Mixue, the largest chain store of ‘new tea’ drinks and ice cream in China which we described as a case study in our Bubble Tea in Southeast Asia report, has filed for IPO in China.
Its prospectus, available on the website of China Securities Regulatory Commission, offers some very interesting glimpses of the company. A few highlights:
- At the end of March 2022, Mixue had 21,582 stores, making it the largest in China, and probably amongst top 5 in the world; its new openings accelerated during the pandemic: 6088 stores in 2020, and 7643 in 2021;
- It has already established a decent presence in Indonesia (317 stores) and Vietnam (249 stores) by the end of March 2022; Sources on the ground in these two countries told that their store count probably has already exceeded 1000;
- Mixue’s main business, measured by its revenue, however, is selling ingredients, packaging, equipment and other operational materials to franchisees for the production of drinks and ice cream. Amongst these, ingredients and packaging represent more than 87% of the total revenue;
- Therefore, Mixue essentially is a supply chain company;
- Mixue currently possesses a 168k sqm industrial park, with 130k sqm fully automated production space. It is actively sourcing for new production sides – in fact, majority of the IPO proceeds (62.32%) will be used for manufacturing and warehousing/logistics;
- Mixue sold RMB305.7 million (US$43 million) worth of straws (not exactly environmentally friendly we know) in 2021. Using the separate source which says that each straw costs RMB0.1 – this translates to 3 billion drinks sold in the year;
- The two founders, who are brothers, still control 85.56% of the shares prior to the IPO. Dilution will be about 10% after the IPO. What is more interesting is the name of the two entities through which employees hold their shares:青春无畏 (young and fearless) and 始于足下 (starting with your first step).
It seems that Mixue is still expanding rapidly and the market, including that of Southeast Asia, provides ample room for growth.
Whether it can handle the complexity and quality at scale (since every store is franchised) would be a big challenge to watch.