Investment Rating - The report indicates a slowdown in the expansion of the new tea beverage industry, with a net decrease of 17,000 stores in the past year, highlighting a significant market consolidation [1][2]. Core Insights - The new tea beverage market in China has grown rapidly, with the market size increasing from RMB 187.8 billion in 2018 to RMB 517.5 billion in 2023, reflecting a CAGR of 22.5% [2]. - The competition among new tea brands is evolving from scale and price wars to a more complex, multifaceted competition focusing on product innovation and brand differentiation [1][2]. - The top five brands in the ready-to-drink tea market have increased their market share from 38.5% in 2020 to 46.8% in 2023, indicating a trend towards market concentration [1]. Summary by Sections Product Innovation and Marketing - New tea brands are focusing on health-oriented product innovations, with companies like沪上阿姨 launching over 100 new products annually [4][6]. - The marketing strategies of brands are diversifying, with successful collaborations and IP creations enhancing brand recognition and consumer engagement [8][15]. - The demand for healthier and higher-quality options is driving the evolution of ready-to-drink tea products, with brands prioritizing differentiation [7][19]. Franchise and Supply Chain Dynamics - The franchise model is becoming increasingly important, with 56.1% of tea beverage stores being part of a chain as of 2023, projected to rise to 72% by 2028 [17][20]. - The initial investment cost for opening a new store under沪上阿姨 is approximately RMB 275,000, which is lower than the industry average, making it attractive for potential franchisees [18]. - A robust supply chain is critical for maintaining product quality and customer loyalty, with沪上阿姨 achieving extensive national coverage for fresh ingredient delivery [21][19]. Market Trends and Future Outlook - The report highlights that the fastest growth in the ready-to-drink tea market is occurring in third-tier and lower cities, with沪上阿姨 having 49.4% of its stores in these areas as of 2023 [28][31]. - The overall revenue for沪上阿姨 in 2024 is projected to be RMB 3.28 billion, with 48.2% of this revenue coming from third-tier and lower cities [31]. - The industry is expected to continue evolving, with brands that can innovate and differentiate themselves likely to thrive, while those lacking in these areas may face significant challenges [39].

Core Viewpoint - The successful IPO of Hu Shang A Yi on the Hong Kong Stock Exchange reflects strong market confidence in its business model and growth potential, with a market capitalization exceeding HKD 18.1 billion after a significant stock price increase [1][3]. Group 1: Business Model and Growth - Hu Shang A Yi's rapid expansion is driven by a franchise-focused business model, with 99.7% of its 9,176 stores operated by franchisees across over 300 cities in China [4][5]. - The company has seen a strong reinvestment from existing franchisees, with 48.8% of new stores in 2024 coming from current franchisees, indicating a well-functioning franchise system [6]. - The average initial investment for a new store is approximately CNY 275,000, lower than the industry average, making it attractive for potential franchisees [6][7]. Group 2: Product and Supply Chain - Hu Shang A Yi has a diverse product line, including the "Light Enjoy" brand and "Hu Coffee," catering to various consumer preferences and enhancing franchisee profitability [7][9]. - The company sources ingredients globally, ensuring product quality and innovation, with over 100 new products launched from 2022 to 2024 [8][9]. - A centralized procurement platform helps maintain low ingredient costs, benefiting franchisees and creating a sustainable growth loop [8]. Group 3: Market Strategy and Positioning - The company is strategically focusing on the lower-tier markets, with 50.4% of its stores located in these areas by 2024, capitalizing on the expected rapid growth in these segments [9][10]. - The mid-priced tea beverage market is projected to grow significantly, with Hu Shang A Yi positioned to capture a substantial share due to its extensive network and brand recognition [13][16]. - The combination of its franchise model, product diversification, and focus on lower-tier markets positions Hu Shang A Yi for sustainable growth and competitive advantage in the tea beverage industry [19][20].

Core Viewpoint - Hu Shang A Yi (02589.HK) successfully listed on the Hong Kong Stock Exchange at an issue price of HKD 113.12, reflecting strong market optimism for the new tea beverage sector and the company's business model [1] Market Overview - The Chinese ready-to-drink beverage market has seen rapid growth, with the market size increasing from RMB 187.8 billion in 2018 to RMB 517.5 billion in 2023, representing a compound annual growth rate (CAGR) of 22.5%. It is projected to reach RMB 1,163.4 billion by 2028, growing at a CAGR of 17.6% [1] - The ready-to-drink tea market holds the largest share within this sector, accounting for 50% in 2023, with a market size expected to grow from RMB 108.5 billion in 2018 to RMB 258.5 billion in 2023, and further to RMB 573.2 billion by 2028 at a CAGR of 17.3% [2] Company Performance - As of December 31, 2023, Hu Shang A Yi operates the fourth-largest ready-to-drink tea store network in China, with revenues of RMB 21.99 billion in 2022, RMB 33.48 billion in 2023, and projected RMB 32.85 billion in 2024. Net profits were RMB 1.49 billion, RMB 3.88 billion, and RMB 3.29 billion for the same years [3][4] - The company has a strong focus on mid-range pricing, with a price range of RMB 10-20, filling the gap between lower-priced brands and premium offerings [5] Business Model - Hu Shang A Yi employs a franchise-focused business model, with 99.7% of its stores operated by franchisees, totaling 9,176 stores by the end of 2024, covering over 300 cities [5][6] - The company has a significant presence in lower-tier cities, with 50.4% of its stores located in third-tier and below cities, which is a strategic advantage due to lower investment costs and high demand [7][8] Revenue Breakdown - Franchise-related revenue accounted for 94.3% in 2022, 96.3% in 2023, and 96.5% in 2024, indicating a strong reliance on the franchise model for income generation [6] - Revenue from third-tier and below cities was RMB 9.45 billion in 2022, RMB 15.24 billion in 2023, and RMB 15.83 billion in 2024, representing 43.0%, 45.5%, and 48.2% of total revenue respectively [8] Strategic Focus - The company emphasizes product innovation, launching over 100 new products annually to meet diverse consumer needs, including seasonal offerings and new product lines [9] - Hu Shang A Yi has established a robust supply chain management system, with a nationwide cold chain logistics network to ensure product freshness and quality [10] International Expansion - Currently, Hu Shang A Yi's international business is in its early stages, with overseas revenue of RMB 6.33 million in 2024, accounting for only 0.2% of total revenue. The company plans to focus on increasing penetration in lower-tier cities while exploring niche markets through sub-brands [10]

Core Viewpoint - The article highlights the remarkable growth of Hu Shang A Yi (Shanghai Auntie) from a small tea shop to a major player in the new-style tea beverage market, with over 9,000 stores and a successful IPO on the Hong Kong Stock Exchange, emphasizing its unique expansion strategy and strong consumer trust [1][5][19]. Group 1: Company Growth and Strategy - Hu Shang A Yi has achieved annual sales of 600 million cups, reflecting strong consumer trust in its product quality [5]. - The company has over 5,000 franchisees, demonstrating a 30% second-store rate, indicating confidence in the brand [5]. - The brand has expanded to over 300 cities in China, transitioning from a regional brand to a national giant through a "capillary" expansion strategy [5][19]. Group 2: Product Development and Market Position - The company has launched over 100 new products annually, enhancing its product innovation capabilities [7]. - Hu Shang A Yi has established a brand matrix covering multiple price ranges, including its main brand, a coffee sub-brand "Hu Ka," and a cost-effective "Light Enjoy" version [7]. - As of the end of 2023, Hu Shang A Yi ranked first among mid-priced tea beverage brands in Northern China and fourth overall in the industry [7]. Group 3: Financial Performance - Revenue figures for Hu Shang A Yi from 2022 to 2024 are projected at 2.199 billion, 3.348 billion, and 3.284 billion yuan, with an average annual growth rate of 14.3% [8]. - Adjusted net profits for the same period are expected to be 154 million, 416 million, and 418 million yuan, with an impressive average annual growth rate of 39.49% [8]. Group 4: Franchise Model and Market Penetration - The company operates primarily on a franchise model, with franchise-related revenue increasing from 2.072 billion to 3.169 billion yuan from 2022 to 2024, accounting for 96.5% of total revenue [12]. - The average initial investment cost for new stores is approximately 275,000 yuan, significantly lower than the industry average of 350,000 yuan [12]. - As of the end of 2024, 99.7% of Hu Shang A Yi's 9,176 stores are operated by franchisees, showcasing the effectiveness of its franchise strategy [12]. Group 5: Supply Chain and Market Focus - Hu Shang A Yi has built a robust supply chain network with 12 logistics bases and 15 cold chain warehouses, ensuring product quality and timely delivery [13]. - The company focuses on the underdeveloped market, with over half of its stores located in tier-three cities and below, capitalizing on the lower density of tea beverage shops in these areas [17][19]. - The company plans to use funds from its IPO for digital upgrades, new product development, and supply chain enhancements, aiming to deepen its market penetration [19].