Chabaidao shares plummet 27% in HK debut

Analysts blame competition, weak sentiment for Chabaidao's disappointing debut.

Chinese bubble-tea maker Sichuan Baicha Baidao Industrial Co., known as Chabaidao, saw its shares drop 27% on its Hong Kong trading debut. 

This represents the worst first-day showing for an initial public offering (IPO) raising over $300m since September 2022, Bloomberg reported.

Analysts pointed to rising competition and weak consumer sentiment in China as key factors behind the disappointing debut.

The group offered 147.7 million shares at $17.50 each in its Hong Kong IPO, raising $2.5 billion.

“China’s freshly-made tea shop market is highly competitive and fragmented, with mounting pressure on selling prices, coupled with higher input costs,” said Ada Li, senior analyst for Asia Pacific consumer goods at Bloomberg Intelligence. “Consumers in China have been tightening their purse strings amid economic uncertainties and the ongoing property crisis.”

The company's poor performance is also expected to influence other tea-chain operators, like Sexy Tea and Mixue Group, who are eyeing the market for new share sales.