The Snow King mascot on a cup at a Mixue store in Beijing, China, on Thursday, Feb. 27, 2025.
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Shares of China’s largest bubble tea chain Mixue jumped as much as 30% on its market debut on Monday after a heavily oversubscribed initial public offering.
Shares were last seen trading up 28% at 260 Hong Kong dollars ($33.4) apiece, compared to the IPO offer price of HK$202.5 per share. The stock had initally opened trade at HK$267, according to exchange data.
The company had offered 17.06 million shares in its IPO, raising a total of HK$3.45 billion.
Mixue is known for its milk tea, fruit drinks, ice cream and coffee.
Shares of other Chinese bubble tea companies listed in Hong Kong also rose on Monday morning. Nayuki traded up 7.1%, while Sichuan Baicha Baidao was 5.6% higher. Guming rose 2.2%.
The IPO has gained the support of five cornerstone investors, which include M&G Investments, HongShan Growth, Persistence Growth Limited, HHLR Fund and Meituan’s Long-Z Fund.
Shares of Mixue were highly sought after, with the Hong Kong offering over 5,200 times oversubscribed. The international offering was more than 35 times oversubscribed.
The initial allocation of the IPO was 10% to the Hong Kong offering, and 90% to the international offering.
However, Mixue said that due to the Hong Kong offering being oversubscribed by more than 100 times of the total number of offer shares initially available, it had increased its share of the IPO from 10% to 50%, with the other 50% to the international offering.
The bookrunners for the IPO were Bank of America Securities, Goldman Sachs and UBS.
Investors ‘warming up’ to the bubble tea market
“Investors are warming up to the bubble tea market again,” said Longdley Zephirin, principal and analyst at The Zephirin Group, adding that Mixue’s IPO is a demonstration of how “hungry” investors are.
While Mixue is currently largely based in Southeast Asia, the bubble tea chain may come to follow fellow Chinese tea drink chain, Heytea, in expanding into Europe and the U.S, Zephirin said.
Mixue’s biggest challenge is shifting from tier two and tier three cities into tier one cities, where most of its competitors like Nayuki and Heytea have outlets, Zephirin said.
While there is no official classification, cities in China are often categorized in certain tiers based on factors such as gross domestic product (GDP) and population. Shanghai, Beijing and Guangzhou are widely cited as first tier cities.
“Our base case valuation of Mixue Group is implied market cap of HKD 96 billion or target price of HKD 254, which is 26% higher than the initial IPO price,” said Douglas Kim, an IPO analyst at Douglas Research Advisory, who also publishes on Smartkarma.
