Mixue Group, China’s largest fresh-drinks chain, has launched Hong Kong’s hottest initial public offering (IPO) on the strength of its supply chain – and its ultralow prices.
The retail portion of the company’s Hong Kong debut attracted more than HK$1.6 trillion (US$205.9 billion) in subscriptions on Wednesday, according to a person familiar with the matter. In terms of margin loans, retail investors borrowed nearly HK$1.8 trillion from brokerages to subscribe.
By this metric, Mixue surpassed a record set by Ant Group’s scuttled IPO in 2020 and Kuaishou Technology‘s share sale in 2021, which both raked in around HK$1.3 trillion in loans.
Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.
Trading in Mixue’s shares starts on Monday.
As competition heats up in mainland China’s bubble tea industry, investor confidence is rooted in the company’s supply chain.
According to a recent prospectus, Mixue generates the bulk of its revenue by selling ingredients – milk, coffee and syrups – as well as equipment to its global network of over 45,000 franchisees. The model is powered by a “comprehensive end-to-end supply chain” that includes procurement, production, logistics, research and development and quality control.
A person passes a Mixue shop in Mong Kok. Photo: Reuters alt=A person passes a Mixue shop in Mong Kok. Photo: Reuters>
“As market capacity can be uncertain in the [fresh-drinks] industry, the fact that Mixue can sell raw materials to its own franchisees and have a clear understanding of their demand gives it a lot of agency compared to others,” said Kenny Ng Lai-yin, a strategist at Everbright Securities International.
Mixue’s procurement network covers 38 countries across six continents, giving it access to raw materials. And the vast scale of its purchases means greater negotiating power. For example, the Zhengzhou-based company bought 115,000 tonnes of lemons in 2023, making it the largest buyer in the country. The cost of procurement was around 20 per cent lower than that of its industry peers, according to the prospectus.
In addition, Mixue has five production facilities covering 0.79 million square metres with the ability to churn out around 1.65 million tonnes of ingredients and raw materials a year. Its 27 warehouses – spanning 31 provinces, autonomous regions and municipalities – also give it an edge in gaining footholds in smaller markets, where more than half of Mixue’s stores are located, the prospectus said.
