Core Viewpoint - Baima Tea Industry Co., Ltd. is making another attempt to list on the Hong Kong Stock Exchange after previous failures in the A-share market, with its latest prospectus now disclosed on the HKEX website [1][3]. Group 1: Company Background and Listing Attempts - Baima Tea was established in 1997 and is a national chain brand engaged in the research, design, and retail of various tea products, including Oolong, black, green, and white teas, as well as tea utensils and food [2]. - The company has previously attempted to list on the A-share market multiple times, including a failed attempt in 2022 due to innovation issues and a lack of R&D investment [5][6]. - After withdrawing its A-share application, Baima Tea shifted focus to the Hong Kong market, submitting its prospectus in January 2025, which later expired in July 2025 [2][3]. Group 2: Financial Performance - Baima Tea's revenue from 2022 to 2024 was reported as 1.818 billion, 2.122 billion, and 2.143 billion yuan, with growth rates of 16.8% in 2023 and 1.0% in 2024 [3]. - In the first half of 2025, the company reported a revenue of 1.06 billion yuan, a decline of 4.2% year-on-year, with net profit also decreasing to 120 million yuan, down 17.8% [3]. Group 3: Market Position and Strategy - The Chinese tea market is highly fragmented, with over 1.6 million tea companies, and Baima Tea claims to be the largest high-end tea company in China, aiming to increase market share through brand value and product diversification [10][11]. - The high-end tea market in China grew from approximately 89 billion yuan in 2020 to about 103.1 billion yuan in 2024, with a compound annual growth rate of about 3.7% [11]. - Baima Tea has significantly increased its marketing expenditures, with sales and marketing costs rising from 617 million yuan in 2022 to 692 million yuan in 2024, representing about 32% of its revenue [10][11]. Group 4: Challenges and Industry Insights - The tea industry faces challenges, including declining revenues and profits for other listed tea companies, indicating a tough market environment [7][13]. - The concept of "tea spaces" as a business model is viewed skeptically due to high operational costs and the difficulty of scaling such personalized experiences [12]. - Industry experts suggest that relying solely on capital markets for growth may not be the only viable path for tea businesses, emphasizing the importance of setting realistic investment goals and exploring diverse business models [13].

Core Viewpoint - The article discusses the challenges and recent progress of Baima Tea Industry in its pursuit of an IPO, highlighting the contrasting attitudes of the capital market towards traditional tea companies versus new tea beverage brands [2][4]. Group 1: IPO Progress and Challenges - Baima Tea Industry has faced multiple setbacks in its IPO attempts, including an automatic expiration of its prospectus due to failure to pass the hearing within six months [4]. - The company has now received approval from the China Securities Regulatory Commission to issue up to 29.13 million overseas ordinary shares and convert 43.99 million unlisted shares for circulation in Hong Kong [2]. - The acceptance of family-owned and franchise-driven traditional consumer goods companies is reportedly higher in the Hong Kong market compared to A-shares, as evidenced by the successful listing of Lincang Ancient Tea [4]. Group 2: Franchise Structure and Financial Performance - As of September 2024, Baima Tea operates 3,498 stores nationwide, with 92.1% being franchise stores, contributing approximately 50% of total revenue [5]. - The revenue from franchise channels for the years 2022 to the first nine months of 2024 was 912 million, 1.073 billion, and 819 million respectively, maintaining a stable contribution to total revenue [5]. - The gross margin for franchise channels was significantly lower at 46% compared to 78.2% for direct sales in the first nine months of 2024 [5]. Group 3: Family Ownership and Governance Issues - The Wang family holds 55.9% of the voting rights, indicating a highly concentrated family ownership structure typical of family businesses [7]. - The management team is predominantly composed of family members, which raises concerns about governance and transparency in decision-making [7][8]. - The family governance model may pose challenges in maintaining operational independence and stability as the company scales and faces increased scrutiny post-IPO [8]. Group 4: Market Position and Industry Dynamics - The capital market shows a stark contrast in preference between traditional tea companies and new tea beverage brands, with only a few tea companies successfully listed [9]. - Baima Tea's market share in the high-end tea market is only 1.7%, significantly lower than leading new tea beverage companies [9]. - The tea industry is characterized by low standardization and a perception that tea is primarily consumed by older generations, which may hinder Baima's appeal to younger consumers [9].