An extraordinary general meeting of shareholders for NAYUKI (ASX: 02150) descended into a tense confrontation, with retail investors directly challenging the company's chairman over a range of issues from executive compensation to strategic direction.
The meeting, held in a conference room at the company's Shenzhen headquarters, was attended by a small group of individual shareholders, with no institutional investors present. The atmosphere, initially cordial, quickly turned contentious during the Q&A session.
A shareholder, reportedly facing paper losses exceeding one million, pointedly asked Chairman Zhao Lin if his salary could be tied to performance, suggesting a symbolic one-dollar pay. Zhao's response was that such a figure "is not realistic." This exchange reportedly led the chairman to call for a brief pause, asking attendees to "have a cold drink and cool down."
Other investors pressed management on high operational costs compared to rival tea chains, the company's plans for market value management, and the use of cash reserves. Questions also extended to product strategy, with long-time customer shareholders expressing disappointment over the shift from freshly baked bread to pre-made items and the downsizing of store formats, fearing it would erode the brand's premium image.
Co-founder Peng Xin addressed the product concerns, explaining that cost reductions involved switching to medium-grade fruit with minimal taste impact. The move to pre-made bread was attributed to the dominance of online orders post-pandemic, arguing that centrally produced, flash-frozen bread offered more consistent quality than items left to cool in stores. She defended smaller stores, stating the core brand identity was "healthy tea drinks," with spacious venues merely being a vehicle.
Despite these explanations, the underlying frustration from shareholders was palpable, stemming from a catastrophic decline in the company's share price. From its IPO price of HK$19.8, the stock has plummeted over 96%, recently trading around HK$0.67, classifying it as a penny stock. This collapse has left early investors with devastating losses.
The stark contrast with industry peers was highlighted. On the same trading day, competitors like Mixue Bingcheng and Guming commanded share prices and market capitalizations vastly superior to NAYUKI's, whose total market value is now a fraction of Mixue's.
The core conflict at the meeting centered on a fundamental disconnect: investors see no clear path to profitability in the domestic market, while management pins its growth narrative on international expansion and franchising. However, contributions from overseas operations and new light food categories currently account for less than 1% of total performance.
The company's financial trajectory has been consistently downward. For 2025, revenue fell 12% year-over-year to 4.331 billion yuan. Except for a minor profit in 2023, the company has reported losses in the other four years since listing, with cumulative losses exceeding 6 billion yuan. A narrowing loss in 2025 was achieved through severe cost-cutting, including an 18.7% reduction in raw material costs, which contributed to a more than 30% decline in bakery revenue.
Historically high costs for employee salaries and rent, coupled with a halving of the average customer spending, have created a perfect storm. The company has also been slow to adapt, only beginning its franchising push in 2023. By the end of 2025, its total store count had decreased to 1,646, with just 358 being franchised—a stark contrast to rivals with tens of thousands of franchise outlets.
Management's current turnaround plan heavily relies on accelerating franchising and overseas growth, targeting 300 new stores this year. However, investors warned against lowering franchise standards to pursue store numbers, cautioning that handing locations to inexperienced "mom-and-pop" operators could jeopardize quality, food safety, and the brand's premium positioning.
The overseas strategy, while highlighting impressive average monthly sales of $300,000 per store in the U.S., remains at a very small scale. The company has not separately disclosed the profitability of its international ventures, leaving the financial sustainability of this expansion unverified by the market.
Five years after its high-profile listing, NAYUKI's brand recognition remains, but its market halo has definitively faded. The chairman's remark that a one-dollar salary "is not realistic" is likely to echo in the minds of shareholders for many trading sessions to come.
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