To The Moon

There’s something oddly poetic about sipping a ¥7 cup of milk tea while billion-dollar delivery platforms torch cash to bring it to your door. China’s food delivery war is escalating — and not all participants are burning their fingers. While Meituan, JD.com, and even Taobao jostle for app space and user loyalty with relentless subsidies, a different group of players are quietly steeping success. I’m talking about the milk tea brands — and yes, one of them is on my watchlist for all the right reasons.

The short answer to which tea stock am I bullish on? CHAGEE. But let’s not rush the ending — there’s a lot brewing beneath the frothy surface.

Chaos in delivery lanes, calm in the tea trade

Premium Tea, Not Just Froth: Nayuki’s Recovery Has Legs

Before we dive deeper into CHAGEE’s metrics, here’s how its HK-listed peers have fared this year — and who’s been bubbling to the top.

$NAYUKI(02150)$ was once a cautionary tale of overpriced ambition. But now? It's looking more like a comeback story. The stock has clawed back from a 52-week low of HK$0.89 to around HK$1.62, on the back of strong volumes and a shift in consumer strategy. While it’s still loss-making — with a net margin of -18.6% and negative EPS — it’s sitting on over HK$2.4 billion in cash, has a manageable debt ratio of 37%, and a surprisingly decent current ratio of 2.5.

More importantly, it’s repositioning itself where the money is: premium, experience-driven tea. The brand has doubled down on mobile loyalty programmes, collaborations with luxury brands, and newer store formats. Revenue has stabilised around HK$4.9 billion, and while YoY growth is still negative, its cash burn is moderating. With a price-to-sales ratio of just 0.5 and a price-to-book of 0.63, the market is deeply discounting any hope of a turnaround — which is precisely why I think there's upside.

Delivery Platforms Are Subsidy-Drunk, and It’s Starting to Show

Meanwhile, $JD-SW(09618)$ and $MEITUAN-W(03690)$ are engaged in a bitter pricing war — and it’s not doing their share prices any favours. JD’s forward P/E is a bargain at 7.84, and it still produces billions in net income, but its consumer margins remain tight. Meituan has better profitability — an 11.5% net margin — but trades at 19x trailing earnings and 3.6x book. Worse, it's still throwing cash into promotional black holes, while average order values stagnate.

Both stocks remain attractive from a scale and infrastructure perspective, but the subsidy war has a whiff of déjà vu. We’ve seen this movie before with ride-hailing apps — and it ends with margin compression and investor fatigue.

The irony? While these platforms bleed to subsidise ¥5 deliveries, the tea brands themselves are sipping steadily on rising volumes — without footing the bill. They’re letting the delivery giants duke it out, while focusing on in-store and online engagement.

The Real Cream Rises: CHAGEE is My Favourite Cup

Now let’s talk about $Chagee Holdings Limited(CHA)$. It’s not listed in Hong Kong (yet), but I believe it’s the most exciting name in the space. Think of it as the Luckin Coffee of tea — minus the accounting scandal.

CHAGEE’s numbers are enviable. It boasts a 19.6% net margin, 34% ROA, and a stunning 96% return on equity. With over ¥13.3 billion in trailing revenue and YoY growth of 35%, it's doing something very right — and I’ve seen it first-hand. The stores are minimal, fast, high-margin machines. From Malaysia to Singapore, CHAGEE has nailed cross-border branding in a way that’s surprisingly rare for a China consumer name.

Its P/E of 24.4 is hardly cheap, but it’s justified when you stack it against Meituan’s 19 or Mixue’s frothy 42. Unlike other chains, CHAGEE owns more of its stores, giving it control over margins and branding. It’s also sitting on HK$5.3 billion in cash with just HK$788 million in debt — a financial cushion that many startups would kill for.

And yes — the tea’s actually good. I’ve tried it. (Almond Oolong, if you’re asking.)

Now take a look at CHAGEE’s recent share price — a volatile brew, perhaps, but one still showing plenty of flavour.

Not exactly steeped in consistency — but still outperforming expectations.

ChaBaiDao and Mixue: The Middle Ground That’s Growing Fast

Among the rest, $CHABAIDAO(02555)$ is an underappreciated player with better fundamentals than many realise. It runs at a 9.6% margin with 20% ROE — solid for a brand still expanding domestically. And while YoY revenue dropped 17%, it’s already rebounding on store optimisation. A forward dividend yield of 2.29% doesn’t hurt either.

Then there’s Mixue (HKEX: 2097), which many investors love to hate — but with a market cap of HK$206 billion and nearly 18% margins, it’s arguably the McDonald’s of bubble tea. Its valuation is steep, with a P/E over 42 and price-to-sales near 7.5, so I’d wait for a pullback before getting in.

Still, both companies are riding the same wave: high customer retention, low store CAPEX, and rising volume thanks to... well, Meituan and JD’s subsidised delivery. I suspect neither minds letting someone else pay for their customer acquisition.

CHAGEE isn’t just rising. It’s redefining premium tea power

CHAGEE Is My Favourite Sip — But HK Investors Still Have Options

For now, CHAGEE is my top pick. It’s rare to see a tea brand with such strong fundamentals, cross-border scalability, and premium appeal. It may not be HK-listed, but its performance is too strong to ignore — and if it ever IPOs locally, I’ll be first in line.

That said, HK investors aren’t without options. Nayuki offers turnaround potential at deep-value levels. Mixue and ChaBaiDao both have brand power and growing financials. And if you want a little flavour from the delivery side? Meituan’s scale and profitability are hard to dismiss, even if I wouldn’t call it my cup of tea.

In a market where delivery giants subsidise every cup, the real profits may flow to the ones who make the tea — not the ones who carry it.

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