China's largest bubble tea makers Mixue and Guming apply for Hong Kong IPO

investing.com:

SHANGHAI/SYDNEY (Reuters) — China's leading bubble tea makers including Mixue Bingcheng and Guming are rushing to apply for first-time share sales in Hong Kong as companies in the fast-growing sector expand aggressively amid fierce competition.

Mixue Group and Guming Holdings, China's largest and second-largest freshly-made bubble tea chains by store count as of 2023, submitted applications for initial public offerings (IPO) in Hong Kong on Tuesday, Hong Kong Stock Exchange filings showed.

Mixue, which has roughly 36,000 stores, is looking to raise $500 million to $1 billion in its Hong Kong IPO, while Guming, with 9,000, is aiming to raise $300 million to $500 million, according to a source with direct knowledge of the matter.

Guming and Mixue did not immediately reply to a request for comment.

Bubble tea is one of the few bright spots on the consumer front in China, with low-price operators doing particularly well.

According to a China Chain Store & Franchise Association study, the country's 486,000 bubble tea stores were expecting a 40% rise in yearly sales in 2023, reaching a market size of around 145 billion yuan.

But with low product differentiation, competition has been fierce among players. Another industry giant, ChaBaiDao, also submitted its Hong Kong IPO application just a few months ago.

«I think there is a big rush to IPO right now, as generally speaking these chains have been expanding aggressively but have had to be willing to lose money to do so,» said Ben Cavender, managing director at China Market Research Group.

«Whoever can IPO the fastest and get to a stable operating position may be the winner over the long term.»

Mixue applied to list on Shenzhen Stock Exchange in 2022, aiming to raise roughly