Mixue IPO pops 43% as Hong Kong sees best start since 2021

March 03, 2025 (MLN): Shares of China's largest bubble tea and drinks chain Mixue Group jumped more than 43% on their first day of trading on the Hong Kong Stock Exchange on Monday, as the city records its strongest start to a year for new listings since 2021.

Mixue known for its cheap drinks and red-cloaked Snow King mascot raised $444 million in an initial public offering by selling 17m shares in the deal at a fixed price of HK$202.5 each.

The shares rose as high as HK$290 in the session after opening at HK$262 each.

The gains outpaced a 1% rise in Hong Kong's Hang Seng Index, as Reuters reported.

Retail investors subscribed for 5,258 times more shares than were on offer in that tranche, according to Mixue's filings, making it one of Hong Kong's most popular IPOs.

The retail subscription rate was just below Bloks Group whose retail book was 6,000 times oversubscribed, a record, in its January IPO.

The institutional tranche of the deal was 35 times covered, the filings showed.

There has been $1.44 billion worth of IPOs in Hong Kong year to date, making it the best start to a year since 2021, according to Dealogic data.

So far in 2025, IPO debutantes have recorded an 11.7% gain on average on their first day of trade, significantly higher than the 7.6% gain in 2024, the data showed.

Mixue's high profile among Chinese consumers for selling drinks for as cheap as 6 yuan ($0.82) and a lack of IPOs in Hong Kong drove demand for the stock from retail investors, advisors on the deal said.

"Many Chinese tea chain stocks had dismal debuts and Mixue's 30% plus jump is a pleasant surprise to investors," said George Au, Philipp Securities deputy sales director.

"Some clients were so enthusiastic they brought their entire families to open accounts just to participate in this IPO."

Hong Kong's shortened IPO settlement period has prompted some of the city's brokerages to offer highly reduced margin loans to buy into new share sales, pushing up retail interest in offerings like Mixue.

"The cost for retail investors to subscribe has been reduced to close to zero, which is increasing their incentive to participate," said Dickie Wong, Kingston Securities executive director.

Mixue is often seen as China's largest chain of iced drinks, milk tea, and ice cream.

However, it operates more like a raw-material supplier than a traditional beverage brand.

Founded in 1997 as a small ice shop in Zhengzhou, Henan province, Mixue has grown into a franchise giant with over 45,000 stores globally by September 2024, surpassing Starbucks' 40,576 stores worldwide.

Unlike Starbucks, which operates 53% of its stores directly, Mixue relies heavily on franchising, with more than 99% of its stores run by franchisees.

This model has proven highly profitable. In the first nine months of 2024, Mixue reported a net profit of 3.49bn yuan, up from 3.19bn yuan in the same period of the previous year, according to its IPO filings.

The secret lies in its franchise model, which generates revenue by selling food materials, packaging, and equipment to thousands of franchisees, supported by its robust manufacturing capabilities, according to its filings.

Mixue has expanded at an astonishing pace, adding 8,582 net new stores in 2023 and another 7,737 in the first nine months of 2024, averaging 28 new stores daily.

In contrast, Starbucks opened just 377 net new stores in the quarter ending December 2024.

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