Introduction:Before Lunar New Year’s Eve, Nayuki Tea officially submitted its IPO prospectus to the Hong Kong Stock Exchange. This high-end new-style tea beverage brand, known for its signature “fruit tea + soft European-style bread,” has reached a valuation of nearly RMB 13 billion after five rounds of financing. However, beneath the glossy exterior, its net profit margin in 2020 was only 0.2%, with annual net profit totaling just RMB 4.484 million. The profitability pressures and expansion risks behind its rapid growth have drawn significant attention. This article will delve into its valuation logic, membership system operations, store expansion strategy, financial details, and explore the future direction of the industry.
On the eve of Lunar New Year’s Eve, Nayuki Tea rushed to submit its prospectus to the Hong Kong Stock Exchange before the Spring Festival holiday, marking a significant step toward its Hong Kong listing. This high-end ready-to-drink tea brand, which has built considerable market recognition with its innovative focus on “fruit tea paired with soft European-style bread,” has completed five rounds of financing and now has an overall valuation approaching RMB 13 billion, or about USD 2 billion.
Nayuki Tea positions itself as a leader in China’s high-end ready-to-drink tea market. It not only pursues commercial success but also sets an ambitious goal to rival international coffee chain giant Starbucks, aiming to build a globally influential beverage brand. However, its eye-catching valuation and rapid expansion have also subjected its financial performance to close scrutiny.
According to the prospectus, as of the latest practicable date, Nayuki Tea’s membership system had accumulated approximately 29.2 million registered members. Notably, in the first nine months of 2020,49.4%over
Nayuki Tea’s membership system was officially launched in 2019. In May of the same year, it also partnered with Tencent to introduce a group-buying feature, further enhancing user interaction and engagement. During the 2020 National Day and Mid-Autumn Festival holidays, the brand reported that it sold over 3.4 million cups of tea beverages and more than 1.6 million soft European-style breads in just eight days. Its membership base also surged by nearly one million during this holiday consumption boom, bringing the total number of members to nearly 27 million.
In terms of store layout, as of September 30, 2020, Nayuki Tea had established over 420 outlets in 61 cities across mainland China. Both its store expansion speed and coverage demonstrate its aggressive ambition for growth. Early in the rollout of its “National City Expansion Plan,” the brand invested tens of millions of yuan to build its own supply chain system. It is understood that its first central factory, covering an area of over10,000 square meters, has also been completed. This move is relatively rare in the industry and highlights the brand’s emphasis on quality control and operational efficiency.
However, despite rapid market expansion and high brand visibility, Nayuki Tea’s profitability has not lived up to expectations. Multiple financial reports indicate that in 2020, the brand’s net profit was onlyRMB 4.484 million, with an overall net profit margin of just0.2%, a figure that can be described as meager, forming a stark contrast with its high valuation.
A deeper analysis of its income statement reveals that high operating costs are the main drag on profits. These include raw material procurement, employee salaries, store rents, daily operational expenses, as well as depreciation and amortization of fixed assets — all of which place significant pressure on gross profit.
According to its prospectus, in the first three quarters of 2020, Nayuki Tea recordedRMB 2.11 billionin operating revenue, but still posted a loss ofRMB 27.51 millionduring the same period. Fortunately, the same-store sales in the third quarter of 2020 gradually recovered to about90.9%of the level seen in the same period of 2019. The brand is also optimistic that it can achieve positive same-store sales growth in 2021.
Zhu Danpeng, an analyst in China’s food industry, pointed out that Nayuki has long been in a loss-making state, primarily due to various hidden risks brought about by overly rapid expansion. These include increased management difficulty, declining per-store efficiency, and challenges in cost control — all issues the brand must confront in the future.
“Going public to make money” seems to have become the ultimate aspiration for many new-style tea beverage brands. But for investors and the market, the key question is: can going public truly translate into long-term, stable growth momentum for the brand? In the increasingly competitive tea beverage market, whether Nayuki Tea can leverage the support of capital markets to stand out as a representative brand of new-style tea remains to be seen over time.
The above content is compiled by CoffeeHunters, a coffee news website.
