Shares in China's largest bubble tea and drink chain mix group jumped nearly 30% on the first day of trading on the Hong Kong Stock Exchange on Monday after raising $444 million in its first public offering.
Mixue sold 17 million shares at a fixed price of Hong Kong $202.50 ($26.04) each.
The stocks began trading at HK$262 each, with profits surpassing the 0.8% increase in Hong Kong's Hangsen index.
According to Mixue's filing, retail investors subscribe to 5,258 times more shares than they were offered in its tranche, making it one of Hong Kong's most popular IPOs.
Retail subscription rates were the record of 6,000 oversubscribed retail books at the January IPO.
The institutional tranche of the contract was covered 35 times, the application stated.
The media reported that Hong Kong retail investors have applied for a record $1.8 trillion worth of margin loans to buy mixed stocks during the book construction process.
The debut is a positive start to the mix compared to rival Gumming, where shares fell 10% on the first trading day in Hong Kong on February 12th.
Mixes are often considered China's largest chain of ice drinks, milk tea and ice cream. However, it behaves more like a biological supplier than a traditional drink brand.
Founded in 1997 as a small ice shop for Zhengzhou, Mixue had grown into a franchise giant with over 45,000 stores worldwide by September last year, surpassing 40,576 Starbucks stores around the world.
Unlike Starbucks, which directly operates 53% of its stores, Mix relies heavily on franchises, with over 99% of its stores being run by franchisees.
This model has proven to be extremely profitable. In the first nine months of 2024, Mixue reported net profit of 3.49 billion yuan, from 3.9 billion yuan in the same period last year, according to IPO submissions.
This means selling drinks that cost an average of 6 yuan ($0.8234) per cup.
The secret lies in a franchise model that generates revenue by selling food, packaging and equipment to thousands of franchisees supported by its robust manufacturing capabilities, according to its submission.
Mixue's prospectus showed that sales of goods and equipment, which accounted for 97.6% of Mixue's total revenue in the first nine months of 2024, contributed to just 2.4% of franchise fees. Mix relies on supply chains rather than traditional franchise revenue.
Wearing the playful snowman mascot of the mix, snow kings, crowns and red cloaks, he played an important role in the brand's popularity.
Mixue expanded at an incredible pace, adding 8,582 new online stores in 2023, and another 7,737 in the first nine months of 2024. In contrast, Starbucks opened just 377 new online stores in the quarter that ended in December 2024.
This rapid growth is supported by Mixue's vertically integrated supply chain. The company produces approximately 60% of the ingredients in its drinks in-house, the highest percentage in China's newly-made beverage industry. We also guarantee 100% sourcing of beverage materials, packaging materials and equipment from our own brands. This is rare in the industry.
The five production bases of the Chinese mix produce large quantities of sugar, milk, tea and coffee. In 2023 alone, the company produced 244,666 tons of sugar, accounting for 1.8% of China's total production. This scale allows the mix to maintain a low-cost strategy while ensuring quality control.
