Chabaidao (02555) has been abruptly halted from trading by the Hong Kong Stock Exchange amid an investigation into suspected manipulation of its initial public offering. The Hong Kong Securities and Futures Commission (SFC) has frozen HK$4.379 billion in assets belonging to a group of eight offshore companies allegedly linked to the scheme. The stock has yet to resume trading, and the company has made no public statement.
According to the SFC, the group centred on Sun Ran is suspected of participating in fraudulent IPO schemes involving two companies: Chabaidao and another pharmaceutical firm. The regulator stated that the IPO may have been artificially manipulated to create a false appearance of demand for the shares. Proceeds from the offering may have been diverted away from the company under undisclosed agreements, allegedly used for so-called financial product investments, and may have been quietly routed back to major IPO placees or their connected persons.
Legal professionals caution that a trading suspension does not automatically mean the listed company has broken the law. Lawyer Wang Weiwei of Beijing Zhongwen Law Firm explained that IPO market manipulation could involve subscribers, placing participants, fund providers, and other market entities. Whether the suspected manipulators are connected to the listed company, and whether the company or its personnel knew, participated, or provided assistance, must be determined based on investigative evidence. He stressed that two separate questions must be distinguished: whether manipulation occurred during the IPO, and whether the issuer and responsible parties participated or should bear legal liability. One cannot directly conclude that the issuer was involved simply because an IPO is suspected of being manipulated.
Regarding whether investors can claim compensation from Chabaidao, Wang noted that a suspension itself does not automatically create a right to compensation. Investors would need to establish the existence of actionable illegal conduct, the responsible parties, actual losses, and a legal causal link between the violations and the losses. He also advised distinguishing losses from normal market fluctuations from those potentially caused by illegal acts.
Where the Trouble Began
On 13 October, trading in Chabaidao shares was suddenly halted on the Hong Kong Stock Exchange, with no date announced for resumption. The exchange notice stated the suspension was directed by the SFC under Section 8(1) of the Securities and Futures (Stock Market Listing) Rules. The SFC later issued a statement explaining that the halt was necessary to maintain an orderly and fair market and to protect the investing public while its investigation continues.
Chabaidao was founded in 2008 and had 8,863 stores globally as of the end of June 2026. Its core profit comes from selling raw materials, packaging, and equipment to franchise stores, a segment that has consistently accounted for around 95% of total revenue. The company completed its IPO in just eight months from first filing to listing. It initially submitted its prospectus to the Hong Kong Stock Exchange on 15 August 2023, saw that filing lapse, then launched its offering on 15 April 2024 and listed on 23 April 2024, with CICC as sole sponsor. The IPO priced shares at HK$17.5 each, raising HK$2.586 billion, making it the second listed new-style tea company after Nayuki. On its debut, the stock fell below its offer price, dropping nearly 39% intraday. Before the suspension, Chabaidao traded at HK$4.035, giving it a market capitalisation of about HK$5.96 billion, down roughly 77% from its IPO price and wiping out nearly HK$20 billion in value.
Financially, Chabaidao grew revenue from RMB 3.644 billion in 2021 to RMB 5.704 billion in 2023, with net profit rising from RMB 776 million to RMB 1.151 billion, a compound annual growth rate of 21.6%. In the first half of 2026, revenue reached RMB 2.655 billion, up 6.2% year-on-year, while net profit attributable to shareholders rose 3.2% to RMB 336 million. Gross margin fell to 30%, and revenue from royalties and franchise fees dropped 19.5% year-on-year.
Who Are the Suspected Groups?
Alongside the Chabaidao suspension, the SFC announced asset freezes against two suspected groups. The first, centred on Sun Ran, involves multiple entities with assets frozen up to HK$4.379 billion. The second, centred on Liu Haoran and the Ruikai Group, has assets frozen up to HK$285 million in connection with another suspected IPO fraud case.
Sun Ran is a licensed representative of Harvest Global Investments and controls eight companies including Avant Team, Citadel Wealth, Fortuna Capital, Gemstone Capital, and Generations Capital. According to SFC licensing records, Sun Ran holds CE number AUZ782 and possesses licences for Type 1 (dealing in securities), Type 4 (advising on securities), and Type 9 (asset management). Market observers noted that the "A" prefix on her licence number suggests she was an early core applicant within the institution's licensing system, covering the entire chain of fundraising, account opening, and placing transactions, which may explain how the eight offshore capital companies around her could smoothly complete large-scale placing operations through six brokerages.
The second group's core figure, Liu Haoran, is connected to The Reynold Lemkins Group (Asia) and Kaufmann & Company Pan-Asia, with HK$285 million frozen. He is suspected of involvement in the IPO fraud of another company. Liu serves as China chairman and chief investment officer of Ruikai Group, a global investment institution claiming single-family-office backing, registered in Hong Kong in 2020 with Liu as sole shareholder. He also registered Ruikai Pan-Asia (Beijing) Consulting Co., Ltd., where he is legal representative with a 98% stake and registered capital of RMB 1 million. Liu has publicly described Ruikai's business model as taking up 5% to 15% of an offering with its own funds during the final window before an IPO to fill subscription gaps and provide support, while using market influence to drive external orders and create a perception of strong demand.
Legal View on Whether Laws Were Broken
Wang Weiwei reiterated that a suspension is a regulatory measure and does not equal a finding that the listed company has violated the law. He noted that IPO market manipulation may involve subscribers, placing participants, fund providers, and other market entities, and that determining whether the suspected manipulators are connected to the listed company, and whether the company or its personnel knew, participated, or assisted, requires investigative evidence. He emphasised that one cannot directly conclude the issuer participated in manipulation just because an IPO is suspected of being manipulated.
On investor compensation, Wang stated that a suspension itself does not automatically give rise to a compensation claim. Investors would need to establish actionable illegal conduct, the responsible parties, actual losses, and a legal causal link. He also advised distinguishing losses from normal market price fluctuations from those potentially caused by illegal acts. For current Chabaidao shareholders, the more immediate issues are the inability to sell shares during the suspension and the potential impact of the investigation's outcome on the resumption of trading and market prices. However, the case is still under investigation, and whether relevant parties have committed violations and what liability they may bear must await further findings.
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