Investment Rating - The report assigns a "Buy" rating for the company, marking its first coverage [10]. Core Insights - Baima Tea is recognized as the largest high-end tea supplier in China, with a strong brand presence and continuous enhancement of brand equity [2]. - The company's revenue has shown steady growth, with a forecasted increase in earnings per share (EPS) from 2.64 to 3.69 CNY from 2025 to 2027 [10]. - The company is expanding its offline presence significantly, with plans to add 1,500 new stores in the next 3-5 years, focusing on lower-tier cities [9]. Summary by Sections Company Overview - Baima Tea is a well-known supplier of various tea products in China, including high-end Pu'er tea and other tea-related products, with its brand "Baima" recognized as a famous trademark [2]. Financial Performance - Revenue is projected to grow from 18.18 billion CNY in 2022 to 21.43 billion CNY in 2024, with net profit increasing from 1.66 billion CNY to 2.24 billion CNY during the same period [3]. - In the first half of 2025, revenue decreased by 4% to 10.63 billion CNY, primarily due to a reduction in offline stores [3]. Product Sales - In the first half of 2025, tea sales saw a slight decline of 4%, while tea utensils and tea food experienced growth of 1% and a decline of 20%, respectively [4]. - The average price of Baima tea increased from 643 CNY/kg in 2024 to 667 CNY/kg in 2025 [4]. Market Strategy - The company is enhancing its online sales through live streaming, which has contributed to an increase in online revenue share to 35.49% in the first half of 2025 [5]. - As of October 2025, the number of offline stores reached 3,730, with a net increase of 226 stores since the beginning of the year [9]. Earnings Forecast - The forecast for EPS is 2.64 CNY for 2025, with a projected PE ratio of 33, indicating a solid market position [10]. - Revenue is expected to grow steadily, with a projected increase to 2,598 million CNY by 2026 [12].

Core Viewpoint - Baima Tea Co., Ltd. has successfully passed the hearing for its IPO application on the Hong Kong Stock Exchange, marking a significant step towards its public listing after multiple attempts in the past 12 years [1][3]. Company Overview - Baima Tea is a leading player in the Chinese tea market, ranking first in terms of revenue and net profit among high-end tea suppliers as of 2024 [3][9]. - The company operates over 3,700 chain stores nationwide, establishing itself as a dominant force in the tea industry [3][9]. Historical Background - Founded by Wang Wenli, Baima Tea has roots in a family with a long history in tea production, dating back to the Qing Dynasty [6]. - The company has faced several challenges in its journey to go public, including failed attempts to list on various exchanges before finally targeting the Hong Kong market [1][3]. Financial Performance - Baima Tea's revenue for the years 2022 to 2025 (first half) shows a steady growth trajectory, with figures of 18.18 billion, 21.22 billion, 21.43 billion, and 10.63 billion respectively [9]. - The net profit for the same period was 1.66 billion, 2.06 billion, 2.24 billion, and 1.20 billion, indicating a positive financial outlook [9]. Market Position - The company is recognized as the "King of High-End Tea" in China, leading the market in both oolong and black tea segments [3][15]. - Baima Tea's gross margin has been impressive, with rates of 53.3%, 52.3%, 55.0%, and 55.3% from 2022 to 2025 (first half), reflecting its high-end product strategy [9]. Business Model - The company employs a franchise model, with approximately 50% of its revenue generated from franchise sales [14][16]. - Baima Tea has established a comprehensive sales system that includes both direct and franchise stores, with a focus on offline channels [13][14]. Challenges and Risks - Recent financial reports indicate a decline in revenue and net profit for the first half of 2025, attributed to a decrease in offline store numbers and rising administrative costs [15]. - The sustainability of the franchise model is a concern, as the company relies heavily on franchisees for revenue generation [16][17]. Marketing Strategy - Baima Tea has invested significantly in marketing, with sales and marketing expenses accounting for about 32% of revenue in recent years [13]. - The company emphasizes creating a high-end brand image through various marketing initiatives, including global tasting events and participation in international forums [11][13]. Future Outlook - The company aims to enhance its brand recognition and market presence through innovative marketing strategies and product offerings [11][18]. - Despite the challenges in the high-end tea market, Baima Tea's established brand and market position provide a solid foundation for future growth [18].

Core Viewpoint - Eight Horses Tea Co., Ltd. has successfully passed the hearing for its IPO application on the Hong Kong Stock Exchange, marking a significant step towards its public listing after multiple attempts in the past decade [1][3]. Company Overview - Eight Horses Tea is a typical family-owned enterprise from Fujian, founded by Wang Wenli, who comes from a prominent tea family known for its Tieguanyin tea [4][6]. - The company aims to position itself as the "Moutai of tea," emphasizing high quality and brand value [6]. Business Development - The company has faced challenges in its IPO journey, with previous attempts to list on various exchanges failing before finally targeting the Hong Kong market [1][3]. - As of the latest data, Eight Horses Tea operates over 3,700 chain stores nationwide, making it a leading supplier in the Chinese tea market [3]. Financial Performance - Eight Horses Tea reported revenues of 1.818 billion, 2.122 billion, 2.143 billion, and 1.063 billion yuan for the years 2022, 2023, 2024, and the first half of 2025, respectively, with net profits of 166 million, 206 million, 224 million, and 120 million yuan [9]. - The company's gross margin has been strong, with rates of 53.3%, 52.3%, 55.0%, and 55.3% for the same periods, reflecting its high-end market strategy [9]. Market Position - According to the prospectus, Eight Horses Tea ranks first in the high-end tea market in China, as well as in the oolong and black tea segments [9][12]. - The company has established a strong brand presence through extensive marketing efforts, including global tasting events and participation in international forums [10]. Sales Channels - Eight Horses Tea has developed a comprehensive sales system that includes both direct and franchise models, with a significant focus on offline channels, which accounted for approximately 72.2% to 64.2% of total revenue from 2022 to the first half of 2025 [10][11]. - The company has a substantial reliance on franchise sales, which constituted around 50% of total revenue in recent years [11]. Challenges and Risks - The company has experienced a decline in revenue and net profit in the first half of 2025, attributed to a reduction in offline stores and increased administrative expenses [12]. - There are concerns regarding the sustainability of the franchise model, as the company has a high inventory level of 444 million yuan and long turnover days of 168 days [12][13].

Core Viewpoint - The article discusses the challenges faced by Baima Tea Industry in its long journey towards IPO, highlighting its struggles in the traditional tea market and the impact of changing consumer preferences on its business model [5][6][9]. Group 1: IPO Journey - Baima Tea has been attempting to go public for 12 years, with multiple failed attempts across different stock exchanges, including Shenzhen and Hong Kong [6][8]. - The company has submitted its IPO application to the Hong Kong Stock Exchange for the fourth time since 2019, indicating a persistent but challenging journey [7][8]. - The cold reception from capital markets towards traditional tea companies is a significant factor in Baima's struggles, as evidenced by the experiences of other companies like China Tea and Tianfu Mingcha [11][12]. Group 2: Company Challenges - Baima Tea faces four major pain points: reliance on OEM production for over 50% of its products, a high percentage of franchise stores (93%), a misalignment with the current consumer trend of downgrading, and a lack of appeal to younger consumers [13][14][15]. - The company's revenue has declined by 4.2% year-on-year, and net profit has dropped significantly by 17.8% as of mid-2025 [13]. - The reliance on franchise stores has led to quality control issues, with complaints about product quality and false advertising [23][32]. Group 3: Market Positioning - Baima Tea's positioning as a high-end brand is increasingly problematic in a market where consumer spending is tightening, particularly among middle-class consumers [37][42]. - The average annual purchase amount of Baima's members has decreased from 2860.4 yuan in 2022 to 2469.6 yuan in 2024, indicating a decline in purchasing power [43]. - The company has attempted to introduce more affordable products but faces stiff competition from brands that better understand consumer preferences [47]. Group 4: Youth Market Engagement - Baima Tea has struggled to connect with younger consumers, who prioritize efficiency, transparency, and experiential consumption [50]. - The company's attempts to innovate and attract younger demographics, such as launching sub-brands and new product lines, have not yielded significant results [51][53]. - To effectively engage with younger consumers, Baima may need to shift from a passive to an active approach in its marketing and product development strategies [55].