Chinese bubble tea chain ChaPanda sinks in Hong Kong trading debut

Chinese bubble tea chain ChaPanda sinks in Hong Kong trading debutChinese bubble tea chain ChaPanda sinks in Hong Kong trading debut
via 萨古的奶茶计划 / YouTube
Shares of China’s Sichuan Baicha Baidao, also known as ChaPanda, saw a steep decline in its debut on the Hong Kong Stock Exchange despite raising over $330 million in its initial public offering (IPO).
IPO and market debut: ChaPanda’s shares were initially priced at 17.50 Hong Kong dollars ($2.23) each, marking the city’s largest IPO so far in 2024. But on Tuesday, they opened 10.1% lower and closed 26.9% lower at 12.80 Hong Kong dollars ($1.63).
  • At one point, the shares were down as much as 38.3% ($10.80).
About the company: ChaPanda was founded in Chengdu in 2008. Today, it is China’s third-largest maker of freshly made tea drinks — mainly bubble teaboasting 8,016 stores across 31 provinces, autonomous regions and major municipalities.
Market implications: Tuesday’s disappointing debut reflects broader issues in the Hong Kong stock market, which has been sluggish due to economic challenges and low investor confidence.
  • The Hang Seng Index (HSI), which serves as the primary gauge of market performance in Hong Kong, has shown a downward trend, further dampening the IPO climate.
Industry impact: ChaPanda’s sinking share prices could signal caution for the bubble tea industry, particularly for other chains considering IPOs. The steep decline highlights potential investor skepticism about the sustainability and profitability of bubble tea companies in a saturated and highly competitive market, despite the industry’s popularity and rapid growth in China and abroad.
Future plans: ChaPanda intends to use its IPO funds to improve its supply chain and digitize its operations.
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