Investment Rating - The report maintains an "Accumulate" rating for the industry [1] Core Views - Eight Horse Tea, a leader in the high-end tea market, has recently listed on the Hong Kong Stock Exchange, indicating strong market confidence [10][11] - The company's revenue has shown growth, but profits have declined, with 2024 and 2025H1 revenues at 2.143 billion and 1.063 billion RMB respectively, reflecting a year-on-year change of +1% and -4% [15][18] - The online sales channel is increasingly important, with its revenue share rising from 19% in 2020 to 35% in 2025H1 [23] - The offline channel remains the primary revenue source, with a significant increase in franchise stores, which now account for 76% of total revenue [24][30] - The tea market is experiencing growth, particularly in the high-end segment, which is expected to reach 128.4 billion RMB by 2028, growing at a CAGR of 4.0% [29][35] Summary by Sections Weekly Industry Insights - Eight Horse Tea is recognized as a prominent national chain brand in the tea industry, focusing on high-end tea products and targeting younger consumers [10] - The company has a rich heritage, with its founder being a representative inheritor of a national intangible cultural heritage project [11] Market Performance Review - For the week of October 27 to November 2, the Shenwan retail index increased by 1.63%, while the Shanghai Composite Index rose by 0.11% [33] - Year-to-date performance shows the Shenwan retail index up by 3.88%, compared to a 17.99% increase in the Shanghai Composite Index [37] Company Financials - In 2025H1, the company's gross profit margin was 55%, slightly down by 0.2 percentage points, while the net profit margin was 11%, down by 1.9 percentage points [18][22] - The company's offline revenue decreased by 5% year-on-year, while online revenue saw a slight decline of 2% [23][27] Market Trends - The overall tea market in China was valued at 334.7 billion RMB in 2023, with a CAGR of 5.1% from 2019 to 2023 [29] - High-end tea market growth is outpacing the overall market, indicating a shift in consumer preferences towards premium products [29][35]

Core Viewpoint - Baima Tea, a leader in China's high-end tea market, successfully listed on the Hong Kong Stock Exchange, raising approximately HKD 4.5 billion through its IPO, with a strong oversubscription rate of 2680.04 times for the public offering and 13.58 times for the international offering [3][6]. Company Overview - Established in 1997, Baima Tea is recognized as the top brand in the high-end Chinese tea market, offering a comprehensive product range that includes various types of tea and related products [6]. - According to a report by Frost & Sullivan, Baima Tea ranks first in the Chinese tea market by the number of chain specialty stores and by sales revenue in the high-end tea segment as of the end of 2024 [6]. - The company has a total of 3,585 offline stores in China, including 244 direct-operated stores and 3,341 franchised stores, with a significant online presence across major e-commerce platforms [6]. Shareholding Structure - The controlling shareholders of Baima Tea are family members acting in concert, holding a combined 49.98% of the shares, with Wang Wenbin holding 22.69% and Wang Wenli holding 18.22% [5][6]. - Other notable shareholders include Tianjin Changfeng (6.14%) and various institutional and individual investors, with public shareholders collectively holding 10.59% [5]. IPO Details - The IPO involved a global offering of 9 million H shares, representing 10.59% of the total shares post-issue, with a maximum price set at HKD 50.00 per share [3]. - The IPO was managed by a team of underwriters including Huatai International, Agricultural Bank of China International, and others, with KPMG serving as the auditor [10]. Market Performance - Following the IPO, Baima Tea's shares closed at HKD 81.80, reflecting a 63.60% increase, resulting in a market capitalization of approximately HKD 69.53 billion [7].

Core Viewpoint - Eight Horses Tea Industry has successfully passed the listing hearing on the Hong Kong Stock Exchange, marking a significant step towards its IPO after a lengthy 12-year journey, amidst challenges faced by the tea industry in capital markets [2][5][11]. Company Overview - Eight Horses Tea Industry has attempted to go public multiple times since 2013, with three failed attempts to list on the A-share market between 2013 and 2022 due to various market conditions and internal adjustments [3][11]. - The company transitioned to the Hong Kong market in 2023, submitting its prospectus and successfully passing the hearing in October [5][11]. Market Context - The tea industry is considered a challenging sector for capital investment, with few successful IPOs among tea companies since 2012. The complexity of the supply chain and the non-standardized nature of tea products contribute to this difficulty [4][11]. - As of 2023, only a few tea companies, including Lincang Ancient Tea, have successfully listed, with significant stock price declines post-IPO [4]. Business Performance - Eight Horses Tea Industry has established itself as a leader in the Chinese tea market, ranking first in terms of sales revenue and store count as of 2023. The company has maintained its position as the top seller of Tieguanyin tea for over a decade [8][12]. - The company reported revenues of RMB 1.82 billion, RMB 2.12 billion, and RMB 2.14 billion for the years 2022, 2023, and 2024 respectively, with a noticeable slowdown in growth for 2024 [14][15]. Challenges and Concerns - Despite its market leadership, Eight Horses Tea faces performance concerns, with a decline in revenue and net profit reported in the first half of 2023, attributed to decreased sales in offline channels and rising administrative costs [16]. - The company has a family-controlled management structure, which raises governance concerns as it scales and seeks to meet higher regulatory standards post-IPO [16][17]. Industry Outlook - The overall Chinese tea market is projected to grow from approximately RMB 288.9 billion in 2020 to about RMB 407.9 billion by 2029, with a compound annual growth rate (CAGR) of around 4.6% [13]. - The high-end tea market is expected to grow at a faster rate, with a CAGR of approximately 5.6% from 2024 to 2029, indicating a potential opportunity for Eight Horses Tea to expand its market share [13].

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 - Eight Horse Tea is experiencing a slowdown in revenue and profit growth despite an increase in store count, indicating potential challenges in consumer purchasing power and market dynamics [5][7]. Group 1: Company Overview - Eight Horse Tea was founded in 1997 by the Wang brothers from Anxi, Fujian, and has shifted its brand positioning from "luxury tea" to "business and political gift tea" targeting small and medium-sized enterprises [2]. - As of the latest prospectus, Eight Horse Tea operates 3,633 stores across major cities in China, with a distribution of stores in first-tier, new first-tier, second-tier, and third-tier cities being 10.9%, 20.8%, 28.6%, and 39.7% respectively [2]. Group 2: Financial Performance - Eight Horse Tea's revenue figures from 2022 to 2024 are 1.82 billion, 2.12 billion, and 2.14 billion yuan, with growth rates of 16.8% in 2023 and 1.0% in 2024 [5]. - In the first half of 2025, the company's revenue was 1.06 billion yuan, reflecting a year-on-year decline of 4.2% [6]. - The average annual purchase amount per member in Eight Horse Tea's offline stores decreased from 2,860.4 yuan in 2022 to 2,469.6 yuan in 2024, indicating a weakening purchasing power among members [3][4]. Group 3: Store Expansion and Revenue Analysis - Despite the increase in store count from 2,931 at the end of 2022 to 3,585 by mid-2025, the revenue per store has declined, with figures of 447,600 yuan, 443,000 yuan, and 411,800 yuan from 2022 to 2024 [6]. - The offline revenue for Eight Horse Tea was 1.312 billion, 1.493 billion, and 1.443 billion yuan from 2022 to 2024, with a 5.3% decline in offline channel revenue in the first half of 2025 [6]. Group 4: Profitability Trends - The gross profit margin for Eight Horse Tea has shown a steady increase, recorded at 53.3%, 52.3%, 55.0%, and 55.3% from 2022 to the first half of 2025 [6]. - Net profit figures for the company were 160 million, 210 million, and 220 million yuan from 2022 to 2024, with growth rates of 24.0% and 8.9% in 2023 and 2024 respectively [6]. - In the first half of 2025, net profit was 120 million yuan, down 17.8% year-on-year, attributed to reduced revenue and increased administrative expenses [7].