Recent financial disclosures from five Hong Kong-listed bubble tea chains, including Mixue Group, Guming, CHABAIDAO, Shanghai Auntie, and Nayuki's Tea, have highlighted a clear divergence in the industry's performance. Combined, these five companies reported total revenues exceeding 60 billion yuan last year, with aggregate net profits attributable to parents surpassing 10 billion yuan.
Among these listed companies, CHABAIDAO reported growth in both revenue and profit. Its financial report shows that for the full year 2025, CHABAIDAO achieved total revenue of 5.395 billion yuan, a 10% year-on-year increase. Net profit surged 71% to 821 million yuan, while the adjusted net profit reached 833 million yuan, up 29% compared to the previous year. The gross profit margin improved from 31.2% to 32.5%, and the adjusted net profit margin rose from 13.1% to 15.4%.
However, this performance seemingly failed to win over investors. Following the release of the 2025 report, the company's stock price did not sustain a strong upward trend. On March 27, the day of the earnings release, the stock experienced a sharp afternoon rally but quickly retreated, closing up only 2.44% at HKD 5.87. The price-to-earnings ratio implied by its market capitalization remains low within the industry. As of April 28, CHABAIDAO's stock price closed at approximately HKD 5.70, representing a cumulative decline of over 65% from its IPO issue price of HKD 17.50. The market's cautious reaction likely reflects investor skepticism regarding the sustainability of the company's long-term growth.
The divergence between CHABAIDAO's financial results and its stock performance may be attributed to several key factors. Firstly, the seemingly high growth is primarily a rebound from a low base in 2024, with profits still not recovering to 2023 levels. Secondly, underlying growth momentum appears insufficient, particularly evidenced by store expansion rates that lag behind industry peers.
The year 2024 was a significant downturn for CHABAIDAO. Revenue fell 13.8% year-on-year to 4.918 billion yuan, while net profit attributable to parents plummeted 58.6% to 472 million yuan, marking the weakest performance in nearly five years. This sharp decline was driven by intense price wars within the bubble tea sector, leading to substantial product subsidies and discounts offered to franchisees. Concurrently, distribution and sales expenses surged over 200% to maintain brand visibility, creating a dual squeeze on profitability.
It is from this severely depressed base in 2024 that the 2025 "impressive" growth figures emerge. Even though revenue only recovered to 5.395 billion yuan—still below the 2023 level of 5.704 billion yuan—and net profit rebounded to 805 million yuan—merely 70.7% of the 1.139 billion yuan achieved in 2023—the year-on-year comparisons appear favorable.
Despite the reported increases, 2025 performance did not return to 2023 benchmarks. The 70.5% net profit growth is largely a mathematical artifact of base effect recovery, rather than being driven by enhanced store efficiency, significant product innovation, or market share gains. This explains the lack of sustained bullish momentum in the stock price post-earnings, as growth derived from a low base offers limited sustainable upside potential.
Analyzing the revenue composition reveals that CHABAIDAO's income is not primarily derived from selling beverages directly. Instead, over 95% of revenue comes from sales of goods and equipment to franchisees, along with royalty and franchise fees.
Revenue from the core business of selling goods and equipment grew 10.1% year-on-year, showing steady expansion. However, income from royalty and franchise fees declined by 10.2%. Other revenue streams demonstrated strong growth, increasing by 58.3%. The double-digit drop in royalty and franchise fees may indicate franchisees voting with their feet. In 2025, CHABAIDAO's net store addition was sluggish at just 226 stores. This contrasts sharply with peers like Mixue Bingcheng, which added over ten thousand net new stores, and Guming and Shanghai Auntie, which each added over a thousand.
The number of CHABAIDAO franchisee closures has risen consecutively, reaching 933 stores closed in 2025. Against net additions of only 226 stores, this points to significant challenges in expansion.
Within the broader bubble tea sector, many brands have relied on aggressive franchise expansion to drive growth narratives. However, once expansion slows, these high-growth stories often falter. The continuous emergence of new brands employing similar marketing and franchise-driven growth strategies has led to severe market saturation and intensified competition.
Beyond franchise-led store count increases, the sector has struggled to articulate new, compelling growth narratives. Consequently, the bubble tea segment is gradually falling out of favor with capital markets, as evidenced by Nayuki's Tea's stock performance and the tepid response to CHABAIDAO's IPO, which saw its stock break issue price on its first trading day and trend downward since.
Specifically for CHABAIDAO, the franchise model has been crucial to its rapid growth. However, the sustainability of relying solely on store expansion to drive revenue is questionable. An analysis of recent franchise store numbers shows that CHABAIDAO has moved past its phase of rapid, land-grab style expansion. Net store additions have been declining since 2023, with figures of 1,440, 594, and 226 stores for 2023, 2024, and 2025, respectively. Concurrently, the number of franchisee closures has been rising steadily, from 220 in 2023, to 890 in 2024, and 933 in 2025.
The constraints on franchisee growth are linked to the proliferation of bubble tea brands and their similar expansion strategies, leading to an oversaturation of physical stores. Currently, most brands primarily expand by attracting franchisees, generating revenue through sales of materials, equipment, and franchise fees. However, as the market matures beyond the initial land-grab phase, this growth model becomes increasingly challenging to sustain, prompting brands to intensify marketing and promotional efforts to attract customers.
Facing a bottleneck in franchisee growth, brands are also engaging in relentless price wars to protect market share, importing the "9.9 yuan" trend from the coffee sector into bubble tea. Since 2024, numerous brands have reduced product prices, launched promotions, or introduced budget product lines targeting the sub-10 yuan price segment.
Amidst this industry-wide price competition, CHABAIDAO has actively participated. While not officially reducing menu prices, the brand has heavily promoted discounts and offers on various delivery platforms, e-commerce sites, and its own mini-programs. These extensive promotional activities are likely a fundamental reason for the pressure on net profit margins. With franchise expansion slowing and price competition intensifying, how CHABAIDAO will craft a convincing growth narrative moving forward remains a critical question.
Comments