NEWS WRAP: Auntea Jenny passes listing hearing, paving the way for Hong Kong IPO

The premium tea chain’s listing would be the final one in a recent string of similar IPOs that will collectively raise nearly $2 billion

By Doug Young

Auntea Jenny (Shanghai) Industrial Co. Ltd. passed its Hong Kong listing hearing on Wednesday, paving the way for it to become the last from China’s crowded field of bubble tea chains to recently list. Following the development, the company posted an updated prospectus on the Hong Kong Stock Exchange website.

Previous reports said Auntea Jenny was aiming to raise about $300 million from the listing. That would make it among the smaller listings among its peers, behind more than $400 million raised by Chagee (CHA.US) in its U.S. listing on the Nasdaq last week. Leading chain Mixue (2097.HK) raised about $500 million in its Hong Kong IPO earlier this year, while Guming (1364.HK) raised about $250 million.

The companies’ new shares have performed strongly since their trading debuts, with Guming and Mixue both more than double their IPO prices, while Chagee is up by a more modest 10% in the week since its debut. All three of those newly listed companies currently trade at price-to-earnings (P/E) multiples of 30 or higher. A similar multiple would value Auntea Jenny at about 10 billion yuan ($1.4 billion), based on its annual profit for 2024.

All of the listings have been heavily oversubscribed by retail investors, reflecting the popularity of their brands and huge size of China’s market for premium tea drinks. But many of the companies have come under pressure lately due to stiff competition and weakening demand as Chinese consumers rein in their spending in a slowing economy.

Based in Northern China, Auntea Jenny pays particular focus to China’s smaller cities, with stores in third- and fourth-tier cities accounting for about half of its total. Mixue also focuses on such markets, often selling its premium tea drinks for 10 yuan or less.

All of the major chains boast thousands of stores in their networks, following recent rapid expansions using a franchise business model. Auntea Jenny had 9,176 stores at the end of last year, up sharply from 5,307 stores at the end of 2022.

As its network grew and the market boomed, Auntea Jenny’s revenue rose more than 50% in 2023 year-on-year to 3.35 billion yuan. But the figure contracted slightly to 3.28 billion yuan last year as the market cooled and competition remained fierce. Auntea Jenny’s profits have shown a similar trend, more than doubling year-on-year to 388 million yuan in 2023, before falling to 329 million yuan last year.

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