Sichuan Baicha Baidao Industrial (Baicha Baidao, also known as Cha Baidao) was listed in Hong Kong, and its share price plummeted nearly 40% on the first day. Schematic diagram. (Shutterstock)
[The Epoch Times, April 23, 2024](Comprehensive report by Epoch Times reporter Li Yan) On Tuesday (April 23), Chengdu-based Sichuan Baicha Baidao Industrial (Baicha Baidao, also known as Baicha Baidao) was listed in Hong Kong. The stock price plummeted nearly 40% on the first day.
The bubble tea chain raised about HK$2.59 billion (about US$330 million) in its initial public offering. However, shortly after the opening, its listing price plummeted from HK$17.50 to HK$10.80, a drop of 38%. It later recovered part of the decline and closed at HK$12.80.
Cha Baidao’s IPO was priced at HK$17.50 per share, but market demand was lukewarm. The shares issued to retail investors were only half-subscribed, while institutional investors were oversubscribed by only 1.1 times.
According to Bloomberg, the plunge was the worst debut since 2015 for a company that raised at least $300 million in funding.
In terms of sales, Chabaidao is the third largest ready-made tea company in China, with a market share of 6.8%.
Tianjin Construction Development Group, another listed company, raised about $20 million in its IPO and saw its share price fall by more than 30%.
The losses highlight the difficulties Hong Kong now faces in attracting business and investment. The former Pearl of the Orient has seen its capital raised through new listings fall for four consecutive years.
Hong Kong completed just 73 IPOs last year, with the amount of money raised falling to its lowest level in two decades and the city’s benchmark Hang Seng stock index falling more than 16%.
In 2020, China canceled the initial public offering of Alibaba subsidiary Ant Financial Group at the last minute, kicking off a years-long crackdown on businesses that has spread across industries and left trillions of companies Market value evaporated.
Last week, China’s securities regulator said it would support stock issuance in Hong Kong and also planned to relax regulations governing stock trading links between Hong Kong and mainland China. However, as Hong Kong struggles to recover from the epidemic, the national security law is introduced, and China’s economic growth slows down, investors are worried about the market prospects, including the increasingly competitive freshly brewed tea industry.
Ada Li, senior Asia-Pacific consumer products analyst at Bloomberg Intelligence, said, “Chinese consumers have been tightening their wallets amid economic uncertainty and the ongoing real estate crisis.”
The plunge in Chabaidao’s value may also affect other peers considering selling shares in Hong Kong to expand the market, including bubble tea rivals Mixue, Guming and Auntea Jenny.
(This article refers to reports from AFP and Bloomberg)
Editor in charge: Lin Yan#
Tags: Chinese bubble tea chains share price plummets day listing Hong Kong Baicha Baidao Baicha Baidao Baicha Baidao
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