tales of huge domestic networks and going abroad. But stocks of several recently listed chains have faltered after their IPOs, as the market descends into the type of cutthroat competition often seen in China. That’s caused all but a few leading players to drop off investor radars, quickly becoming yesterday’s tea story.
Auntea Jenny (Shanghai) Industrial Co. Ltd. (2589.HK), known for its signature “grainy milk tea” containing five separate grains, is squarely in the class of second-tier players. The homey company’s shares surged to as high as HK$197.60 after their IPO last May, representing a 75% premium over its offer price. But that frothy valuation proved fleeting, as the stock quickly lost momentum after its midyear results showed a profit increase of only 20% in the first half of last year, short of market forecasts.
After laying dormant through an extended winter, Auntea Jenny ‘s shares came back to life last week after it announced it expected to report a profit of 495 million yuan ($71 million) and 525 million yuan for 2025, up 50% to 60% year-on-year. The company attributed the jump to ongoing expansion of its store network, which drove revenue growth. It also credited its cost-reduction and efficiency-enhancing initiatives, alongside improvements in its supply chain efficiency.
But even after a 7% rise in its stock over the two trading days after the announcement, Auntea Jenny’s shares are still down more than 50% from last year’s peak. Even so, the company’s profit forecast for last year translates to a relatively high price-to-earnings (P/E) ratio of 19 times, suggesting limited upside potential for the stock in the near-term.
Decelerating franchise expansion
In the current climate of cutthroat competition and falling prices, same-store sales have stagnated and bubble tea chains are largely relying on expanding their franchised networks for growth. Auntea Jenny is typical of the difficulties many are facing. Gross merchandise volume (GMV) for its individual stores has not only stagnated but has begun falling. The company’s average GMV per store was approximately 1.6 million yuan ($230 million) in 2023, but fell 12.5% to 1.4 million yuan in 2024.
With its per-store GMV declining, Auntea Jenny has had to rely on adding more franchisees to keep its growth alive – something that’s becoming difficult in an increasingly saturated market. Data compiled from the China Chain Store & Franchise Association, Guosheng Securities, and Tech China indicates that the total number of bubble tea outlets in China has fallen from a peak of 515,000 in 2023 to 448,000 in 2024, and further dropped to 415,000 last year.
With the overall store count now declining, even leading brands are being forced to slow down their pace of domestic new openings. While Auntea Jenny opened 905 new franchised stores in the first half of last year, it also shuttered 645 over that time, resulting in a net addition of just 260 stores. That’s a 60% decline from the net addition of 653 stores in the same period of 2024. In such an environment, it’s becoming increasingly difficult for Auntea Jenny to achieve frothy revenue growth of earlier times simply through store expansion.
Stalled overseas expansion
As the domestic bubble tea market becomes increasingly overheated, most major players are looking overseas for relief. At the end of last year, market leader Mixue (2097.HK) had 4,500 overseas stores in 13 countries. Chagee (CHA.US) boasted more than 260 overseas outlets. And Chabaidao (2555.HK) had 21 stores within Southeast Asia midway through last year.
Auntea Jenny has yet to join that race, at least not in earnest. Despite having more than 10,000 stores domestically, Auntea Jenny had just a single overseas outlet last year in Malaysia. International expansion is undoubtedly challenging, involving a range of factors from adapting to diverse market tastes and cultures, to establishing local supply chains. Auntea Jenny appears to have yet to resolve those issues – if indeed it plans to seek growth abroad.
Inconveniently positioned in the middle
Investor concerns surrounding Auntea Jenny often point to the company’s lack of competitive brand positioning, leaving it without a distinctly premium nor thoroughly mass-market reputation — essentially stuck in the middle. The company’s name rarely comes to mind as a premium brand, where names like HeyTea and Chagee more typically prevail. At the other end of the spectrum, Mixue overwhelmingly dominates the mass-market segment, leaving little room for Auntea Jenny in that space. What’s left, the mainstream mid-tier segment, is crowded with intense competition. Competitors like Guming (1364.HK) and Chabaidao operate at similar scale to Auntea Jenny, making it difficult for any of those to differentiate themselves from the crowd.
In terms of brand awareness, Auntea Jenny lags significantly behind its peers. The leading three brands are currently Mixue, Chagee, and Guming, according to iiMedia’s “2025 China Top 10 NPS Word-of-Mouth Index for Modern Tea Beverage Brands.” Auntea Jenny ranked only seventh on the list with 22.37 points, trailing Mixue by 10 points.
While Auntea Jenny performed well enough last year, many attribute a big part of that to a price war between takeout delivery companies Meituan and JD.com during that time. That price war saw the two behemoths slash their delivery fees, which significantly boosted takeaway business for all the bubble tea companies. But now that price war has begun to subside, which should drive delivery costs back to more normal levels.
At the end of the day, Auntea Jenny is caught up in an extremely competitive market with pressures coming from multiple directions. Premium players like Chagee and HeyTea are above, mass-market leader Mixue is below, and direct competitors Guming and Chabaidao are at Auntea Jenny’s own tier. Stuck in the middle and lacking a distinctive market position, the company’s shares may be more suitable for investors pursuing short-term trades rather than ones looking for a longer-term bubble tea fix.
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